The Monday Morning Teaser

The featured article this week will look at the visionary economics of sustainability: How would our whole society have to change if we accepted that each generation had to leave the planet more-or-less as we found it? In other words, what if we aimed not for growth — more and more people consuming more and more stuff and leaving more and more waste behind — but for a steady-state economy whose output was consistently sufficient to support a stable population?

The text for that sermon is a new book by Rob Dietz and Dan O’Neill, Enough is Enough.

The weekly summary calls attention to: the massive industrial accident in Bangladesh, Jason Collins’ coming out, atmospheric CO2 nearing 400 ppm, and how the Bush Library continues the parade of BS that characterized the Bush administration.

I spent the weekend enjoying Portland, Maine (the best little city in the Northeast) rather than doing my background reading and prep work, so the Sift will come out a little slowly today.

May 6, 2013 – 8:24 am Categories: Morning tease | Post a comment

Immune to Evidence

Our political polarization and dysfunctional public debate is largely driven by convictions and worldviews immune to contrary evidence and expertise.

— Tom Allen, Dangerous Convictions (2013)

This week everybody was talking about the Tsarnaev brothers, Chechens, and Muslims

One measure of prejudice is how easily an individual can be reduced to a group stereotype, so that he shares the collective guilt of his people and passes his guilt on to them.

I’m old enough to remember the 1980s, when the Irish Republican Army was one of the most feared terrorist groups on the planet. (An engineering conference I attended in Brighton was originally slated for the Grand Hotel before the IRA blew it up. You can get the flavor of the times by watching the classic 1980 film “The Long Good Friday” in which an English gangster learns that the ordinary rules of gang war don’t apply when you cross the IRA.)

Know what I don’t remember? Public discussions about whether the Irish are terrorists by nature or Catholicism is a religion of violence. (I’d love to hear Irish Catholic Bill O’Reilly respond to those questions.) That’s the measure of our prejudice against Muslims and Chechens, or perhaps of the privilege our society accords Catholics and the Irish.

In fact, many of the loudest Islamophobic politicians today winked and nodded at IRA fund-raising in the US then. Anti-Muslim Congressman Peter King went even further, speaking at a pro-IRA rally in 1982.

Right-wing Christians have committed acts of terror in the US, such as the assassination of Dr. George Tiller in Kansas. (I call this terror rather than just murder, because the point wasn’t merely to kill Tiller, but to intimidate any doctor who might think about replacing him.) Tiller’s murderer is revered as a hero by the Army of God. If they were the only Christian group you ever read about in the newspapers, what would you think of Christianity?

The measure of Christian privilege in America is that Christians and Christian churches don’t have to comment on such crimes unless they want to. But the Cambridge mosque the Tsarnaev brothers had a tangential connection with did feel obligated to issue a denunciation of the bombing. Even so, no matter how often such denunciations happen, American Islamophobes won’t hear them and will claim Muslims “remain silent“.

As a native-born white American male, I never have to worry that somebody might hold Adam Lanza or Jared Loughner or Don Blankenship against me, or wonder why I haven’t denounced their crimes loudly enough. That’s the measure of my privilege: Unlike Muslims or Chechens, I have the right to be judged as an individual; I can’t be reduced to the stereotype of my group.

Interesting finding from sociologist Robert Putnam (of Bowling Alone fame): Religious beliefs are not correlated with public-spirited virtues like generosity, but commitments to a religious community are. The people to worry about are not the members of the Islamic Society of Boston, but the intensely committed believers (of any faith) who are unsocialized by a church, synagogue, mosque, or whatever institution draws people of that faith together.

John Cassidy imagines how the public discussion would be different if the Tsarnaevs had used assault rifles rather than bombs.

which led to a discussion of conspiracy theories

many of which have been inspired by the Boston bombing.

Rachel Maddow did a great piece about the mainstreaming of right-wing conspiracy theories. Stuff that responsible conservative leaders would have ostracized a generation ago (as William F. Buckley and Barry Goldwater ostracized the John Birch Society in the 1960s) is now getting the hearing it doesn’t deserve. What used to be “crazy” is becoming merely “controversial”.

Steve Benen points out:

This just doesn’t happen on the left. This is not to say there aren’t wacky left-wing conspiracy theorists — there are, and some of them send me strange emails — but we just don’t see prominent, center-left media professionals trumpet such silliness or Democratic members of Congress racing to take the nonsense seriously.

It’s hard to know what to do with crazy theories like Boston-was-a-false-flag-operation or Obama-protected-the-Saudi-bomber. Arguing against them in some way validates that they’re worth arguing about — that the theory is controversial, not crazy. As you undoubtedly know if you have a friend who sends you such stuff, it’s easy to get sucked into the details of bizarre theories, and the conspiracy theorists love it when you do. Whatever psychological need conspiracy theories fill, nothing scratches that itch better than arguing obscure details with a doubter.

Conspiracy theories attract because they make life more interesting; they let the theorist be an insider, superior to the sheep who accept conventional views; they simplify the bewildering complexity of events and are strangely reassuring — better to believe the world is controlled by an evil conspiracy than face the fact that it’s out of control altogether.

So when Uncle Dave sends you that link to some talking-head “proving” something ridiculous, your response (if any) should be boring and not provide any opportunity for him to demonstrate his superior knowledge. Here’s what I suggest: Return a link to this video of a talking head making sense about conspiracy theories in general.

Send the same link every time: This is my response. I’m going to keep giving the same answer as long as you keep making the same mistake, no matter how many different ways you make it.

Make sure he realizes you wasted no time at all figuring out how to address the unique issues raised by this particular theory. Be repetitive. Be boring. Don’t scratch the itch.

But I wrote about the dysfunctionality of Congress

Or rather, former Maine Congressman Tom Allen did, and I reviewed his book.

We also heard a lot about the George W. Bush legacy

The new Bush Library opened in Dallas Thursday. And so began a predictable attempt by conservatives to whitewash the memory of one of the worst presidents of all time.

I don’t have to list and refute all their arguments, because Alex Seitz-Wald already did on Salon. And wruckusgroink on Daily Kos asked the right question: What if (instead of all the incompetent and evil things he did), President Bush had done nothing? What if he had just put the government on cruise control with the peace-and-prosperity policies Clinton had in place? “All Bush had to do was NOTHING to have a successful presidency.”

On the idea that historians will eventually give President Bush more credit (as they have Truman and to a lesser extent LBJ and Nixon), I stand by what I wrote as Bush was leaving office:

What happens when historians re-evaluate a president? Picture the events of a presidency as weights on a two-pan scale: a success pan and a failure pan. Even with the advantage of hindsight, an event seldom jumps from one pan to the other. Bad things stay bad; good things stay good. All that changes is our estimate of how much the events weigh.

… Now picture future historians re-assessing W. The weights may grow or shrink, but they’re not going to jump from one pan to the other. Nobody’s going to conclude that, in retrospect, Bush handled Hurricane Katrina well, or that he really did capture Bin Laden. Ignoring terrorism until 9/11 and turning a $200-billion surplus into a $1.2 trillion deficit are never going to seem like deft moves. The lies he told to start the Iraq War will not to stand to his credit, no matter what awaits in Baghdad’s unforeseeable future. Torture and illegal wiretaps are always going to stain Bush’s record, just as the Japanese internment stains FDR’s and the Palmer raids stain Wilson’s.

That’s the failure pan. So what NATOs, Marshall Plans, Berlin Airlifts, China breakthroughs, or Voting Rights Acts sit in Bush’s success pan? What accomplishments can future historians re-weigh to shift the balance in his favor?

I don’t see any likely candidates. That’s why I expect Bush to wind up more like Herbert Hoover than Harry Truman.

So far, that prediction is holding up. But I will admit to being surprised by this: The post-Bush Republican Party has gone so far off the deep end that W doesn’t seem nearly as radical as he did at the time.

In other Bush-related news, the Constitution Project’s bipartisan report on detainee treatment after 9-11 came out. “The most important  or notable finding of this panel is that it is indisputable that the United States engaged in the practice of torture.”

and you also might be interested in …

Having spent the last several years watching the final decline of both of my parents, I can testify that this is a very important article: If this was a pill, you’d do anything to get it by Ezra Klein.

An experimental Medicare program in Pennsylvania does something radically low-tech: It identifies old people with chronic illnesses and sends a nurse to visit them once a week. The nurse answers questions, straightens out confusions about medications, notices if the patient suddenly looks worse, and so forth. The goal is to catch problems before they require hospitalization, because spending time in the hospital is bad for chronically ill old people. The program’s architect says:

Being in the hospital for three days or five days sets them back to a point where they’ll never regain what they were. That’s where the scales tip. That’s where people end up needing a nursing home.

Turns out, the program works, as proved by randomized trials over more than a dozen years. The patients are healthier, stay out of the hospital, and so cost less for Medicare to cover — even after paying the nurse. If you’ve spent any time with chronically ill people in their 80s, none of this should surprise you.

So is Medicare taking the program national? No, they’re shutting it down in June. Says one expert:

There is a bias in medicine against talking to people and for cutting, scanning and chopping into them. If this was a pill or or a machine with these results it would be front-page news in the Wall Street Journal.

The Daily Show’s John Oliver was at his best in this segment, in which he compares the Australian politicians willing to implement gun control even at the cost of their careers to American politicians whose definition of “success” fails to mention the public good.

“Never again,” he says, “will a political career end in a senseless act of meaningful legislation.”

BP lied twice about the 2010 Gulf of Mexico spill: It claimed the spill was about 1/10th of its actual size, and it told the clean-up workers that the dispersant they were exposed to was safe. Now we have the safety manual they were supposed to distribute, but didn’t.

The NYT Magazine’s “Our Feel-Good War on Breast Cancer” points out an inconvenient truth: Raising “awareness” isn’t actually moving us any closer to a cure.

Poor Todd Akin has had to relive his “legitimate rape” comment over and over again. It must be tough to have such a traumatic experience and then wonder for the rest of your life if you might have avoided it somehow. If only our society had more compassion for people who suffer through things like that.

In addition to Afghanistan and Iraq, President Obama may be winding down another war: the war on drugs. “While law enforcement will always play a vital role in protecting our communities from drug-related crime and violence, we simply cannot incarcerate our way out of the drug problem.”

The White House report calls for prevention through education. Let’s hope that means accurate education, rather than the anti-drug propaganda I remember from high school. Here’s what I learned from my high school drug programs: Adults would spout any kind of BS to get me to do what they wanted. That lesson stuck with me.

The Oscar-winning documentary Inside Job (about Wall Street’s role in creating the housing bubble that started the Great Recession) is available for free on YouTube. In HD, no less. Based on Charles Ferguson’s outstanding book Predator Nation, narrated by Matt Damon, free on your computer right now — what’s not to like?

The Bangladesh disaster and follow-up on the Texas factory explosion will have to wait until next week.

April 29, 2013 – 12:32 pm Categories: Weekly summaries | Comments (2)

What’s Really Wrong With Congress?

Everybody seems to agree that Congress doesn’t work.

If you’re liberal, you’re appalled that even something like universal background checks for gun purchases (90% public approval!) can’t pass. If you’re conservative, you’re horrified that nothing can be done about the mounting national debt or the projections for exponential growth in entitlement spending.

And even if you care not at all about parties or ideologies, it’s just embarrassing to watch our leaders create one artificial crisis after another. We’re the richest country on the planet, and yet we’re constantly threatening to shut down our government, default on our bonds, mint a trillion-dollar coin, or do some other weird thing that would shame the generalissimo of a banana republic.

Is this any way to run a super power?

Former Congressman Tom Allen has written the best book I’ve seen about the problem — Dangerous Convictions: What’s really wrong with the U.S. Congress.

Allen served as one of Maine’s two congressmen for six terms before he quit to run for the Senate in 2008. (Susan Collins beat him handily.) He seems to have been a more-or-less average Democrat. (GovTrack.com places him in the middle of the Democratic pack ideologically.) In his book, he discusses the few times he was able to work with Republicans, the many times he wasn’t, and what the difference might have been.

He is unimpressed with many of the standard explanations of Congress’ polarization and overall dysfunctionality, particularly the ones that attribute the problem to personalities. Yes, Democrats and Republicans no longer socialize together the way they did back in Jackie Kennedy’s day. But Allen sees that more as symptom than cause. Republican congressmen seemed like nice enough guys when he met them in the House gym, and he had no trouble working with them when they shared an interest, like when Maine and New Hampshire politicians all wanted to keep the Portsmouth Naval Shipyard open.

And while mainstream pundits may pine for “bipartisanship”, the lack of it is also an empty explanation. There is no bipartisan philosophy, so what would a bipartisan alliance do? (Whenever a pundit gets specific about a bipartisan agenda, some rude person points out that Obama has already proposed most of it and been rejected.)

Allen saw enough pre-Obama polarization to doubt the explanations that pin the blame on him. (i.e., Obama doesn’t schmooze enough, or twist enough arms.)

Even the influence of money doesn’t really explain the problem (though it certainly doesn’t help). The United States has suffered periods of even worse corruption in the past — among the many candidates, I would pick the Grant era — and yet the country managed to more-or-less function.

Worldviews. Allen sees the problem not as an unwillingness to find common ground, but as an inability to get to a point where compromise is possible. Take global warming. If Democrats were pushing one solution (cap-and-trade, say, or a carbon tax) and Republicans another, then it might not be that hard to pass a program with elements of each. That’s how business has gotten done in Washington since L’Enfant sketched the city on paper.

But instead, a proposed Democratic solution is met with a Republican denial that the problem exists. How do you compromise on that?

Four chapters of Allen’s book focus on specific issues and the worldview gaps that have made them unsolvable: the federal budget (where Democrats can’t accept the Republican claim that tax cuts pay for themselves), Iraq (where a plan for the country’s reconstruction was deemed unnecessary), health care (where Republicans never really admitted that the uninsured were a problem), and global warming.

Again and again, Allen and his Democratic colleagues ended up asking each other, “Do these guys really believe what they’re saying?” Unable to imagine that they did, the only other explanations were that the other side had been bought by monied interests or that they were pandering to crazy people. Hence the distrust and unwillingness to invite them to parties.

That view, obviously, favors Allen’s own side. But he then makes an admirable effort to see through Republican eyes. What if they do believe what they’re saying, but their worldview is so different that we seem to be the ones who must have nefarious motives? How could that come about?

The explanation he comes to still favors the Democrats, but is much more nuanced and fascinating.

First and second languages. Allen begins with a deep insight from Robert Bellah’s 1985 classic Habits of the Heart: Americans discuss values and morality in two ways. Our first language is individualistic: It’s my life. This is what I want to do with it. I want the freedom to be my own person and live by my own values. Our second language (which we speak less well) is communitarian: I want to belong. I want to do right by others. I want to live in a community that is just and fair.

We don’t really have a language for discussing the trade-offs between individuality and community. Instead, we tend to flip abruptly from one to the other: We’re individualists until suddenly we sense that we’ve gone too far, and then we’re communitarians for a while.

(This insight parallels George Lakoff’s models of the conservative strict-father morality and the liberal nurturant-parent morality, particularly as I adjusted them in Red Family, Blue Family in 2005. Lakoff observes that there is no “center” morality. Instead, centrists maintain both models and apply different ones to different issues.)

Conservative rhetoric speaks the first language, which is why it often sounds simpler and clearer. (Small government. Low taxes.) Liberal rhetoric speaks the second language, so it often sounds muddled and requires a longer explanation than a sound bite allows.

(Allen doesn’t discuss social issues, where liberals sometimes have the first language/second language advantage. Gay rights is at a tipping point now because liberals are winning that debate in both languages: Gays should be free to live their own lives, and my community should treat them fairly.)

This point in history. Two things about the current situation give Democrats the advantage:

  • The shift from a local/national economy to a global economy has created problems that are fundamentally not individual. When your job gets shipped to China or the value of your house crashes, it’s generally not because of anything you did.
  • Our governing philosophy has been individualistic since Reagan. (Even Clinton followed a kinder, gentler conservative agenda on things like welfare reform and bank deregulation.) So all the low-hanging fruit has been picked by now. If a problem can be solved by free markets and low taxes, we’ve solved it already.

Consequently, we’re at a point where the respective advantages of the two parties are wildly divergent: If a conversation can be kept on an abstract level, the Republican rhetorical advantage holds: They speak Americans’ first language and Democrats speak the second language. But if you get into details and start gathering evidence on a particular issue, the Democratic solution works better.

The budget debate is the perfect example: Republicans do well when they can keep the discussion on the level of “government spends too much” or can list some small examples of “government waste”. But when they have to quantify the amount of waste and list programs that they want to cut, they’re in trouble.

Selecting for ideologues. As a result, specific, evidence-based, expertise-respecting conservatism has all but died out. A Republican Congressman who publicly accepted, say, the consensus of climate scientists on global warming or the consensus of economists that tax cuts don’t pay for themselves — that candidate would be on the wrong side of conservative rhetoric in the next primary. One who went beyond rhetoric about government incompetence or “death panels” and presented a serious plan for what a Walmart worker should do when she gets breast cancer, well, he’d have a short career.

So we’re left with the conservative ideologues, with people who aren’t interested in discovering how the world is, because they know how it has to be: cutting taxes and spending has to be good, involving government in a problem has to be bad, government debt has to be bad, and so on. If some problem (like global warming or the 50 million people who lack health insurance) doesn’t have a free-market solution, then it can’t really be a problem.

To me, the paradigm is Rick Santorum’s indignation when someone confronted him with the fact that tens of thousands of the uninsured die unnecessarily every year. He simply couldn’t deal with it and substituted his fantasy world for the real one: People without health insurance don’t die unnecessarily, and if they do, it’s their own fault.

Talking past each other. So the typical liberal/conservative debate in Congress these days looks like this: The liberal will present an evidence-based expertise-based plan to, say, deal with the economy’s measurable lack of demand by spending money to fix our roads and bridges. The conservative will respond with unquantifiable, uncheckable assertions that debt will destroy business confidence, and that unemployment will go down if we stop coddling the unemployed with extended benefits and instead cut regulations to give the “job creators” more freedom.

Where can the conversation go from there? There is literally nothing to talk about. As Allen says:

Our political polarization and dysfunctional public debate is largely driven by convictions and worldviews immune to contrary evidence and expertise.

What Allen wants to see. Allen calls for a renewed commitment to four virtues: respect for evidence, tolerance of ambiguity, caring about consequences, and commitment to the common good.

Almost by accident, he winds up with the best program for Republican renewal I’ve seen: Republicans need a vision of a right-sized government, what it does, and where it gets the resources to do it.

They don’t have one now. What a conservative government should do is always “less”. As a result, Republicans can only unite on the negative: They can block what Democrats want to do, but on most of the serious problems that Americans face at the moment, they have no solutions to offer.

So in Republican primaries, the incumbent’s vision of “less government” can always be trumped by someone who wants even less than that. The only possible escape from this constant devolution is to envision a right-sized conservative government that is committed to solving certain problems and commands the resources to succeed.

April 29, 2013 – 11:00 am Categories: Articles | Comments (6)

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The Monday Morning Teaser

The featured article this week is a review of Tom Allen’s recent book Dangerous Convictions: What’t really wrong with the U.S. Congress.

I don’t usually like books by out-of-office politicians. Most of them are either revising history to make their mistakes go away or polishing their rhetoric for a comeback. But ex-Maine-congressman Allen has done something thoughtful here. He’s taken his impressions from 12 years in the House and combined them with a lot of background reading on how Americans think and talk about politics. I found the result both enlightening and thought-provoking. (And now I have to go repeat Allen’s reading project, starting with Robert Bellah’s Habits of the Heart and Robert Putnam’s American Grace.)

His diagnosis, in brief, is that the fundamental cause of the polarization in Congress is a deep worldview difference between Democrats and Republicans that makes them unable to take each other’s points of view seriously, much less find common ground or work out compromises. He goes a long way towards tracing the roots of that worldview difference. Almost accidentally, he ends up tracing out a Republican reform agenda far better than anything Republicans have come up with.

In the weekly summary, the Boston bombing conversation has shifted towards discussions about Islam and conspiracy theories. I’ll give my advice for dealing with the conspiracy theorist in your life.

Also, the George W. Bush Presidential Library opened, and lots of people bent over backwards to say nice things about the Bush legacy. But when the worst presidents in American history are discussed, George W. Bush will always be part of that conversation.

In the shorter notes: Obama may be looking for a way out of the War on Drugs. Attempts to defend austerity are still falling flat. And Medicare is about to end a program that cuts costs and improves care.

April 29, 2013 – 8:45 am Categories: Morning tease | Post a comment

Unaffordable Luxuries

In the immediate wake of great disasters — a flood, a blackout, or an economic collapse — people tend to behave the same way, reverting to a rough-and-ready communism. However briefly, hierarchies and markets and the like become luxuries that no one can afford. 

— David Graeber, Debt: The First 5,000 Years

This week everybody was talking about the Boston Marathon bombing

Living 30 miles from Boston, I had a hard time finding anybody who wanted to talk about anything else.

Here’s my hope for the long-term effect of the Marathon bombing: Maybe this will undo some of 9-11’s impact on the American psyche. That’s the point of this week’s lead article: “Maybe 9-11 Can Be Over Now“.

The way everybody pitched in reminded me of the David Graeber quote at the top of the post. (I reviewed his book in 2011.) In Copley Square and Mass General Hospital, nobody was worrying about how they would get paid. For a few hours it was just “From each according to his ability, to each according to his need.”

The first responders did a great job. The hospitals did a great job. (New Yorker columnist Atul Gawande is both a great writer and a doctor at a Boston hospital, so his account of the symbiosis between systemic planning and individual initiative is particularly insightful.) The police did a great job. (Esquire columnist Charles Pierce is a great writer from Watertown. His account is worth reading too.)

The big corporate media did not do a good job. CNN had that horrible afternoon where it reported an imaginary arrest.

Comedian Andy Borowitz nailed them:

Authorities who have spent the past forty-eight hours combing CNN in the hopes of finding any information whatsoever have called off their search, they confirmed today.

Rupert Murdoch’s New York Post was even worse: It put photos of the wrong suspects on its front page. (Thank God those two guys weren’t lynched.)

Some alternative media did better. TPM assembled a useful chronology of what happened when. And Wikipedia continues to be an under-appreciated resource for staying on top of current events.

There’s been a lot of back-and-forth about whether Dzhokhar Tsarnaev should be read his Miranda rights or whether the public-safety exception applies. ThinkProgress explains the history of the exception pretty well. As I get it, officials would be justified in asking something like “Are there any more bombs out there?” to protect public safety. But if they’re asking questions to build a criminal case, Miranda applies.

A lot of Muslim-haters — people who still probably can’t find Chechnya on a map — have been using this event as a new excuse to hate Muslims. Cartoonist Clay Bennett expresses my point of view:

and the Senate filibuster that defeated the gun bill

The background-check amedment, already watered down from a proposal that has consistently polled at around 90%, failed to get past a Republican filibuster Wednesday.

The New Yorker’s Alex Koppelman wrote about how depressingly unsurprising this was:

it wasn’t just the vote to block Toomey-Manchin that was so disheartening—that a minority of the Senate, representing a minority of Americans, was able to vote down legislation that had been so watered-down as to make it utterly unobjectionable. It wasn’t just that the Republican-controlled House would never have passed the bill, even if there had been sixty votes for background checks in the Senate. It was watching the whole process, realizing again so vividly and on an issue that matters so much, that the people who make the laws for three hundred million people are often cowards or fools or both.

The most blood-boiling thing was Mitch McConnell crowing about his ability to thwart the public will, emphasizing that no compromise had ever been possible. (See photo, posted to Facebook by McConnell.)

And satirist Andy Borowitz was having a good week:

In the halls of the United States Senate, dozens of Senators congratulated themselves today for having what one of them called “the courage and grit to stand up to the overwhelming wishes of the American people.”

and the Texas fertilizer explosion

The owners of the West Fertilizer Company caught a break this week. Yeah, their Texas plant blew up Wednesday, killing at least 14 and injuring hundreds, but it didn’t fit into the terrorism narrative established in Boston on Monday, so hardly anybody paid attention.

Nobody knows yet exactly how the blast happened, but on the surface the situation resembles the Upper Big Branch mine disaster of 2010: insufficient inspections, safety violations, and wrist-slap fines that the company treated as a cost of doing business. Congressman Bennie Thompson:

It seems this manufacturer was willfully off the grid. This facility was known to have chemicals well above the threshold amount to be regulated under the Chemical Facility Anti-Terrorism Standards Act (CFATS), yet we understand that DHS did not even know the plant existed until it blew up.

The Nation’s Richard Kim does an interesting thought experiment: What if we took this kind of violence and innocent death as seriously as we take terrorism?

Let’s imagine that the question—Why?—became so urgent that the nation simply could not rest until it had overdetermined the answers. We’d discover that OSHA hadn’t inspected the plant in 28 years—did this play a role in the disaster? If it’s found that the company that owns the plant, Adair Grain, violated safety regulations, as it had last year at another facility, we might call it criminal negligence and attribute culpability. But would we ascribe ideology? And which ideology would we indict? Deregulation? Austerity? Capitalism? Would we write headlines that say—Officials Seek Motive in Texas Fertilizer Explosion? And could we name “profit” as that motive in the same way that we might name, say, “Islam” as the motive for terrorism? Would we arrest the plant’s owners, deny them their Miranda rights and seek to try them in an extra-legal tribunal outside the Constitution, as Senator Lindsey Graham has suggested we treat US citizen Dzhokhar Tsarnaev?

and the debunking of an influential economics paper

which (believe it or not) you should care about. That’s my second featured article this week: “Why the Austerity Fraud Matters“.

and you also might be interested in …

I have heard from my own high-school-student sources about pro-abstinence assemblies, where outside speakers mix sexual misinformation with conservative religion. So I can’t say I was shocked by the descriptions of the West Virginia assembly that  Katelyn Campbell protested.

Apparently she protested so well that her principal resorted to threats: He said he would call Wellesley College, where Campbell has been accepted to study in the fall, and give her a bad character reference. Campbell refused to be intimidated, and Wellesley appears to be impressed, as they should be.

If you want to discourage something, tax it. So these six states tax poverty.

April 22, 2013 – 11:39 am Categories: Weekly summaries | Post a comment

Why the Austerity Fraud Matters

When disputes break out among academics, most people don’t care. For good reason: Academic controversies are usually hard to follow, and concern topics that wouldn’t matter to most of us even if we understood them. (I was in an academic dispute once, and my side won. Trust me, you don’t want to hear about it.)

But this week a controversy broke out in economics, and it actually deserves your attention. A paper that has had a major influence on public policy around the world turns out to be wrong. And not just wrong in a subtle way that only geniuses can see, or even wrong in an everybody’s-human way that you look at and say, “Oh yeah, I’ve done that.” This one was wrong in three different ways that make you (or at least me) say, “That can’t be an accident.”

The bogus paper came out in 2010: “Growth in a Time of Debt” by Carmen Reinhardt and Ken Rogoff (both from Harvard). The paper that refutes it appeared last Monday: “Does High Public Debt Consistently Stifle Economic Growth? A Critique of Reinhart and Rogoff“ by Thomas Herndon, Michael Ash, and Robert Pollin (all from the University of Massachusetts).

Before I get into the back-and-forth of it, let’s return to why you should care. It has to do with whether the government should be trying to create jobs or cut spending.

Stimulus vs. austerity. Many countries came out of the Great Recession with a much larger national debt, but persistent unemployment and slow growth. And that led to a debate: The usual thing a government does when it has high unemployment and slow growth is spend money. (People need jobs and the private sector is skittish about expanding, so the government hires people to do things that need doing: building highways, fixing sewers, insulating homes, and so on. Or maybe the government boosts the economy by subsidizing certain kinds of consumption, like the popular cash-for-clunkers program that got a bunch of old gas-guzzling cars off the road.)

But maybe this time the thing to do was to cut spending, because of all that debt. Maybe spending more, and so increasing the national debt, would just make things worse.

The same debate was happening in all countries, and none of them went completely one way or the other. But the poster child for austerity has been the United Kingdom, where it hasn’t worked. Here’s how British economic growth has compared to the projections made by the UK’s Office for Budget Responsibility. Austerity has brought the UK essentially no economic growth for three years.

The US has had its own stimulus/austerity debate, which has kept the Obama administration from spending as much as it wanted (or as much as Paul Krugman wanted, which was even more). But compared to the other major economies, the US has been on the stimulus side of the debate, which is probably why (disappointing as our economy has been these last few years) we’re doing better than most other countries. (This graph is scaled so that all countries are equal when austerity-loving David Cameron became the UK’s prime minister.)

Basically, the US and Germany are the only countries in that group that have seen any net growth since 2008.

The gist of what we’ve seen since 2008 is: Keynes was right. In the long run you probably want to keep your national debt under some kind of control, but not when you have high unemployment and slow growth.

How Reinhart/Rogoff leads to Ryan. Now, obviously, the budget debate we keep having in Washington doesn’t acknowledge this reality at all. Conservatives like Paul Ryan and Rand Paul, who want drastic cuts in government spending  (to them, the sequester is just a down payment), somehow get away with claiming to have a “pro-growth” agenda.

How is that possible? Well, partly it’s just dogma. The Gospel According to Ayn Rand states that government is always and eternally bad for the economy — she called for “a complete separation of state and economics” — and no accumulation of facts can outweigh holy writ.

But also, a handful of economists provide academic cover for the “pro-growth” austerity nonsense. And the biggest fig leaf in the bunch is the Reinhart/Rogoff paper. In his 2013 budget proposal, Ryan wrote:

Even if high debt did not cause a crisis, the nation would be in for a long and grinding period of economic decline. A well-known study completed by economists Ken Rogoff and Carmen Reinhart confirms this common sense conclusion. The study found conclusive empirical evidence that gross debt (meaning all debt that a government owes, including debt held in government trust funds) exceeding 90 percent of the economy has a significant negative effect on economic growth.

More precisely, R/R found a “threshold” that gets crossed when a nation’s public debt exceeds 90% of the annual GDP. (The United States currently has  a debt-to-GDP ratio around 100%. It was comfortably below the 90% “threshold” until almost exactly the moment the R/R paper appeared.) In other words: All your economic intuition and experience might tell you not to cut spending in a slow-growth environment, but something magic happens when debt crosses 90%. Beyond that point, debt suddenly becomes toxic.

Jared Bernstein comments on the significance:

Those whose goal is severely shrinking the size of government in general and social insurance in particular need hair-on-fire results like this from established experts to keep the fire going,  even in the face of statistics that lean strongly the other way

What they did and why it’s wrong. Reinhart and Rogoff looked at 20 industrialized countries year-by-year and divided the country-years into four bins: years when the national debt was 0-30% of GDP, 30-60%, 60-90%, and over 90%. They found significantly lower average economic growth in the over-90% bin. The average annual growth rates for the four bins in the 1946-2009 (post-WW2) period were 4.1%, 2.8%, 2.8% and negative .1%.

Now, if you look at those countries and years one-by-one, the case isn’t always impressive. For example, 1946 in the US. We had a lot of debt because we’d just fought World War II, and we had a recession because all the discharged soldiers and laid-off tank-factory workers hadn’t found new jobs yet. So high debt and negative growth were happening at the same time, but not because government debt was killing the economy.

Those are the kinds of one-off situations that you hope cancel out in the averages. And they kinda-sorta do, if you assemble your data honestly and do the math right. Unfortunately, R/R did neither. When Herndon/Ash/Pollin go back and do the analysis right, growth in the over-90% bin jumps from negative 0.1% to positive 2.2%.

So what mistakes did R/R make? Well, one was really stupid: They plugged the wrong row number into a formula on their spreadsheet, so their average skipped a bunch of rows, representing 6 of the 20 countries. (They’ve confessed to that mistake.)

Second, their data-set didn’t really include all the country-years it should have. So, for example, New Zealand only has one year in their average, when it ought to have five. Unfortunately, that makes a huge difference in the country average, because that one year NZ had -7.9% growth, when the five-year average was +2.6%.

And third, they made the bizarre choice to average by country rather than by country-year. So that one anomalous year in New Zealand ended up constituting 1/14th of the entire average rather than the 1/110th it should have.

Why it’s so bad. The significance of the R/R paper comes entirely from those mistakes.

Yes, an honest and accurate accounting still shows a negative correlation between growth and debt-to-GDP ratios, but everybody would have expected that anyway, because there’s well-known causality in the other direction: recessions cause debt/GDP ratios to rise*. (GDP goes down because that’s the definition of a recession. Debt goes up for two reasons: Revenue drops because there’s less income to tax, and spending rises to pay for more unemployment insurance and food stamps.)

The only significant part of R/R was the threshold, and that was wrong: The something-magic-happens-at-90% was just a spreadsheet typo plus statistical sleight-of-hand.

So the data R/R assembled provides absolutely no reason to have some special fear about the current level of debt in the US. We haven’t just passed through some economic equivalent of the sound barrier. To the extent that debt was bad before, it’s still bad, and to the extent that it didn’t matter before, it still doesn’t matter.

Fraud. I anticipate taking heat for using the word fraud in the title. The Herndon/Ash/Pollin paper doesn’t use it, and to fully justify fraud you’d have to see into the hearts of Reinhart and Rogoff. Responsible academics are slow to use words like fraud, because academics are cautious in general. You’re not supposed to publish something you can’t fully prove, even if your rivals do.

But I’m not an academic any more, so I’m using a preponderance-of-evidence standard, not a beyond-reasonable-doubt standard. Let’s look at the three mistakes.

The spreadsheet error shows an unbelievable level of negligence, but if that were the only mistake I’d be inclined to give R/R some benefit of the doubt. The original mistake was almost certainly honest, but not finding the mistake is the real culpability. They didn’t look the gift horse in the mouth; the mistake gave them the result they wanted, so they didn’t check too hard.

They claim to have filled in the missing data in later research, but they’ve done nothing to point out what a difference it makes. And they defend their weighting scheme — an argument I could buy if they had defended that scheme in the original paper while pointing the major difference it made in the result. But they didn’t. They were hoping the readers wouldn’t notice.

In their response to H/A/P, Reinhart and Rogoff, defend their non-spreadsheet errors “in the strongest possible terms”.

But surely the authors do not mean to insinuate that we manipulated the data to exaggerate our results.

I can’t speak for H/A/P, but I won’t insinuate anything, I’ll say it outright: Yeah, R&R, you manipulated the data to exaggerate your results.

R/R’s response. One proof of the fraud is that they’re still doing it. Their response claims:

We do not, however, believe this regrettable slip [the spreadsheet error] affects in any significant way the central message of the paper or that in our subsequent work.

And that’s just flatly false.

Do Herndon et al. get dramatically different results on the relatively short post war sample they focus on? Not really. They, too, find lower growth associated with periods when debt is over 90 per cent.

And that’s sophistry. The “relatively short post war sample” are the economies that happen to resemble the United States today. And “lower growth” is not the result the paper is noted for; no one would care if that were the whole message, because that is completely explained by the well-known recession-causes-debt relationship. The 90% threshold is the paper’s claim to fame, and that result has blown up completely.

And finally, while they don’t explicitly claim that they’ve found a debt-causes-slow-growth relationship, they keep using their result as if they had. They do so even in their response:

There is also the question of whether these growth effects can be economically large. Here it is very misleading to think of 1 per cent growth differences without recognizing that the typical high debt episode lasts well over a decade (23 years on average in the full sample.)

It is utterly misleading to speak of a 1 per cent growth differential that lasts 10-25 years as small. If a country grows at 1 per cent below trend for 23 years, output will be roughly 25 per cent below trend at the end of the period, with massive cumulative effects.

That point is utterly meaningless if the causality works in the other direction, if the slow growth is causing the debt rather than the other way around. And another re-analysis of the R/R data shows that’s what’s happening. That analysis also was simple to do. As Matt Yglesias comments:

it’s striking that R&R didn’t even check this. I don’t begrudge any academic’s right to rush into publication with an interesting empirical finding based on the assembly of a novel and useful dataset. I don’t even begrudge them the right to keep their dataset private for a little while so they can internalize more of the benefits. But Reinhart and especially Rogoff have spent years now engaged in a high-profile political advocacy campaign grounded in a causal interpretation of their empirical work that both of them knew perfectly well was not in fact supported by their analysis.

Buying apples, selling oranges. And that’s the important point. The biggest reason R/R’s paper has been so badly misused in our political debate is that they have been out there misrepresenting their results. Senator Coburn described their testimony to 40 senators a few months before the debt-ceiling debacle in 2012. After listening to their initial testimony,

Senator Kent Conrad, D-N.D., the chairman of the Senate Budget Committee, then offered his own stern warning to the assembled senators. Turning around in his chair in the middle of the room, he explained to his colleagues that when our high debt burden causes our economy to slow by 1 point of GDP, as Reinhart and Rogoff estimate, that doesn’t slow our [economic growth] by 1 percent, but by 25 to 33 percent, because we are growing at only 3 or 4 percent per year.

Did either professor interrupt to say, “Wait, Senator, we’re not saying the debt causes a slowdown. Our data just shows a correlation that could be explained by slowdowns causing high debt.”? No.

Reinhart echoed Conrad’s point and explained that countries rarely pass the 90 percent debt-to-GDP tipping point precisely because it is dangerous to let that much debt accumulate.

Fraud. Fraud, fraud, fraud.

* A point I often make when numbers appear in the Sift: Correlation is not causation. Correlation just means that two things tend to go together; causation means that one causes the other. A very common fallacy is to display a graph showing that A and B go up (or down) together, and then say that A causes B.

My favorite way to demonstrate the fallacy: Birthdays are good for you; people who have a lot of birthdays tend to live long lives.

April 22, 2013 – 10:41 am Categories: Articles | Comments (6)

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Maybe 9-11 Can Be Over Now

Here’s my hope for the Boston Marathon bombing: Maybe it can mark the end of the 9-11 Era. It feels so different from 9-11. Maybe it can exorcize the demons that have haunted us these last dozen years.

9-11 was a wound that refused to heal. I think that had something to do with the kind of story it was and the way we told it: It was a tragedy, and the many heroic individual stories that came out of 9-11 just served to make the larger story that much more tragic.

The greatest heroes of 9-11 all died. They were the first responders who charged up the burning towers only to be crushed in the collapse. They were the passengers of United Flight 93, who crashed their own plane rather than let it become a bomb. We could not identify with them or feel connected to their courage, because we lived. To have survived on a day when the real heroes died … it felt almost shameful.

The villains — the men who hijacked the airliners and slammed them into the Twin Towers — were likewise dead. They died on their own terms, as martyrs and victors in their own eyes, and they were beyond our reach now.

So in spite of all the people who did the best they could that day, the overwhelming emotions of 9-11 were shame, depression, anger, and fear. As a country, America came out of 9-11 looking for somebody to blame, and wanting to mess them up as badly as we could.

We could not let the story end this way, so we took it to Afghanistan and Iraq. We took it to Bagram and Guantanamo and Abu Ghraib. If some of the people we killed or maimed or tortured were innocent, so be it. Collateral damage. Our people had been innocent too.

9-11 was a monstrous act that we couldn’t resolve in our hearts, so it turned us into monsters.*

But we will tell the Boston Marathon bombing story as a challenge that Americans rose to. Not years later in another country, but as it was happening. Not by dying or killing, but by living and saving lives. This time, the tragedy sets up the stories of heroism, not the other way around.

It started immediately, with the ordinary people, the runners and their friends and families, who raced into danger to help the wounded. But unlike the 9-11 first responders, they did not become martyrs or victims. They continue to walk among us like the typical Americans they are.

EMTs and police were already present at the finish line, and their performance will be a model for the rest of the world for years to come. Their story is a victory, not a tragedy. It is a tribute to them that only three people died on the scene.

Everyone who made it into an ambulance is still alive a week later, because hundreds more nurses and doctors became heroes by saving lives, not by dying or by taking lives in revenge. Like the runners and the EMTs, they did not vanish into a martyr’s Heaven, but melted back into the general population. Maybe you pass them on the highway or stand in line with them at the supermarket. Maybe you are one of them.

Our leaders expressed sorrow, promised justice, and asked for our cooperation. They got it. People sent in their photos, and studied photos taken by others. Asked to stay off the streets or keep to their homes, we did.

Police swarmed in from all over the area, and worked together under federal leadership without visible rancor. They did their jobs, protecting the public without becoming our masters. They did not create more victims by rounding up hundreds of innocents. A policeman died, a fourth victim, but no more civilians.

And they caught the bad guys. One died in a suburban shootout that miraculously killed no bystanders. The other was wounded, but managed to hide for most of  the next day. He was found by a citizen who did not kill or get himself killed. He called the police, who captured the suspect alive and took him to a hospital.

That night, the convoy of police leaving Watertown became a spontaneous victory parade, and the citizens (who had been cooped up in their houses all day) streamed out onto the streets to cheer.

Unlike 9-11, it was over.

This time, like the aid-giving marathoners, like the EMTs, like the hundreds of doctors and nurses and police, at least one perpetrator will live and not become a martyr larger than life. We may get what we never had for 9-11: an explanation and a motive. We may come to look on Dzhokhar Tsarnaev as a troubled teen-ager, rather than a demon we see whenever we close our eyes and keep trying to kill by projecting him onto others.

Along the way, we may exorcize another demon who has haunted us too long: the Terrorist Superman, who desires nothing but mayhem and can be stopped by nothing but death. Who requires superhuman security measures and inhuman methods of interrogation. The monster who can only be fought by other monsters.

And that forms the essence of my hope: Maybe the events of this week have shown us that we don’t have to be monsters any more.

Maybe we can just be people who help other people, workers who save lives by doing our jobs, citizens who respect our authorities and get respect in return. Maybe we can seek justice without losing our human compassion. Maybe we can stand for values higher than mere survival. Maybe we can once again be part of a nation that is admired rather than just feared.

9-11 will never be forgotten, but I think it is time for it to be over. Maybe now it can join the Kennedy assassination and Pearl Harbor and the other great sorrowful events of our history. A scar, a memory, but not a wound.

So this is my post-marathon-bombing hope: That now we can stop being the frightened, angry, shamed survivors of 9-11 and go back to being Americans. It’s been a long time.

* In an earlier version of this article that I posted on Daily Kos, some commenters were inclined to absolve everyday Americans and put the blame on President Bush. I’m not going to make excuses for Bush, but he didn’t create the widespread post-9-11 desire for violence, he just channeled it. By the time the Iraq invasion rolled around, I and many other people were opposed. But I definitely felt the fear and anger it was based on.

April 22, 2013 – 8:23 am Categories: Articles | Comments (5)

The Monday Morning Teaser

It’s been one of those weeks: At last count, 14 people were dead and dozens still missing in the Texas fertilizer explosion, and that event could barely stay on the front page with all the Boston coverage.

The Sift isn’t a breaking-news kind of blog, so my coverage of the Boston Marathon bombing is to take a step back and wonder what it might mean to the country long-term. The thing that stands out to me is how the narrative hooks of 9-11 got reversed: In 9-11, heroism set the stage for greater tragedy, symbolized by the first responders who charged up the burning tower and died when it collapsed. In Boston, the initial tragedy set the stage for greater heroism.

So I wonder if Boston can be the first step in undoing some of the mistakes we justified by pointing to 9-11. And so the first featured article this week is: “Maybe 9-11 Can Be Over Now”.

The second featured article is longer, because the topic is more complicated. In “Why the Austerity Fraud Matters” I try to explain why you should care about an academic dispute between economists: The case for focusing on the national debt rather than unemployment is based on a highly influential paper that is simply a fraud.

That doesn’t leave much space for a weekly summary, but there’s still that Texas thing to deal with. And the Senate siding with the NRA over the American people.

April 22, 2013 – 7:22 am Categories: Morning tease | Post a comment

Buying Civilization

I like to pay taxes. With them I buy civilization.— Oliver Wendell Holmes, Jr.

This week everybody was talking about Margaret Thatcher’s life and death

The Iron Lady hasn’t been prime minister since 1990, so you might think the old wounds would have scabbed over by now. Apparently not. After Thatcher’s death was announced, “Ding-Dong the Witch is Dead” went to #1 on iTunes-UK. Not to defend her, but do I have to point out how sexist that is? If she were male, maybe opponents could be satisfied with Elvis Costello’s “Tramp the Dirt Down“.

When her death was falsely reported in 2008 and plans for a 3-million-pound state funeral came out, Scottish comedian Frankie Boyle commented:

For 3 million, they could give everyone in Scotland a shovel, and we would dig a hole so deep that we could hand her over to Satan personally.

To put her impact in American terms, Thatcher was the anti-FDR. By the time she left office, the union-dominated Britain of the 1970s was as hard to remember as the Roaring Twenties were when Roosevelt died in office in 1945.

She inspired the Reagan Revolution in the US, and symbolized the plutocratic and plutolatric trends that today make the US and the UK (plus Italy, for some reason) the rich countries with the greatest inequality and the least economic mobility.

I guess that’s hard to forget.

and taxes

It’s April 15, time for my annual attempt to popularize the term work penalty — the extra tax you pay because you work for a living rather than having money that works for you: How Big Was Your Work Penalty in 2012?

Of course, we can’t tax wealthy heirs, and we can’t tax their dividend or capital gain income because … well, just because. They’re “job creators” or something. There’s a word for this, plutolatry. It usually means “worship of wealth”, but it could also mean “worship of the rich”. I’m looking for ways to work it into conversations, like I did in the previous section.

Another Tax Day point worth making: Americans would save a lot of time and money if the IRS would use the information it has and just mail us a bill. If your tax situation was simple, you could pay the bill and be done with it, but if you wanted to itemize or claim some complicated tax break, you could file a return the way you do now.

Why doesn’t that happen? Two reasons: The tax-prep industry makes money from the current arrangement, so they lobby Congress to keep things the way they are. And anti-tax conservatives want Tax Day to be painful so that the public will resent paying taxes.

and Obama’s budget

which included a proposal to figure the cost-of-living adjustments to Social Security using the stingier chained CPI. I discuss this in Four Things I Know About Social Security. #3 is “Chained CPI is a way to cut Social Security benefits, not a way to measure inflation more accurately.”

and (oddly) a C&W song

For some reason I haven’t fathomed, this week all sorts of people were moved to comment on Brad Paisley’s new song  “Accidental Racist” (performed with black rapper L L Cool J). The song has a why-can’t-we-all-just-get-along theme, but annoys blacks and liberals by (among other things) making a false equivalence between whites judging a black man by his gold-chain bling and blacks not forgiving whites for the iron chains their ancestors wore.

In my terminology, Paisley is expressing privileged distress: His song’s main character (never assume a song is autobiographical) suffers because blacks now feel empowered enough to object to racist crap (like a confederate-flag t-shirt) that he used to get away with. He then imagines that his suffering is comparable to what blacks suffer from racism, so he’s ready to call it even and wipe the slate clean.

The debate basically amounts to: Yeah, the song raises the race issue in a pretty clueless way, but if it were any more clueful, Paisley’s fans wouldn’t listen to it and so wouldn’t be thinking about overcoming racism at all. Half a loaf.

While we’re on the subject of racial cluelessness, Rand Paul spoke at historically black Howard University. Paul treated the Republican Party’s dismal performance among black voters as some of kind of mystery. He reviewed the party’s stellar racial record from Lincoln through the 1950s, and then skipped completely over the last 50 years, when Republicans courted the racist Dixiecrats who were leaving the Democratic Party after it embraced the Civil Rights movement. (Charles Blow filled in that history for Paul. I reviewed it in detail in December.)

Jon Stewart summarized:

You can’t just yada yada yada the last 60 Republican years: “A Republican freed the slaves, gave black people the vote, yada yada yada, and now all blacks vote Democratic. I mean, what the hell?”

Josh Marshall commented on Paul’s shock that his audience already knew the history he was trying to tell them and still wasn’t sold:

When you look at who’s the bamboozled and who’s the bamboozler in this part of the GOP subculture you see that it’s not so clear cut. … The GOP is so deep into its own self-justifying racial alternative reality that there’s some genuine surprise when the claptrap doesn’t survive first contact with actual black people.

and you also might be interested in …

An unplanned consequence of putting armed police in public schools: Incidents that used to send you to the principal’s office now send you to court. The NYT reports:

Joshua, a ninth grader who lives south of Houston, got into a brief fight on a school bus in November after another boy, a security video showed, hit him first. The principal called in the school’s resident sheriff, who wrote them both up for disorderly conduct.

Charges were eventually dismissed, but Joshua had to find a lawyer and miss class for two court appearances. “I thought it was stupid,” he said.

Harvard’s Jal Mehta proposes a really radical change in education policy: Train teachers rigorously and well, and then let them do what they’re paid to do.

Show this to the next person who tells you about “liberal media bias” on climate change.

Number of climate scientists participating in discussion: zero.

Exxon’s pipeline spill in Arkansas is much smaller and less messy than a Keystone XL spill would be. Imagine this in your back yard.

Yet another sad story about a teen rape victim getting hounded by her peers.

You’ve got to wonder if this is finally the right place for a “Just Say No” approach. As we saw in the Steubenville case, a lot of teen guys seem not to realize (at least not until after the fact) that it’s wrong to take advantage of a girl who can’t resist. That’s why I like this video:

April 15, 2013 – 10:50 am Categories: Weekly summaries | Comments (1)

Four Things I Know About Social Security

1. It’s not going bankrupt in seven years.

Stephen Moore shouted this popular-but-bogus claim (over Bernie Sanders’ objections) on the April 5 episode of Real Time with Bill Mahr. It’s a common conservative talking point often put forward in publications like the Washington Times.

2020 is when the Social Security is projected to start paying out more than it takes in. (It already pays out more than it collects in taxes, but interest will make up the difference until 2020, according to the current Trustees’ Report.) This has to do with the retirement of the baby-boomers, and has been foreseen for decades. (If you’re a baby-boomer with an IRA, at some point you plan to start taking money out rather than putting money in. You don’t become bankrupt at that moment.) That’s why Social Security has been taking in more than it paid out since it was reformed by President Reagan and a Democratic Congress in 1983. (Then, the Social Security Trust Fund was only months away from hitting zero.) That’s how the Social Security Trust Fund accumulated its $2.7 trillion surplus.

The claims Moore shouted were “That money’s been spent already.” and “You can’t spend the same money twice.” He’s referring to the fact that the government-as-a-whole has not been building up a surplus (other than briefly at the end of the Clinton administration), so what the SSTF holds is not a stash of dollars or a pile of gold, but U.S. government bonds. In other words, the SSTF loaned its surplus to the rest of the government, which spent it. This has been demagogued as “raiding the trust fund” and somehow is supposed to make the whole idea of the SSTF illegitimate.

But nobody applies that logic to any other situation. When private pension funds hold big chunks of their assets in U.S. government bonds, or when individuals have government bonds in their IRAs, that’s considered the safest possible investment; nobody claims the money is “already spent”. Ditto for corporate bonds. Hasn’t the corporation “already spent” that money too? Or bank CDs — that money isn’t sitting in the vault; the bank loaned it to people who “already spent” it by starting businesses or building houses.

In short, “you can’t spend the same money twice” is flim-flam, and Stephen Moore and the Washington Times know it. (That’s why Moore had to shout. If people examine what he’s saying calmly and rationally, they’ll see through it.) The SSTF is holding $2.7 trillion in the safest possible investments. That stash will keep increasing until 2020, when the program will begin to tap it the way President Reagan and Speaker O’Neill pictured back in 1983.

2. It’s not a “Ponzi scheme”.

Shortly after World War I, Charles Ponzi opened an investment company that promised large returns from a murky investment strategy, and his early investors seemed to get the returns he promised. That drew in more investors, who also got big returns, and so on.

The secret was that Ponzi was using the new investments to pay the returns to the current investors, creating the appearance of profits that didn’t exist. Bernie Madoff used the same trick just a few years ago. Both schemes collapsed, as such schemes eventually must, because they require more and more investors to keep going.

In an ideal Ponzi scheme, the schemer disappears with the money at precisely the moment when investors start trying to cash out, but neither Ponzi nor Madoff was able to time it correctly. Both went to jail.

Calling Social Security a “Ponzi scheme” (as Rick Perry and other conservatives have done) is a pejorative way to point out something everybody knows: The program relies on current workers paying taxes in order to finance the pensions of retirees. If the economy collapsed to the point that no one could pay taxes, the SSTF would drain out and benefit payments would stop. (Fox News’ Andrew Napolitano presented these well-publicized facts as if they were some top-secret revelation.)

But the differences dwarf the resemblances:

  • Social Security has no schemer who plans to run away with the money.
  • The finances are public. Everyone can see what is happening.
  • It’s not a get-rich-quick scheme that appeals to people’s greed. It’s a social contract between generations that appeals to our desires to (i) not let our elders starve, and (ii) not starve when we get old.
  • The assumptions Social Security depends on are a continued healthy economy and continued faith in the social contract. A Ponzi scheme depends on an exponentially growing pool of suckers that eventually has to exceed the population of the world.
  • Consequently, a Ponzi scheme inevitably collapses, at great loss to the last round of investors. Social Security can keep going as long as its two underlying assumptions hold.

In short, anybody who refers to Social Security as a Ponzi scheme is just trying to piss people off, and has no intention of discussing the program seriously.

3. Chained CPI is a way to cut Social Security benefits, not a way to measure inflation more accurately.

Chained consumer price index is an alternative to the consumer price index (CPI), which is how the government measures inflation for purposes like the cost-of-living adjustment (COLA) in Social Security. The original selling point for chained CPI was that it is a more accurate measure of inflation, because it allows for the way that people change their decisions as prices change. That’s the point made in this video by Fix the Debt (a “non-partisan” billionaire-funded organization that coincidentally wants “lower tax rates” that increase the debt, but benefit billionaires).

Chained CPI produces with a slightly lower measure of inflation, which results in lower COLAS than the CPI we use now, and — given time and the magic of compound interest — substantially lowers Social Security benefits down the road. Those lower benefits happen gradually, so we can tell ourselves it will be painless for the elderly.

We can also tell ourselves that it won’t “cut” benefits. As the FtD video says:

Benefits won’t be reduced, they’ll continue to grow over time, and they’ll do so more accurately. Furthermore, what the critics aren’t seeing is that the current system pays everyone more than it intends to. So instead of overpaying everyone, perhaps it makes more sense to focus on the people that need the additional help.

Here’s the problem with that: If you really wanted Social Security COLAs to be “accurate”, you’d base them not on the basket of goods and services tracked by either the CPI or the chained CPI, but on the goods and services seniors actually need and buy (i.e., fewer baby diapers and more adult diapers). Economist Dean Baker explains:

The Bureau of Labor Statistics (BLS) has constructed an experimental elderly index (CPI-E) which reflects the consumption patterns of people over age 62. This index has shown a rate of inflation that averages 0.2-0.3 percentage points higher than the CPI-W.

The main reason for the higher rate of inflation is that the elderly devote a larger share of their income to health care, which has generally risen more rapidly in price than other items. It is also likely that the elderly are less able to substitute between goods, both due to the nature of the items they consume and their limited mobility, so the substitutions assumed in the chained CPI might be especially inappropriate for the elderly population.*

While the CPI-E is just an experimental index, if the concern is really accuracy, then the logical route to go would be for the BLS to construct a full elderly CPI.

So the CPI-calculated COLAs have probably been too low, not too high. Rather than “overpaying everyone”, we’ve been letting inflation slowly whittle Social Security benefits away. Switching to chained CPI allows inflation to whittle faster.

If the way we want to reduce the deficit is by cutting Social Security benefits gradually over time, let’s argue that case on its merits. Let’s not kid ourselves about “more accurate” measures of inflation.**

4. We could keep the program solvent far into the future by raising the cap on taxed wages.

Unless you’re in the the upper or upper-middle class, you may not realize that not all wages are subject to the Social Security tax. In 2012, any wages over $110,100 were not charged Social Security tax. As a result (according to economist John Irons of the Economic Policy Institute), 6% of wage-earners exceed the cap, and because some of them exceed it by quite a bit, the percentage of income untaxed by Social Security is much larger and growing:

Due to growing income inequality, the share of earnings above the cap has risen from 10 percent in 1982 to over 16 percent in 2006. This is because incomes have grown strongly at the top while middle incomes have stagnated.

This trend is expected to continue, meaning that a growing share of earnings will remain outside the tax base.

The cap also means that higher-income individuals pay a smaller share of their income in Social Security taxes than middle-class employees. Including the employee and employer shares of Social Security and Medicare taxes, earners in the middle fifth of the income distribution pay an average effective payroll tax of about 11 percent. In contrast, the top 1 percent of earners pay just 1.5 percent on average.

… According to the Social Security Administration, fully eliminating the cap on taxable earnings would be sufficient to fully close the projected shortfall.

* People who talk about changing your buying habits have clearly not dealt with any actual seniors. When doctors suggested my 89-year-old father was developing a peanut-butter allergy, I bought him jars of soy and almond butter to try instead. While cleaning out his cabinets after he went to a nursing home, I found them unopened.

** I wouldn’t tie benefits to inflation at all. I’d tie them to the median wage.

April 15, 2013 – 10:05 am Categories: Articles | Comments (3)

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