Dominoes vs. The Great Leap Forward

If you missed Nathan Smith's TCS article on the ongoing saga of Social Security reform, do check it out.

Bush's plan for carve-out private accounts would have amounted, institutionally, to a sort of Great Leap Forward. DeMint's plan will set in motion incremental changes which may be compared to knocking down a row of dominoes. The first domino to fall is the payroll tax surplus in the Trust Fund. The second domino will be the excessive scheduled benefits that drive the program into long-term bankruptcy. The third domino will be the restriction of personal retirement accounts (initially created as lockboxes to stop the raid on the Trust Fund) to T-bonds. When that falls, all Bush's Social Security reform goals will have been accomplished, and we'll have a system of forced savings and private accounts.

Suppose that the DeMint plan passes and personal accounts are created from the surplus, then fast-forward two years. Now every working person under 55 — well over 100 million Americans — will own a personal retirement account consisting of US Treasury bonds. Since everyone and his brother knows that Social Security can't pay promised benefits in the long run, most young people will see these accounts as their sole source of real retirement security. But they'll also realize that the personal accounts are too small to underwrite a comfortable retirement. Moreover, they will learn that new money will cease being deposited in their accounts after about 2018, when the Baby Boomers' retirement puts an end to the surpluses.

At this point, there will be pressure from younger voters to increase the size of their personal retirement accounts. If, up until now, the Social Security program has consisted of one-sided class warfare, with the old fighting against the young and the young not defending themselves, personal accounts will clarify younger generations' stake in the fight.

Nice account of what perhaps should have been the strategy all along. I don't have a good independent sense of what DeMint's odds are. Probably not great, but better than than is being reported.

  • Loury makes only very brief mention of his own experiences with the criminal justice system.

    In case anybody’s interested, here are some of the details:

    “…assault charges were brought against him by a twenty-three-year-old Smith graduate, who-unbeknownst to Loury’s second wife, Linda, an economic, professor at Tufts-had been living at his expense in a Boston apartment. The telephone was registered under his name; local papers called it a ‘love nest.’ The woman who showed up in court wearing a neck brace, accused him of dragging her down four flights of stairs, shredding her clothes, and throwing her books and papers out the window. (The charges were eventually dropped.) Then, in late November, he was arrested for possession of marijuana and cocaine. On searching his car, police found a home-made pipe. A local reporter chanced on the arrest while reading the police blotter, and within days the story had been picked up across the country. Loury was again in the news, this time with potentially career-stopping headlines. As court dates and drug buys swirled around him, Loury was emerging as exactly the kind of person he had warned black America to avoid: a violent, irresponsible, drug-using womanizer who put his own pleasure above the demands of his career and the needs of his family.”

    Shortly thereafter, Loury “pulled a Colson,” so to speak, and got “born again”:

    “…religion…has become increasingly important to him since 1989, when he was ‘born again.’ After a life spent relishing the twin pleasures of personal hedonism and professional success, Loury says, he has found more authentic fulfillment through faith even as he has discovered a profoundly illiberal truth: ‘My pursuit of personal freedom-my constant quest to be free of constraint, to be unfettered-has been the source of much of my unhappiness.’ Only religion, Loury contends, provides the emphasis on work and character which is so desperately needed in America’s ghettos. To synthesize the best of black nationalism and Christian morality, he has proposed a hybrid that he calls Christian Nationalism…”

    *The New Yorker*, 5/1/1995

    • I should add that the really sad thing about Loury’s piece is that there are still people who find this sort of thing “fascinating” and “hard-hitting” when, in fact, it is simply the latest iteration of what has been the conventional liberal wisdom on African-American crime rates for at least 40 years now – conventional liberal wisdom that has dictated an endless series of policy failures.

      The right’s “lock’em up” approach is the only thing that actually seems to have achieved its avowed goal here, here – i.e., reducing crime rates.

  • lyca

    Hang on, this is hard to believe. I know the New Yorker doesn’t have archives, but you don’t by any chance have some kind of link?

  • lyca

    On the falling crime rate — which was remarkably deep and persistent through the ’90’s –I don’t think it’s that simple. An article from The Guardian notes that the fall in crime happened simultaneously all over the developed world. How could it then have depended on good US policy? The one constant is that over that period, every developed country in the world reported more black market drug use. Maybe crime didn’t fall, but was just increasingly going unreported. In the US, the “clearance rate” — the percentage of cases for which police arrest or identify a suspect — has gone down. (See here . )
    So we might be skeptical about what’s going on.

    Now there are studies that show that increased incarceration does Granger-cause a decline in crime rates, so maybe you’re right. But the crime rate in NYC started falling under Dinkins’ mayorship, before all this Republican “lock ’em up” stuff.

    And even if the right’s approach does reduce crime, we’re left with two questions. First, what does increased incarceration cost us? Second, could we also reduce violent and property crime by decriminalizing drugs?

  • Richard Pointer

    I have read both and Loury’s book (2008). I agree with Lott that you have to consider the black community, but I also think that Loury is correct about the negative externality inflicted upon the urban ghetto by the drug war; white parents get a feel good ‘my kid won’t do something illegal’ pat on the back and the African American community gets an ‘upped ante social problem’. I wonder if Lott has researched the effect of higher punishments on murder rates, because he brushes it aside by saying it is costly. Well yes but if you calculate it like a law and economics Economist, poor people’s death count less… Maybe I am being too harsh on him.

  • Looking over the raw ICVS crime data, Lott sure picked some odd stats for the tables in his piece:

    http://rechten.uvt.nl/icvs/pdffiles/ICVS2004_05.pdf

    It’s appears that he cherry-picked outlier data to “prove” his point that “the U.S. looks remarkably safe.”

    The 2003-2004 survey (table 12) puts the U.S. sexual assault rate at the very top of all countries surveyed, for example.

    • Dave

      Nice work. I’d call Lott’s claims on crime rates totally busted.

      It is interesting that the US does have a relatively low robbery rate (right now). But with the sexual assault rate the highest, and the assault/threat rate also pretty high, the low robbery rate could just be random or an artifact.

      • John Thacker

        I’d say that the two of you are engaging in your own cherry-picking.
        The report indicates that the US overall victimization rate is near the average.

        The 2003-2004 survey (table 12) puts the U.S. sexual assault rate at the very top of all countries surveyed, for example.

        Of course, as the ICVS report itself notes

        “Measuring sexual offences has proven to be difficult because of cultural
        differences in what type of behaviour is perceived by female respondents
        to constitute an offence.”

        and later on page 77

        The ICVS measures on sexual violence,
        then, need to be interpreted with more than usual caution. An additional
        reason to exercise great caution is the recurrent finding that rates of sexual
        offences of countries are less stable over the years than those of other
        types of crime. This finding may indicate that responses to the question
        on sexual incidents are susceptible to events or media campaigns that
        may have temporarily raised awareness about this issue.

        They also note that there’s a particularly low response rate and low rates on these numbers (for sexual assault), and that some results on the raw numbers contradict wider, more detailed studies. (Such as developing countries have relatively more partner abuse than developed countries.)

        Also note that the US swung from very low in sexual assault in 1999 to high, whereas Estonia plunged from very very high to low.

        The US also has a low pickpocketing rate, especially, to go with the low robbery rate.

        Interesting cherry-picking argument, arguing that every low crime rate for the US is random or an artifact, and then focusing on the high ones.

        But in any case, the US has long had a history of high violent crimes and of locking people up. None of that means that the two things cause each other.

        • John,

          Lott himself calls out the “low” sexual assault rate in the U.S. as proof America should be locking up even more brown, scary people:

          “The International Crime Victimization Survey (ICVS) indicates that for the violent crime categories of sexual assault, robbery and aggravated assault, the U.S. looks remarkably safe. [3] This is even truer for the more serious categories of sexual assault and robbery. Prison is costly, but one could only imagine how much higher American crimes rates would be without it.”

          Lott took data from a report that surveyed 10 crimes in 28 countries over 5 years and picked 3 crimes, 8 countries and 1 year to “prove” his point.

          I could easily take a different narrow slice of data from the same report Lott used and “prove” exactly the opposite of what he is arguing.

          Isn’t that cherry-picking defined?

          • John Thacker

            Isn’t that cherry-picking defined?

            Yes, he was cherry-picking by using the previous survey that had a very low number for sexual assault. All my complaints about using it stand for him as well.

            I didn’t say that he wasn’t cherry-picking. I said that you two were engaging in it as well. Is it right to cherry-pick because he was?

          • I offerred up my post in the spirit of Karl Popper and his black swan, John.

            Stewart vs. Cramer has got me worried that every “fact” you see presented in the news and the internet is really just self-interested piffle.

            Whenever possible, I’m going to try to look at the raw data instead of someone’s interpretation of what it means from now on.

            If that makes me a cherry-picker too, well…call me Red Fingers.

  • The Grauniad was, as usual, lying. Crime rates have soared in the UK while they have fallen in the U.S. They now rival or surpass us in just about everything but homicide (a tiny percentage of violent crime).

    There’s an official U.S. gov. study comparing crime rates in the U.S. & the U.K. in recent years, which you can google as easily as I can. Please give it a try before asking me to do it for you.

  • lyca

    Okay, sorry. I just took the newspaper at its word. And I’m sorry about doubting the New Yorker article — I didn’t know that story and it seemed shocking.

  • Jason Malloy

    There are only two real reasonable purposes I can see for prisons: The first is deterrence, and the second is to sequester dangerous people away from society. But being dangerous is a biological condition. Women aren’t dangerous, and old people aren’t dangerous., but some young, low status, unmarried men get very dangerous. The difference is entirely biological. And if the problem is biological, the solution can be biological. In fact, we already pretty much have this solution: it’s called chemical castration, and it virtually kills recidivism among sexual offenders. I know of no studies for its effects on other kinds of violent offenders, but the null assumption is the effects would be similar. Sexual offenses and other violent offenses stem from the same psychological pathway of impulses.

    So here is a modern alternative to prison: If an offender is sentenced to, say, 5 years in prison, they will be offered the choice to either serve their time, or to remain free if they volunteer for the reversible regimen of feminizing chemicals for a time equal to their sentencing. Basically an updated form of probation for more serious crimes. Another option might even be total freedom in exchange for surgical castration.

    While this type of option raises the cruel-and-unusual flag for some, the major concern it creates is the exact opposite for me: while it would no doubt prevent future crimes from the castrated person himself, the castration penalty is so non-threatening, so un-cruel compared to prison that it would probably also raise crime in the general population by serving as a “get out of murder free card” for many others. Pre-op transsexuals would basically get a free murder card. And many men, I’m sure, would gladly give up their own testicles for the murder of their choice.

    The balance is probably still in favor of the castration option.