Dear Paul Krugman (from Angry Bear): Please Read This About Social Security

Sometimes President Obama upsets me. Especially when he follows the illegitimate framing of the issues surrounding our budget, deficit, and debt. It is worth noting that Social Security DOES NOT contribute to the deficit, the debt, nor any real (or manufactured) budget/debt crises. If we want  to cut government spending, we need to cut UNFUNDED government spending (which is largely the cuts called out in sequestration: You know, the major cuts to the military and pentagon budgets) not FUNDED spending...

So, I particularly enjoy when real economists take the time to write it up, like this blog by Dale Coberly of Angry Bear writing about Social Security, with the hopes that it will be cross-posted by Paul Krugman who has a much wider audience. A very well supported post that shows that Social Security shouldn't even be in the discussions about budgets and deficits, etc. 

So, read the article here, but in summary (the key points!):

Social Security has nothing to do with the deficit...  

... and therefore should not be part of the "deficit reduction" hysteria.

Social Security is not going broke.

The Trust Fund is NOT Social Security. It does not matter at all when it "runs out."   

The "Eight Trillion Dollar Actuarial Deficit" can be paid for by raising the payroll tax eighty cents per week each year.

Social Security was designed...insisted upon by Roosevelt...to be worker paid: "So that no damn politician can take it away from them." 

One has to only follow the money to see where the "Big Liar's" desire to take SS: Remove it from the public's control (via the government) to private control so that a few can extract (extort) money from the flows into the fund.  

No doubt this will be much wider read if taken up by Mr. Krugman (as Angry Bear hopes!), but I am more than willing to spread the word if I can... 

As Mr Coberly closes:
The Big Lie is that "Social Security is going broke, causing huge deficits that will burden our children."
Tell the people.

Read the article, and please, Spread The Word!   

Time to Change Course, Rebuild Finance and Debate 'What is The Good Life'

Jamie Galbraith is one of my favorites: He speaks clearly and holds nothing back. Elsewhere he has called for the destruction of the Financial System and a clean rebuilding of it. Makes sense, since in its current form it serves us not, and instead extracts the value of our labor and output. Finance should be a utility: Moving money from where it is to where it is needed. However, the reality is that Finance instead preys upon the majority, stripping the value from our assets (via loans and speculation), pocketing money they create akin to Counterfeiting.

As Finance grows and extracts all they can from a particular market, it continually moves on. Currently its intended prey is our public institutions: Social Security, Medicaid, Medicare, and even perhaps our public lands. Through its tools in the House and Senate, they pretend that it is the only way.

But there is a another reasonable way of viewing the current situation. Finance promised us jobs and prosperity if we cut taxes on Capital and High Incomes. We did so in 2003, with dismal job growth and stagnate gains since. It was a loan that didn't pay off. It is time to call it in: If we have learned anything over the past 20 years is that leaving money in the hands of the Finance industry and the excessively wealthy does society no good - and there is no credible argument that the majority of society need to give anything up to pay for the misdeeds of the members of the Finance Industry.

Galbraith here explains the global state of affairs very nicely, and reveals in commonsense terms how what is happening in America is not distinct or separable from what is happening in Europe - that Finance is currently in the advanced stages of destruction of the World Economy. Although speaking to a European Audience, he reveals many things about the global economy, the US Economy, and exactly how and why there are different current outcomes, but that all is not stable...

Galbraith: Change of Direction

Thinking Empathetically

The genius of Sherlock Holmes was seeing the pattern that wasn't there – recognizing that the dog didn't bark, but should have, that something was missing from the clutter of the room, etc. It turns out that is a devilishly difficult thing to do: Our minds place the available information into patterns, but gloss over anything that isn't readily handy. Researchers have shown that we can regularly find a pattern in a sequence of numbers or shapes, but seldom do we recognize a pattern in the missing numbers or shapes.

Not only do we seldom see these patterns, but due to the way our minds work on available information, we even less frequently notice when we have blindly omitted even considering the holes. This crops up in our everyday interactions and conversations, in the ways we view ourselves and others.

Listening to a group conversation yesterday, I was struck by how this mechanism blinds us to possibilities for how others think and feel, for what may motivate them. Instead of recognizing that they didn't have the information about others' motivations and desires, and taking that into account, it was almost universally common for the various speakers to assume that the others either didn't have motivations or desires, or their motivations and desires were only of the most basest sort.

If we stop and consider, however, it doesn't make sense that only we have positive motivations, desires, hopes, fears, biases, and that our motivations, desires, etc. are unique and not universally shared by the majority of those we recognize as human. Truly, this is the key to thinking empathetically: To believe and then think and act as though those around us have dreams, just like us; that they have fears, just like us; that they have motivations and desires, just like us. That where we have found our lives shaped by forces outside of our control, perhaps they, too, have had their lives buffeted and diverted, not by lack of motivations or dreams, but in spite of them.

We are quick to give ourselves a pass when the outcome of our lives doesn't match the inputs we've made: We know the details, both of what motivated us and what outside influences either helped or hindered our achieving our goals. But we are equally quick, since this intimate information is seldom available about others we see, to assume that the lack of information is proof of lack, and that those others are deficient in those qualities, rather than realizing the truth: We just don't know.

Upon reflection, I often wonder if my own motivations and desires would by themselves be insufficient for achievement, if it weren't for the influences and stabilizing forces of the people in my life. If it wasn't for those who looked to me to provide education, shelter, and love; if it wasn't for those who looked for my advice and valued my experience in my job or my community; if it wasn't for those who demanded that I be a good friend and a good example; would I be all that I am?

So I give thanks today for all of those people who have shaped and guided my life, for those who have taught me and those he needed my teaching, for both change me. Thanks for those who have loved me, and those who have requested my love, for one is not complete without the other. Thanks for those whom I have needed, who have consoled me, encouraged me, and challenged me; and for those who have needed and accepted my consoling, my encouragement, and my challenges to them.

And I encourage you to consider that the success in your life is likely due to the richness of the people surrounding you; to the quiet, often unspoken motivation living up to their expectations places upon you and aids you; and overall, to think empathetically, to become aware of the lack of information you have about those who are struggling, and rather than discount their internal processes, consider that perhaps the determining forces are external, that they could be more if only they had a rich network of people and community. Just as those external forces awaken motivations and dreams in us and alleviate our fears, the less successful others in our community have motivations and dreams, and rather than condemning them by failing to recognize that we don't have the proper information, we need to consider always that they may not be so different from us.

Modern research may have illuminated the mechanism and given it a name, but the ancients knew and understood it well, and crafted a simple reminder to overcome this availability bias. So, today, as we bow our heads in humility at what we have gained during our lives, I remind you to retain the humility for the knowledge you don't have, and to remember:

“Judge not an individual until you have first walked a mile in their shoes.”

Enacting a Pigou Tax

The growing inequality in America is probably one of our greatest problems – from reduced health outcomes to increased violence to reduced beneficial productivity (think of the quants who could have been working on energy or health care but instead were figuring out ever more creative ways to fleece the unsuspecting pension fund of its money), grotesque increases in inequality degrade a society in a multitude of ways. However, an equally difficult problem has been to find a reasonable solution.

Interestingly, British Depression Era Economist Arthur Pigou floated a possible solution to neutralizing undesirable externalities: Tax them! (An economic Externality is a side effect of a transaction that costs a third party – pollution is the most common example.)

In this well-presented essay, Liam C. Malloy and John Case explain more fully the idea, what it would imply, and present even some 'whys' – Why we would want to do this, Why it would help, Why it is reasonable for a society to take this action.

I was particularly struck by the number of topics we've discussed over the past year: The fact that higher taxes do NOT correlate with reduced economic productivity; The fact that CEO's who are paid 300-400 times their average workers are not producing at 300-400 times the average rate (in fact, likely 'earning' their income by lobbying the government for breaks or handouts for their company or sector); The fact that 80% of the productivity growth of America's economy over the last 35 years has gone to the top 1% (as pointed out in the article, if the 90% increase, 2.1% per year had accrued to everyone, today's median household income would be $85,000 instead of the $50,000 that it is.)

The only omission I easily spotted was failing to call to equate income taxes on labor (wages) and capital (capital gains). There is no good reason to give preferential treatment to money earned via investment, and many, many reasons to tax investment income at exactly the same rate as labor income. Left unsaid is that for the Pigou Tax to be most effective, it would have to apply equally to all income, regardless of source. But, that is a change that needs to occur regardless of our enacting a Pigou Tax.

Enjoy, and spread the word! Want to do something positive for America's future? Advocate for those actions (like this) that would reduce the grotesque, almost third-world, levels of inequality currently present. Our country does best when everyone works towards a common goal, and when everyone, even the rich, acknowledge and act like we're all in this together.

Leonardo Da Vinci Exhibit

We stopped by the Da Vinci exhibit at the Denver Pavilions yesterday. On display there are over 60 recreations of Da Vinci original machines – many believed to never have been executed before. From his fertile mind sprang ideas for gears, bearings, chains, and flight. Although the tools and materials available during his day (late 15^th century) were inadequate to realize many of his inventions, the ideas were sound.

For instance, he developed plans for a bicycle, the rear wheels connected to the operator's pedaled crankshaft via a flat chain – a chain that would have been impossible to make in his day, but closely resembles early bicycle (and other machinery) chains.

Some of the best aspects of the exhibit are those interactive inventions sprinkled throughout. I took the kids, and they marveled as they played with gear systems, chain systems, bearings, and thoroughly enjoyed assembling the interlocking bridge that requires no fasteners. Of course, too, they wanted to spend much more than time than would have been polite in the 360 degree mirror room whereupon we could all gaze upon our backsides...(And see, for once, what really was behind our ears!)

They give guided tours every hour, and we drew a student art major who propelled us around the exhibits with her animated explanations, her easy knowledge, and her nearly breathless wonder at the accomplishments of the man: Whether the leap in progress was mechanical, imagination, or artistic, her enthusiasm was infectious, especially for the kids. Written placards next to exhibits really are no match for the spoken account from a knowledgeable guide – especially when the guide will entertain questions.

Naturally, on the way out, we stopped by the gift shop to see if there was something which would help us remember our trip. Puzzles, games, models of the machines, t-shirts: It seemed they had it all. But the item that intrigued my son the most was a simple black notebook: faux leather outer binding yellow, parchment-like pages. I purchased each of the children one, along with M. Gelb's book, “How to Think Like Da Vinci.”

The inspiration from the trip was on full display today. Early this morning my 12-year-old mastered writing in mirror script to be more fully like Da Vinci. Then, after reading a chapter of the book, he started imagining, writing, drawing in his 'notebook', creating his inventions. Later he tried bringing one to life (with modest success!), illustrating that often the best gift we can give our children is a blank book along with the permission to fill it up with their ideas, their imaginings, their life (along with the necessary string, tape, glue, cardboard, etc.!)

Da Vinci didn't start receiving a formal education until he was 14 years old. Prior to that he developed his process of disassembling, assembling, drawing, thinking, and learning about the ways in which the world works and how to illustrate them, and how to combine known parts into previously unknown creations. He didn't suffer under the need to get an 'A': he was driven, it appears, from a formidable curiosity, and perhaps the realization that, as a bastard child, without learning all he could, making his way in the world may have been very difficult. It is hard to know what drove him, but if even a little of that drive and inquisitiveness can be transferred to our children, and will stick, then Da Vinci and those who brought the modern exhibit to life are my newest heroes.

Romney Will Say Anything

I didn't realize how ripe of a take-down there was awaiting Mitt “Robme” Romney, but it's all out there just waiting for someone to put it all together...

Mr. Romney claims that he will create 12 million jobs during the next 4 years if only we elect him as president. He doesn't say how he'll create the jobs, just elect him, sit back, and find out...

Nail #1: Since he won't specify, we are enabled to speculate. And some big guns have speculated, like those fine folks at Macroeconomic Advisers and Moodys Analytics. Their estimation: The economy, regardless of the president will add 11.8 million jobs over the next four years. So, that's only 200,000 for you?

Mr. Romney has repeated used the meme that he was a job creator while working for Bain Capital, that he knows how to create jobs...

Nail #2: Search for the jobs he created, and you will search in vain. But you will find cogent analysis of his work and methods there, by no less a business standard than Bloomberg:

What’s clear from a review of the public record during his management of the private-equity firm Bain Capital from 1985 to 1999 is that Romney was fabulously successful in generating high returns for its investors. He did so, in large part, through heavy use of tax-deductible debt, usually to finance outsized dividends for the firm’s partners and investors. When some of the investments went bad, workers and creditors felt most of the pain. Romney privatized the gains and socialized the losses.

So, Mr. Romney is willing to mislead on his record, mislead on what he'll actually accomplish while at the helm (if we give it to him). But, he has served in government before, what did he accomplish there? Surely that would give him some bona-fides...

Nail #3: As Governor of Massachusetts, which as candidate Romney he claimed he would initiate a jobs program "second to none in the history of the state.” But, the history, as capably outlined by Jim Kaplan of the Tampa Bay Times: “When Romney's four-year term expired, the job growth rate of 1 percent lagged four points behind the national rate.” So, even though he has promised this particular outcome before, last time he utterly failed.

During the second Presidential Debate, Mr Romney asserted that “Government does not create jobs”.

Which leads us directly to...

Nail #4: Mr. Romney: If the government does not create jobs, how the he** are you going to create jobs as president of the United States? You didn't create jobs when you were in the private sector, you failed to create jobs the last time you were in government, and you are willing to lie to us about what will happen even though, by your own assertion, it is impossible for you to accomplish that! What kind of a man are you?

I believe four nails allows us a roundtrip on this particular coffin. Sleep well, Mr. Romney. I don't believe there is a place in heaven for folks like you. May I suggest you read Neil Gaiman's collection of shorts, “Smoke and Mirrors”. There is a particular story in there about a place where time has no meaning...

Free Will and Democracy

In 1797, the Reverend Timothy Dwight, then president of Yale University, argued “...that if God had decided from all eternity that an individual's fate was to die of smallpox, it was a sin to interfere with the divine plan through a man-made trick like vaccination.”

Sound familiar?

Everyone has their own conception of what a god or God is, how he or she interacts with the world. We cannot possibly address all concepts in a morning essay. However, the line of thinking implicit in Reverend Dwight's argument, and present too in Candidate Mourdock's recent comments on pregnancy resulting from rape, is of a god that influences or guides our behavior.

Probably the most useful image of God in this instance is of the Platonic God: The God represents in his or her divine instance all that is good or perfect. To illuminate our behavior, we have only to ask, “Is my behavior emulating what would be the behavior of one who is perfect, and perfectly good?” If so, the behavior is likely acceptable, if not, one may wish to reconsider.

But that is not the god that Dwight and Mourdock envision. Their god has a plan, and interfering with the plan is the wrong, for the simple reason that we cannot know the plan aforehand, and it is then assumed that what ever occurs is the plan!

Notice, however, that the God of Dwight and Mourdock is indistinguishable from a non-god, indistinguishable from the absence of any god. It is impossible to discern, using their logic, that there is a god in the universe. Saying that a pregnancy resulting from rape is God's will is logically equivalent to saying that a pregnancy resulting from rape is Nature's natural outcome – there is no test that could be administered to determine the difference.

Mourdock's conclusion rhetorically begs the question...

But the line of thinking is more insidious than even that. Implicit in reaching the conclusion that we shouldn't interfere is to deny the concept of Free Will, the concept that we can (and should!) make our decisions and choices upon the best available information currently at hand.

Present at our nation's founding were individuals steeped in Enlightenment ideals, individuals who were willing to place Free Will front and center of our public and political discourse. A Democracy cannot exist without Free Will, and the exercise thereof. Freely we can make arguments for or against our behaviors, for or against laws and policies that may constrain that behavior, and freely we can submit to the conclusions. However, democratic discourse has no place for vacuous appeals to invisible authority, no place for attempts to eliminate the exercise of Free Will from individuals and replace it with one person's concept of what should be.

People who exhibit thinking like Mourdock (we can add Todd Akins as another example) have no place in public office. Their underlying thought processes hew back to the days of predestination, back to unquestioned submission to authority. Their thinking denies Free Will, denies that others have the right to exercise it, denies a foundational cornerstone of Democracy.

In so doing, they reveal that they are unfit for public office in our Democracy.