Robert Samuelson Says We Should Seize Bill Gates' Software Copyrights

December 09, 2013

In his column today he noted the need to seize Bill Gates property, telling readers:

“Copyrights were once thought to be legally and politically impregnable.”

Okay, we know Robert Samuelson would never advocate policies that hurt the rich. He actually said “pension benefits were once thought to be legally and politically impregnable,” as he celebrated pension cuts in Rhode Island and Illinois, along with the prospect of further cuts in Detroit and Chicago.

There is no doubt what is going on here, Samuelson tells us in his sentence:

“We are locked in a generational war, which will get worse before it gets better.”

Samuelson is saying this in the context of a country that has seen the most massive upward redistribution of income in the history of the world over the last three decades, with the richest one percent of the population getting close to half of the income gains over this period. But Samuelson doesn’t want people to pay attention to all the money going upwards, he wants them to focus on the money going to seniors, even when it means seizing their property.

The pensions, whose cuts Samuelson celebrates, are part of workers’ pay. They already put in the time expecting that the government would follow through on its part of the deal. From a legal or ethical standpoint it is difficult to see a better argument for taking away workers’ pensions than taking away Microsoft’s claim to a copyright on Windows. Hey, it would be unfortunate, but if we’re really broke, maybe the money going to Microsoft in licensing fees should be going instead to the government. After all, much of the system was developed with public funding anyhow.

The crassness of Samuelson’s effort to pit young against old, while concealing the role of the rich, should be apparent to all readers. He gives us the usual story:

“The elderly’s interests are running roughshod over other national concerns. Social Security, Medicare and Medicaid — programs heavily for the retired — dominate the budget, accounting for about 44 percent of spending, and have been largely excluded from deficit-reduction measures.”

Of course people paid for their Social Security and Medicare benefits. Social Security is a pension and insurance system run through the government. The elderly are entitled to these benefits in the same way that rich bondholders are entitled to millions of dollars of interest payments on their bonds. They paid for them. 

The cost of Medicare does somewhat exceed the taxes that people pay into the program, but that is because we pay more than twice as much per person for our health care as people in other wealthy countries. This isn’t due to better care. This is due to the fact that we pay twice as much for our doctors, drugs, and medical equipment as people in other wealthy countries. This is another case where the story should be class war, but Samuelson turns reality on its head to make it generational war.

He even gets the story of Obamacare wrong, telling readers that the young may take up the charge in beating up seniors:

“One reason is the Affordable Care Act. Among other things, Obamacare expands the young’s compulsory subsidization of older Americans (in this case, those not yet 65). Under the law, some of the young will pay artificially high insurance premiums to cover the medical expenses of older and sicker Americans.”

Actually, the subsidy is running from the healthy to the less healthy. A healthy 55 year-old will pay a far larger amount to subsidize the less healthy than a healthy 25 year-old, since their premium will be on average three times as high. In fact, since a healthy 55 year-old is far less likely to qualify for a subsidy than a healthy 25 year-old, the size of the subsidy will be even larger. 

Of course this pattern of subsidy from the healthy to the less healthy was not created by Obamacare. It already existed in the employer-provided insurance market where the vast majority of the working age population gets its coverage. The cost of health insurance premiums is effectively deducted from workers’ wages. Healthy workers face the same deduction from their wages as less healthy workers. Obamacare simply is applying the same system to the much smaller market for individual insurance. It might have been useful to point this out, but that would not advance Samuelson’s generational war agenda.

In reality, the wellbeing of the young will depend far more on the extent to which the upward redistribution of income continues in the decades ahead. If workers get their share of the economic growth projected for the next three decades the gains will be an order of magnitude greater than any conceivable tax increases associated with Social Security and Medicare. And if we stop the pilfering by the rich in the health care industry, public sector health care programs will be easily affordable even with the aging of the population.

And the needless losses in potential output we are experiencing now (@ $1 trillion a year, according to the Congressional Budget Office), because deficit hawks like Samuelson insist that we can’t use the government to boost demand and create jobs, are disproportionately born by the young. They are seeing the largest hit in the form of reduced employment and lower wages for those who do have jobs. If we had the political will to get the unemployment rate back down to the 4.0 percent rate we had in 2000, the benefits to the young would swamp any potential gains that they could have from stealing their parents’ pensions or Social Security. 



The Samuelson piece is somewhat misleading in its use of a study from the Center for Retirement Research at Boston College. It told readers:

“A study of 173 cities by the Center for Retirement Research at Boston College found pension costs averaged 7.9?percent of tax revenues, but those of many cities were much higher: 17 percent in Chicago, 15 percent in Springfield, Mass., and 12.9 percent in New York.”

These figures are based on the contributions that would be required to make the funds fully funded, not the contributions currently being made. In a city like Chicago, which has a large shortfall as a result of more than a decade of underfunding, there is a large difference between these two numbers.


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