Ain't Nothin' Like the Real Thing, Baby

I have a new piece up at Fox News on the the relative political security of personal retirement accounts and the Social Security status quo. Reform obstructionists like to say that the status quo is at least as secure because Social Security is so popular, and, in any case, Congress could just tax the hell out PRAs if they wanted. This argument doesn't work because the reason SS is so untouchable is that it was designed to create the illusion of property, contract, and insurance. If fake rights are the electricity in the third rail, then real rights should pump out even more wattage.

My conclusion:

The political vitality of Social Security-as-we-know-it was designed to be parasitic on the American commitment to property and contract. But parasites cannot be more secure than the host. If Congress fears to trespass on illusory property, it will not be bolder when encountering a real legal fence. Personal accounts — real ownership, real rights — offers in reality what the status quo offers only in appearance. The shadow, as Plato would remind us, is not more solid than the form.

Americans deserve real ownership, real property, and real retirement security. Unlike the slowly eroding status quo, PRAs offer Americans the real thing.

Whole thing.

Self-Ruled or Rule-Ruled?

Yale Law Professor Akhil Reed Amar has suggested:

Divide the state into one hundred equally populous single-member districts, as under the current system. Give each person one ballot and one vote, but within each district, after the votes are cast, don't just add up the votes and in effect waste or ignore the votes of those of the minority party or parties– the “losers.” Instead, treat all voters, all ballots, equally, but in a different way. Suppose we put all of the ballots from a given district in a twirling drum, pull one ballot out in a lottery, and declare the candidate listed on that ballot the winner from that district. Ex ante, each ballot has an equal chance of casting the winning vote. If you get 20 percent of the vote in a district, you have a 20 percent chance of winning the election even if someone else got more votes. Like the current system, lottery voting uses small single-member districts, but because of the law of averages, lottery voting generates an overall legislature that looks much more like the one generated by cumulative voting. A geographically dispersed 20 percent minority party will win around twenty of the one hundred seats. Each party will get its fair share–its proportionate share–of legislative representation, tracking pretty closely the overall percentage of the vote it received statewide.

So,why not?

During a nice conversation about alternative voting schemes last night at the Amsterdam Falafelshop with my friend Clark, I got thinking about just how little most Americans are aware of the degree to which the democratic rules of the game constrain the range of the politically possible. We blithely believe that since we have some scheme of universal suffrage that the government must reflect the “will of the people.” But this is utterly fallacious. There are probably an uncountable number of different voting schemes that are equivalently “democratic,” but which would produce wildly different legislatures, policies, and civic cultures. Amar's ingenious idea is just one example of an alternative democratic scheme that would give quite different results from our current system.

The interesting normative question is whether a political community can truly exemplify the ideal of republican self-governance if they do not understand the extent to which the rules of collective decision-making limit their choices, some possibilities being ruled out of bounds simply in virtue of being governed by one set of rules rather then another.

Amar speaks of law schools, but I think his point is general:

Too few of us–citizens and lawyers–recognize that a choice exists. This is largely a failure of education, especially in law schools where professors train students much better in the arts of textual and doctrinal analysis, and now even in certain law and economics and statistical techniques, than in the basic rudiments of social choice theory. Plain meaning, expressio unius, judicial review, the Coase theorem, regression analysis, and T tests–these are all part of law school vocabulary. But the Condorcet Paradox, agenda manipulation, May's Theorem, single peakedness, Downsian equilibrium, Black's Theorem and the like, are not–not yet, at least.

I think our attitude toward democracy would undergo a fairly radical change if it was broadly understood just how much we are ruled by the rules.

Notes on Modularity, Value Pluralism, Cultural Variation, etc.

I am convinced that the mind is at least moderately modular. The mind is composed of an interrelated suite of neural “programs” selected to solve problems specific to different domains of human activity. I've recently been intrigued by the idea that a variety of modules that operate according to different rules might provide some basis for the thesis that there are plural, incommensurable values.

I don't believe in extreme versions of value realism, that there are value-properties out there in the world independent of their relation to human beings. I think value-properties are relational, and are what they are in part because of the contribution of human emotional and cognitive capacities. However, they are not subjective. Things aren't valuable just because I believe they are, or because I want them to be. Beauty, for example, is not a matter of opinion, but a matter of the way objective features of external objects or events jive with certain more or less universal human mental capacities. People can have wrong opinions about beauty, because the relevent capacities might be insufficiently developed, or because they haven't learned to pay attention to right thing, or because their judgment is clouded by a specious theory. So there can be right or wrong answers about value questions within the class of people who share the relevant capacities.

Value-properties, and accurate value-judgments, are capacity-dependent in this way. But there is no single value-responsive capacity. Our ability to judge a fair trade, a good mate, a decent piece of meat, or a nice song, likely depend on different capacities that produce judgments based on different standards. The love for one's daughter may be produced by a very different cognitive/emotive mechanism than one's love for Bach. Our value judgments in a particular case likely depends on which module is activated and deployed. It may be that we judge our own reasons in a different way than we judge other people's reasons, due to the different standards implicit in the operation of different modules, which may lead to seemingly hypocritical sets of judgments. Different contexts, which elicit different modules, may lead to varying value-experience and (correct) value-judgments about the same subject matter, and thus our reasons for action may seem to fail to cohere. It is well-confirmed that people make different judgments when in “hot” and “cold” states. And it may be that neither state produces the uniquely correct judgment, but that different contexts activate programs that sensitize us to different, incompatible values, each of which we are responsive to and regard as reason-giving.

Moral “learning” might then involve becoming conditioned to activate one module rather than another in certain contexts where the other module is “naturally” dominant. One social convention about the proper mode of value-response might enable different coordinative possibilities and therefore different social formations than another convention, although both sets of social formation are, at bottom, the consequence of value-responsive motivation and action. Culture we can think of as a set of institutions and practices that reinforces patterns of contextual modular activation, and therefore value-response, and therefore individual action, shared expectations about individual action, social coordination, and social formation.

Every culture in one sense is equally natural, relying on natural capacities for value-response. But some cultures might be less natural than others in the sense that rely less on the “default” modular activation rules and rely more on “trained” modular activation, or on conventional external institutions and cues “designed” to manipulate the default rules. Certain patterns of modular activation might have unintended coordinative consequences, which might undermine the pattern, further reinforce the pattern, or create pressure to modify the pattern and create cultural change.

We get cranky sometimes because our culture constantly reinforces and rewards counter-“intuitive” activation of non-default modules, and this can be effortful and feel unsatisfying, leaving us constantly feeling that there is something it might have been better to do. But reversion to default patterns is badly maladaptive within a set of social formations built on coordination around heavily reinforced non-default patterns. Alienation. We don't crave the Pleistocene. We'd just like to take a little holiday from time to time, and respond to value, and be motivated by reasons, according to the “natural” default pattern of modular activation.

That was more for me than for you. But if you got this far, thanks for listening. Pope Benedict: beware modular pluralism!

My Socks are Cold Feet Insurance!

Yglesias, guesting over at Talking Points Memo, contests Julian's claim that it doesn't make sense to think of Social Security as “insurance” (making some of the same points I made in this TCS column.)

First and most obviously, Social Security provides insurance against disability. Through the survivor's benefits it also provides a kind of life insurance. Third, through the fact that you keep drawing benefits until you die rather than until some lump sum has been exhausted, it provides a kind of longevity insurance. Living until over the age of 65 is a very common and quite predictable feature of contemporary life, but none of us know exactly how long we're going to live. Someone who dies at 78 and someone who dies at 100 would need nest eggs of very different sizes to live comfortably in retirement. One's ability to keep working during the earlier portions of old age is also not-exactly-predictable. In my line of work it's a reasonable bet that I'll be able to keep on writing away for the vast majority of my lifetime, but many careers aren't like that. The guarantee of benefits starting in your mid-sixties serves as a kind of second-tier of disability insurance against the possibility that the vicissitudes of life will leave you unable to ply your trade into your late sixties and seventies even though you might be healthy enough to live.

Matt does an extremely effective job of evading the issue. First, let me point out that the big debate we're all having is about retirement policy, not disability. So let's leave that aside. Second, Matt seems to implicitly accept that turning 65 years old does not constitute an insurable “loss” that might be thought to require reimbursement. Older people are on average wealthier. In terms of buffering people against risk, it makes a heck of a lot more sense to transfer money from chi chi retirees in Boca to people facing the “risk” of turning 20. I think we can all agree that birthdays aren't insurable events. It's both weird and dishonest to represent a birthday or the event of voluntarily leaving the labor market as an insurable “loss.” Social Security checks are event-conditioned welfare payments. That's just what they are.

Now, yes, it turns out that we don't know exactly how long we're going to live, and so there's some chance we might outlive our savings. Or we might face some kind of financial catastrophe that guts our retirement nest egg. You don't know how long you'll be able to be a productive contributor to the economy, etc. But the point that Matt fails to address is that insofar as Social Security “insures” against these contingencies, so does means-tested welfare, and to a very great extent, so do personal accounts. Means-tested benefits are much MORE like insurance in the sense they kick in only upon the occurrence of some kind of loss or hardship. An annuity from a personal retirement account is exactly like a stream of Social Security checks, except that you actually own something. If Social Security is insurance, then so is a personal account annuity. The reason why Feldstein, in his presidential address to the APA, “Rethinking Social Insurance” discusses the current system, personal accounts, and means-tested benefits as alternative forms of “insurance” is simply that if the current system counts as social insurance, then so do the alternatives.

Regular commercial insurance works by subsidies across the risk pool. (And is by its very nature “social.”) Premiums are actuarially determined on the basis of bunch of variables like the probability of the occurrence of loss and the likely cost of reimbursing it. It's a kind of bet. The premiums of people who get lucky, and don't experience the relevant kinds of losses, reimburse people who get unlucky and do experience them.

Social Security isn't like this at all. It “reimburses” everyone who turns 65 (or 62 or 67). Like I said, this event isn't a loss; it is in fact correlated with being rich. A system that pays everyone–Warren Buffet, Tom Cruise, etc.– is conspicuously un-insurance-like. It's sort of like a system of home-owners insurance where everybody's house burns down ten years after you move in. There's nobody who gets lucky, so no way to transfer risk across the pool. Rather than being structured at all like regular insurance, Social Security is a system of chained intergenerational transfers — a chain letter, a Ponzi scheme — which is not what insurance is.

If you insist on calling non-insurance insurance, then Social Security is like insurance in the way that any stream of income is like insurance. It makes it possible to pay for stuff that you wouldn't otherwise be able to pay for. But that's not what insurance is, except in the loosest possible sense. You don't think that you have insurance because you have a salary. You don't think you have disability insurance because you walk around with a helmet on. Most people who receive Social Security are perfectly able to “self-insure.” And Social Security improves their ability to self-insure largely because it's replacing income that the government took away in the first place.

The point is: A system that pays everyone benefits upon the occurrence of a near-universal, non-loss event by means of a system of intergenerational wealth transfer just isn't insurance in the paradigmatic sense. If “insurance” just means “making sure that people don't suffer when they don't have enough money,” then ANY system that makes sure that people have enough money is insurance. Inter-family transfers, churches, charities, clubs, etc. count as insurance in this sense. And so do means-tested old age benefits and personal retirement accounts.

Is there any liberal reason to prefer the current system over means-tested benefits or personal retirement accounts? None that I can think of. Most of the people who are freaking about progressive indexing provide a distinctly illiberal reason. Unless we trick the middle class by taking their money away and then giving it back to them later while deceptively framing the whole enterprise as a kind of contractual agreement between a consumer and an insurer, mean spirited voters will starve ol' Ethel and Wilbur.

The first thing wrong with the argument is that there is nothing other than sheer knee-jerk ideological prejudice behind the assumption that a non-deceptive system wouldn't provide big enough benefits. I think the reverse is more likely true. Under a mean-tested system, sentimental Americans prodded on by massive interest groups like the AARP and heavily voting seniors would end up supporting benefits that are way too big, thereby causing a serious moral hazard problem. That's why we need mandatory investment accounts instead!

Almost everyone now thinks welfare reform was very a good thing. The problem before wasn't that Americans are stingy. The problem was that means-tested benefits really were TOO GENEROUS. As far as I can tell, there is nothing whatsoever to the “hard-hearted Republicans will starve gramps” argument other than reactionary boogety boogety.

Second, from a liberal perspective, it's just wrong to use the power of the state to trick the voters. The voters are supposed to tell the government what to do, not the other way around. We get righteously ticked when the Bush administration distributes faux pro-Bush “news” segments, and pays off opinion writers in an attempt to manipulate public opinion, and we should. And any good liberal, who cares at all about public reason, transparency in government, and informed reflective deliberation among self-governing citizens should throw up a little bit every time they think about the Social Security status quo.

So, there's no reason to believe that you've got to trick the voters to make sure they're generous enough. And it's wrong to trick them in any case. Is this really the liberal argument? Seriously?

The closer you look at the current system from anything resembling an authentically liberal perspective the more its appeal recedes. There's just no there there. Institutional path dependency and historical inertia is all it's really got going for it. A free, self-governing people should hope that's not enough.

Adapting Minds

My old prof David Buller is getting some play in the Wall Street Journal [sub. req.] and Kausfiles for his new book Adapting Minds: Evolutionary Psychology and the Persistent Quest for Human Nature. Kaus is right that Sharon Begley's WSJ “review” is fairly overblown, although Buller's book is a more of a threat to Kaus's Robert Wrightist brand of ev psych than Kaus is willing to let on.

Begley makes it sound like Buller has blown up evolutionary psychology. He hasn't. The whole point of the book is to promote a better evolutionary psychology, of which Buller is an unabashed enthusiast. Buller argues against what he calls Evolutionary Psychology (note the caps), which is a bundle of positions staked out by Cosmides, Tooby, Pinker, Symons, et al., including the hypotheses of massive modularity, the “psychic unity of mankind,” etc., together with a handful of well-known empirical predictions, e.g., men prefer young nubile women for sex partners, step-dads beat their kids more, etc.

Buller's attack on all these fronts is extremely impressive, and has me reconsidering my own position on a number of issues. The wonderful thing about Adapting Minds is that Buller has no Gould/Lewontin style political motive for debunking Pinker/Cosmides-style EP. Buller has produced an exemplary piece of applied philosophy of science (and plain ol' science) that aims to get at the truth. I haven't finished quite yet, but I already have the feeling that this is a book that is going to hit lots of ev psych people where it hurts, simply because it takes everything they say dead serious, runs it through the methodological and evidential wringer, and finds it wanting. My guess is that some of the ev psych “results” that Buller has debunked will be reconfirmed by better, future studies. And others will stay dead. But there will be ferment, and we will end up with a better naturalistic picture of human minds. Which is what makes it a great book, and makes me proud to have been Buller's student.

Krugman on Progressive Indexing

Thank you President Bush. This is beautiful.

The important thing to understand is that the attempt to turn Social Security into nothing but a program for the poor isn't driven by concerns about the future budget burden of benefit payments. After all, if Mr. Bush was worried about the budget, he would be reconsidering his tax cuts.

No, this is about ideology: Mr. Bush comes to bury Social Security, not to save it. His goal is to turn F.D.R.'s most durable achievement into an unpopular welfare program, so some future president will be able to attack it with tall tales about Social Security queens driving Cadillacs.

It is simply impossible to square Krugman's worry with the idea that Social Security is supposed to provide “old age insurance.” If we understand insurance very loosely as anything that mitigates the harm caused by a financial loss, or simply by the lack of adequate finances, then a means-tested welfare program for the elderly poor would serve this “insurance” function quite effectively. It would also achieve a much more progressive redistribution of wealth, normally a liberal desideratum.

Social Security reactionaries like Krugman often talk out of both sides of their mouths, on the one hand touting the democratic popularity of Social Security, and on the other hand throwing a fit if the mirage of pointless middle-class to middle-class transfers is exposed for what it is: an illiberal and indefensible manipulation of voters by the political class. What's Krugmans complaint here? That once we throw back the curtain on American old age assistance, and expose Social Security for what it is, a Rube Goldberg device designed to manufacture a sense of middle-class entitlement (that's F.D.R's “most durable achievement”), the American voting public will not support programs for the elderly poor at a level people like Krugman deem adequate. That is to say, if the deceits of the Social Security system are not in place to manipulate the preferences of American voters, then American voters will express their own preferences, and that is not OK. Because . . . why? No, Krugman, THIS is about ideology.

In any case, is there any reason, other than an insane conviction in the rottenness of American voters, to buy into the prediction that citizens with unmanipulated political preferences would not support fairly high levels of assistance for the elderly poor? I simply cannot believe that the massive political energy now being wasted to conserve the Social Security status quo–a regressive tax and a huge set of transfers that achieves precious little progressive redistribution–would not be effective in ensuring a decent level of benefits for the needy in old age. Little old ladies with no savings simply do not generate the suspicion of free-riding and the resentment of parastism that Great Society welfare at its worst managed to do.

Of course, a system of personal retirement accounts would do a great deal to ensure that few Americans are needy in old age. That's the great appeal of personal accounts together with a well-designed means-tested safety net. Fewer people will need help, and those who do need it will get it — and without the waste and anti-democratic deception of “insurance contributions,” “trust funds” and the sky-blackening green tornado of pointless transfers.

Last, it is very encouraging that Krugman chose to compare Social Security reform with welfare reform, the biggest American public policy triumph of the past twenty years.

Tell Me Lies, Tell Me Sweet Little Lies

Julian has gone and written a great little piece on themes I've been struggling at great length to express half as well.

What worries liberals about progressive indexing, and about the shift to a more overtly welfare-like Social Security system, is that welfare benefits tend to be politically unpopular—and much easier to cut than benefits perceived as universal. Social Security, in other words, is a massive Rube Goldberg device, an ornate and utterly superfluous system of transfers from the middle and upper classes to themselves, the sole purpose of which is to construct—and conceal—a much smaller welfare machine for elderly retirees nestled deep in the guts of the meta-contraption. Some defenders of the status quo are now attempting—though they scarcely seem to believe it themselves—to argue that Social Security is no less vital for the middle class. But corner a progressive over a quiet drink and he'll probably admit that, in fact, the only defensible purpose of Social Security is to ensure that nobody retires in poverty. There may be political reasons for cutting a monthly check to Bill Gates when he turns 65, but there are no sane policy reasons.


And I've just discovered this excellent piece by William Voegli, who seems to have been reading my books and my mind. I liked this paragraph especially:

Forty-five years ago William F. Buckley noted liberalism's penchant for turning “the skies black with criss-crossing dollars.” Those dark skies serve a purpose. As more and more dollars fly around, the confusion about where all of them start out and end up increases. The dollars often arrive ostentatiously (Social Security checks in the mailbox) but depart surreptitiously (payroll withholding and employer “contributions” to Social Security). This contrast makes it easy for each household to regard itself as a net importer rather than a net exporter of the dollars that make up this green tornado. The ultimate goal is to leave people believing an impossibility: that an enormous but nevertheless finite number of dollars can be vacuumed up and airdropped in such a way that the vast majority of people wind up gaining more than they lose.

Nicely done! (Other than leaving me wondering if green tornados leave the sky black.) And spot on!

I am truly delighted to see the Social Security-as-ignoble-lie meme catching on. With luck, my own thoughts on the illiberal manipulation at the heart of Social Security will see the light of day in the near future. Upshot: any kind of liberal who purports to cherish public democratic deliberation among free and equal citizens should want to beat down the Social Security status quo like a narc at biker rally.