Why Social Security Is the Best Retirement Saving Vehicle

Why Social Security Is the Best Retirement Saving Vehicle – Bloomberg:

Although Social Security could theoretically be financed through general revenue (and was, in part, during the payroll tax holiday in 2011 and 2012), there is strong political pressure to ensure that Federal Insurance Contributions Act tax revenue and benefits paid stay in line over the long term. This means that any major benefit increase would have to be accompanied by a FICA tax increase, ensuring that benefits do not rise above a level that is fiscally and politically sustainable.

So what is the policy upshot? One option, as I argued last week, is to expand Social Security to finance a larger share of retirement costs. Another option is to transform defined benefit and defined contribution systems so they mimic Social Security’s virtues: That is, they would invest in lower-risk assets expected to grow roughly in line with GDP or wages and not chase yield by taking on excess risk.

Despite the rhetoric commonly heard from conservatives, libertarians, and conservatives who like to call themselves libertarians, when it comes to the risk involved in financing Social Security is actually an example for other retirement systems to follow.

Serious problems found in study that supported austerity

Well that’s embarrassing:

This error is needed to get the results they published, and it would go a long way to explaining why it has been impossible for others to replicate these results. If this error turns out to be an actual mistake Reinhart-Rogoff made, well, all I can hope is that future historians note that one of the core empirical points providing the intellectual foundation for the global move to austerity in the early 2010s was based on someone accidentally not updating a row formula in Excel.

Long story short, the original study vastly overstated the correlation between high debt and low growth.

So much for Bobby Jindal’s new tax code

Bobby Jindal’s Political Collapse Is Dangerous News For The National GOP | TPMDC:

Governor Bobby Jindal (R-LA), considered a leading presidential contender in 2016, is suffering a political meltdown in his home state. His approval rating plummeted to 38 percent in a poll last week by the non-partisan Southern Media Opinion & Research, down from 60 percent just a year ago. In an ominous sign for national Republicans, the immediate cause is a sweeping economic agenda with strong parallels to the House GOP’s latest budget.

On Monday, Jindal scrapped his own proposal to eliminate the state’s income and corporate taxes and replace them with a statewide tax on sales and business services. His retreat was a concession to the reality that the proposal was headed towards a humiliating defeat — and taking Jindal down with it along the way. Jindal said in a speech to lawmakers that the backlash against his plan “certainly wasn’t the reaction I was hoping to hear,” but that he would respect the public’s wishes and start again.

Not even a majority of Republicans in the state supported the plan. How did Jindal’s team think this would go down?

“The euro is the gold standard minus the shiny rocks”

Why the Euro Is Doomed in 4 Steps – Matthew O’Brien – The Atlantic:

The euro is the gold standard minus the shiny rocks. Both force countries to give up their ability to fight recessions in return for fixed exchange rates and open capital flows. But giving up the ability to fight recessions just makes it easier for recessions to turn into depressions. And that puts all of the pressure on wages to adjust down when a shock hits — the most painful and destructive way of doing things.

European nations that start downward spirals have trouble getting out of them because they don’t have the option of utilizing monetary policy. Rather than having a central bank reduce the value of their currency compared to other countries to boost exports, these countries are forced to lower wages relative to their competitors. Obviously this hurts workers and further drives down the economy.

The last 5 years have proven that this arrangement isn’t a good deal for the nations who are doing well or for the nations who are suffering. Either the European Central Bank needs to take stronger steps to help the PIIGS/Slovenia/Cyprus or the euro needs to go away.

Historians need to stop treating the founding fathers as ‘sacred’

Jonathan Freedland, reviewing ‘Karl Marx’ for the New York Times:

Not that this relatively soft treatment of Marx’s anti-Semitism detracts from the overall achievement of the book. Sperber forces us to look anew at a man whose influence lives on. And he also offers a useful template for how we might approach other great figures, especially the great thinkers, of history — demystifying the words and deeds of those who too often are lazily deemed sacred. For all the books that have been written about America’s founding fathers, for example, we still await the historian who will do for them what Jonathan Sperber has done for Karl Marx.

Like the Smithsonian’s The Dark Side of Thomas Jefferson, Karl Marx: A Nineteenth-Century Life portrays Marx for all his human faults. It would be nice if we’d stop treating the founding fathers of the United States as some kind of moral guides.

United States flies bombing exercise over Korea

North Korea readies rockets after U.S. show of force | Reuters:

On Thursday, the United States flew two radar-evading B-2 Spirit bombers on practice runs over South Korea, responding to a series of North Korean threats. They flew from the United States and back in what appeared to be the first exercise of its kind, designed to show America’s ability to conduct long-range, precision strikes “quickly and at will”, the U.S. military said.

I really hope this situation doesn’t escalate to the point where either side actually thinks it’s a good idea to use nuclear weapons.

What do Republicans do when everyone is considered a welfare queen?

Republicans’ New Welfare Queens | New Republic:

Is Sessions a math dunce? No, he just subscribes to an unrecognizably maximalist definition of “welfare,” one that includes every single federal program that’s means-tested. He includes Medicaid and the Children’s Health Insurance Program, usually described as health care programs, which account for nearly half his total. He also includes Pell grants, job training programs, and various other functions that are “welfare” in roughly the same sense that all government spending is “socialism.” By stretching welfare’s meaning until it has almost none, Sessions is able to calculate the total welfare tab not at an underwhelming $96 billion, but at $746 billion, which is indeed more than the tab for Social Security, or Medicare, or defense. Then he adds in the state-funded part of these programs so he can say the total exceeds $1 trillion.

I’m sure that many conservatives and libertarians do subscribe to the belief that any means-tested program is basically welfare. It’s interesting to see the extent to which there’s a “What’s the Matter with Kansas?” effect going on – how many white Americans with a thing against welfare have children getting free school lunches or attending private schools because of voucher programs or are actually receiving welfare? 

Oh right, about the same number as blacks. [Yes, I’m implying that much of the ire against welfare is based on racism.]

Republicans are putting themselves in a weird position for the coming elections. They’re already associated with 47% rhetoric (GOP strategists must love Mitt Romney). They’ve lost the black and likely the Latino vote for at least another few election cycles. They rail against welfare despite the fact that a significant portion of the remaining electorate even considering voting for them is taking advantage of the programs they claim they would do away with (or which would have to be eliminated to make up for magic asterisks in their budget proposals). They’ve completely lost the youth vote (compare the GOP of today to Reagan, who won the youth vote  by 20 points in 1984). How does this party stay relevant when they no longer represent any major demographic?

Let’s all take a moment to not take Liz Cheney seriously

Liz Cheney for The Wall Street Journal:

President Obama is the most radical man ever to occupy the Oval Office. The national debt, which he is intent on increasing, has passed $16 trillion. He believes that more government borrowing and spending are the solution to every problem. He seems unaware that the free-enterprise system has lifted more people out of poverty than any other economic system devised by man.

I wonder what drugs you have to take to get to the reality that Liz Cheney lives in. My guesses are shrooms or mescaline.

Seriously, Andrew Jackson did the Trail of Tears and Obama is the most radical President ever? Get the fuck out.

Americans strongly support government job creation proposals

Americans Widely Back Government Job Creation Proposals:

Job creation proposals enjoy widespread public support, including majority backing among all party groups, even when the issue of government spending is raised in an era when deficit reduction is one of the major priorities for the federal government. Despite the high levels of support for the job creation proposals, the political realities in Washington are such that Congress has not passed any of the proposals since President Obama first advocated many of these more than a year ago. The major sticking point with jobs legislation — as with most other measures being considered in Washington — may not be whether the programs should be pursued but whether the government should pay for them through increased taxes or cuts in other government programs.

I wonder what Obama would have to put on the table to get a job creation bill out of House Republicans. Food stamps? Medicaid? The Cadillac subsidy included with welfare?

The Case for American Socialism

Capitalism in America has failed. With the Dow Jones Industrial Average reaching a record high recently, many would argue that the United States has rebounded from the economic recession and is now well along the path to full recovery, and that the previous assertion is far from truth. Failed economic policies and pandering to corporate-supported lobbyists over the past several decades resulted in a housing bubble and subsequent burst that catalyzed a recession larger than any since the Great Depression in the early 20th century. Though the country is indeed on the upswing again, the abhorrent mismanagement of our economy, our society, and our political structure will unfortunately continue as long as policymakers with poor understandings of the mechanisms that drive them continue to be elected and supported.

Every election cycle in America brings with it a host of tired, poorly-reasoned methodologies. Politicians continue to implement failed fiscal ideologies like trickle-down economics and lower taxes for higher earners, ever tighter government control over our civil liberties with the odious Defense of Marriage and Patriot Acts, and political grandstanding with repeated filibusters against every piece of legislation to circulate through the House of Representatives and the Senate. Despite every indication to the contrary, a significant portion of the American government pushes poorly-reasoned positions, promising a better America but ultimately only causing damage to the financial underpinnings of the entire planet, reduced freedoms through laws of dubious legality, and unreasonable inefficiency of Congressional proceedings. Were the people able to more directly shape policy in this nation, many of these issues would be resolved, at least in part.

In “Stumbling on Happiness,” Daniel Gilbert explores the concept of “super-replicators” – anything capable of multiplying or being transmitted more effectively or much faster than would normally be expected – through the lens of genetic replication and idea transfer, to explain the misguided belief that having children makes people happier, and its persistence through time across our entire society. More-so than any other argument presented in Gilbert’s essay, this one struck a deep chord. What is it about bad ideas that causes their superior comparative uptake with respect to good ideas? More generally, how do we decide what bad ideas are? Why do ideas that we know are bad continue to resurface even after being cast aside or fading away? Specifically in the context of social and economic politics, how do ideas we already know are bad continue to exist?

The actions of the United States government have resulted in the gradual stripping of American freedoms and the imperilment of the American Dream. Most recently, this has been done through obscene systematic judicial overreach via the broken plea bargain system, levying extreme sentences against political dissidents ending in the death of a young man with a bright, promising future. Also symptomatic of the decline of the nation is the absurd, disproportionate violence by militarized police forces throughout the country; the current system arms officers well beyond what is necessary to carry out their duties, to the detriment of the people as a whole. Similarly, on a global scale, America has caused the deaths of hundreds of thousands of civilians in two unfunded and poorly overseen wars that this and the previous administration were lax in pushing to take care of. Aggression by the United States against other sovereign nations, both friend and foe, is not confined wholly to paramilitary activities, however; the capitalist perpetual greed machine has endangered the entire planet’s future through willful violations of financial procedures and laws by the banking system, it has directly contributed to the wholesale destruction of the ecosystem through lax environmental regulations, and stripped funding and thereby efficacy from the educational system, reducing our chances of maintaining, protecting, and improving the planet we call home.

Yet through it all, the American people have continued to vote along party lines and vehemently resist any real meaningful change. The commonly held belief in this country is that the hard-capitalism and pseudo-representative democracy economic and political systems in place here are the best in the world, but this is an unfounded belief, and in many ways quite wrong. The United States consistently ranks well behind the social-democracies in northern Europe in happiness, education, and life expectancy, to name a few metrics. Despite this, many Americans have remained resistant to the socialist label; the Republican Party went as far as passing a resolution derisively referring to the Democratic Party as the Democratic Socialist Party. Truly, the anti-socialist sentiment is a super-replicator: this behavior in the United States originated with the First Red Scare following the 1917 Bolshevik Revolution in Russia. Things settled down until the Second Red Scare, pushed primarily by Senator Joseph McCarthy, after the Second World War. McCarthyism never fully left the country after the Second Red Scare, and has most recently been popping up in political rhetoric, targeted at President Barack Obama and the modern Democratic Party. But would a Democratic Socialist Party really be a bad thing?

In the face of evidence showing the superiority of the modern socialist democracies, the anti-socialist diatribe has not ceased. Following the passage of the Affordable Care Act spearheaded by President Obama, many pundits and political commentators around the country decried the new “socialist” policies, though they were actually corporatist in nature. The Republican Party bills itself as the party of smaller government, claiming that larger governments with more employees are inefficient and to be avoided. That position seems strange: the Organization for Economic Co-Operation and Development has compiled a database of statistics regarding the economies of the world, and this database shows quite plainly that twelve countries are ahead of the United States in total employment as of the third fiscal quarter of 2012, and the Nordic countries specifically employ roughly 30% of their population in the public sector. The 2009 bailout of the financial and automotive industries was widely regarded in America as a very socialist move, despite the fact that, following the bailout, the United States government still owned only about one twentieth of one percent of American companies. This last opinion makes even less sense when juxtaposed with the reality of the social democracies of the Nordic sphere: Sweden allowed Saab to go bankrupt and Volvo is now owned entirely by Geely, a Chinese company. When it was discovered that the major banks in Iceland held assets worth nine times the country’s economy, the financial structure was destabilized and every other bank folded up and collapsed. In response, Iceland eased consumer debt by amending loan repayment laws, raised taxes, and seized control of the largest lending firms in the nation, even eschewing America’s tradition of ignoring financial executives’ responsibility for the economic disaster and jailing at least two for fraud. Most of the northern European countries are strongly in favor of free trade too, and to a greater extent than has been seen in America in over a century. Democratic socialist countries in Europe are living the American dream while America itself is not.

Sweden learned over a decade ago how to cope with an economic recession and the effects of bad government, and they emerged a much stronger social democracy because of it. Iceland recovered from a then-terrifying financial crisis a short while ago where their foreign debts were over eleven times larger than the entire Icelandic gross domestic product, and their economy is fantastically strong after strict regulation and oversights helped get them back on track. Other countries in the region have dealt with and resolved economic issues of their own, and all have proven consistently to be the most socially progressive nations on the planet. The major differentiating factor between those populations and any of the regional populations of the United States is the adoption of socialism in some form or another, and America would be quite foolish indeed to continue ignoring that fact. Free market, laissez-faire capitalism in the United States has failed the American people, and tried-and-true socialist ideas can provide the answer we so desperately need. Daniel Gilbert was spot-on when he described the spread of certain ideas as super-replicators: poor ideas do spread and persist, specifically in politics and economics, though this does not have to remain the case; with the proper education and public relations efforts, the ideals held by the successful socialist democracies throughout the rest of the planet could become super-replicators in this country as well.