Philip Longman in The Return of Thrift discusses how demographic changes and unsustainable finance of government middle-class welfare will lead to significant changes to the standard of life for all Americans. He writes about the abuse of medicaid, medicare, social security, and other programs that allow the significantly well off to gain more then they have put into such programs, at the risk of future generations.

The first thing that strikes you about this book is it well organized, and thought out. It presents facts and stories in a clear, organized format. Chapters are short for quick and easy reading. I made it through the book in little more then 2 hours. It is truly an enjoyable book to read, giving new insight into politics.

Dire Predictions

As good as the book was written, it's conservative predictions have been shown to be untrue over time. Most of his dire predications have generally been proven wrong by the passing of time. Social Security has been prolonged for a time far beyond the 2004 death date, given by some 8 years ago. While new dates exist to predict the future death date of Social Security, Medicaid, and Medicare, they seem to be moving forever into the future. It is possible that the various programs that money out to the middle-class will become insolvent at some point in the future, but as long as that day always remains in the future, we have little to fear.

It is hard to dispute Longman's conclusions that many pension plans (public and private), social security and Medicare are built on fiancially dubious methods of spending today's money to pay for today's retires, instead of putting money away for future retires. This has the effect of paying for today's debts with tommorow money, a risky proposition, until you consider the fact that the federal government is big and does this all the time. Deficit spending is a problem, but as shown in the late 1990s, a few boom years along with an slightly adjusted tax rate can wipe it out with little pain at all.

The book is loaded with examples of how the federal government was able to fix previously dire failings with social welfare programs through higher taxes, creative finance (borrowing for today), and economic growth. Longman generally thinks such tricks will be unsustainable over the long run, eventhough the United States government has never faulted on it's debt or even come close to doing that. Maybe the social security package of future generations will be less generous then today, but social forces will most likely mitigate the problem.

Refreshing View Point

Longman only attacks programs that supply direct welfare to middle-class retires in the form of healthcare and pensions. He does not go after farm supports, educational spending, nor funding of the poor through AFDC or it's sucessor of TANF. He points out cases of abuse or misuse that ought to be criticized and limited, such as Medicaid for seniors who have access to family money, but withstains from condeming the whole Medicaid program on these faults.

This is a refreshing view from what many conservatives have been giving us over the years. Many conservatives would like to see flat out cuts to all social programs, not just those helping the middle class and the wealthy. Some conservatives go so far as to say that AFDC/TANF breeds lazyiness in the poor, an argument that Longman abstains from making. He notes that most programs for the poor are relatively cheap compared to social security checks and civil service pensions given to the fairly well off.

Return to Thrift

Longman's central point for writing the book is to demostrate that current social welfare systems, that protect people into retirement are failing, and that the middle-class can not rely solely on government to protect them if they want a reasonable standard of living post-retirement. It encourages people to save for their retirement, to think about tommorow, to conserve. It makes people look at the long term and think not about the value of flash, but to think about how they want to sustain their lives for the long haul.

That notion attracted me to this book when I saw it on the library shelves. I was not particularly interested in a fiscally conservative argument, as much as reading a stinging criticism of middle class lifestyles, where consumption is everything and conservation is largely unimportant. That's what I got in this book, although not without a lot of alarmist claims against social security.

Retired Life

So if we don't save and save a lot of money, the book suggests that we will all end up in the poor house when we retire. Indeed, to keep an income similiar to what we had during our working years it would mandate we save a large sum of money every year—possibly as much as 20% of our income. Without a strong social security or pension net to keep us up, we are doomed for poverty the book notes.

That assumption is wrong insofar as it only considers that people need the kind of money that they made pre-retirement to live a decent life. That is absurd, unless you plan to live as active of a life post-retirement as pre-retirement, meaning that you are very busy. Many people retire to their already paid off houses, and drive cars that they bought while they were still bring in an income. Moreover, retired people drive significantly less then working people (no commuting), most likely meaning half as many miles put on a car, leading to a longer life for the vechicle. Many modern cars get well over 200,000 miles on them if the driver is willing to push them that far.

When you are retired, you have a lot of free time on your hands to make some money on the side. You could take a part time job to alivate some of your bordem and gain more money. You could produce and service some of the things that you never had time to do before retirement. You could save other ways that would have minimal impact on your quality of life: fewer mall trips, less eating out, and getting rid of cable TV.

So maybe only taking in close to the poverty line each year, being retired is not the end of the world. You wouldn't be living in the slums, and you wouldn't require that much in the way of assets to get by. So a moderate pension, 401k, and social security could be more then enough to sufficently live on. It seems as though Longman's dire consequences are only as dire as you make them to be.

Conclusions

This is an excellent book that is well worth your read, even if you are a liberal like myself. Some of the facts have not shown the test of time, but it's criticism of the excesses and thoughtlessness of middle class life are well deserved. Society will inevitably change, and predicting the future is a difficult science, but we should act in some way or another prepared for the new world.