Social Security Crisis on Infinite Earths

Yglesias seems to be on a one man “there is no social security crisis” crusade. Now, it's true that no one is going to perish in a mangled, fiery, blood-soaked heap of runaway social security next week, or even next decade. But let me say a couple things. (There will be MUCH MUCH MUCH more in coming months).

First, we are approaching something very like a comprehensive fiscal crisis. Check out Jagadeesh Gokhale's and Keith Smetters's paper on the “Fiscal Imbalance” or “FI.” The FI is “current federal debt held by the public plus the present value of all projected federal non-interest spending, minus all projected federal receipts.” A sustainable fiscal policy has an FI of zero. The estimated FI is about $47 trillion. That's real money. To get the gravity of the problem, think about this: Holding other options fixed we could wipe out the FI if we (pick one):

— raised federal income tax collections by 70.1%.
— raised payroll tax collections by 96.7% [!].
— cut discretionary spending by 107.8%. [Impossible!!!]
— cut Social Security & Medicare outlays 45.9%.

(This stuff is above is neatly packaged in Shaviro's Regulation paper.)

Clearly, a real solution will be some combination of spending cuts, small tax increases (big raises can cost more is distortion than they bring in in revenue) and Social Security and Medicare reform. It is just not possible to correct the massive FI by tinkering around the edges of the major entitlement programs until they really are in a genuine crisis.

Second point! This is way more important. The case for social security reform by no means depends on the existence of a crisis. Social Security as it exists is extremely bad public policy. A reform package like Cato's is both a practical and moral improvement. It eliminates the budgetary burden of social security over the long haul. It places retirement largely outside the fickle, unstable and risky context of politics. It meets a demand of justice in expanding and strengthening property rights over the fruits of one's labor. It meets a demand of justice by creating a system where people internalize responsibility for their own long-term welfare. It meets a demand of justice by broadening the class of stakeholders in a healthy, stable, high-growth market liberal order.

That's the argument for social security reform. If there wasn't even a prospect of a crisis, if the current system was infinitely sustainable in fiscal terms, we still ought to adopt something like the Cato plan on grounds of justice.

Summary: (1) all the “there is no crisis” noise irresponsibly evades the broader looming fiscal crisis in which social security outlays figure massively; (2) even if no crisis loomed, we should still switch to a system of personal accounts on grounds of justice; (3) In the face of “no crisis” arguments, proponents of reform should place Social Security in the larger economic context, and then move on to the abundant practical and moral merits of the reform proposal. Don't allow the independent moral case get lost in crisis vs. no crisis minutiae.

Solstice is the Reason for the Season

Good Reason piece by Julian about the absolutely idiotic “Merry Christmas” controversy. I really dislike that one self-righteous athiest guy in the small town who calls the ACLU because there was a prayer before the public high school football game. And I really dislike the self-righteous Christian who thinks that an earnest attempt at inclusion in a pluralistic society is tantamount to an attack on Christendom. Oh, I don't know, why not just say what you like, and let other people say what they like, and when they say something other than what you would have said, say to yourself, hey, that's alright, that's how they roll. Really, it's easy if you try.

And, hey Christians! Jesus wasn't born in December, anyway. Solstice truly is the reason for the season! Happy Solstice!

The Illusory Aura of Ivy

Salam, Douthat, and Menashi have taken over at Weirdness ensues, and it's almost entirely Reihan's fault (or to Reihan's credit). Anyway, good stuff, at least that which is non-free-associative enough to comprehend.

The exchange between Reihan and Douthat about the pointlessness of affirmative action at elite schools reminded me of Marie Gryphon's talk on affirmative action at a Cato panel this summer. (Check out Marie's talk and replies in the newest Cato Policy Report.) Here's the bit I had in mind:

But contrary to what many assume, attending a selective school does not raise student incomes, regardless of race. This is an important new finding. A couple of years ago, economists Stacy Dale and Alan Krueger generated shockwaves by solving a persistent problem of older research on this issue. They compared students who were accepted to Cornell, for example, and went to Cornell, to students who were accepted to Cornell but chose, for reasons of their own, to attend a less selective school, like the University of Washington. Comparing students with identical acceptances allowed them to control for all of the factors that colleges consider when they accept students. Dale and Krueger found that when genuinely equivalent students are compared, those who attended the fancier schools make no more money at all—not an extra dime—than students who attended the less selective schools. The idea that the Ivy League will make you rich is just another part of the myth. The Dale and Krueger paper, by the way, is in the Quarterly Journal of Economics, Fall 2002, in case you need to print it out and give it to that neighbor who is so proud that his son got into Penn early admission this year.

This is an extremely satisfying finding to people like me who did not attend prestigious schools, but who fancy that there is a very nearby possible world in which they were admitted to Princeton. Now, I find that this news is not entirely welcome in DC, a town choked in Ivy. As Reihan or Ross point out, pedigree really matters in the reputation- (and not so much money-) based nepotistic professions, like academia and journalism (I could never have been a TNR “reporter-researcher” like Reihan or my eminent Columbian housemate). And it is of course from journalists and academics from whom we receive our opinions about things like affirmative action. So we should not be surprised that the transformative effects of Yale are rather overplayed.

Are Libertarians Cheerier?

Just an observation. Going through my blog roll, I noticed that the libertarian blogs have a rather cheerier general tone than both the left and right blogs. I find this interesting, because surely things are going not-so-well for us in political terms. The left seems extremely dyspeptic and chicken-littely these days. The right seems gloating, dumb, and ham-fisted. Why so chipper, friends? Well, we're perennial losers, so it doesn't get us down. And it probably helps a lot if you can enjoy, guilt-free, the full range of pleasures offered by an advanced consumer culture. Despite all the big-government badness that daily assails us, I am nonetheless daily delighted by the cultural plenitude I enjoy. The happiness research seems to show that one thing that can make you more happier on a daily basis is a spirit of gratitude. Do you suppose libertarians are more grateful for capitalism? Yeah computer! Yeah The Arcade Fire. Yeah The Kleptones! Yeah new USB drive. Yeah books from Amazon that just came in the mail! Yeah Guacamole Doritos! Yeah Filene's Basement where I just bought very nice gloves for thirty minutes wages! Yeah free Moveable Type! Yeah cheap Dreamhost! Yeah all the folks rich and not so rich who pay for the Cato Institute! Yeah Yeah Yeah!

We Don't Need No Stinkin' Baseball

MLB's extortion efforts seem to be falling apart here in the district! Jim Henley is your go-to man for reliable libertarian baseball analysis. Here. Here. Here.

For Carol Schwartz fans, here this tidbit from the NYT:

“I can just picture the baseball owners high-fiving each other until they collapsed from exhaustion” after reaching their deal with Mr. Williams, said Councilwoman Carol Schwartz.

Well, you showed 'em Carol. Good work.

I admit it: I will be pretty disappointed if baseball stays away. But if it's a choice between successful extortion or baseball staying away, that's easy.

[UPDATE: A very reasonable column from Jim Caple at ESPN. I'm truly disgusted by the way sports journos and radio guys insist on doing their macho routine 24/7 and then go into a spurned welfare queen hissy when the subsidies for their adolescent hobbies don't come through. It's a really, really sad example of concentrated benefits/diffuse cost logic. So good for you Jim Caple!]

Mary Warnock and the Culture of Life

I agree with Warnock that not only should euthanasia be allowed, but that the stigma attached to surrendering to death be relaxed.

The amount of money spent to keep alive people for whom life has become nothing more than a searing wait for death is abominable. I cannot imagine wanting to spend tens of thousands of dollars to extend my life a couple extremely miserable months when I could otherwise give it to my children or charity. Indeed, if I had to spend that money on myself, I would rather use it to finance a truly glorious death.