Re: "The Risks in Social Security" (Washington Post, Editorial, Feb 20)
I take issue with your worries and suggestions about personal retirement accounts. Other nations have had issues in implementing their reforms but in general they are very successful. Where they have had problems they are instructive to pitfalls we should avoid. Direct government investment in the stock market ignores a key reason for personal accounts, namely actual ownership by citizens of their own savings. Furthermore it's hard to imagine a bureaucrat successfully choosing an investment portfolio and doing so without political bias. Hand-wringing about every possible cost and risk is a recipe for doing nothing and for long-term financial disaster. As Don Boudreaux taught me, in economics we must always ask: "Compared to What?", and in that light moving towards personal retirement accounts and away from a failing pyramid scheme is compelling.
re: Where's the Faith In This Agenda? (Washington Post Op/Ed: E.J. Dionne, 2/19)
Mr. Dionne should be cheering about the lack of government emphasis on faith-based charities. It's not because there's anything wrong with faith-based charities; they are a strong positive force especially among people who truly need help. The problem is the government's involvement. When Uncle Sam says he will do something, he squeezes out the private sector financially and motivationally. A perfect example is Social Security. Uncle Sam starts a retirement plan and Americans now have a nearly non-existent savings rate. Financially, Uncle Sam taxes away what would be savings and motivationally he makes people think he'll take care of them later so they don't need to save anyway. The same is true with charitable funding, faith-based or not: It's the worst place for government participation because it will cause no end of bad unintended consequences to institutions that conservatives and liberals alike truly care about.
To the Editors:
Ward Churchill's comments comparing 9/11 victims with Nazis were truly repulsive and demonstrative of his ignorance. Furthermore, he should be fired...but not because of those comments. Although it was that essay which brought Churchill into recent prominence, it is the information discovered since then which is cause for him to be fired. First, he apparently lied to get a job at Colorado, taking a job under an "equal opportunity" program from a true native American. Second, he does not have, nor did he ever have, a PhD which is a standard requirement for his tenured teaching position. Third, to get tenure he signed an oath to uphold the Constitution of the United States and of the State of Colorado including not condoning violence against the government, an oath he has demonstrably violated many times. This last point is critical, and to be clear it is absolutely not a violation of First Amendment rights. Churchill signed the oath voluntarily as a condition of tenure, and the legality of the oath has been tested all the way to the Supreme Court who found it valid. Churchill is an evil person who should be fired from the University of Colorado, although not for the reason most people are discussing.
Re: A Political Case for Social Security Reform (Opinion, Gary Becker, 2/15/05)
It is with some trepidation that I argue with a Nobel Prize winner, but Mr. Becker is incorrect that there is no economic gain from privatization. Allocation of capital through financial markets is far more efficient than through government spending. Also, economic decision making by people with property rights in their retirement accounts are more efficient than politically motivated government spending. Mr. Becker also misses important political points about inherent discrimination in the system (against low-wage workers and minorities) and widespread misunderstanding about the true nature of Social Security receipts (no different from general revenue, not invested in anything, and with no future guaranteed payment). While I applaud Mr. Becker's emphasizing the government's use of the current Social Security surplus to mask the deficit, he does us all a disservice to say that there are few other excellent reasons to reform the system.
Re: "One Class Action Cheer" (Wall Street Journal Editorial, Feb 14)
Although it's great to see real movement in tort reform, I can't help but shake my head at the further creep of the Federal government into all areas of our economic lives. "Federalism" does not mean "rule by the Federal government". Along with a prescription drug benefit and the massive Federal move into education policy and funding, bringing class action suits into Federal court continues our dismaying drift away from the Founders' basic principles which have served us so well for over two centuries.
PUBLISHED IN THE LA TIMES FEB 16, 2005
To the Editors:
Re: "The Meathead Proposition" (LA Times Op/Ed, Michael Kinsley, Feb 14)
Meathead was not an economist, and Michael Kinsley would do well to avoid his economic arguments. In a capitalist system, wealth can be created; 2 plus 2 can equal 5 eventually, something that is never true in a ponzi scheme like Social Security. Beyond this, Kinsley again misses some major points: First, If private accounts forced an equal amount of bond buying, that is not the same as leaving the program alone because the bond buyer actually owns something. Second, Social Security discriminates against traditional Democratic constituencies such as low-wage workers and working women. Third, the current Social Security surplus masks the true size of the Federal deficit, allowing even more government profligacy. Not only are Kinsley and Meathead wrong about the economics but they also ignore many other excellent reasons to reform the system.
As the political party which claims to be the party of “the little guy”, low wage workers, minorities, and women’s rights, one wonders whether it is ignorance or politics causing the Democrats to oppose to reforming Social Security, a program which massively discriminates against their stated constituencies.
Social Security discriminates against low wage workers. Payroll taxes are typically the largest tax paid by low income workers who often pay no other income-based taxes. These workers typically spend all their income on the basic necessities of life, leaving no room for savings or investment. Social Security is not likely to return more than 1% annually whereas over any reasonably long time period, a conservative combination of stocks and bonds have returned at least 5 times that much. If personal accounts were available, these workers would be able to generate true retirement nest eggs which could keep them from being impoverished retirees.
Social Security discriminates against women, especially working women. Women tend to earn less than men over their lifetimes due either to wage differences, time off to raise a family, or both. The “dual entitlement rule” means that the lower-earning worker in a couple, most often the wife, get benefits as a worker or as a spouse, but not both. And a widow may receive the benefits she has earned or what her husband had earned, but not both. Thus, working women and widows end up with lower benefits than stay-at-home women in a household with the same total income. Divorced women are also discriminated against, not being entitled to spousal benefits if they were married for less than a decade. The problem for women is exacerbated by their longer life expectancy causing retired women to be generally poorer and for longer than men.
Social Security discriminates against minorities. In addition to minorities often being low-wage workers, they have shorter life-expectancies than the average American (although racial differences are small for people of similar incomes.) This means that minorities, especially African-Americans, collect their benefits for fewer years than the average worker and constitutes little more than a transfer from minority workers to white workers.
Due to the structure of Social Security, women are about twice as likely as men to retire in poverty, with black women then twice as likely as white women.
But it gets worse: Whereas higher income workers invest in 401(k) plans and IRAs which they own and can bequeath, low income workers have only their Social Security benefits in which they have no property rights. If a high wage worker passes away, he or she is likely to have retirement savings which can be passed along to a surviving spouse or children. Other than as described above for a spouse, a low wager worker who passes away leaves no inheritance of Social Security benefits; the government simply never has to spend that money. So, higher income workers can maintain their next generation’s financial status while the current Social Security system has the pernicious effect of preventing a low income worker from being able to raise his children’s standard of living.
Social Security keeps poor people poor.
The ongoing discussion of stock market returns, high-dollar transition costs, benefit cuts and tax increases makes the issue sound like Wall Street versus Main Street, and misleads citizens into thinking that the primary beneficiaries of Social Security reform will be rich people, stock brokers and Republicans. The truth is that personal retirement accounts bring traditional Democrats the greatest change in quality of life during retirement and in the ability to improve their children’s lives. It’s scandalous that Democrats’ elected representatives, whom you might expect to be screaming about injustice, refuse to reform the Social Security system as it continues to discriminate against low income workers, women, and minorities.
Re: Hooray for the Deficit (Wall Street Journal editorial, Feb 8, 2005)
To the Editors: Your editorial "Hooray for the Deficit" (2/8/05) implies one of the best but least-discussed reasons for at-least-partial private ownership of Social Security "accounts": The current Social Security surplus is used to mask the true deficit between government spending and what most people would consider revenues intended to fund it. Rather than bemoan the additional borrowing the transition would require, we should cheer the fiscal transparency it will create while understanding that such clarity about true government profligacy is one of the major reasons fans of big government will oppose the reforms.
Please take a look at my online photos from an amazing trip to Capetown, Namibia (most of the western half of the country), Victoria Falls (the Zambia side), and Sabi Sabi private game reserver (bordering Kruger Park in South Africa.)
Feel free to e-mail me with any travel questions!
In the style of William Safire (I'll be sad to see him go from the NY Times Editorial Page), here's a conversation I can imagine having happened between George W Bush and Karl Rove after the 2nd election:
W: Well, Karl, that was pretty close!
K: Sure was, Chief.
W: Why do you think we had such a hard time when the economy was doing well, even with Iraq being a bit of a challenge?
K: All that matters is that we won...why we won seems unimportant now.
W: Well, I don't think so. I ran the first time on important principles like free trade and limited government. I don't know much, but I know I believe in these things.
W: Well, on your advice the first term was full of steel tariffs, farm subsidies, and the largest one-time increase in entitlements with the medicare drug benefit. You said I needed to do these things to win even though they didn't go along with my beliefs.
K: Well, we won, didn't we?
W: Yes we did, but I don't know if it was because or in spite of my following that advice. I mean, we beat Gore because people thought he was a man without principle, and then you immediately coax me into abandoning my principles for political gain.
K: It's a tough game we play.
W: Well, I'm not playing any more. There are certain things that are just right and I'm not going to avoid them. It's easy now because I don't have to run for anything. I wish it had been easy last term because in hindsight I don't think those big government laws I signed did anything to help me.
K: What about the future of the Republican party?
W: I'll take the heat for pushing Social Security reform. Once that gets traction the rest of the party can follow when they see that people are behind me on this one. This issue is a winner and is a great way to show the country that big issues can be tackled. If we get something done with Social Security, that will give us good leverage to start talking about income tax and medicare reforms.
K: I hope you're right. It's a big gamble, but the payoff could be big if you're right.
W: I'm not embarrassed to say that I care about my legacy and I can think of no legacy I'd be prouder of than being the first president to cause major reform in the socialist policies of the New Deal, the first to step on the "third rail of politics" and not find deadly current....and boy do I hope this Iraq thing works out.