Bismarck’s Revenge…

Originally written: September 26, 2011

Over a century ago, the Chancellor of Germany, Otto von Bismarck, developed a method to drain freedom and autonomy from his people, assuring their loyalty and fealty, as well as his re-election.

In simplified form, here was his insight: Assume the government needs 10 thousand marks from each citizen to run the government. Simply take 12,000 marks instead. But tell the people that the government is taking the extra 2000 marks for them. Tell them they will get it back when they retire. Tell them the government is looking out for it—looking out for them—in their senior years.

Of course, that wasn’t true. The extra money was never invested, never held as any citizen’s personal property. Instead, it was spent, just like the first 10,000 marks were spent. That was immediately evident. For one thing, people just about to retire when Bismarck’s program began received far more than they had put in, an impossibility if the money received was simply related to the money taken from them. For another, the money held by the government, putatively for each citizen, was not part of the citizen’s estate, could not be spent on personal emergencies, could not be inherited by their children or heirs.

But Bismarck knew a secret explicitly enunciated by a subsequent German Chancellor on a different topic; he knew the political result of “The Big Lie.” “People believe lies,” Adolph Hitler was later to explain, “provided they are big enough.”

And so, in Germany at the beginning of the 20^th century, people began to believe that money forcibly taken from them and immediately spent by the government was actually money that was saved for them, money that actually belonged to them…money they had title to. It wasn’t true—it was never true—but it was believed. And in politics, that’s all that matters.

Bismarck was the father of the welfare state, and soon his progeny spread throughout the world. The welfare state started in Germany was soon adopted in the United States—FDR created Social Security in the 1930s. It started small (2% of your income up to $3000) but, as all such programs of enforced dependency, began rather quickly to grow (now 15% of your income up to $106,800). For many Americans, it is the largest tax they face. It has reached the point in the United States where simple transfers—the taking of money from one group of Americans so as to write checks to another group of Americans—has become the primary role of government. 

It is now quite easy to find intelligent, concerned Americans, well aware of the impending bankruptcy of Social Security, themselves troubled about the massive debt held by the federal government, who nonetheless also believe that they are entitled to Social Security payments—that is, that they hold title to these payments—simply because they were forced to pay into the system for decades and had been promised a return. 

Now, they are well aware the government routinely lies. They have learned there were no weapons of mass destruction. They have heard of Nixon’s secret war in Laos and Cambodia. But they can’t come to believe the government would lie about the Big Lie. When told that there is no money, that it was never saved and invested, that the Supreme Court ruled decades ago they have no property rights to any Social Security money, they don’t get upset at the politicians who set up the system; they don’t get upset at the politicians who continually lied to them about Lockboxes. They get upset instead at the people who have finally told them the truth. Retirees are well aware that the only way to pay them what they were told they would receive is to grab the money from today’s workers who will themselves never see a cent. And even though many of these workers are their own children and grandchildren, they nonetheless seem fine with it.

It is worth recalling a Catholic anecdote: It is said that St. Augustine prayed to God “for chastity…but not yet.” It seems Bismarck’s revenge against those who long for a return to limited government and individual freedom is that he has bequeathed to us a growing group of people who want less government, lower spending, a correction of the debt…and a government check. They want limited, Constitutional government…but not yet.