The Disability Death Spiral

A must-read article in the Wall Street Journal:

According to the Social Security Administration, the number of working-age Americans relying on Social Security's disability programs has increased dramatically over the past two generations.

In December 2012, more than 8.8 million working-age men and women took such disability payments from the government—nearly three times as many as in December 1990. For every 17 people in the labor force, there is now one recipient of Social Security disability program payments.

But the pool of working-age government disability recipients may be even larger than those getting funds just from the Social Security disability programs alone. The Department of Health and Human Services reports that more than 12.4 million working-age Americans obtained disability income support from all government programs in 2011. That's more than the total number of employees in the manufacturing sector of the economy.

• In recent years, the biggest increases in disability claims have been for "musculoskeletal" problems and mental disorders (including mood disorders). But as a practical matter, it is impossible for a health professional to ascertain conclusively whether or not a patient is suffering from back pains or sad feelings. The government's disability-insurance programs were intended to address genuine need. On the current trajectory, the Social Security disability fund is projected to run out of money during Mr. Obama's second term.

The author, Nick Eberstadt, has written a book called A Nation of Takers.   But this isn't "taking"... this is scamming, fraud, pure and simple.   But the problem is that the temptation to not work and to scam the disability system has increased because the abilitiy to get a good manufacturing job has decreased.   Why?  

First, we are pricing ourselves out of the world labor market.   America desperately needs to do away with the idiocy of the minimum wage.   A man working productively at $5 per hour is a better citizen and has more of a future than the same man sitting home collecting disability that he's scammed.

Second, we are regulating ourselves into massive inefficiency.   America desperately needs to trim the environmental and OSHA and other regulatory regimes that make building a factory in America so costly compared to other countries.

The combination of government policies that hamstring the manufacturing sector and parallel government policies that incentivize fraud by men who are essentially unemployable* in non-manufacturing jobs is the problem.  



* I want to be clear here.   People talk about a "post-industrial" America, a "service economy" America.   That's fine for my kids.   They all have 120+ IQs.   But Americans are simply lying to themselves if they think the left side of the bell curve, the huge swath of Americans whose IQs are between 85 and 100, are going to succeed in an "information" economy.   They're not.   They are good people, decent people, people who deserve dignity.   But they only way they are going to be able to function economically to have a dignified life is if they have jobs they can do.   And that means manufacturing jobs -- unskilled or semi-skilled labor.   Government policies that hamstring manufacturing and subsidize the idiocy that everyone should go to college won't work and are immoral.