February 28, 2005
I’ve blogged far too much about Social Security. But it’s an addiction. How we handle Social Security is probably, tied with the War on Terror, the most important long-term question that we as a country are facing right now. Some people have said there is no crisis. I think personally that if you look at the lies we’ve been told about Social Security, the crisis isn’t waiting for 2018 or 2042, it’s already started.
The real question is what we’re going to do about it. Demographics don’t lie, we’re not going to grow our economy out of this problem. So we’re faced with a couple of options. In all honesty, they boil down to three possible choices: increase revenue, decrease benefits, or scrap the system for something completely different.
1) Deny there’s a problem and hope American’s don’t revolt later: This, of course, is the current Democratic plan. And, it just might work. We’ll be forced to ever increase taxes, with the only alternative being drastic benefit cuts. After all, in 20 years when the demographics get really ugly, they’ll actually be able to legitimately claim that anyone trying to change the system is trying to kick Granny down the stairs. That is, if the Democrats are still around.
2) Modify it slightly: This is the easy solution. Changing benefit schedules, maybe a modification to the retirement age, etc. This is not going to cut it. It might delay the problems, but as life expectancy increases and birth rates decline, it will keep the program specifically at subsistence levels for eternity. Costs will remain high and benefits remain low, and that’s bad for both rich and poor.
3) Private Accounts: I’ve been slowly feeling a draft as I think more and more about this. If done properly, private accounts could be a tremendous wealth-generating machine. But I see two serious problems with this. First, the government is not known for doing ANYTHING properly. I keep bringing up references to government programs when I argue against socialized medicine, because the government doesn’t have feedback loops that business has to ensure efficiency. Knowing our government, any privatized Social Security system will be overburdened by administration costs, bureaucratic red tape and over-regulation, lack of choice, and political meddling. If they can’t do it right, it’s worse than doing nothing at all. Second, this will bring a MAJOR influx of federally controlled money into the market. With federal money comes federal regulation, and federal regulation of the market is the Democrat’s wet dream. Could the government ruin both Social Security and the stock market? And if government money is used without proper diversification, will its effect distort the market too much? Americans are becoming more and more investment-savvy on their own, perhaps we should keep this out of the federal purview? As a libertarian, I can no longer support what would be one of the greatest federal expansion of authority in our time.
4) Means-testing: I think this may be the best option that we have. I mentioned that we’re forced either increasing revenue or decreasing benefits. Increasing revenue means increasing taxes. That’s not a problem to the class-warfare left, especially since the first thing to go will be the payroll tax salary cap. The problem, however, lies with stealing the money that upper-income earners are now investing to pay now-rich retired people. Let’s cut, or avoid increasing, payroll taxes now and not pay rich people later. Social Security is an insurance program. If we’re going to insure against something, let’s insure against poverty, not old age. According to the AARP, Social Security keeps about 48% of the elderly out of poverty. So if you means-test the program, you can save over half the cost. It avoids the problem of increased taxes dragging on the economy, and could even reduce the tax burden, spurring some added economic growth, and allowing people to save for their own retirement. In addition, if we increased the retirement age slightly for the guaranteed benefit to account for increased life expectancy and improved senior health, we could do even better. Assuming we stick with this option, we may even be able to increase the benefit to old folks facing poverty, and ensure that their retirement is better than the mere subsistence-level stipend they currently receive.
No matter what we do, someone has to get the short end of the stick to fix this problem. With option 1, future workers get the short end. They’re the engine of our economy, and increasing their taxes worsen their ability to invest, hurting themselves and the general economy. Option 2 screws everyone equally, and does nothing to improve the situation. Option 3 screws the economy by giving the government too much of a hand. Option 4 screws the old rich folks. The one group that legitimately does not need the money would cease to get it. Young workers who don’t believe they’ll ever get Social Security aren’t as angry, and might save a little in taxes, and the left always loves taking away from the rich, so they shouldn’t have a problem with it either. All parties are served, except the group that doesn’t need it. Sounds like a winner to me!
Of course, it is possible this would have happened without the US going into Afghanistan and Iraq, but I can’t say it’s all that likely.
I’m just sayin’…
What a headline. That sounds pretty bad, doesn’t it… They go on to say:
Personal incomes which had been bolstered by a large stock dividend payment in December plunged 2.3 percent in January, the sharpest decline in more than a decade. Consumer spending was flat, the government reported Monday.
The Commerce Department said the sharp January drop in incomes followed a record 3.7 percent jump in incomes in December with both months heavily influenced by a $3 per share dividend payment that computer software giant Microsoft made on Dec. 2.
Without the huge $32 billion dividend payment by Microsoft, personal incomes would have shown steadier gains of 0.6 percent in December and 0.5 percent in January.
So basically what they’re saying is, if I get a big bonus or something at work, and the next month my raise kicks in but my check is smaller than my bonus, that’s a huge hit to my personal income, right? Because that’s what happens. Income is at least a percent higher than it was in November, and a one-time bonus in December made the month-to-month number look bad. If I can see “personal income reductions” like that, I’ll take it any time I can get it.
There’s a big difference between factual accuracy and truthfulness. It’s a line Michael Moore doesn’t seem to understand, and whoever wrote this headline has the same problem. What they said is true, month-to-month numbers dropped. But the truth of the numbers shows that the economy is improving each month, and the month-to-month only looks bad because December was so good.
February 27, 2005
The NY Times is reporting that Bush & Co have decided to take a 9-year old prodigy on the road to help them stump for Social Security reform.
The battle over Social Security has been joined by an unusual lobbyist, a 9-year-old from Texas who has agreed to travel supporting President Bush’s proposal.
The boy, Noah McCullough, made a splash with his encyclopedic command of presidential history, earning five appearances on the “Tonight” show and some unusual experiences in the presidential campaign last year. He beat Howard Dean in a trivia contest at the Democratic National Convention and wrote for his local newspaper about his trip to see the inauguration.
Noah plans to run for the White House in 2032 – and he wants Social Security addressed before then.
“It will be bankrupt when I’m president,” he said.
Awwwwww… Isn’t that adorable???
The real question here is not whether this is dishonest and a poor way to inform the American people about whether or not Social Security needs to be reformed. As Reagan once quipped regarding politics, “It has been said that politics is the second oldest profession. I have learned that it bears a striking resemblance to the first.” Certainly this is nothing more than showmanship, that does little to inform anyone of anything.
The real question is what has become of the American citizenry? Do Bush and Rove really believe that the American people will respond more to a 9-year old kid than an actual debate on the issues? I think that they do. Rove is quite a smart guy. I’m worried that he’s right.
Hat Tip: dadahead
I’m not planning on doing much posting on the Oscars. Since I’ve seen only two of the movies released in the last year and a half, neither of which are nominated for Oscars, there’s not a whole lot to say.
I might have to chime in if Chris Rock goes off and starts swearing and slandering people. The hopes that it might happen is the sole reason I’m even going to watch.
February 26, 2005
In high school, many of my English teachers had an affinity for modern and minority authors. Thus, somehow I missed out on being forced to read many of the ‘classics’. Of course, one of them did assign Anthem by Ayn Rand. So I’ve started going back and reading some of the books that I missed out on. (Yes, I am enough of a nerd that I consider it “missing out”, and now am going back and doing it).
The most recent was The Grapes of Wrath, a story about dust bowl farmers leaving a situation where there was no work for them, only to arrive at a situation where there was no work for them. Written in the populist new-deal era, it of course looks upon unions and collectivism as the solution. Few people seem to understand that the only constant in life is change, and that rather than tilting at windmills, change dictates that seeking employment outside subsistence farming was necessary for the dust bowl migrants.
In a desire to not be stuck in the hellhole of a modern-day Sysiphus, I have decided that it is time to jump ahead of the curve. California has ceased to be the Golden State, and is no longer a land of opportunity for a young couple looking to buy a house and start a family. It’s a sad day, because California is one of the most beautiful, temperate states in our great Union, and while I did not grow up here, my wife’s family and childhood are here. But when an electrical engineer cannot earn enough money to buy a house and earn a living, it is time for a change. That said, we’re off to the ‘Dirty South’. In mid-May, we trade in the land of fruits, flakes and nuts for Hot-lanta. I’m interested to watch the transition of my wife from Valley Girl to Georgia Peach, and excited for the prospect of having a real, actual, finished basement to myself. To all the people that have ruined California, you have it all to yourself now: I’ve found greener pastures.
February 25, 2005
Okay, so here’s the deal. My wife and I both work. Right now, she’s running a surplus. The amount of money she earns exceeds her necessary expenditures. So she’s passing that money to me. Of course, in our future, the demographics are going to change, and when we have kids, she is not going to be working. Thus, at that time, I can pay back the “trust fund” that she’s building up, right? Of course, during this time, that “trust fund” has been used to pay rent, bills, and other things. So when the day comes, for me to “pay back” the fund, it will require me to either make more money or reduce other expenditures. Since our actual income and expenses are aggregate, losing one income hurts both.
There’s a little accounting trick going on here. Of course, it’s the same accounting trick our government is using. Who is it tricking? Us.
That’s where our government is. Everyone keeps talking about the social security “trust fund”. The trust fund is not money that the SSA has saved. It’s a drawer full of IOUs from our government. One pocket has spent the money it should be holding for the other.
For this reason, we really need to figure out how to fix this issue. They say that in 2018, Social Security will have to draw from the “trust fund”. Right now, the payroll tax is providing money not into savings that will be drawn later, but is paying for general expenditures of the government. As that trust fund transfer decreases and then reverses, the rest of the government will either have to increase taxes or reduce spending to cover the difference. This is a problem next year, a bigger problem the year after that, and only grows and grows. The references to the “trust fund” only confuse the issue.
Once you remove the references to the “trust fund”, you realize a simple fact: to cover social security and maintain constant spending in other areas, total government spending will increase, and tax receipts need to increase with it.
The problem isn’t waiting for 2018 or 2042. The problem is now. We must immediately reduce spending. Whether we do this by reforming Social Security or by cutting back the rest of the government doesn’t really matter. But unless we start cutting spending now, we’re in for some trouble. Raising payroll taxes now may help the immediate situation, but it doesn’t help retirees down the road, unless the “trust fund” is actually saved. Suffice to say, running a deficit right now only makes it worse.
As they say in A Few Good Men, “These are the facts. And they are undisputed.”
Iowahawk is one funny, funny man. I guess when you’re surrounded by corn, you develop a monster wit.
If there could ever be an apt tribute to the memory of Hunter S. Thompson, this is it.
I don’t normally link the Anti-Idiotarian Rottweiler. They’re funny and one of my daily reads, but not the first place that comes to mind when I hear the words “civil debate”.
But this fisking of Kofi Annan’s WSJ op-ed just screams for a link.
As near as I can tell, the theory behind libertarianism and free-market capitalism is that people, left to their own devices, will usually make the right choices. Those right choices may not be the desired behavior of the nanny state, but will be rationally best for the individual. Democrats, on the other hand, seem to believe that individuals are one government decree away from throwing their lives down the tubes, and thus government needs to step in and manage and watch over to make sure we don’t hurt ourselves.
This, of course, is true for a number of different issues. The left doesn’t think you can be trusted with your own retirement, so they’ll handle it for you. Likewise, you can’t be trusted with healthcare, so the government will handle that. You can’t argue with your employer for benefits or working conditions, so they’ll mandate those.
And you can’t seem to demand of automakers that they improve gasoline efficiency, therefore they’ll do it for you.
Rationally, there are two parts of the equation. First, there are the economics of gasoline prices and mileage. Second, there is concern for the environment. The market works very well to keep both of these things in balance. If you look at the growing market for hybrid vehicles, it is obvious that increased gas efficiency is a buying point for many people, likely beyond that of just the “greens”.
Using myself as an example, I ask myself whether it is worth it to get a hybrid vehicle. I currently drive the ubiquitous light truck, a Ford Ranger. Based on my lifestyle, I’d like to keep the versatility of a light truck, so my options are currently non-existent for hybrids. That will change, of course. So, when I look at a new vehicle, I have two questions to ask myself. First, how much more does this hybrid cost? Second, at my current rate of driving, how long would it take to recoup that expense?
Currently I drive about 10k miles/year. A low amount by most standards. My truck now gets between 16 and 17 mpg. Let’s say, for the sake of argument, that a hybrid light truck would get 32 mpg, exactly double. We’ll hold gas prices at a constant rate of $2/gallon. With those numbers, I would spend $1250/year on gas for my truck, or only $625/year for the hybrid.
Hybrids currently cost, from my limited research, about $3000 extra. At a savings of $625/year, it would take around 4 years for that price adder to be recouped. Since I plan to keep cars for a longer period of time than this, it is worth it, if I am buying a new car, to buy a hybrid. I have consciously left out the environmental portion of the decision, since I don’t necessarily believe that global warming is the problem it is purported to be. I’d be willing to pay a slight premium for a “green” car, but it’s not a primary factor in my decision making.
Therefore, it is in my rational self-interest to make my next purchase a hybrid. And since it will likely be 4 or 5 years before I purchase another car, I may even be able to follow my standing rule, which is to never buy cars brand-new, I may even be able to pick up a used hybrid truck for a song.
Does the government get to claim credit for my rational decision? Not if I have anything to say about it, but they’ll probably try.
For you fellow bloggers out there, I need some help. As you can see from one of my post pages, I have been able to display the post, number of trackbacks, and trackback URL on the same page as comments. However, I want to be able to insert the trackbacks themselves on the same page, much like one of Jackey’s posts.
If anyone knows how to do this, please let me know via comments or the email link in the upper right. Thanks!
February 24, 2005
There’s been a few discussions recently in the ‘crazy’ libertarian circles I run in over whether libertarians are served by having an organized political party, and if not, whether we would have an easier time dragging the Republicans or the Democrats towards our side. Loyal opposition dadahead recently has posted his scorching response, suggesting Libertarians are closer to the Democrats:
If one’s libertarianism is genuinely motivated by a belief that the exercise of state power is an inherently bad thing, the GOP is the last place you should call home. The Republicans are truly becoming the party of quasi-fascism, promoting an ideology of unquestioning obedience to the state. The Patriot Act alone should be enough to convince any genuine libertarian to run screaming from the party of George W. Bush.
Not to mention the GOP’s committment to ending women’s reproductive rights, using the American military machine in the service of corporate interests no matter how many lives it costs, prosecuting the war on drugs, and generally eroding any freedoms that the American people have managed to claim over the last 200 or so years.
I, of course, was forced to respond:
I’m a firm believer in the Political Compass. Specifically, if you look at their analysis of the 2004 US Presidential Election, you see that Kerry and Bush really aren’t that far away from each other. And I personally believe that most of modern American politics is firmly in that upper-right quadrant. Should libertarians identify with Republicans or Democrats? In theory, there’s not that much separating the two. But frankly, I voted for the guy I think was most likely to lower taxes, stave off the nationalization of our health care system, revamp social security, and who I think was the better choice regarding the war. Bush hasn’t lived up to everything I wanted to see, but I also don’t think he has a chance in hell of enacting his anti-same sex marriage amendment, so the downsize isn’t as bad as Kerry, who I think would be actively promoting nationalized health care.
I also worry that you are heavily demonizing the Republican party. Yes, we have a religious right that has more power than I would like to see. However, I think the left’s characterization of the Republicans as racist or fascist is unfounded. Granted, racists will prefer the non-Al Sharpton/Jesse Jackson party if given a choice, but the racist idiots who vote Republican are hangers-on, not policy makers.
I personally believe that most politicians in general are interested in nothing more than increasing their own power. But I think that most average Republicans and Democrats honestly believe that their policies will help people. They only differ on methods.
Judging by the Political Compass results for the 2004 Election, I highly doubt that either the Republicans or Democrats are close enough to libertarians to truly be “fellow travelers.” I’ve always thought that when looking at the parties, I think of a CD player. Following the left’s definition of “progressivism” as being forward, I see the Democrats as pressing “play”, and the Republicans only looking for “slow motion” or “pause”. The greens, of course, are frantically looking for the “fast forward” button, and only the libertarians actually want to hit “rewind”. Granted, I’ve left out the anarchists. They want to pull out the CD, toss it in the fire, and cackle maniacally while laying the concertina wire around their fortress.
My only possible answer can be that having a Libertarian Party is necessary. As both the Republican and Democrat parties push farther left and continue to erode any differentiation between them, people will be looking for a viable third party. Being the only party that truly values both economic and social liberty, we can slowly snipe people from both major parties.
However, polls indicate that most Canadians are opposed to the scheme. Many believe that the umbrella, when fully implemented, could lead to an international arms race.
Prime Minister Paul Martin, who leads a tenuous minority government, has said that Ottawa would not support what he called the “weaponization of space.”
Of course not. My guess is that the US wanted some money to help the research and development of this missile defense shield, and Canada is too burdened by their “free” health care that they can’t afford it.
In reality, however, they know that if we build missile defense, it will be designed to stop any missile heading anywhere near North America, so even if they rebuke us here, they’re still going to get protected by the shield. Granted, I’m pretty sure nobody is going to try to nuke Toronto (although losing Quebec wouldn’t be much loss), but they’re still going to be a free rider on our defense shield.
And I don’t see how this in any way is a part of the “weaponization of space.” That phrase is used to mark space-based weapons, not weapons that happen to travel through space. ICBM’s already travel through space, so if nothing else, we’re defending ourselves against the weaponization of space.
PS – All said, I’m not sure “missile defense” should be our highest priority. Any country that would fire a missile at us can likely be deterred by the doctrine of MAD. I think we should have it eventually, but it wouldn’t be priority #1 on my list.
First the US and Russia, now this. Taiwan has softened their rhetoric towards China:
Taiwanese President Chen Shui-bian told an opposition leader Thursday that he would not shut the door on eventual unification with rival China if Beijing expressed goodwill.
China and Taiwan have always had close ties. Much like the US or Australia were very heavily “British” after gaining independence, or the former Soviet republics who still hold important cultural ties with Russia. Taiwan’s ties are even closer than the US and Britain, because there are still people alive who were around in the days of the revolution.
If it weren’t for that pesky communism thing, Taiwan and China likely never would have had a problem. I’ve thought for a long time that Taiwan would never be willing to rejoin the mainland if communism existed. Thankfully, however, China is starting to realize the folly of their grand experiment, and has been slowly moving away from communism for the last 10-15 years. China is on their way to becoming a global economic powerhouse, and Taiwan is slowly losing reasons not to re-unify.
Maybe it’s just a start, but if commercial airliners are crossing the Strait of Formosa, it’s grows ever less likely that missiles will do the same.
February 23, 2005
Last weekend, the wife, dog, and I went to a party rental store to complete an order for a party my wife is planning. A very nice lady helped us, and was excited to hear the dog’s name, “Guinness”. She proceeded to tell us all about her husband, who had a shirt that read Guinness: Gaelic for Genius. She continued to tell us about how her husband was a retired electrical engineer, enjoyed brewing beer in his spare time, etc etc. But one thing she mentioned was a bit odd. She said her husband was a genius. She said this matter-of-factly, with no particular emphasis or boastfulness. It was a simple fact.
I was completely taken aback. We live in a culture where so many things are triumphed; fame, sports ability, fortune, looks, personality, virtue. Yet intelligence is not one of them. The smartest among us are chided as nerds, and any acknowledgement of intelligence is to be avoided. We care not when Muhammed Ali proclaims himself “The Greatest”, but when someone believes they have genius-level intelligence, that is unacceptable. MENSA is a joke to the general population. I knew a woman (admittedly a loud, obnoxious moron) who was aghast at the fact that I said I believed I was in the top 20% of the country (much less even saying genius-level intelligence). And this lady matter-of-factly says her husband is a genius?
Perhaps it is a concept that flies in the face of both religion and our declaration of independence. Surely the founding fathers did not believe that every man is created identically, but they believe that there is an inherent equality. Religion favors faith over reason, and eating from the Tree of Knowledge was man’s first sin. Of course, Kobe Bryant is certainly not created equal to me, nor am I able to craft music like Ray Charles. They have levels of ability far beyond that of the average in their fields. Some people are gifted with business acument, writing talent, social skills, and a few of us have exceptional intelligence.
The general definition of genius is to be in the top 2% based upon measured intelligence (with an IQ or other score). Of course, this means that 1 out of every 50 people in this country is a genius. Typically, those people know that they are different, and already have trouble relating to others in their age group. A gifted child grows up unable to see why his classmates are not “getting it”, and can’t grasp why the only people he relates to are always older than he. Adding a social stigma against intelligence on top of this makes it much more difficult for a child to understand.
If I have children blessed with high intelligence, I am going to do my best to ensure that they understand what comes along with it. There are plenty of benefits and pitfalls growing up as a gifted child. But the first thing is to ensure that the child understands that he is not a pariah, and that there is nothing wrong with him. Too many kids, myself included, grew up shunned and ostracized for our quirks. I was fortunate enough that I had parents that understood me, and a school with a strong gifted program. But those kids without these advantages will grow up to hide and be ashamed of their intelligence. And that robs both themselves and the world of their abilities.
Today, it occurred to me. What would happen if we pitted the House of Representatives and Senate against each other on spending? Give the Senate sole control of authoring the budget, and give the House sole control of tax rates.
The principle here is that the House would represent the interest of the people to bear as little taxation as possible, while the Senate would represent the interest of the government to put money towards different problems.
Now, that’s the kind of radically reasonable idea that will get you laughed out of Washington. But, as you all know, I’m an idealist, so let’s give this idea the attention it deserves. I think there is a lot to be said for this sort of plan. The founding of this country was based upon a system of checks and balances. Constitutional authority was supposed to be a check on legislative power, but we see what judicial activism has done to that idea. So, if we set our bicameral legislature at odds in this sort of manner, it could easily bring us some badly needed checks on spending. As an added benefit, it could reduce pork, because it’s a lot harder to justify pork spending for one small community if you (as a Senator) represent an entire state.
Yet I believe this proposal has one basic flaw. I have spoken on many occasions about how taxation is hidden from the general public. The general public has an insatiable appetite for government, and a profound aversion to paying for it. As long as taxation is hidden and indirect, the public will not truly fight to ensure the House reins in taxes. As long as they assume they can soak “the rich”, despite the fact that the government finds all of us richer than you would like to think, they won’t rein in government. If we can bring about a simple, direct method of taxation that all people can understand and is not hidden, I think the above proposal would bring benefits in spades. But perhaps thinking our government would end the special-interests boondoggle that is our tax code makes me more idealistic than even Quincy.
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