Words mean things.

I've been thinking about the word "entitlement."  We hear it bandied about a lot these days, as in "slashing entitlements" or "keeping entitlements in check."  Screams of protest when "entitlements" are threatened, and yet to say someone has an "entitlement mentality" is an insult.  But what is an entitlement?

As usual, I went to a dictionary.  An "entitlement" in the legal or government sense just means that the government lays out the qualifications for receiving a particular payment or benefit, and if you meet those requirements, you are then "entitled" to the payment.  Think of it like a contract:  if you enter into a contract with another party and fulfill the conditions set forth in the contract, you are then entitled to payment as stipulated in the contract.  That's it; there are no further rights involved or created. 

But in "real life," an entitlement is something you deserve because you are, well, YOU.  If I am entitled to something, I have a right to it.  Oh, there comes that word, a right.  And if something is a right, then it can't be taken away.  See how that happened?  You fulfill the requirements of an entitlement program, so you are (legally) entitled.  But that isn't how we non-lawyers talk, so you feel entitled to ("deserving of, having a right to") the benefit.  And so if someone touches those entitlements, they are trampling on your rights!  All because the legal definition doesn't match up to the everyday usage of the word.

Personally, I always thought that only Social Security and Medicare are entitlement programs, because you could only have benefits if you or your fiduciary had paid into them.  Then you had a "right" to those programs because of the social contract that Social Security represents.  But that is wrong!  Do you see how I was confusing a right to something with mere entitlement in the legal sense?

It turns out that an entitlement program is just a government spending program that imposes restrictions on the category of person/company receiving the money.  Social Security and Medicare, yes, but also unemployment, food stamps, agricultural price supports (I despise that one), and a host of other programs. 

We must let go of the idea that entitlement program recipients somehow have a right to payments which continue for all time.  There are no rights involved.  The language problem also means that two different classes of government payments get combined into one thought.

It seems that we need to have two labels, not one.  The first would apply to the benefits that you have paid into, like Social Security or military retirement.  For those payments, what you eventually receive has some relationship to the amount you paid in.  Maybe just "Benefit."  Maybe something else.

The second label goes to all the other payments that the Congress comes up with.  For those, I'm in favor of "Other People's Money," or OPM for short.  Just to make it crystal clear where ALL of that money has come from. 

What do you think?  Any other ideas for a change in language?

Back to Wonkiness

There are a couple of issues in the news I like to follow, and one of them is the idea of a credit-driven bubble. The best and most painful example is our current housing bubble, but I personally believe there is a higher-education bubble, too. More on that when it isn't Christmas Eve.

The Dallas Fed just published an analysis of recovery from the current housing bubble. In the very first paragraph there is this:

9.1 million homes were built between 2002 and 2006, a period when 5.6 million U.S. households were formed.

If that doesn't jump out and shake you then nothing will. This report goes on to discuss how there can't be a "soft landing" from the housing bubble. There isn't enough money in the world to muffle the bursting bubble.

Capitalism is awesome, because it allows for the most rational and highest uses of resources to create wealth. It is also, unfortunately, subject to painful corrections, but those are the times when resources are getting re-allocated so that there can be a recovery. Like ripping off a band-aid, it hurts like crazy when you do it, but it is over faster and the recovery can begin in earnest. Programs to mitigate the pain, while comforting in the short run, are really just a waste of time and money. Kindness can kill us all.