## Thursday, March 31, 2005

The Wage indexation of *initial* social security benefits does not imply that productivity growth has zero effect on SSA trust fund solvency.

Blahous and Luskin argue that productivity growth has no affect on SSA solvency because benefits are indexed to wages. As far as I can tell from reading Brad's blog "faster productivity growth improves Social Security's finances by an amount equal to roughly half of life expectancy at retirement times the change in the productivity growth rate." and "'the indexation of initial Social Security benefits to wages means that increased benefits offset much of the higher revenue from faster wage growth'" (that is without bothering to look up the SSA's explanation of social security) benefits are indexed partly to prices and partly to wages. The first check received by a retiree, disabled worker or survivor is indexed to wages. Subsequent checks increase proportional to prices.

Consider a hypothetical person (no names but I am younger than that) aged 45 who will live (I hope) past 85. To calculate the number on the check he will get at age 85 take a number somewhere and multiply it by the ratio of wages in 2025 to wages now then multiply it by the ratio of prices in 2045 and prices in 2025. See indexed half to wages half to prices.

I attempted to deduce this formula from Brad's statement "faster productivity growth improves Social Security's finances by an amount equal to roughly half of life expectancy at retirement times the change in the productivity growth rate." OK that would be about right if my guess as to the way the program works is right.

By the way, try to type the name the White House social security "expert" and "Luskin" in the same sentence without trembling.
"Like pre-paying a mortgage" when you don't owe the bank anything anymore.

I think I finally understand what is wrong with the well know pro-personal accounts talking point quoted above. I learned this from Brad DeLong's blog, but I had to read hundreds of words and then think to figure out what he was saying (heaven forfend). Brad is going to be less busy day after tomorrow and might want explain these things slowly and clearly for us non experts.

"given divorces, remarriages, the progressivity of the benefit formula, and so forth, in a large number of cases the government does not have a large enough Social Security liability to be able to reduce it enough to balance the cost of the money diverted to the private account. A ballpark estimate is that the Bush private accounts proposal has a net fiscal cost to the U.S. government of some \$1.1 trillion in present value--half a percentage point or so of taxable payroll."

Those two sentences are the kernel of the argument and they are long. I think it means "in many cases it will be impossible to claw back money diverted to personal accounts plus 3% real because that would imply a negative guaranteed benefit."
Then to elaborate and attempt to spaqn a talking point
"The restriction that guaranteed benefits be positive implies that, in many cases, for the social security administration, personal accounts will be like pre paying a mortgage when you don't have a mortgage." or better

"For the social security administration, diverting revenue to personal accounts for rich contributors would be like pre-paying a mortgage when you don't have a mortgage on your house."

The implicit hypothesis of the conditional "would" is not just "If Bush's secret plan is enacted" it is also "If Bush's secret plan is enacted and enough time has passed for the aforementioned rich to run their guaranteed benefit down to zero."

This is a technical detail. The present value of such losses to the Social Security Administration might be overestimated and could be as low as a mere Trillion dollars.

## Wednesday, March 30, 2005

Schindlers' List

The Schindlers are selling the list of their supporters to anyone who'll pay,

I know they are suffering horribly, and I try to face the issue seriously and avoid puns, but the Schindlers sure aren't making it easy.

## Tuesday, March 29, 2005

I have this theory that Rumsfeld is obsessed with a light quick military as opposed to a lumbering muscle bound military, because he is, shall we say, not personally oversized.

Blogger ate a post on this theory with actual links and stuff.
It had links to articles in obscure Princeton alumni journals about how he was captain of the 150 pound football team at Princeton. That's pathetic. Serious short guys like me either play with the big boys or ignore sports entirely (OK short guys like me ignore sports entirely). Also he was a champion wrestler in the 157 pound weight class, which is about one pound for every billion his plan for a lighter quicker military is scheduled to cost (and cost over-runs are not as excluded as are overweight wrestlers).
Invitation to a Blogging Conference on the White House Press Corps

Not another conference on blogging but a conference conducted by blogging. At this blog. Actually I guess I should start small so this is really an

Invitation to a Blogged Debate on the White House Press Corps

since I am inviting only one member of the White House Press Corps to represent the officially recognised press

Jeff Gannon/Jim Guckert.

Dear Jeff/Jim

First, since this is a cyber invitation, may I refer to you by your tag USMCPT ?
Dear USMCPT, if you are kind enough to wish to participate in this debate, send an e-mail to robert.waldmann@gmail.com and I will reply with the password which will enable you to post on this blog.

For security purposes, I will have to be able to make sure you are really Jeff/Jim Gannon/Guckert. Sorry to be difficult, I guess they didn't make so much trouble at your White House Press Corps gig, but I want to make sure that the views of The White House Press Corps are represented by an upstanding member of the corps.

To receive the password, could you please attach a photo which I can compare to photos of you on the web? You know which ones. To make sure that this is not a photo dowloaded from some site I haven't heard of, could you write "Bloggers Rule" in water soluble magic marker on your lower abdomen before snapping the photo ? In view of anatomy and geometry and stuff, I will understand if it is written upside down and backwards.

I admit I had considered other code phrases (which are not work safe) such as

[safety space so you don't show the suggestion to your boss]
[safety space so you don't show the suggestion to your boss]
[safety space so you don't show the suggestion to your boss]
[safety space so you don't show the suggestion to your boss]
[safety space so you don't show the suggestion to your boss]
[safety space so you don't show the suggestion to your boss]
[safety space so you don't show the suggestion to your boss]
[safety space so you don't show the suggestion to your boss]
[safety space so you don't show the suggestion to your boss]
[safety space so you don't show the suggestion to your boss]
[safety space so you don't show the suggestion to your boss]
[safety space so you don't show the suggestion to your boss]
[safety space so you don't show the suggestion to your boss]
[safety space so you don't show the suggestion to your boss]

"George Bush sucks this"
or
"Robert's is bigger than this"

Which would also demonstrate that you have maintained your well known level of honesty.

OK so I show I assume your boss has no sense of humour, or maybe, that my efforts at humour aren't funny.
The Amateur Organismal Biologist

Why do reptiles have smaller brains for their body size than mammals ?
This is a clear pattern. I'm sure all reasonable explanations have been considered.
I thought of one. A key problem for cold blooded animals is that they're nerves work slowly in the cold. They become sluggish. This is very costly especially if they are cometing with warm blooded animals at night or in the early morning

This could make it very important for reptiles to have short reflex arcs (did I use the term correctly well anyway I explain). Consider sensory stimulus goes in and behavior comes out. In the simplest case only two nerves need to be involved sensory in motor out. In this case (me blogging) many neurons are involved. Now imagine how long it would take me if each synapse worked slowly because I was cold blooded and cold.

A large brain might be a disadvantage for a coold reptile. It would still be slowly slowly figuring out how to respond long after it was in the stomach of a mammal.

Now consider relatively large reptile brains. They are found in large reptiles which are found in areas with very even temperature. Also large reptiles tend to be alligators and crocodiles who are generally found in the water (evens out temperature swings). Now their brain sure isn't huge, but there is nothing more sluggish than an alligator in an ice box (except maybe me).

Also comodo dragons live on evenly warm islands and Galapogos turtles live on islands almost exactly on the equator (also there are huge land iguanas on the Galapogos).

In contrast small lizards and snakes manage to be pretty alert even in fairly early spring in temperate zones.

## Sunday, March 27, 2005

Blogging has transformed me from
an isolated anomic atom cut off from all practical political action
into
an isolated anomic atom cut off from all action
Sono Più furbo di te Curzio

Curzio Maltese is an Italian journalist who brilliantly expresses his horror with Italian politics. This time he made a boo boo writing
" L'UNICO augurio possibile alla fine della farsa di Alessandra Mussolini ammessa, esclusa e riammessa alle regionali del Lazio, è che la vicenda non varchi i sacri confini della patria, come avrebbe detto il nonno della signora."

That is

"The only thing one can wish at the end of the farce of Alessandra Mussolini admitted, excluded and re-admitted to the ballot for the regional elections in Lazio is that the matter not cross the sacred borders of the fatherland, as the grandfather of the lady would have said."

Little hope of that now Curzio. The vicenda varceà i confini and will arrive at www.blogspot.com (where few foreigners will see it but violating sacred borders is a matter of principle). Anyway the vicenda is absolutely hilarious.

Alessandra Mussolini is the grandaughter of Benito Mussolini. For a while she was a semi respectable member of parliament for the semi respectable post fascist party "Alleanza Nazionale". She broke with the party for reasons including its rapidly declining respect for her dear granpa (and the fact that it didn't defend her policeman boyfriend when he was accused of corruption).

Now she would like to campaign for president (governor) of the regione (state) of Lazio (Rome and surroundings). To get on the ballot, she needed to collect a large number of signatures (also write in votes are not allowed so it is on the ballot or out of the election). The current president is a member of Alleanza Nazionale called Francesco Storace who has become fairly respectable and has even learned not to hit people in front of television cameras. He is struggling in a close race for re-election against someone named Marrazzo.

Left of center functionaries officially confirmed the signatures on Mussolini's ballot application. It was suspected that they had not checked carefully because they new she would draw votes away from Storace. Storace challenged the authenticity of the signatures. Lazio is trying to be a modern region with a web page and computer center called Laziomatico. Regions are responsible for health care, so people at Laziomatico can access health records of people in, for example, Rome. The technical director of Laziomatico used that password illegally to check the addresses corresponding to the signatures on the Mussolini ballot application. They did not all match (I believe some may have matched).

As a result an appeals court and the regional administrative tribunal of Lazio excluded Mussolini from the ballot. Mussolini went on a hunger strike with a resulting marked improvement in her appearance (which was always OK as she takes more after her mother and maternal aunt Sophia Loren then after gramps).

The fact that data for the case had been obtained by hacking emerged caused a mini scandal. Mussolini appealed to the highest administrative court the consiglio di stato. This consiglio re-admitted Mussolini on the grounds that the challenge to the signatures was done improperly. They did not feel the need to express an opinion as to whether the number of people doing the signing was equal to or somewhat lesser than the number of signatures.

So, in the end, my wife will have the right to vote for Mussolini (which she will not excercise). I won't because I am not an Italian citizen.

## Saturday, March 26, 2005

"schiavo" means "slave" in Italian

I have been trying to avoid mentioning this when discussing such a tragic case, but I can't help myself after reading Majikthise's excellent point

3. Florida isn't a slave state. It is supremely offensive to suggest that Michael Schiavo should give Terri back to her parents. He's not Terri's owner, he's her husband and her guardian. There is clear and convincing evidence that Terri didn't want a tube. There is no evidence that she'd want to be intubated, divorced, and shipped home to mommy, daddy and their creepy cabal of quacks and itinerant friars. Notice the subtext: Terri's desire to control her own body doesn't matter, nice girls sacrifice their dignity to spare the feelings of others.

Now that I have given up, I note too that Schindlers trying to save a life must remind us of Oscar Schindler's list, that their lawyer Gibbs has a lot of energy but it is not useful, because he generates more heat than light (a point about usable energy made by Willard Gibbs) and that Dr Hamasfar doesn't seem to accept the idea that the hemisphere's of the cerebral cortex are necessary for higher reasoning.

returning to majikthise, I do think that in the rest of her excellent post she is rather hard on the Schindlers. I note that she disagrees with Kevin Drum too writing of liberals "The left stands for ... And most imortantly, for universality." and
"4. The Schiavo case is about basic fairness. It's about how everyone ought to play by the same rules. No special dispensations, no do-overs, no trials by legislation for the favored few." although, on her point 4, no one could possibly envy the Schindlers and their extra rights.
Matt on relativism II

Below I wildly praise and mildly criticize Matthew Yglesias' post "Relativism and Schiavo"

Here again high praise for Yglesias who recognises that the behavior of pro-life fanatics is reasonable, even moderate, given their beliefs. I would add also that people who prosyletize insistently might get on one's nerves but really have no choice, if they honestly believe that one must accept Jesus as your savior or go to hell.
So not a new thought to me, but also not one I ever thought of mentioning on this blog.
Another locally realistic violation of Bell?s inequality ?

On December 9 2003 I was thinking about the EPR experiment. I am actually thinking about the
experiment as proposed by E P and R, not the experiment as performed. There are
four basic but very weird points to remember in order to understand the proposed
experiment. One is that electrons spin around sort of like little globes but that the
absolute value of the angular momentum is always hbar/2 no matter from which
direction you look at them. This is not like, say, the earth which spins around the
North-South axis so the angular momentum is less if you look down another axis.
The second strange fact is that you can?t measure the angular momentum of one
single electron around two different axis (one version of the Heisenberg
principal). This can be understood as measuring around one axis changes the spin
around another axis. This makes sense in terms of comprehensible things like
macroscopic magnets because the way to measure spin is with a magnet and a
magnet does change spin. The third strange fact is that sometimes you know that
the spin of two electrons around any axis is opposite. This is true if the two
electrons are in what is called a singlet state. This means that even if you can?t
know which way (clockwise or counterclockwise) each electron is spinning
around both the North South axis and the East West axis you can know that the
two are spinning in opposite directions around each axis. The fourth strange fact
is that, according to quantum mechanics the correlation between ?spin is
clockwise around the North South axis? and ?Spin is clockwise around the North-
East South-West axis? is greater than one !!! that is the probability both are
clockwise is greater than the probability that the spin around the North South axis
is clockwise and the spin around the other axis is whatever and unmeasured. I
won?t be able to explain this so that it makes sense. It is clearly crazy. It is also an
experimental result not just a theory. I am sure I will never understand this, so I
can?t explain it. Trying to grasp this fact, and it appears to be a fact (see below) is
like trying to pound a square peg into a round hole.

Now the point of EPR is that Heisenberg shmeizenberg you can use the singlet
state fact to test the quantum mechanical correlation greater than one by
measuring the spin around N-S of one of the electrons and the Spin NE-SW of the
other. They were very sure that the experimental result would disprove quantum
mechanics. After some decades the experiment was finally performed (with light
not electrons) and quantum mechanics was confirmed. I gave up.

Then I heard about the work of Luigi Accardi and Massimo Regoli. They have an
argument that you can reconcile the experimental result with a locally realistic
theory (one that makes sense as correlations are less than or equal to one) if the
singlet state is a statement about measuring spin around one magic axis (NS say).
The quantum craziness comes from treating electron 2 is counterclockwise around
NS as equivalent to electron 1 is clockwise around NS AND electron 2 is
counterclockwise around NE-SW as equivalent to electron 1 is clockwise around
NE-SW. What if the singlet state had to do only with the N-S axis ?

An objection is that the singlet state fact has been tested for many directions and
always works.

I have a slightly modified version of the Accardi Regoli story (which is probably
in one of their working papers which I haven?t read). Here the experiment is we
have electrons that were in the signlet state flying out of a source each one
through an electromagnet which can be oriented NS or NE-SW. If both
electromagnets are oriented the same way, the spins are opposite. If the
experimenter moves the electromagnets so they are not oriented the same way, the
electrons see this and don?t act like singlet state electrons at all anymore. This
means that the EPR experiment result is not equivalent to a correlation greater
than one.

OK so the little electrons are spying on the experimenter. There are two things.
Which way does he point the electromagnets and are both turned on (measuring)
or not. If they are oriented on the same axis then the measurement of electrons
going through magnet 1 does not depend on whether magnet two is turned on and
the measurement of electrons going through magnet 2 is always opposite. If they
are oriented in different directions, then the measurement of electrons going
through magnet 1 depends on whether magnet two is turned on. This is an effect
of an event which took place a long time ago (by flying electron terms) so there is
nothing impossible about it.
Brevity is the soul of Blogging

Let me express my infinite envy of Matthew Yglesias contrasting this brilliant explanaion of what relativism is and isn't with my ramblings at www.fistfulofeuros.net where I am listed as the most recent onymous guest blogger.

Yglesias explains "He [Brooks] makes, however, a common error of the cultural conservative in conflating a principle of freedom with a principle of relativism. People normally don't find this confusing when you talk about things other than sex or death." and "Brooks thinks the liberal view on the Schiavo case contains no moral principles. I would say, rather, that each liberal's view contains two principles."

One [is that] society should govern itself in regard to these dilemmas ... According to individual choice as determined, in cases of controversy, by the law. The other is the principle about what you would choose for yourself". I can't write like Yglesias but I can cut and paste. Yes, of course, now that he puts it that way, it is clear that Brooks and other cultural conservatives have made a gross intellectual error.

I, in contrast, am inclined to go off on a discussion of relativism and ontology.
Hmmmmm onymous, ontology something to do with mental onanism ?

OK so I try again. What is moral relativism.
1) as noted by Matthew Yglesias it is not belief in allowing people freedom to do things to themselves which you think are mistaken. That is an absolutist belief in freedom and toleration.
2) it might be the view that the moral law says only people should do what they sincerely think is right. This is absolutist and silly. According to this view the actions of the hijackers on 911 were moral. Clearly no one would accept this view after more than a moments thought.
3) we can't proves something is right and what is wrong. This seems to me to be obviously true and doesn't amount to anything. The absence of proof makes no difference in the absence of doubt.
4) there is no objective right and wrong just different beliefs. This is derived from 3 by confusing proof and truth (epistemological and ontological objectivity). It amounts to almost nothing. You can know someone for decades and observe their (very moral) behavior and not know that they believe this until you ask them.

Update: Having read Brooks' original article, I think one bit of Yglesias' post is either clumsy or deliberately provocative. The second possibility is much more like Yglesias but I can't see the point. Brooks becomes outrageous when he equates belief in freedom and moral relativism "Once you say that it is up to individuals or families to draw their own lines separating life from existence, and reasonable people will differ, then you are taking a fundamental issue out of the realm of morality and into the realm of relativism and mere taste." To me this is like saying "once you say 2+2=4 you end up agreeing that it is all right to torture people for fun." More seriously, to Brooks it seems obvious that if something is an important issue it should be decided by the state and that freedom should be restricted to minor issues of "mere taste." In other words one can recognise peoples freedom to choose and also judge them criticize them even condemn them as immoral. Brooks is not an idiot (he just plays one on TV) so why does he pretend not to understand the distinction between moral suasion and compulsion ?

Anyway I wrote this update to note that, in his gentle critique of Brooks, Yglesias seems to play with the idea of comparing mere taste with morality writing
"The Go Fug Yourself people are not being non-judgmental about fashion, and certainly don't think there are no objective standards by which fashion choices may be judged. Nevertheless, I take it that they don't think celebrities should be legally prohibited from wearing fugly attire, should they choose to do so. " This must be some kind of joke, why else would he talk about fashion when explaining that he doesn't consider the issue one of mere taste ?
Obey or Die Says the Army Special Forces Command at Fort Bragg, N.C.

It's official -- disobediance of orders of a prison guard may be punished by death.
Ignoring the recomendations of investigators, the Army Special Forces Command at Fort Bragg, N.C. decided not to charge military personel who played a role in the death of colonel Jameel [last name lost between page one and page 2 of the NY Times article] by pulling him to his feet with a baton held against his throat. The Army Special Forces Command at Fort Bragg, N.C. concluded that this was a lggitimate use of force "in response to repeated aggression and misconduct by the detainee" that is, according to the

The decision not to prosecute in that case, as well as one other, was made by the Army Special Forces Command at Fort Bragg, N.C., the Army said.

A senior Army legal official acknowledged that the Iraqi colonel had at one point been lifted to his feet by a baton held to his throat, and that that action had caused a throat injury that contributed to his death.

The Army accounting said the Special Forces Command had determined that the use of force had been lawful "in response to repeated aggression and misconduct by the detainee", that is, according to senior army investigators "the prisoner's resistance to his captors' instructions had caused them to gag him and to lift him to his feet with the baton, actions that contributed to the death." In other words it is OK to kill someone who disobeys. The Special Forces Command does not seem to suggest that the baton wielder was in danger and acted in self defence. They seem to have concluded that the use of potentially lethal force with a disobedient prisoner is OK.

Fellow US citizens remember what has been done in your name and remember that silence is consent.

In a trivial personal comment I note that this excedingly important story is reported by Douglas Jehl and that my one blogging hit (link from Atrios and 7,000 visits) was a criticism of a slip by Jehl. I think very highly of him and his work.

The original text from Jehl is probably better than my summary.
The former Iraqi colonel was not identified but has been named in other reports as Jameel [last name lost between page 1 and page 2 of the story here]

The senior Army legal official said the prisoner's resistance to his captors' instructions had caused them to gag him and to lift him to his feet with the baton, actions that contributed to the death.

Again fellow US citizens remember what has been done in your name and remember that silence is consent.

## Friday, March 25, 2005

I disagree with Kevin Drum *again*
This is getting alarming. I might not be able to post every time I disagree with him.

Drum writes

"I haven't thought this through completely, but mostly as a discussion topic I'd like to toss out the hypothesis that there's a pretty good reason for Dems to stay on the sidelines: because there are no major core principles of liberalism at stake here. Here are the various arguments that have been floating around Terri Schiavo:

Congress shouldn't pass laws directed at a single person. No, Congress probably shouldn't. On the other hand, let's be frank: I can think of circumstances where I'd be all in favor of this, and I'll bet you can too. Don't get me wrong: this was both a bad law and a politically craven one as well, but I'm not sure single-person legislation per se really contravenes any deeply held liberal principles.

I think a law ad personum violates a core principle of liberalism -- that the law should be equal for everyone. The recent bill gives "parents of Theresa Marie Schiavo" rights which other American citizens don't have. This violates the principle of equality before the law and the principle that the law should be anonymous. These principles are central to liberalism strictly speaking, that is to the beliefs shared by modern liberals and classical liberals.

I might agree that the bill does not violate a core principle of leftism and hypothesize that Drum thinks "leftism" when he says "liberalism" and knows that the word "leftism " is poison in the USA.

I am not a lawyer. I definitely have the impression that the bill clearly violates the 14th amendment because it explicitly denies equal protection to people who are not parents of Theresa Marie Schiavo. I section 5 "Nothing in this Act shall be construed to create substantive rights not otherwise secured by the Constitution and laws of the United States or of the several States." was included to make it possible to argue against this. I am amazed at such a crude attempt to prove by assertion that a law which clearly and explicitely grants new rights does not grant new rights.

I think the key issue for Drum is that the bill gives extra rights to two people. A bill which deprived two named people of normal rights would be unnacceptable. Drum's liberal principle seems to be "everyone is equal before the law, but some people are equaller than others.
Bloggging and speling

Lot's of bloggers spell bad. This might be a clever strategy. One of my only hits today came from someone interested in monoclonals and protien. According to google, I am a leading authority on this, although I am no expert on protein. Many of my visits are from people who mispelled the same word in a search that I mispelled here. Why should I learn how to spell ?

Actually I know when i comes before e -- i before e except after c, when it says a as in neighbor and weigh and in the following two sentences. Neither leisured foreigner seized the weird height and the sheik trades his caffeine for counterfeit protein.
So why did I spell it protien. Did I just explain.

In other news, I want to join Matthew Yglesias' group "zealous advocates of the alphabeticlly challenged."
I disagree with Kevin Drum too

I had thought he was interested in the raise the ceiling option but he writes

POSTSCRIPT: And while we're on the subject, Matt is exactly right about Dems standing firm on refusing to offer an alternative plan of their own. It's not necessary, since Social Security isn't in crisis, and it would be politically moronic — as no less an expert than George Bush himself has admitted. Bottom line: Bush is stuck in the quicksand on this issue, and it's not up to the Democratic party to throw him a rope. He's the one who claims there's a crisis, so let him make the first move.

Like a broken record, I repeat that, while it is almost always a bad idea to demand attention when your opponent is attempting political suicide, this is an exception. The public strongly supports an excellent proposal which is anathema to Republicans -- elmiination of the FICA ceiling. This proposal is so good that it will add to Bush's discomfiture. Proposing it would not be throwing Bush a Rope it would be throwing him an anvil.
Bowling for Personal Accounts

Brad DeLong notes that the Bush administration is considering changing their social security personal accounts proposal. The current proposal allows people to divert parti of their FICA to personal accounts and reduces the guaranteed benefit by the amount plus 3% real interest. In polls, people don't seem interested in the accounts and Robert Shiller thinks they are wise to avoid them.

3% real is a guess on the T-bill return. The idea is that, this way, account holders will pay for the extra public debt needed to replace their contibutions to the Social security trust fund. Now the White House is considering claiming that they think that the return is going to be 2% real making personal accounts a better deal for participants and worse for the social security administration.

I think this is important for one reason. The claw back rate means that money in personal accounts is not at all protected from greedy boomers.

In comments to Brad's post Riggsveda writes "I just saw another CNN report where Bill Schneider interviewed young people in a trendy bowling alley (!) and asked them what they thought about SS privatization. The prevailing feeling was one of thoughtless cynicism, something along the lines of "There's no way the money I contributed is going to be there when I retire. I'd rather have private accounts so those baby boomers can't get their hands of my money." I would have thought "trendy bowling alley" was a contradiction in terms. Riggsveda's summary of the reason many young people support private accounts is plausible to me. So I think that the kids are confused. Money in a personal account is not protected at all. It can be taxed (anything can be taxed). Less blatantly, the claw back rate can be changed. Nothing prevents us boomers from telling the kids "you got a nice return on your personal account kid. We are going to raise the interest we charge you on the diverted money to 6.5%. Try to beat that sucker."

A personal account whose value depends on a parameter set by law is no protection.

Also trying to guess the T-bill rate is crazy. The idea is that the treasury and private citizens will take huge bets against each other on the T-bill yield. This risk is unattractive to private citizens and serves no purpose. It would make more sense to claw back money diverted plus interest on the average treasury security.

To see how silly charging a fixed real rate is, imaging someone who invests the personal account in Treasury securities. If the Bush administration's second guess is right this is a mean return zero low (but positive) risk investment and really dumb.

It is theoretically possible for personal accounts to be a good deal both for the SSA and participants if stock is currently underpriced. The reason is that the SSA is not allowed to buy stock and personal accounts participants would be allowed to buy stock. The gains would come at the expence of current stock owners who would stupidly sell underpriced stock. Such gains would come to participants in personal accounts only if they want to buy more stock than they currently own and something is blocking them from doing so (this is not quite logically impossible). However, there is no point in using personal accounts to buy treasury securities in a Balanced portfollio. It seems obvious to me that shifting from a large balanced portfollio to one with the same amount of stock and no bonds would avoid pointless administrative costs and mutually risky bets against the SSA on yield on treasury securities.

## Thursday, March 24, 2005

Joespin also known as Joementum (angular)

Joe Lieberman said that "every year we do nothing about Social Security's coming insolvency we add \$600 billion in unfunded liabilities."

He was off by \$ 300 billion. Of course his claim would mean nothing if it were true.

Brad Delong and Paul Krugman (at this link that lasts) point out that this is nonsense. The increase in the present value of the shortfall does not imply any need to make reforms harsher in order to eliminate it, unless such reforms included tax increases or benefit cuts in the year which just past (as no proposed policies do). The present value future tax increases or benefit cuts increase by exactly the same factor as the present value of the shortfall.

The present value of liabilities would have increased \$ 600 billion this year only if the trustees forecasts were perfect.
In the latest report " The trustees said that Social Security's unfunded obligations total \$4 trillion over the next 75 years, an increase from last year's projection of \$3.7 trillion in unfunded liabilities" so over the past year the present value increased by \$ 300 billion not \$ 600 billion. An increase of \$ 600 billion implies no increase in the difficulty of obtaining actuarial balance. Noting the difference \$ 300 billion is another way of noting that this years new evidence shows that last years report was too pessimistic extending the trustees streak. This in spite of blatant attempts to make the numbers look as bad as possible as noted by Brad Matthew Yglesias and Brad Plumer (who is even younger than Yglesias).
Major Marshall Metaphor

I absolutely agree with Josh Marshall's argument that standing up for principle is good politics.

For my part at least, this doesn't mean I'm ditching pragmatism in favor of a come-what-will idealism. Not at all. Far from it. I simply think that we are now operating in a political context in which clarity and candor about where Democrats stand makes for good politics -- much better certainly than the tacking back and forth that has become second nature after such a long time sailing against an adverse wind.

That metaphor worked very well, which is unusual for a double metaphor. I am more used to appreciating Dave Barry's parodies of such metaphors. Also the metaphor is deliberately very gentle with the behavior that Marshall criticizes. It's not that they are unprincipled and trim their sails to the wind, they are just fated to sail against an adverse wind.

Admiralble
OUCH 43 %
Bush gets hammered in the latest CBS Poll

This was not a bad sample for Bush. Self described Republicans outnumberes self described Democrats by 15%. Amazingly more people identified themselfs as Republicans than approved of Bush's job performance. The poll mainly focused on Theresa Schiavo. Clearly dismay at the cynicism and invasiveness of the Republicans had a major effect which might disipate. Still that's got to hurt.

Poll: Keep Feeding Tube Out

NEW YORK, March 23, 2005

[snip]

Party Identification
Republican
44%
Democrat
29%
Independent
28%

THE POLITICAL IMPACT OF THE SCHIAVO CASE
As mentioned earlier, Congressional approval ratings have fallen since last month and are at their lowest point since 1997, and President Bush’s job approval ratings have also declined. 43 percent now approve of President Bush’s handling of his job as President; 48 percent disapprove.

36 percent approve of President Bush’s handling of the economy, and 53 percent disapprove. Bush’s approval rating on Iraq has also dropped; 39 percent approve, down from 45 percent in late February; 53 percent now disapprove.

BUSH JOB APPROVALS

Overall
Now
43%

Which is 1% less than 44%.
Can Hugh Hewitt count ?

He writes

of Wittemore's ruling against temporary restraining order requested by the Schindlers

"But it is a wholly different matter when a court simply ignores the obvious intent of an overwhelming majority of the Congress"

The bill passed the Senate by voice vote with 3 Senators present. 3 is not an overwhelming majority of 100 and the House of Representatives is not the Congress. Hewitt ignores the fact that Congress specifically deleted a provision which would have required a stay and that Senator Frist, speaking on the floor of the Senate, stressed that the courts were free to grant a stay or not.

Mr. FRIST: "Nothing in the current bill or its legislative history mandates a stay."

That, however, was meerly something said by the proposer of the bill on the floor of the Senate. Only an activist judge would give as much weight to that as a press conference. I am not joking. Hewitt cites a press conference in his construal of the meaning of the law "Tom Delay, in the Sunday press conference where this was announced, stressed that the legislation had been crafted to get Terri back on hydration and nutrition pending a de novo review of the facts in federal court." I wonder if this is the first time that anyone has claimed that judges are bound by statements made ex podium in a press conference.

Also note that congress does not seem to feel bound by the 14th amendment (the law explicitely gives special rights to parents of Theresa Marie Schiavo) so why couldn't they have passed a law requiring that any request for a TRO made by Theresa Schiavo's parents be granted or, for that matter tht Theresa Schiavo('s body) be feed and hydrated ?

Brad Delong is a bit too eager to make a pun of Frist and First so I can't tell which theory he finds more attractive 1) that Frist didn't bother to consult a lawyer and didn't know that for a TRO you need irreversibility of consequences without a TRO (clear in this case) and a reasonable chance of winning the case (clearly absent in this case) or 2) Frist wanted to make sure that Schiavo('s body) dies before the facts of the the case were made clear to the public. I, for one, don't pick the first.

Orrin Kerr notes that the courts are supposed to apply the law not follow the guidance congressment give them in press conferences.

Jeffrey Dubner notes that no American judge who should be less acceptable to Hugh Hewitt is named Antoni Scalia who wrote "It is the law that governs, not the intent of the lawgiver."

It might seem odd that Scalia believes in following the intent of the founding fathers and ignoring the intent of congress (I know this is Rhenquist's view I am not sure of Scalia. One might even suspect it has something to do with his outlook being closer to 18th century than 21st century (in particular it is 13th century not 12th and not certainly later). If I recall correctly the logic of the position is as follows -- if judges ruling contradict the aims the legislature they can change the law (just as they can if the intent changes as a result of further thought or elections or stuff), however it is hard to amend the constitution, so judges should put less faith in their reading of the plain meaning of the words. There is, of course, a rational which makes me agree with justice Scalia. Thomas Delay has immense power in Congress and wasn't alive in 1789, but, while names can, it seems, be written into laws, they are not to be used in motivating judicial doctrine.

## Wednesday, March 23, 2005

George Orwell explains the scriptural basis for the Texas Health and Safety Code Chapter 166 Advance Directives ( the Texas Futile Care act of 1999 which is clearly explained by Mark Kleiman)

"Keep the Aspidistra Flying"

Though I speak with the tongues of men and of angels, and
have not money, I am become as a sounding brass, or a
tinkling cymbal. And though I hve the gift of prophecy,
and understand all mysteries, and all knowledge; and though
I have all faith, so that I could remove mountains, and have
not money, I am nothing.

so you see good Christians can turn off the life support of people with terminal conditions against their will if they can not pay for their medical care.

It is also odd how Orwell managed to anticipate the theological doctrine Thomas Delay.
Great minds think alike.
Thomas Delay is depraved beyond belief. I thought that there is nothing he could possibly say that would lower my opinion of him, but he said

"One thing that God has brought to us is Terri Schiavo, to help elevate the visibility of what is going on in America," Mr. DeLay told a conference organized by the Family Research Council, a conservative Christian group. A recording of the event was provided by the advocacy organization Americans United for Separation of Church and State.

According to congressman Delay God destroyed Theresa Schiavo's brain to help him fight off the investigation of his many crimes. The man is insane. Fortunately he is also stupid.

via Pandagon

Update: an actual transcript at thinkprogress.org does not begin with the statement about God bringing then Terri Schiavo. This could be because it appeared earlier in Delay's speach, but I am not sure. The transcript shows that Delay linked Schiavo's problems (almost completely absent cerebral cortex) and his own (completely absent sense of shame ooops no I mean he is being persecuted).

Update 2: Josh Marshall has more of the transcript which does indeed include the line "one thing God has brought to us is Terri Schiavo to elevate the visibility of what's going on in America." It is interesting that I am now absolutely confident that the quote is accurate. Thus I learn that I trust Josh Marshall even more than I trust the New York Times.

## Tuesday, March 22, 2005

Senator Santorum demonstrates that he does not know what a trial is when denouncing the unfortunate judge who was picked by a cruel computer to hear the Schindler/Schiavo appeal

" "What the statute that [Whittemore] was dealing with said was that he shall hold a trial de novo," the Pennsylvania Republican explained. "That means he has to hold a new trial. That's what the statute said."

"What he's saying is, 'I don't have to hold a new trial because I've already determined that her rights have been protected,'" Santorum said."

Wittemore did not dismiss the case, he refused to issue a temporary restraining order. He was asked by the Schindlers to do so before hearing the case. Theresa Schiavo's attending physician argued that the case could be heard without a temporary restraining order, since Theresa Schiavo is not about to die (I would say that she is dead and her body is not about to die).

These people are willing to denounce anyone who does not do what they want.

He is denouncing judge Wittemore because his name popped out of a computer and because he is not willing to pretend that federal courts are likely to reach a decision different from that of state courts when the law and facts of the case are clear.

Matthew Yglesias just wrote "non-blogger journalist types," not that he was snearing or anything. I'm open minded too. Some of my best friends are non bloggers. There's nothing wrong with the blogologically challenged.
Immigration and Social Security

I am obsessed with US politics although I live in Europe. I have been following and even contributing to the US debate on social security. This is a bit absurd, since, over here in Italy I participate in a system which is still really insolvent in spite of a series of ruthless reforms (before that it was a Ponzi scheme that worked -- like a Ponzi scheme).

Here the standard thing for progressives to say is that the demographic transition (to the lowest gross reproductive rate of any living species anyway in the history of the planet) means that Italy should welcome immigrants (like me). I'm doing my bit contributing away even though I will get roughly doodly squat when I retire. Looking at it from the point of view of native Italians, this is the great thing about pay as you go systems. We immigrants have to pick up our share of the legacy debt. With prefunding, current residents oay off the legacy debt.

Now In the USA about one in five new residents is an immigrant. They are not newborn when they arrive so there remaining life expectancy is less than that of US born babies, but still that is a huge factor. The effect of personal accounts on SSA finances are like a single mom prepaying her mortgage just before remarrying -- generous but dumb.
I agree with Matthew Yglesias and disagree with Jim Henley

In particular, I think that, as usual, Yglesias hits the nail on the head arguing that, on this issue, one shouldn't leave "legalities aside".

However, I also disagree with Henley in another way. I certainly agree with one important thing he says "If the experts are correct, there’s no suffering to prolong. It means nothing to her [Theresa Schiavo] either way. The best you can say about the evidence as to her wishes is that it is minimal. That leaves the vigorous living as our scope of concern."

However, I disagree on the important point of how to serve the interests of the Schindlers "if Terry Schiavo’s parents are willing to assume “custody” of her and provide for her care, why would that not be an acceptable outcome for all concerned? Michael can have a divorce and remarry. His [sic Her] parents get the fulfillment they wish or the punishment they deserve." I think it is clear that the Schindler's will not get fulfillment they wish if Theresa Schiavo is left in her current state of pseudo life. I do not believe that people ever deserve punishment (although punishment is sometimes necessary). Henley wants to obey the wishes of the Schindlers, but his attitude towards punishing them reminds me of Eugene Volokh.

I don't think that anyone deserves to suffer, but surely no one deserves to suffer the way the Schindler's are suffering, nor should a parent be punished for unwillingness to acknowledge the death of a child.

Henley writes " Killing her would, on all evidence, cause her parents grievous woe" which is certainly true, as the death of a loved one always does. However, they are already suffering this greivous woe, their belief about what should be done is based on a denial of reality and does not reflect their true interests. My heart goes out to them, so I want to end their suffering by ending their desperate refusal to accept what has already happened.

I'm sure that, in the unlikely event that Henley noticed this post, he would consider my attitude to be illiberal and patronizing. It is. However, I note in my defence that I am not proposing depriving the Schillings of rights because they don't know what to do with them, but only arguing that they should not be given special rights denied to all other citizens in order to enable them to further delay their possible acceptance of their tragic fate.

update:

On the other hand maybe Henley is right and I'm wrong. The Schindlers are adults. If they would choose to feed their (to my mind late) daughter through a tube and she is effectively deceased, liberalism and deference to the (to my mind unhealthy) opinions of adults would imply that Michael Schiavo could just as well let them have their way. Also when Henley wrote "legalities aside" he didn't mean "we should set the legalities aside" but rather "if the legal issuess hadn't arisen."
I think it is unhealthy and unfair to Michael Schiavo and to Robert and Mary Schindler to focus so much attention on the case of Theresa Schiavo. However, I can't avoid mentioning two ironies
in this NYT article.

"Judge Whittemore asked Mr. Gibbs to cite case law that would bolster the claim that Ms. Schiavo's Fourteenth Amendment rights to due process had been violated,"

Mr Gibbs (lawyer for the Schindlers) cited the fourteenth amendment and, in particular sectoin 1 "No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws."

He appealed to Judge Whittemore on the basis of a " new law, which gives "any parent of Theresa Marie Schiavo" standing to sue in federal court to keep her alive.". This law is clearly unconstitutional because it explicitely denies all of us who are not parents of Theresa Schiavo equal protection. It openly creates a priviledged group of citizens -- parents of Theresa Schiavo. It is highly ironic that Gibbs appealed simultaionously to the law and to the sentence in the 14th amendment which clearly declares it to be unconsitutional.

"The lawyer, David Gibbs, also said Ms. Schiavo's religious beliefs as a Roman Catholic were being infringed because Pope John Paul II has deemed it unacceptable for Catholics to refuse food and water." This argument is astounding. Gibbs is arguing one of two things. He might be arguing that Schiavo has sinned by asking that, if she were in her current state, her feeding tube be removed and that Catholics rights are violated if they are allowed to disobey the Pope, that is, that they have the right to obey and can not be deprived of the right to allow the Pope to rule their lives even if they want to. He might also be arguing that Schiavo did not choose to have the tube removed, but that her soul will be sent to hell for something done against her will. Either Catholics have the right to be forced to obey someone else or, according to Gibbs' theology the Catholics' God sends people to hell because of something done to them against their will.

David Gibbs is a remarkable man.
Heresy against Liberalism

that is against liberalism itself, not against the democratic left (as the word is used in the USA Canada and the United Kingdom) or the pro market right (as the word is used in continental Europe). Liberalism has a few core principles. One is that, other things equal, freedom is better than servitude. Another is that discussion is good, that it is better to examine our beliefs and find contradictions, and, even, in ideological liberalism that the truth emerges from free and frank discussion. I was raised liberal. I think there are some questions which don't bear examination. I am a heretic.

In particular, I do not think we should examine the question of the dollar value of a human life. It would be nice if we could conclude that it is infinite, but I think this view does not stand up to examinination. In practice we do not minimize the risk of death at the expence of everything else. Even if we did, we can currently save lives at some expence (very modest if they are babies in the third world). This means that we decide which lives to say. Until there is no way to spend money to save a life, placing infinite value on another life is saying that one person is worth more than all those we could save.

Finally Thomas Schelling points out that if we accept any income inequality (and we all do) and respect peoples choices at least when we would make the same choices in their shoes (a very very weak claim compared to the first principle of liberalism) then we must conclude that the life of a rich person is worth more dollars than the life of a poor person. This conclusion is intollerable to me.

Now there have been attempts to get around this impasse by rejecting consequentialism. One might attempt to find a fundamental distinction between risk and certainty of death. I find that totally unconvincing. One might distinguish between doing evil that good might come and doing something which certainly has bad undesired consequences (this is my attempt to state the Jesuit doctrine of dual effect). I find this totally unconvincing. I am unable to confute the logic of Schelling's argument. I like logic.

I am willing to abandon logic.

I refuse to consider Schelling's argument. I do not accept it. I will not attempt to refute it. I confess my heresy.

## Sunday, March 20, 2005

Jim Ukockis

is an (until now) unsung hero who tried to save health care reform from Ira Magaziner.

"due to freakish administrative mishap by the White House," some of his memos were released to the public including Brad DeLong . They are works of art, in particular of black humor. I particularly liked

Box Number: 1435 Date: 3/26/93
To:
From:
Title: Ukockis, p.3

which concludes

"The result is obvious -- aggressive investors will not be attracted either. With both timid and aggressive investors excusing themselves, we are left with only crazy investors, which brings us to the government"

Mr Ukockis is a civil servant and knows of what he speaks.

## Saturday, March 19, 2005

George Orwell and Eugene Volokh disagree

Volokh "

I particularly like the involvement of the victims' relatives in the killing of the monster; I think that if he'd killed one of my relatives, I would have wanted to play a role in killing him. Also, though for many instances I would prefer less painful forms of execution, I am especially pleased that the killing — and, yes, I am happy to call it a killing, a perfectly proper term for a perfectly proper act — was a slow throttling, and was preceded by a flogging. The one thing that troubles me (besides the fact that the murderer could only be killed once) is that the accomplice was sentenced to only 15 years in prison, but perhaps there's a good explanation."

Orwell "Who would not have jumped for joy, in 1940, at the thought of seeing SS officers kicked and humiliated ? But when the thing is possible, it is merely pathetic and disgusting."

Volokh "I am being perfectly serious, by the way. I like civilization, but some forms of savagery deserve to be met not just with cold, bloodless justice but with the deliberate infliction of pain, with cruel vengeance rather than with supposed humaneness or squeamishness. I think it slights the burning injustice of the murders, and the pain of the families, to react in any other way."

Orwell "It is said that when Mussolini's corpse was exhibited in public, an old woman drew a revolver and fired five shots into it, exclaiming, "Those are for my five sons !"It is the kind of story that the newspapers make up, but it might be true. I wonder how much satisfaction she got out of those five shots, which, doubtless, she had dreamed years earlier of firing."

Volokh "I should mention that such a punishment would probably violate the Cruel and Unusual Punishment Clause. I'm not an expert on the history of the clause, but my point is that the punishment is proper because it's cruel (i.e., because it involves the deliberate infliction of pain as part of the punishment), so it may well be unconstitutional. I would therefore endorse amending the Cruel and Unusual Punishment Clause to expressly exclude punishment for some sorts of mass murders."

Orwell "A week earlier he would have been scandalised at the idea of giving coffee to a "Boche". But his feelings, he told me, had undergone a change at the sight of "ce pauvre mort" beside the bridge: it had suddenly brought home to him the meaning of war. And yet, if we had happened to enter the town by another route, he might have been spared the experience of seeing even one corpse out of the -- perhaps -- twenty million that the war has produced."

George Orwell might say returns

I had a short lived unviewed blog entitled George Orwell might say. The idea is that, in spite of the disadvantage of having been dead for 54 years, George Orwell could probably make more of a contribution to current debate than living pundits. In the post above George debates Eugene Volokh.

Orwell's experience is of interest to me because I believe two contradictory things some of the time. I am both sympathetic with swinish Benthamite utilitarianism (maximise pleasure minus pain and forget about being true to our better natures) and absolutely opposed to using the criminal justice system for revenge. Yet if I accept all pleasures as valuable, why do I reject the pleasure of revenge.

Maybe, deep down, I don't believe revenge is sweet. Personally, I rarely want revenge for anything (this reflects the fact that the world has been very very indulgent with me). I am fairly sure that if I ever had reason to avenge something any brief pleasure would be outweighed by a permanent sense of guilt.

Of course it is more likely that I have semi convinced myself that I believe two contradictory things.
Do I disagree with Brad DeLong and Michael Froomkin about pre-funding social security too ?

This is getting ridiculous.

On social security, Brad does advocate eliminating the \$ 90,00 ceiling and more boldly advocates taxing all income. Still he doesn't explain what he wants to do with all the money. He says benefits are bsically OK so it must be that he wants to cut the Social Security tax rate.

I agree that this would be good, but I think pre-funding would be better. I have two reasons. First, the US national saving rate is too low. Other things equal pre funding would help that. Pre funding has made Singapore one of the richest countries in the world.

Now other things are not equal. The strength of this argument for pre-funding depends on how one thinks pre-fuding would affect the general fund surplus/deficit. I am confident that, the indirect effects of a social security administration surplus on the general fund deficit are less than one for one. Believing in one for one (or more) offset would lead one to imagine that any tax increase is useless, because it will just lead to tax cuts elsewhere.

Second, in steady state, prefunding offers a better deal to workers than pay as you go if the rate of growth of economy is less than the rate of return on capital. This is clearly true in the us In as noted by Abel Mankiw Summers and Zeckhauser some time ago, since capital is a source of funds not a sink. The only way to make the social security administration earn a rate of return less than the growth rate of the wage bill (so prefunding is costly to beneficiaries) is to force it to invest badly. This is the current approach, but it doesn't have to be that way. Like Ronald Reagan and Bill Clinton, I think the SSA should buy stock and corporate bonds as well as t-bills.

One might argue that this would give the SSA too much power over firms. However, there is no need for the SSA to be allowed to vote its shares (actually it should be required to vote them proportionally to how other shareholders vote theirs). There would have to be a rule for which shares the SSA would buy. That means I have to address the concerns of the renegade Froomkin.

Froomkin wrote

"Start with the buying end. Buying will either be mechanistic, delegated, or discretionary. If it is mechanistic, we have the wrangle over the formula, which then distorts markets unless the formula is to buy a basket consisting of the entire stock market (even this, arguably, has secondary effects on the bond market, but let’s not go there).

In fact, this is the only buy/sell formula that doesn’t create huge problems right off: have the feds buy a basket that represents all the shares in a multiplicity of exchanges (not just the big ones). But this isn’t easy to do, especially for small-cap stocks, without distorting markets."

The rest of the post argues that any rule other than buy a basket consisting of the entire stock market would create distortions. I consider the rest of the post to consist of setting up straw men and knocking them down. I argue that the SSA should buy the market. Froomkin's argument against is that "this isn’t easy to do, especially for small-cap stocks, without distorting markets." Now the SSA is not agile and congress is anything but agile. There will not be a problem with a sudden huge order for stock. Rather purchases will be highly predictable. In theory this should not affect relative prices of different shares (note that for me theory is a pejorative term). In practice, it will, as suggested by Froomkin drive up the price of low cap stocks compared to high cap stocks. Curiously there is strong evidence that this price is currently too low. Since I don't think the market is efficient, I don't think that a public intervention which changes stock prices necessarily moves the market away from efficiency. Indeed the guess that stock is still underpriced compared to its value to the US Treasury (which has extra special risk bearing capacity) is the reason I think the SSA should buy stock.

Now I think there are risks (Froomkin hints at them). If SSA bureaucrats are required to buy stock they are required to ignore their suspicions about market manipulation. There could be two forms. One is driving up the price of a stock by other than arms length purchases. The other is cornering the market for a stock. Both are illegal, but both are not always easy to detect. In both cases, the markets ability to survive such tricks might depend on private agents deciding not to buy stock even if it can't be proven beyond reasonable doubt that its price is manipulated. A legal requirement to buy unless manipulation is proven will make such frauds more profitable. I don't know enough to estimate so I just guess that this is a tolerable cost.

## Friday, March 18, 2005

American Taliban critic

Oliver Willis ably defends his claim that the religious right are the American Taliban.

but he neglected to mention one point of similarity between Mullah Omar and, say, Ralph Reed
They are crooked hypocrites.

Omar had an air conditioned stable for his cattle: no sinful luxury (like music) for people, but can't let those cows sweat. An Omar banned alcohol but decided to look the other way and not notice opium shipments (provided the growers tithed).

Reed is similarly consistent

"Perhaps the most bizarre example of this contradiction was detailed by Washington Post reporter Susan Schmidt. When one Louisiana tribe, the Jena Band of Choctaws, won initial approval of a casino three years ago, another tribe, the Louisiana Coushetta, hired Abramoff to block the potential competition. Abramoff and an associate, in turn, paid \$4 million to Ralph Reed, a Republican consultant and evangelical leader, to organize local anti- gambling sentiment against the Jenas. To get the job done, Reed worked with his fellow evangelical James Dobson."

Just as pure as Mullah Omar.

Dionne and Schmidt were scooped by indianz.com citing Mother Jones

Can you believe thiis ?

Ethics Seeks Big Budget Increase
By Jennifer Yachnin
Roll Call Staff
March 17, 2005

House ethics Chairman Doc Hastings (R-Wash.) announced Wednesday that his panel will seek to create an “ethical culture” in the chamber through increased education and outreach for both Members and staff.
This is the committee which is currently not able to function because the Democrats are not willing to vote for a rules change which would make it necessary for at least one Republican to agree before a congressman cough Delay cough can be investigated. Aside from that how can the chairman of a committee which is not, at the moment, technically functioning ask for a budget, let alone a budget increase.

I guess the idea is that, in the last congress, the ethics committee was grossly biased in favor of ethics and now, just for balance, they have to do something against all ethics and decency.
Death Wish

This time death penalty wish. I am very glad that the supreme court has finally ruled that killing people for crimes committed when they were children is unconstitutional. In the article in the New York time reporting this (redundant link) I read something which suprised me into saying "come on. Your totally full of ... error"

Professor Blecker said that analysis was based on faulty premises.

"The problem is that when you look at the opposition of other nations," he said, "they're looking at governments and not people. Every European government which abolished the death penalty did it in the face of overwhelming political support."

I knew of only two relevant number 50% the fraction of Italians advocating death for Mafia bosses in a poll taken immediately after the murder of Paolo Borsellino (2nd investigating magistrate blown up in a month). The conclusion drawn by all Italian journalists is that polls taken immediately after dramatic events are unreliable because, of course, they know Italians are against the death penalty because they and all of their friends are opposed. the other is 48% support in Tuscany, which is one of the most left wing parts of Italy not to mention the region with the most catholic communists (who are definitely opposed for each reason). Also, of course, I know support for killing people is very high in the UK.

I assumed, however, that Blecker's claim was so wrong that a bit of google would show it to be nonsense. Well I know it is hard to look up what people thought when the death penalty was being abolished (1946 in Italy) but I am going to interpret it as making a claim about then now and all time in between (otherwise it would be technically true but deliberately misleading).
I still think that claims including "every" are likely to be false, but my googling amazed me.

I got "Up to 77 percent of Britons support the reintroduction of capital punishment, and close to 50 percent think the same way in France and Italy. Even in peace-loving Sweden, a 1997 poll found that 49 percent of Swedes wanted the return of capital punishment"

(ok AEI is reliable like I work for Columbia University but hey).

I have long believed that, at least for Italy, the huge difference is that US democracy is more majoritarian, I mean not just populist but effectively democratic, and that the air of intellectual and moral superiority typical of Italians talking about the death penalty in the USA is a result of comparing the Italian elite to regular people in the USA.

But I mean Sweden ?!? you have got to be kidding me right ?

update: Morten (last name withheld on his request) explains in an e-mail

"Yes, in a way they are kidding.

That poll (as I remember it) was formulated as "do you believe there are some crime that should be punished by capital punishment" or something to that effect. That means if you go "hm, well I wouldn´t condem executing Hitler" you should answer "yes". As well as a debate on capital punishment it also caused a debate on polling-phraseology, and I think the tabloid (or was it a radio station?) that ordered the polling apologized.

If you mention this on your blog (which btw looks nice and I found it via fistfulofeuros) please withhold my last name and emailadress. Thanks."

I am sure the responses would have been different if the question was more abstract "do you support capital punishment". To me one's answer to the briefer question should logically be yes if one's answer to the actual question is yes, but I'm sure that many many people would answer yes to the actual question and no to the briefer question. Also one can ask a specific question as in "do you think that someone who killed 12 strangers should be put to death if convicted in a fair trial" or "do you think a hitman who kills for pay should be put to death if convicted in a fair trial". by the way, I think there are very very few countries left who use death as the normal punishment for murder or even for pre meditated murder (U.S. certainly not among them). In any case, it is not clear how many Swedes support capital punishment for crimes other than genocide, but it is certainly less than 49%

As in the Italian case mentioned in my original post, I suspect that the focus on polling methodology reflects a gap between elite Swedish opinion and popular Swedish opinion.

## Wednesday, March 16, 2005

Comments are working on blogger

Click on the orange 3:15 AM below to read an actual comment on this blog and my reply.

To comment click on the hour under the post on which you want to comment.

update: now it says permalink and comments and the hour.
Thanks to David Weman for, among other things, the suggestion that I make the link to comments explain that it is the link to comments.

## Tuesday, March 15, 2005

hmmm not another stolen election.
Hitchens via Gary Farber via Mark Kleiman
Something Brad DeLong explained to me which is not totally obvious

In standard general equilibrium theory, the market outcome is Pareto efficient. One of the standard assumptions is that people are totally selfish and care only about their own pleasure minus pain due to consumption. One might wonder if the result can be generalised to the case of people who care twice as much about their own pleasure minus pain due to consumption as that of others. I think that, decades ago, I guessed that assuming that people could give to others would imply the result that free trade and free giving would lead to a Pareto efficient outcome. If I did, I was wrong. The assumption of total selfishness is required for the conclusion that Laissez Faire is Pareto efficient.

If people are altruistic but not 100% selfless then coercion in helping the poor is Pareto improving (Brad explained this to me by the way). Let's say we care about strangers one half as much as I care about people in my family. This is an immense degree of atlruism (my poor kids would be living at lower third world levels if I did). However, at the point when I am indifferent about giving more, you would want me to give more to the poor. The reason is that you don't care any more about me than a poor person.

This is true even if one of the reasons I want to give to the poor is that I know it will make you feel better (and I care about you too).

This means that we would both be happier if we were both coerced to give more than we want. The poor, needless to say, would be much happier.

If people are altruistic, then there is an externality from giving (you give to the poor so I feel better because the poor are less poor). This means that the amount of giving optimal for the rich is more than we would choose acting as individuals.

Charity with no is Pareto efficient only if people are totally selfish or if they are totally selfless caring no more about their flesh and blood than total strangers.

## Monday, March 14, 2005

I disagree with Matt Yglesias too.

Yglesias argues that Democrats should not propose a plan to save social security

I think the Democrats should propose a reform which consists entirely of eliminating the cap on the payroll tax. There is overwhelming support for such a proposal in every poll on the issue. It would cover the social security shortfall for, at least, the next 75 years.

Yeglesias' argument is that prefunding is a fraud, so an increase in FICA is just like an increase in an other tax. Then he concludes arguing that Democrats should instead propose reducing the general fund deficit by increasing some other tax. That is two things are the same and therefore one is better than the other.

I accept the general rule of political strategy that one should avoid specific proposals about spending cuts, one should not take strategy advice from ones adversaries and one should not distract attention from Bush while he is trying to defend a terrible and unpopular proposal.

Every rule has an exception. The elimination the cap is such excellent policy and such excellent politics that it is an exception.

There is no law of nature which implies that FICA must be regressive. There is overwhelming support for making it, at least, a flat tax on payrolls. Furthermore, the Democrats have the advantage of flexibility since they are in opposition. On social security, no decent compromise with the Republicans is possible, so There is no reason for them to try to come up with a proposal which is acceptable to Republicans. Instead they should make a simple effective wildly popular proposal which is absolutely unacceptable to the Republicans.
Paul Glastris points to, praises warmly and criticises mildly David Cutler and an article about his ideas on health care reform written by Roger Lowenstein in the New York Times Magazine

Cutler's points are that, currently health care providers are not rewarded based on health outcomes. There is strong evidence that such incentives work and that they would actually reduce health care spending, since preventive medicine is highly cost effective.

In the late 90's, HealthPartners, a not-for-profit health plan in Minneapolis with 630,000 members, instituted a bonus system to providers. It paid doctors extra if their diabetic patients got blood sugar and cholesterol below certain levels, ceased smoking and took aspirin daily. [snip] Cutler and a team of colleagues analyzed the economic payoff. They found that the program reaped huge rewards. It cost \$330 a patient and was expected to save roughly \$30,000 over each patient's life.

The problem, as pointed out by Cutler, is that HealthPartners did not capture most of the benefits. Instead Medicare will get most of them. Now for starters, I think there is a very strong case that Medicare should reward doctors for convincing their patients to take care of themselves. Starting preventive medicine at 65 is not ideal, but better late than never. Also, I wouldn't be surprised if medicare could save money by paying for efforts to help uninsured people younger than 65 quit smoking, lose weight and diagnose and control diabetes and high blood preassure. I don't mean residential fat farms. I mean you can go to a doctor's office to get nagged.

Glastris is very impressed. His mild criticism is that Cutler is too politically pragmatic to note that the best way to implement this approach is to socialize medicine (as is shown by the experience of the Veteran's Administration). The point is that if people move from one provider to another, the benefits of preventive medicine do not acrue to the group that provided it. If people are all forced to use a single providor (or pay out of pocket) this problem would be resolved. Needless to say, Cutler must know that such a proposal is political poison.

I post just to add that rewarding HMOs and insurance customers because their clients are healthy would make the cherry picking problem worse. There is a big problem that everyone wants to provide health care to healthy people. Rewarding outcomes would almost certainly make this worse. In particular it would be almost impossible to distinguish between efforts to help people drop unhealthy habits and efforts to drive away people with unhealthy habits. Preventive care involves a lot of tough love and it is hard to distinguish that from just being nasty. Even if one rewarded changes in obesity or smoking one would reward efforts to find smokers who really want to quit and fat people who really want to lose weight. You could make a killing with a plan open to everyone, in which participants get health care but have to run a mile a day or pay.

The cherry picking problem, the benefits spill over problem and the interaction of cherry picking and rewards for outcomes all suggest the same solution which is to give people fewer not more choices about health care providers.

## Sunday, March 13, 2005

Personal Accounts and aggregate saving.

I am going to attempt a medium serious analysis of the effects of personal accounts on aggregate private saving. I think it is clear that, other things equal, they would cause a reduction in private saving making it more not less difficult to finance both the retirement of baby boomers and capital formation.

tIt is agreed that the plan will require the government to increase borrowing to pay current benefits. It is claimed that this is no problem, because it is like pre-paying a mortgage. This argument is silly, because pre-paying a mortgage can be a very costly mistake. In particular, if the mortgage interest rate were as low as the return on social security contributions, it would be a very bad idea to pre-pay a mortgage.

Now to discuss personal accounts, one needs to know what exactly the Bush plan is. Bush is keeping it secret so I will make two guesses.

The first is that for every dollar put into personal accounts the guaranteed benefit will be reduced by an amount such that the expected loss in guaranteed benefit discounted at a real interest rate of 3% has a present value of \$1. I will call this plan 1.

Under plan two the guarnateed benefit will be multiplied by the fraction of contributions not put into personal accounts. I assume that if this fraction varies over time, then the amounts are made current to the date of retirement using the rate of growth of average wages as an interest rate (that is dollars at t1 are converted to dollars at t2 by dividing by the average wage at t1 and multiplying by the average wage at t2).

Plan two is more generous than plan 1. The effective return on contributions to social security is, on average, 2%. I read in Brad DeLong's
excellent critique of Greg Mankiw's TNR article that it is "the upper middle class and the rich...effectively borrow from their defined-benefit Social Security account at 1.5% or 2% above inflation to invest their money... poorer Americans ... borrow[ing] from their defined-benefit Social Security accounts at 3% plus inflation?" Thanks Brad.

Also note plan 1 does not offer a better deal to the rich. They get a lower return on contributions to social security but would get the the benefits cut as if they were as generous compared to contributions as they are for the poor.

Personally, I guess plan 1 is more likely, since even Republicans have noticed that they have already given the farm to the rich and they don't want to give them the farm house too. Still I will talk about both. Also Brad assumes that plan 2 will be implemented and *still* seems to think that there is an 80% chance that the effect on national savings will be small. I don't get it.

OK finally the analysis

First I will assume a standard neoclassical growth model with Ricardian equivalence. This is a standard benchmark model. Non-economists will assume that I must be joking. I will assume that aggregates like GNP, interest rates and average wages are perfectly forecastable and that everyone forecasts them perfectly. I will assume that the present value of future tax revenues is equal to the present value of government spending plus the current debt (this isn't really an assumption if I just call a default on debt a tax). Importantly I assume that people belong to infinitely lived dynasties and that each generation leaves a positive bequest to the next. That is, I assume that each person has one parent and 1+n children with 1
In this case, social security reform does not affect aggregate saving. In fact, social security does not affect aggregate saving. Now one might assume that back when social security was introduced it had to cause an increase in the consumption of the first generation of beneficiaries who got something for nothing. It did, but it wouldn't have if they were all giving bequests to their 1+n children and were totally rational. They would have understood that their children were paying for their pensions, saved all the money and given it back when they died if not sooner. Social security is a system which redistributes money from one generation to the other. If everyone is giving bequests, the currently oldest generation is choosing exactly how it wants money distributed among generations, so giving them more money has no effect on the distribution. Clearly this model is not realistic or useful when discussing the effects on savings of social security and its reform.

The model which is generally used is the Diamond OLG model with capital. Same as above except the old give nothing to their children. In this case taking from the young and giving to the old makes the old richer. The first generation of social security beneficiaries definitely spends more. That was, I think, a large part of the point. Remember there was a depression going on and safe nominal interest rates were almost exactly zero making monetary policy ineffective (not to mention the FED was clueless).

In this case an elimination of social security would cause reduced private consumption, since retirees would consume less (in some cases they would consume 0 and starve). However, if currently earned benefits are paid, but no future payroll taxes are collected or benefits earned (elimination with promises kept during the transition) then consumption would increase. The burden of the benefits owed by the currently young to the currently old would be shifted to the public debt. This would eventually have to be repaid generations in the future, but the current young wouldn't care about that and would consume more.

The argument works equally well for plan 2 which would amount to a one third elimination of social security. Because the social security administration has obligations to the old, it must, on average be a bad place to invest compared to the private sector. This is obvious, well known and noted by, among many others, Johnathan Chait in the TNR. Plan 2 would effectively be a huge transfer from the unborn to the currently young, since the unborn would have to pay for promises to the currently old by repaying the huge public debt. Under plan 2, personal accounts are like repaying a mortgage when the bank is currently charging you an interest rate far below the market rate.

Another way of putting this is that, since the return offered by the social security administration is (and must be) below market rates, the present value of the reduction of benefits due to personal accounts must be less than the present value of money diverted into personal accounts. Thus even if one counts the social security shortfall as part of the debt, total public indebtedness would increase if plan 2 were implemented.

Now one might wonder if the Diamond model is a bit hard on the heartless parents. Maybe the model with Ricardian equivalence isn't so far from reality. If so, the increase in public debt due to plan 2 personal accounts would not reduce aggregate saving. Also, if so, budget deficits do not reduce national saving (as is welll known). The argument that plan 2 would not add to the deficit is identical to the argument that deficits don't matter. No one who is concerned by the budget deficit should accept the argument that plan 2 would not reduce aggregate savings.

So what about plan 1 ? I will, for the moment, stick to the assumption that people are rational.
This implies that stock is not underpriced. Plan 1 is much less generous than plan 2, so many people will not set up personal accounts. However, those who do will get a better deal as a result (they are rational). This means that they will be able to afford higher consumption both now and in the future. If they put only treasury bills in their accounts there would be no increase in supply of treasury bills to other buyers. Nor would there be any decline in stock available to other buyers. This means that interest rates and stock prices wouldn't change if there were no other changes in demand. In particular it means that consumption would increase if interest rates did not go up or stock prices go down. The negative effect on aggregate saving would be partially eliminated by an increase in interest rates (as would any negative shock on aggregate saving).

If people put bought other assets with their personal accounts there would be a shift in returns on various assets. the price of t-bills would go down, the price of other assets would go up. This would have no clear effect on aggregate consumption. The consumption of people who sold stock to be put in the personal accounts would not go down as a result. They are rational, they would not sell stock if doing so made them poorer. They will not sell stock if doing so makes them consume less.

If people are rational plan 1 would cause reduced aggregate saving. The effect would be smaller than under plan 2 but it would still be huge if a significant fraction of the population obtained significant advantages from the personal accounts..

Now what if people aren't rational ? If people aren't rational some might set up personal accounts even if social security offers them a better deal. Also people might get excellent returns by buying underpriced stocks from irrational people. The short run effect of private accounts on consumption would be the same. If people irrational think they are richer because they have set up a private account, they should consume more. If people irrationally think they are no poorer after selling underpriced stock, they should not consume less.

Evenutally when people learn they have made a mistake, they will consume less.

This is actually similar to the effect of deficit spending. First higher consumption when the public debt is run up then lower consumption when it is reduced. People who think deficits are a bad idea should think that Plan 1 will have bad effects on aggregate saving, even if they are confident that people who set up personal accounts will eventually rue the day they did.

## Saturday, March 12, 2005

Like many people I like Jonathan Chait's article on social security.

Much of it will be familiar to readers of bloggers like Atrios and Josh Marshall.

I think I disagree with Chait on what the Democrats should do, although he doesn't make his views totally clear. He says they must not compromise. I agree. He writes "The key point Democrats should understand is that, while it may be tactically useful to favor an alternative to privatization, no decent alternative is going to be signed into law under this president." and I certainly agree, except for the word "may". However he also writes

Also, acting now to "save" Social Security would consume scarce resources that may be needed to solve larger problems. Some moderates have suggested cutting a Social Security deal that includes a tax hike. But balancing the general operating budget and saving Medicare and Medicaid will probably require tax hikes, too. These twin problems--the deficit and health care--dwarf Social Security's future insolvency. Pouring resources into saving Social Security now is like driving a fire truck past the blazing inferno to fireproof the house across town.

Chait presents this as an argument against cutting a social security deal (and I agree with him that this would be a mistake) but his subsequent argument would also apply under the highly counterfactual hypothesis that Jonathan Chait could write the bill to save social security. I would jump at a chance to save social security by eliminating the \$90,000 cap and making no other changes. If valid Chait's argument would imply that this is a bad idea because it would "consume scarce resources". This is just silly. an increase in social security taxes consumes no resources. Paying social security benefits consumes resources (we both advocate exactly no change).

It has been, to put it mildly, thoroughly demonstrated that the social security surplus can be used to finance the general fund deficit. Money put in the trust fund can be spent on medicaid, medicare, or the general budget. the economic costs of the deficit are the effect of the unified deficit. The only difference between money earmarked for social security and general revenues is the ghost of the lock box which is feeble but, if anything, pushes in the deficit hawkish direction.

I repeat one more time for my few but patient readers that I think the democrats should advocate a reform which consists entirely of elimination the ceiling on the payroll tax.

I was actually less impressed than Matthew Yglesias with the evidence that self proclaimed social security reformers wrote fairly recently that their aim was to eliminate social security. The case was much clearer that the advocates of invading Iraq had been determined to get Saddam Hussein long before 9/11. I think that even Bush is a bit cautious about the third rail and did not appoint Cato privatizers to top positions. Chait . Like Yglesias, I think the problem with journalists on this issue is the general problem pointed out by Chait in this great article where he politely hints that reporters are ignorant because they don't value looking things up in the public record. If it is in Lexis-Nexis it is not news and so even reporters don't know it. Reviewing, I find that this was not the post in which someone pointed out that you can find peoples hidden agenda out in the open in things they wrote back when they were at the AEI or the Cato institute, so I have to quote Yglesias "You just need to go back and look at who's getting appointed to what jobs and what those people used to write and say before they were in government."

In the case of personal accounts however, Chait didn't nail appointees. He quotes Peter Farrara, Ferrara and Michael Tanner, and a 1983 paper in the Cato Journal none of them are Bush political appointees. The last, by the way, is a new one quoting anonymous sources is standard, citing an article but not naming the author is rare. I'm sure Chait is right. Personal accounts make no sense unless one wishes to undermine social security, but there is much less evidence hidden in plain view than in the case of Iraq.

Bush himself did slip recently as noted by Chait, (but only on further cuts in defined benefits not on making contributions voluntary). Here I think Bush can count on journalists misunderestimating him and assuming he was just babbling.

I think I disagree with Chait on what the Democrats should do, although he doesn't make his views totally clear. He says they must not compromise. I agree. He writes "
The key point Democrats should understand is that, while it may be tactically useful to favor an alternative to privatization, no decent alternative is going to be signed into law under this president." and I certainly agree, except for the word "may". However he also writes

Also, acting now to "save" Social Security would consume scarce resources that may be needed to solve larger problems. Some moderates have suggested cutting a Social Security deal that includes a tax hike. But balancing the general operating budget and saving Medicare and Medicaid will probably require tax hikes, too. These twin problems--the deficit and health care--dwarf Social Security's future insolvency. Pouring resources into saving Social Security now is like driving a fire truck past the blazing inferno to fireproof the house across town.

Chait presents this as an argument against cutting a social security deal (and I agree with him that this would be a mistake) but his subsequent argument would also apply under the highly counterfactual hypothesis that Jonathan Chait could write the bill to save social security. I would jump at a chance to save social security by eliminating the \$90,000 cap and making no other changes. If valid Chait's argument would imply that this is a bad idea because it would "consume scarce resources". This is just silly. an increase in social security taxes consumes no resources. Paying social security benefits consumes resources (we both advocate exactly no change).

It has been, to put it mildly, thoroughly demonstrated that the social security surplus can be used to finance the general fund deficit. Money put in the trust fund can be spent on medicaid, medicare, or the general budget. the economic costs of the deficit are the effect of the unified deficit. The only difference between money earmarked for social security and general revenues is the ghost of the lock box which is feeble but, if anything, pushes in the direction Chait and I like by making the target unified surplus larger.