Sunday, May 29, 2011

Slo-mo grow on the plateau: Tyler Cowen's general theory of American malaise

Why has the U.S. been plagued with a series of jobless recoveries, an extended period of middle class stagnation, and an equally extended rise in income inequality?  Tyler Cowen floats a new unifying theory through a medium that's part of his message: a novella-sized theory outline first  published as an e-book. The title provides an admirably concise precis: The Great Stagnation - How America Ate All the Low-Hanging fruit of Modern History,Got Sick, and Will (Eventually) Feel Better. The book is as accessible in price ($3.99) as it is in concision, clarity, and freedom from technical economic analysis (or jargon).

Cowen proposes that the United States has already picked all the "low-hanging fruit" of a now-past era of transformative technological development.  He claims that we are now living off the wealth (and growth) generated by the life-changing technologies of the late nineteenth to mid-twentieth century: automobiles, mass communication, air travel, fossil fuel exploitation --and that we're currently on a technological plateau, where growth is inevitably slower. At the same time, we're living with government institutions that can't be easily funded at the slower real growth levels that have prevailed in recent decades. So we're fighting with understandable bitterness over whether to maintain past levels of redistribution of a not-quickly-enough-growing pie -- or whether, ultimately, to shrink our expectations of what government can do for us, at least until we get off the plateau and into a new era of transformative technology.  Meanwhile, he is rueful about the efficiency of government where it matters most -- in education and healthcare delivery -- though perfunctorily upbeat about recent attempts to find efficient ways to improve education.

These theses are obviously meant to be provocative, all the more so as delivered in a short e-book that's almost an abstract of a potential tome that would fill in the conspicuously lacking evidence. In responding, I beg some latitude on two fronts. First, Cowen is an extraordinarily well-read polymath and an able economist, and it's fair to take it on faith that his evidence-light outline represents distillation of a huge amount of data and analysis. I'm responding just as a casual and moderately informed reader. Second, I'm going to indulge myself and compound the error by posting my spontaneous reactions without checking on what's probably already a copious response literature.  I could call this an experiment, but it's really an indulgence: I'm eager to read and engage other responses. But I want to get my thoughts out first, and blog space is cheap...

1) I'd question whether we're living in an era in which transformative technological innovation is in short supply. Cowen does allow "the Internet" as the great exception, but points out that the leading-edge tech companies employ relatively few people, and that Internet innovation has been notoriously difficult to monetize. He is strangely silent, though, about the impact of interactive technology and computer technology more generally on production and commerce of all kinds -- just-in-time factory production, product customization, bar coding, all the incredible efficiencies of large-scale retail operations that wring out large profits on tiny margins -- and on interactive technology's role in globalizing production. He also doesn't consider transformative technologies hiding in plain sight: personal computers themselves (never mind the Internet) and cell phones. It's true, as Cowen says, that the basic physical components of middle class life in America don't look that much different than they did in the 1960s. But they are much different. And the differences have generated a lot of wealth, even if  the U.S. middle class hasn't garnered as large a share as it did in he previous generation.

Friday, May 27, 2011

Did Tom Coburn just quadruple the debt ceiling ransom?

Tom Coburn, who recently withdrew from the Senate Gang of Six that was purporting to negotiate a comprehensive tax reform/deficit reduction deal along the lines of Bowles-Simpson, deserves some kudos for saying with increasing clarity that any such deal will have to include increasing tax revenue -- a point the GOP leadership and over 90% of the rank-and-file are unwilling to concede.

In an interview with the WSJ's Jerry Seib posted today, however (below), Coburn also sets the bar for a deal to raise the debt ceiling at $4 trillion in deficit reduction -- that is, a deal on the scale of President Obama's proposal, albeit obviously tilted far more to the right. The working media assumption, prompted by an intimation from Joe Biden, has been that a debt ceiling deal might block out about $1 trillion in cuts over ten years, and/or institute triggers mandating cuts if reductions don't hit targets at various points. 

At about 14:25, Seib asks whether a debt ceiling deal can take the country "some way down the path" toward deficit reduction.  Coburn's response (my emphasis):

Thursday, May 26, 2011

Where taxes are always too high

Another day, another deeply misleading screed on taxes by a Wall Street Journal editorialist - in this case, Stephen Moore. Democrats, he warns, are proposing tax increases that will bring us "back to the taxes that prevailed under Jimmy Carter, when the highest tax rate was 70%."  By adding together every tax increase that any Democrat is currently proposing, along with every increase implemented under Bush Sr. and Bill Clinton, he gets to an ill-defined "tax rate" of 62%.  That's hardly 70%, (or the 91% top marginal income tax rate that prevailed under Eisenhower), but what's an extra 8% among scare tacticians?   

Moore would have us believe that federal taxes have been climbing relentlessly since the halcyon days of Reagan's second term, when the top marginal income tax rate was, he says, 28% (it was actually 33% in a bracket below the top bracket).  Never mind that federal tax revenue as a percent of GDP is currently lower than it was at any point in the Reagan years, and is in fact at its lowest point since the early 1950s. To paint this picture, Moore needs almost one distortion per paragraph. A sampling:

A CT Scan foregone

Noting recent research indicating that many cancer screenings are of dubious value, Ezra Klein opines:
as long as doctors are telling scared and uncertain patients that they need to get screened, they’re getting screened. The moment they stop telling patients to get screened, screenings will plummet. In health care, doctors are really the relevant decision-makers. And right now, they don’t have the evidence to make good decisions nor the incentives to make cost-effective decisions.
That reminds me of a tale I heard told recently by a nurse midwife with many decades of experience working with doctors in hospitals -- and often tussling with them to forestall what she regards as unnecessary care, e.g., Caesarians.  She recalled a trip she took with her grandson to the emergency room after he fell out of a (stationary) truck bed, hitting his head on her driveway and getting a good-sized goose egg. She was deeply impressed with the exam that the ER physician conducted to rule out internal bleeding or risk of brain damage: her trained eye could appreciate how thorough it was. This doctor wanted  to avoid an MRI CT Scan* if all indicators were good, as they were.  That's quite unusual.

Wednesday, May 25, 2011

Not our finest hour?

What's missing from the President's short history of the U.K.-U.S. alliance, delivered to Parliament today?
We are the allies who landed at Omaha and Gold, who sacrificed side by side to free a continent from the march of tyranny, and help prosperity flourish from the ruins of war.  And with the founding of NATO –- a British idea –- we joined a transatlantic alliance that has ensured our security for over half a century.

     Together with our allies, we forged a lasting peace from a cold war.  When the Iron Curtain lifted, we expanded our alliance to include the nations of Central and Eastern Europe, and built new bridges to Russia and the former states of the Soviet Union. And when there was strife in the Balkans, we worked together to keep the peace.

Today, after a difficult decade that began with war and ended in recession, our nations have arrived at a pivotal moment once more.  A global economy that once stood on the brink of depression is now stable and recovering.  After years of conflict, the United States has removed 100,000 troops from Iraq, the United Kingdom has removed its forces, and our combat mission there has ended.  In Afghanistan, we’ve broken the Taliban’s momentum and will soon begin a transition to Afghan lead.  And nearly 10 years after 9/11, we have disrupted terrorist networks and dealt al Qaeda a huge blow by killing its leader –- Osama bin Laden.   

Bush and Blair's adventure in Iraq is present only as an absence, a place where troops are removed. No attempt to count the eight-year war and nation-building exercise as an accomplishment of the alliance.

Elitism in college admissions, and well before

David Leonhardt, noting the rooted economic elitism governing admissions at America's top colleges and universities, spotlights several excellent policies implemented by outgoing Amherst president Anthony Marx  to bring more students of modest means to campus. these include devoting a higher percentage of the budget to aid, devoting more aid to grants as opposed to loans, and, most interestingly, focusing transfer recruitment on community colleges -- which, with their terrible completion records, act as a kind of natural selector of able students. 

Leonhardt frames the problem well, noting that a) only 15% of students at the nation's elite colleges come from the lower half of the nation's income distribution, while two thirds come from the top quartile, b) if you screen out race as an admission factor, colleges are no likelier to admit a lower income student with a given SAT score than a higher income student with the same score, and c) only 44 percent of low-income high school seniors with high standardized test scores enroll in a four-year college.

Beyond the scope of his article, however, is the really shocking extent of educational inequality that winnows the field well before students reach college age.

Tuesday, May 24, 2011

Bill Clinton agrees with me

Bill Clinton hopped on one of my favorite hobby horses in an interview with Brian Till. Does the 42nd president "worry that you and this post-Cold War generation of leaders will be judged harshly by history"? As if...
No. I think that's a cheap trick. I mean, all of this "the greatest generation is World War II?" -- it just happens that they're the most horrible parents in human history, right?

If all of us baby boomers were so bad, then our parents were terrible; they failed. And if we were so bad, how come our kids are so great? We were hellaciously good parents.

I think it's phony as a $3 bill. I think they had a chance to win World War II and it was clear. These are much more complex things [now]. We have no idea if the World War II generation would have made the decisions they should make on climate change if they thought doing so would bring an end to their economic prosperity.
 Plainly, the head of the Clinton Foundation whiles away his evenings browsing xpostfactoid:

Generational contrasts are the refuge for those who prefer moralizing to analysis.  You cannot generalize about the moral composition of hundreds of millions of people born between arbitrarily selected dates.  When I read boomer-bashings, I always mentally reply: if those of the WWII generation were such paragons, why did the raise a generation of feckless self-indulgent screwups? Is prosperity itself inherently corrupting? If so, we'd better stop trying to grow our economy.  Further, one instance of the get-rich-quick mania that Friedman excoriates -- the dotcom boom -- was the flip side of an aspect of our economy he suggests we're losing -- rapid technological development. The tension between productive economic development and unchecked greed is hardly a recent phenomenon in American history. Another alleged moral failing of U.S. leadership --taxcut goodies leading to budget problems -- - was promulgated in the first instance by WWII-gen President Ronald Reagan -- while quintessential boomer Bill Clinton paid in political blood for rebalancing our tax and budget priorities. 

Monday, May 23, 2011

Some context for Netanyahu's high dudgeon

Andrew Sullivan's Dish today served up a beautiful catch of the day, as Jonathan Bernstein calls it: a joint statement issued by Netanyahu and Hillary Clinton on 11/11/2010:
The Prime Minister and the Secretary agreed on the importance of continuing direct negotiations to achieve our goals. The Secretary reiterated that "the United States believes that through good-faith negotiations, the parties can mutually agree on an outcome which ends the conflict and reconciles the Palestinian goal of an independent and viable state, based on the 1967 lines, with agreed swaps, and the Israeli goal of a Jewish state with secure and recognized borders that reflect subsequent developments and meet Israeli security requirements."
Sullivan's conclusion: "What a bald-faced liar Bibi is; and how pathetic that so many fell for his hissy fit yet again." Agreed about the nay-sayers. And I think there's at least a measure of disingenuity in Netanyahu's fury.  But a bit of recent context may be in order. And "bald-faced liar" is I think an overreach.

First, in the runup to Obama's Middle East speech, multiple news reports previewed his proposed parameters for Israeli-Palestinians negotiations in terms identical to these, reported by the New York Times' Helen Cooper on April 21:
The terms of reference could call for Israel to accept a Palestinian state based on the 1967 borders. For their part, Palestinians would have to accept that they would not get the right of return to land in Israel from which they fled or were forced to flee
That preview is missing a crucial qualifier, present in Obama's speech, as in the Clinton-Netanyahu Nov. 11 statement (my emphasis):
We believe the borders of Israel and Palestine should be based on the 1967 lines with mutually agreed swaps, so that secure and recognized borders are established for both states.

Blood up and trigger tongues itching in anticipation of  a "call for Israel to accept a Palestinian state based on the 1967 borders," Netanyahu and his minions may have simply missed/brushed aside the little detail about swaps.

The audacity of nuance

James Fallows today puts his finger on "complexity" in Obama's speeches:
Obama's big speeches have been unusual, because the side they come down on is that of complexity. In his classic Philadelphia "race in America" speech: the recognition that every part of our racial mix has its insecurities and blind spots. In his Nobel prize address: that military force is not the answer but is an answer. In his West Point speech a year and a half ago: that the U.S. can't stay in Afghanistan forever but should stay for a while. You can apply this analysis to almost every major address...

From some politicians, for instance those otherwise dissimilar Georgians Jimmy Carter and Newt Gingrich, a collection of "complex" ideas often comes across as just a list. Obama, most of the time, has pulled off the trick of making his balance-of-contradictions seem a policy in itself. Rather than seeming just "contradictory" or "indecisive." This is unusual enough that it's worth noting.  (And for another time: the vulnerabilities this approach creates.)
I would add two corollaries, one implicit above.  First, those "complex" speeches generally explain or presage complex hybrid policies -- not only in Afghanistan, as Fallows notes, but also in Libya, and in the tax cut deal Obama cut with Republicans last December.  Second, the embrace of complexity also defines his tactical approach to striking legislative or international deals. In formulating his role,  he seems to have internalized, and has in fact explicitly voiced the principle, backed by political science data and the experience of long-term legislators, that a president's public advocacy of a given policy proposal from the "bully pulpit" polarizes party positions and lessens the chance of compromise. As he put it with regard to long-term budget/tax reform negotiations in a Feb. 15 press conference:

Saturday, May 21, 2011

Why Gingrich matters: continuing Zasloff's thought

Jonathan Zasloff offers an absolutely crucial reminder of why Gingrich matters:
The essential nature of Gingrich’s insurgency in the House and his conduct as Speaker was the destruction of the informal institutions of American governance.  By “informal institutions,” I mean those habits and customs outside of formal, written law that make democracy work.  Some things are simply not done; everyone agrees to resist the temptation for political advantage in order to make the system work.

Gingrichism is the philosophy that all means short of illegality are fair game in the struggle for political power.  He came to the fore in the House minority by personal attacks on other members’ patriotism; he stirred up the Republican base with the argument that the Democrats were not merely wrong, but evil and a threat to the Republic.  As Speaker, he destroyed the existing committee structure and bill mark-ups, did away with Congressional institutions to educate members (such as the Office of Technology Assessment or the Administrative Conference of the United States), and centralized power in the leadership.  When he did not get his way with Clinton, he cavalierly shut down the government.  Not cowed by the political disaster that ensued, he used the House’s impeachment power for political purposes and put the House Oversight Committee in the hands of Dan Burton with the express mandate to harass and cripple political opponents.  Gingrich broke institutions not by accident, but on purpose.

And if we examine the most malignant trends of the Republican Party over the last 15 years, many (although not all) of them represent this pattern of destroying institutions — and, importantly, any sense of impartiality, good faith, or nonpartisanship — for the purpose of achieving political power.
I would add two points. First, when the Bush crew came in, they destroyed a whole fresh set of norms. They politicized hiring in the Justice Department; they advanced absurdly sweeping "theories" of executive power, asserting that the president has the right to abrogate any treaty and any law if he deems doing so necessary to the national defense; they institutionalized torture of suspects as official U.S. policy, putting the U.S. in violation of the Geneva Conventions and the Convention Against Torture; they set back the global advance of human rights fifty years.

Friday, May 20, 2011

Writhing out of Norquist's embrace, Part IV

You have to respect a conservative Republican who tells his colleagues that the only way they're going to get a deficit reduction deal is to raise tax revenue, no matter what contortions he has to twist himself into to cover himself.

Tom Coburn has separated himself from current GOP orthodoxy, and specifically from a fundamentalist interpretation of Grover Norquist's no-new-taxes pledge, by degrees.  Now, even as he withdraws (temporarily, he implies) from the Gang of Six purporting to negotiate a tax reform/deficit reduction deal, he's completed the clarification. And incidentally, effectively told Norquist to go fuck himself.

Wednesday, May 18, 2011

An epidemic of bad "effects"

One more replay of a post just restored from the 5/12 Blogger outage: 
A grammatical toggle switch gone bad is affecting the blogosphere.  In the last 24 hours [as of 5/12], we have

a) Jonathan Chait:
Democrats have been arguing that their tax increases should solely effect income over $250,00 a year.

b) Ezra Klein:

[Glenn Hubbard says:] "The economics argument is that marginal tax rates effect work, entrepreneurship, savings, investment.”

Okay, that one's in a quote, minus sic. But are all Klein's interviewees suffering from the same tic? A bit further down the page:

Tuesday, May 17, 2011

Goldblog embellishes Clinton

N.B. This post was temporarily vaporized in the 24-hour Blogger outage last week.

I imagine that lots of people sucked in their breath when they read Hillary Clinton's comments about China as reported by Jeffrey Goldberg, who interviewed her at length for a cover story about U.S. response to the Arab Spring, and first presented the interview on his blog.

What Clinton said was startling enough -- far beyond the pale, as China close-watcher James Fallows points out, of the usual range of U.S. criticism of China, in that it questioned China's overall strategy for coping with internal unrest, rather than just specific actions. But I suspect that reception of her words will be strongly colored by Goldberg's gloss of them, which he offered rather breathlessly in a pull-out introduction to the edited interview transcript.

Here is what Clinton said (unglossed) in response to a statement-question from Goldberg:
JG: And (the Chinese) are acting very scared right now, in fact.

HRC: Well, they are. They're worried, and they are trying to stop history, which is a fool's errand. They cannot do it. But they're going to hold it off as long as possible.
"Trying to stop history" and "hold it off" could mean a lot of things. It could mean failing to foster gradual reform and an evolution of the current system.  Compare, for example, Clinton's expressed (semi-past) hopes for Syria's dictator, Bashar al-Assad:

Monday, May 16, 2011

The state's oldest rival

As I wend my rather leisurely way through Francis Fukuyama's The Origins of Political Order, the author's wide-angle view of the social imperatives and pressures that shape governments adds a useful lens to some contemporary struggles.

One very broad thesis, which may in fact be a near-consensus view among Fukuyama's sources, is that the history of the state is in large part the history of the sovereign power's struggle to neutralize powerful subjects' (or citizens') biological imperative to pass their advantages on to their children  -- that is, to neutralize the force of kinship ties, which are the means of building rival power centers. Hence Chinese emperors  periodically decimated the aristocracy and installed merit-based bureaucracy, while the aristocracy in turn would in periods of dynastic weakness find ways to game the system and win back inheritable offices and privileges; the Mamluk and Ottoman empires kidnapped or drafted promising youths from outlying areas and trained them as an elite slave class that either could not marry or could not pass on wealth or position to their offspring; the French and Spanish kings, desperate for cash to fight endless wars, colluded with an entrenched and tax-exempt aristocracy to extract wealth from everyone else .A handful of fortunate lands developed strong central governments willing to be held accountable  in exchange for diverse elites' consent to be taxed. In all cases, however, the gravitational pull is toward elites' irrepressible will to to pass their elite status to their children.

In this light, current battles in the U.S. over the estate tax, marked by bitter denunciations of the "death tax,"  seem especially visceral.  Also touching a deep nerve are struggles to equalize educational opportunity. Witness this complaint and response by Megan McArdle and E.D. Kain:

Saturday, May 14, 2011

Go repeal and replace yourself

Ezra Klein links today to a  rather tortured hypothesis he put forward last fall to explain how politicians induce themselves to believe in policies it's politically expedient for them to endorse:
I don't think we need to get into talmudic arguments over whether, when Mitch McConnell says "the single most important thing we want to achieve is for President Obama to be a one-term president," he's implying a strategy of "deliberate economic sabotage" or simply offering a confused and politically counterproductive pander to his base. For what it's worth, I don't believe he believes he'd do anything to hurt the economy. Political actors are rarely so rationally cynical as that. The problem is subtler: Can McConnell bring himself to support a policy that will help the economy if it also helps President Obama?

On the simplest level, American politics presents us with an incentives problem: McConnell -- like most minority leaders -- is an avowedly reflexive opponent of the president's reelection. The president's reelection campaign depends on an improved economy.
Reading this, the phrase "repeal and replace" came to mind, and it occurred to me that the GOP's marketing slogan for their alleged healthcare reform plans resonates beyond healthcare. It's the perfect expression of their top priority: to "repeal and replace" Obama.  Healthcare is a mere stalking horse.

Growth at a measured GAIT

My fellow Americans, I believe I have solved our budget problems.  In the shower, no less.

Mulling therein the consensus that 'you don't raise taxes in a recession' (or frail recovery), and the reality-based community's corollary that you do raise taxes when faced with a structural deficit, I thought, why not index tax rates to GDP growth?  The government has no trouble indexing the yield on TIPS to inflation. Why not set a baseline tax rate that's operative at, say, 3% GDP growth, adjustable down in a set ratio all the way to, say, a 3% contraction, and adjustable up all the way to, say 6% annual growth? Economic velocity will determine our GAIT (Growth Adjusted Income Tax).

Republicans will screech, as they did when Clinton raised taxes in 1993, that the American economic race horse has been hamstrung forever. Fine. Make the whole package contingent on performance over one multi-year cycle. If GDP growth doesn't hit an agreed annual target once in, say, six years, sunset the system.  If it does hit the target, reassess after ten years.

Some will protest that taxpayers need 'certainty.' Good -- let's grant ourselves the certainty that tax rates will be commensurate with the demands of the economic cycle.

 Go forth, economists and budget wonks, and work out the details. You're welcome!
Last post: Goldblog embellishes Clinton

Friday, May 13, 2011

Coming soon: a misleading bump in household income?

One thing I learned from Stephen J. Rose is that census figures make U.S. household income appear somewhat more stagnant than it has been over the last thirty years, because household size has shrunk, and households with fewer people have less income on average than larger households. The census divides households into income quintiles, and half of Americans live in the upper two household quintiles. 

Now, Global Insight analyst Patrick Newport reports that in the wake of the great recession, household size is increasing, while growth in new households hit a postwar low last year (hence the continued depression in new housing construction, Newport's focus). His explanation:
One can also infer from the newly released data that "doubling up" played a greater role in 2009 than it did in 2008. For example, the number of households headed by those 15–24 years old fell by 124,000 (students moving back in with parents), while the number of households with six or more people in the home rose by 355,000, an 8% increase. The breakdown by age groups also suggests that "doubling up" increased in 2009. By 10-year age groups, the number of households headed by those in the 15–24, 25–34, and 35–44 age brackets all fell in 2009, while the number in all of the older 10-year age brackets increased. Job losses and foreclosures are concentrated in the younger age brackets.
I wonder: will the increase in household size produce a misleading bump in household income?  Some of those younger adults living with their folks must be earning some income.  Moreover, the growth in household size should be skewed toward lower income households. Hence we may get a faux reduction in income inequality too.

I have lost two pearls of price

Dear reader, in case you haven't picked up the news somewhere, Blogger just came off a 24-hour shutdown, and yesterday's posts have been wiped out. I can confidently state that the world will be a poorer place for want of the two fine posts vaporized from xpostfactoid; if they're not restored within a couple of days I may even exercise myself to reconstruct one of them, an ur-version of which survives in a note to James Fallows (hint: regarding China, I think that the world may react more to what Jeffrey Goldberg said Hillary Clinton said than to what Hillary Clinton said). The second lost post contains the whole of my oeuvre as a grammar scold -- perhaps, on second thought, it's better off permanently stuck in the aether.

This incident has given me and probably thousands of other bloggers a terrifying glimpse of the abyss: suppose one fine day all our posts disappear, instead of outliving the human race as they otherwise seemed destined to do?

UPDATE, 30 seconds later: just as I hit "send," a terrible repressed memory surfaced: I had one post scheduled yesterday that never ran. My traumatized psyche can't even remember what it was...

UPDATE 2: Miracle of miracles, I have that vaporized scheduled post saved as a plain-text email, because Blogger was having lesser problems earlier in the day and the "publish" button failed several times. I will reconstruct and publish shortly. 

Wednesday, May 11, 2011

Subtleties of life expectancy, cont.

Today, Aaron Carroll joins Ryan Grim and Jonathan Chait in highlighting a subtlety in the calculation of the effect of increased longevity on social security costs. Ever-increasing longevity has been used to justify raising the retirement age in the Bowles-Simpson deficit reduction plan (to 69 by 2075 for full retirement).  The catch is this: life expectancy for those who reach age 65 has risen far more modestly than life expectancy from birth:
First, if you made it to 65, even back in 1950, you could expect to be on Social Security for 14 years... life expectancy for someone who lives to 65 and qualifies for these programs, hasn’t gone up as much, or as quickly, as people think.

The reason that Social Security has become more costly is not nearly as much that people are living longer on the program, as it is that many more people were born into the generation approaching 65. They aren’t getting more benefit individually; as a group there’s just more of them. When you argue that you want to raise the age at which they start to 68, instead of 65, you’re basicly giving them as many years on the program as a person who hit 65 in the mid 1970′s. That’s a pretty big change [i.e., we've been getting more years in recent decades?].
There's a further subtlety, though, that's been left out of this discussion. It's true that life expectancy before age 65 does not affect the total size of the benefit that retirees collect.  I presume, however, that it does affect the ratio of active workers to beneficiaries -- though I will note at the outset that that ratio has been remarkably stable since 1975, ranging from 3.2 to 3.4 in every year except 2009, when it dipped to 3.0. And I would guess that that dip occurred mainly because the number of employed workers dropped so precipitously in the Great Recession. 

Tuesday, May 10, 2011

An alternative to raising the retirement age for Social Security

Alan Simpson, of Bowles-Simpson fame, is a die-hard for raising the eligibility age for social security, as the Bowles-Simpson plan proposes.  Ryan Grim reports (hat tip: Chait) that Simpson is a tad unreceptive to to information furnished by the Social Security administration to the effect that life expectancy for those who reach age 65 has risen only modestly since 1940 (about five years each for men and women).  Meanwhile, the retirement age for receiving full social security benefits has been raised from 65 to 67 -- so the system is paying people for an average of three more years than it did for retirees in 1940. 

The Bowles-Simpson plan calls for a roughly proportionate rise in early and full retirement ages -- to 68 in 2050 and 69 in 2075 for full retirement, an to 63 and 64 at the same points for early retirement.  Opponents of that change point out that it is implicitly regressive, since lower income people have shorter life expectancy, and those who do manual labor find it harder to work to older ages. Besides, few people want to work deep into their sixties, and there are other ways of making social security solvent. In Bowles-Simpson as in other plans, raising the retirement age is only one in a broad menu of ways to raise further revenue or reduce the growth of benefits.

The social security segment of the deficit reduction plan put forward by the Bipartisan Policy Center does take increased life expectancy into account, but in a different way.  The BPC proposes to index the benefit formula to longevity : "Specifically, the replacement rates used to calculate benefits each year for new beneficiaries will by 99.7 percent of what they were in the previous year -- which offsets about two-thirds of the additional costs associated with estimated longevity increases." This plan treats social security like an annuity, which is calculated on the basis of life expectancy. 

A budget deal by hook but not by Crook

For two years I have wondered how Clive Crook can continue to lambaste Obama for pursuing policies that Crook agrees with.  In recent weeks the mystery has been solved. Crook thinks that Obama ought to be able to sell policies that please neither left nor right by sheer force of eloquence.  Late last month, he recommended that Obama predetermine the outcome of negotiations with Republicans and champion that outcome in advance. This week, he's urging the President to so overwhelm the electorate with his eloquence that they steamroll a Republican opposition that Crook himself recognizes as beyond reason:
Under present conditions, the administration’s tools for invigorating the recovery are limited, to be sure. However bold and decisive the president chooses to be, he cannot just decree faster growth. But if Democrats and Republicans moved immediately to raise the debt ceiling and promptly to clarify the medium-term fiscal picture – a task that cannot wait until 2013 – they would improve confidence and lessen the risk of a second recession.

The president can play a crucial role in this. Merely calling for unity achieves nothing. But the bin Laden operation gives him fresh political capital, though perhaps not for long. He should use it to impose himself – talking past a stone-deaf Congress to the electorate; advancing cold, clear choices about curbing long-term borrowing; thus making space, should it prove necessary, for renewed short-term stimulus. They call it leadership.

No, they call it fantasy.  Obama -- any president -- is about as likely to convince the American people to demand that their representatives pass his favored mix of tax hikes and spending cuts as he is to singlehandedly take out the rest of al Qaeda.

Please please please Mr. Crook, read a political scientist or two.  Presidents do not overcome a recalcitrant opposition by rallying the public from the bully pulpit; they do not convince the electorate to embrace tax hikes and spending cuts unless someone or group can orchestrate "everybody...[i.e., leaders from both parties] getting in that boat at the same time," as Obama has said he aims to do.  Presidents may seem to convince the public when conditions shift so that the public is willing to try policies they've long been advocating; they may gradually nudge public opinion in a direction toward which it's started to trend; they may, when they have a majority in Congress, push through unpopular policies that are later vindicated by events (or seem to be).  But when they"lead" in the way Crook envisions they suffer the kind of defeat that met Bush Jr. when he tried to privatize social security.

Monday, May 09, 2011

Worshipping success

Like almost all Americans, I am very glad that U.S. forces were able to locate and kill bin Laden.  I'm glad that Obama chose to send in commandos, rather than obliterate the compound with bombs.  I believe that the president acted and planned wisely. I hope he gets a lasting boost in approval ratings, and that he gets reelected.

But I am really getting success of the success narrative that reads this event as an ultimate expression of Obama's character -- along with the obligatory foil, the failed attempted rescue of U.S. hostages in Iran as an expression of Jimmy Carter's ultimate leadership.  Grant that planning meticulously, and in particular adding extra helicopters, boosted the odds for success in this case. Note, as Obama said on 60 Minutes, that the capabilities of the U.S. military in operations of this kind are far beyond what they were "20 or 30 years years ago."  Note too that as it turned out, this operation had to be orders of magnitude simpler than rescuing 52 hostages would have been.

Sunday, May 08, 2011

Two approaches to Social Security reform

Ezra Klein has recommended the deficit reduction plan put forward by the Bipartisan Policy Center* as "easily the most thoughtful, detailed and credible deficit reduction plan on the table. On social security, the BPC plan overlaps in two major features with the  that of the Bowles-Simpson commission. But one major difference is instructive.

First, the two major points of overlap. Both plans would gradually lift the cap on earnings subject to social security to the range of $180-190k in today's dollars, the level needed to restore a target set in 1977 of taxing 90% of Americans' wage earnings.  Both also propose to slow down the cost-of-living adjustment by moving from the current Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) to a so-called "chain-weighted" CPI (CPI-U) that aims to account for changes in consumers' habits when the prices of particular items goes up. According to the BPC plan, the "chained" CPI-U is estimated to grow .3 percentage points more slowly (I assume annually) than the CPI-W. According to the Bowles-Simpson plan, these two measures would close 61% of the existing shortfall over 75 years.

The most instructive difference is in changes to the benefit formula -- the percentage of their lifetime average indexed monthly earnings (AIME) that workers in various income brackets earn as a permanent social security pension.  Both plans, it should be noted, eschew so-called "means-testing" of benefits -- that is, proportionately reducing benefits for those who have significant other sources of retirement income. Means-testing is a GOP talking point for reasons I can't fathom, since it constitutes a major disincentive to accumulate wealth and would raise only modest additional revenue, since the vast bulk of social security payouts go to non-affluent Americans. 

Friday, May 06, 2011

A warning about Pakistan

This cry of anguish and warning in the FT by Aatish Taseer, son of the recently assassinated governor of Punjab in Pakistan, is infused with personal grief and may be overstated (pray it's so), but it's so forcefully written that you can feel your world view wanting to shift as you read:
Let us be clear about what happened last week: Osama bin Laden was not just found living in Abbottabad, there out of some inverse logic of his own. He was found in this garrison town because he was the guest of the army. And now the charges against this army and its agencies are manifold

They range from duplicity in Afghanistan, both aiding the Americans and their adversaries, to a rich trade in nuclear technology with the world's worst countries, to - as senior members of the Indian establishment have claimed - helping to plan and execute the 2008 attacks in Mumbai. Pakistan's neighbours - India and Afghanistan - are hoarse in the throat from repeating that it is the Pakistani army that is the source of jihad in south Asia...   [snip]

I feel you, DiA

This clip-out from DiA on The Dish triggered an image:
The worthwhile, boring, essential parts of war and life do not make good television. They do not even make good narrative: David Foster Wallace's posthumous novel tries to sanctify boredom (and if I ever manage to slog my way past page 56 I'll let you know if it succeeds; he's a great writer, but come on, I'm only human, I have my narrative needs too), but otherwise writers and filmmakers wisely steer clear of the subject. People standing around tables in offices sorting documents into files or making minute adjustments to photographs does not make for compelling reading or watching. But make no mistake, those people are the ones who put the SEALs in that compound.

What I saw was the preamble (there's got to be a more technical term -- the medley of images and theme song at the beginning of each episode) to The Wire, David Simon's epic HBO drama of the Baltimore drug trade. The medley tracks the movements of cops and bureaucrats and people on Baltimore's poorest streets. It's often struck me that the sequence captures the dignity, the intensity, the concentration in the most mundane human tasks -- punching the buttons on a pay phone, dragging on a cigarette, snapping a  photo, exchanging cash for product, u-turning a bicycle. It somehow screens out any moral content we might impose on the actions, shows us all as conscious animals doing what we do.

In any case, the association was no accident. Jumping to DiA, here was the upshot:

Wednesday, May 04, 2011

"Should we redistribute grades like we do income?" Response to Megan McArdle

Megan McArdle does not think much of my response to Robin Hanson's implied argument that redistributing income is no more rational or right than redistributing students' GDP would be.  Let's take her rebuttals one by one (leaving out the final one, "hand-waving," which is mainly a repetition). The italics are hers, generally followed by a quote from my original post, shaded blue. My responses are below each indented excerpt from McArdle.
a) Comparing apples to oranges:  "GPA is more tightly tied to individual performance than earnings are. Granting that a) grading is an imperfect measure of the quality of student input, and b) earnings bear some relationship to performance, it's still true that student performance bears a closer relationship to grade than the social utility of the average person's work does to that person's earnings"  So the correct metric by which we assess grades is accuracy (does it correlate with performance) while the correct measure of income is whether it serves some larger social purpose.  Obviously, comparisons should be of like to like: either how accurately income/GPA are tied to performance, or how accurately they are tied to social utility.  It's not clear that GPA would win on either score.

Income is a measure of a performance that's valued by social means. Pay is generally awarded by a collective entity or a community of customers, which gets the ability to pay by its relationship to the larger community; the value pay confers is by definition social. We collectively pay athletes, mainly by watching commercials with which broadcasts of their games are interspersed and buying branded gear; we collectively pay Goldman Sachs investment bankers by buying stuff from the companies that see fit to pay their M&A fees; we collectively pay teachers by allocating tax money for education. We may pay contractors individually, but their value is determined by how large a subset of the community decides to hire them. Money gets its value by being equally valued by others; every "distribution" is a redistribution; and taxes are simply part of the mix.  Grades, in contrast, we at least attempt to tie to only one factor: the student's work.  Money is meant to be redistributed, student performance assessments are not.

We now all know that proof won't set us free

This assertion by Joan Walsh triggered an off-center thought:

President Obama is right not to release photographic "proof" that Osama bin Laden is dead. There's absolutely no upside: The lunatic fringe will still doubt the evidence, and gruesome corpse photos run the risk of creating a backlash against bin Laden's killing that doesn't exist so far.
The thought: birtherism has corrupted our collective sense of what constitutes proof.  It's now a near-universal assumption that a vocal minority will reject demonstration of any fact, now matter how definitive by any reasonable standard. (As Gideon Rachman put it, "After the controversy over Obama’s birth certificate, why not have one over Osama’s death certificate?") This has always been true to a degree: I remember my mother telling me that there were people who did not believe that Americans landed on the moon in 1969.  But the size, noisiness and impact of what were once regarded as lunatic fringes has made them impossible to ignore.

Going with the flow throughout the Umma

There is a lot of compressed wisdom in this observation by Phillip Zelikow in today's FT:
...the principal focus of attention [in Islamic countries] is back on choices to be made closer to home. The streams of Arab and Muslim political life are flowing down some new channels. More productive issues are on the agenda than those of the 1990s, when inchoate resentments displaced hatred on to what al-Qaeda called the “far enemy” in America, because the problems at home seemed so impervious to change.

Tuesday, May 03, 2011

Afghan Taliban: "Symbiotic" with, or sick of, al Qaeda?

Not to pretend to any great insight here, but this gives me vertigo:
Afghan President Hamid Karzai said bin Laden's killing near Pakistan's capital vindicated his government's growing opposition to U.S.-led combat operations in the Afghan countryside.

"Osama was not in Afghanistan: they found him in Pakistan," Mr. Karzai said. "The war on terror is not in Afghan villages…but in the safe havens of terrorism outside Afghanistan." 

That has been true for many years. Woodward's Obama's Wars begins with Mike McConnell briefing President-elect Obama on the 150 terrorist havens strung through Pakistan's tribal areas -- a network far outstripping that available to bin Laden before 9/11.   It's hard not to wonder: If Karzai is itching to get the troops out and strike a deal with the Taliban, by what Kafkaesque logic would we persist in working against his will to transform his government into something it will never be and clear out adversaries he regards as compatriots? And how can we drive the Taliban out of Afghanistan when they're so comfortably ensconced across the border?

Monday, May 02, 2011

A continuity in Obama's thought

On the occasion of Osama bin Laden's death, David Remnick recalls some  thoughts from Obama in the immediate wake of 9/11 about the terrorist threat, published in the Hyde Park Herald on September 19, 2001:
“We will have to make sure, despite our rage, that any U.S. military action takes into account the lives of innocent civilians abroad,” he went on. “We will have to be unwavering in opposing bigotry or discrimination directed against neighbors and friends of Middle Eastern descent. Finally, we will have to devote far more attention to the monumental task of raising the hopes of embittered children across the globe—children not just in the Middle East, but also in Africa, Asia, Latin American, Eastern Europe, and within our own shores.”

To me, this immediately evoked a most remarkable passage in Obama's defining 2008 campaign speech outlining his approach to foreign policy - delivered on March 19, just a day after his famous speech on race:
What lies in the heart of a child in Pakistan matters as much as the airplanes we sell her government. What's in the head of a scientist from Russia can be as lethal as a plutonium reactor in Yongbyon. What's whispered in refugee camps in Chad can be as dangerous as a dictator's bluster. These are the neglected landscapes of the 21st century, where technology and extremism empower individuals just as they give governments the ability to repress them; where the ancient divides of region and religion wash into the swift currents of globalization.

Chronicle of a death announced

A few matters of tone and message in Obama's speech announcing the death of bin Laden:

Carefully defined enemy: Obama long ago eschewed the phrase "war on terror." Tonight he carefully delineated whom the United States is at war against -- and whom we are not:
For over two decades, bin Laden has been al Qaeda’s leader and symbol, and has continued to plot attacks against our country and our friends and allies.  The death of bin Laden marks the most significant achievement to date in our nation’s effort to defeat al Qaeda.
Yet his death does not mark the end of our effort.  There’s no doubt that al Qaeda will continue to pursue attacks against us.  We must –- and we will -- remain vigilant at home and abroad.
As we do, we must also reaffirm that the United States is not –- and never will be -– at war with Islam.  I’ve made clear, just as President Bush did shortly after 9/11, that our war is not against Islam.  Bin Laden was not a Muslim leader; he was a mass murderer of Muslims.  Indeed, al Qaeda has slaughtered scores of Muslims in many countries, including our own.  So his demise should be welcomed by all who believe in peace and human dignity.
We are at war with al Qaeda, full stop. Fallows hopes that this news might help diffuse the mindset of a "war on terror"; Obama's language suggests as much. Note too that there's no mention of those who harbor and ally with al Qaeda, e.g., the Taliban.  Does that suggest some mite of hope in talks with them? 

Careful treatment of an "ally": The president did not exactly fold Pakistan in a warm embrace. Nor did he exactly warn that country to stay in whatever remains of alliance. The thanks, such as they were, were thin. And the threat, such as it was, was a level below implicit:

Sunday, May 01, 2011

Feeling the presidential elephant in an economic shitstorm

Everyone knows the parable: the king's blind counselors are charged with telling him what an elephant looks like by feeling different parts of his body, and each comes back with an utterly different impression. And the old joke: one of them is positioned under the tail -- at an unfortunate moment. He comes back with a malodorous report.

For the duration of Obama's presidency, the United States has been in a very bad extended moment (economically speaking), and that leads to a corollary of the old parable: At such times, all the king's kibbitzers are clustered under the tail.

Take, for example, two critics of Obama's mode of compromise. Here is Clive Crook, re-casting a critique by Walter Russell Mead. Mead first; Crook after the double indent: