Saturday, April 30, 2005

Saturday Baby Extra: At the Arboretum

by Tom Bozzo

It's a typical April 30 in Wisconsin (cool, breezy, indecisive, for non-local readers), so we have to set the Way-Back Machine to two weeks ago for some atypical April conditions in the UW Arboretum.

Author and son, still holding on from the walk across the parking lot.

Off to the races! Trees with pink flowers were the big draw this visit.

John with another pink tree.

Yellow flowers, however, are not so interesting.

Back to pink.

Julia was enjoying the sunshine, too.

Is it the baby getting the attention, or the yellow flowers? Time to go in any event.

Friday, April 29, 2005

Nothing To See Here

by Tom Bozzo

Here is a test of some blog surgery on Ocean.

Bushism #6: More Disappearing Line Between Parody and Reality

by Tom Bozzo

As I told Oscar and his comments section last night, during last night's press conference, George W. Bush channeled George Oscar Bluth II (*) and performed some privatization magic (oops, illusions) on Treasury securities.

I just heard this on the radio this morning:
I've traveled the country to talk with the [i.e., to a carefully screened segment of the] American people. They understand that Social Security is headed for serious financial trouble and they expect their leaders in Washington to address the problem.
I admit to chuckling at GWB's delivery of "serious financial trouble," like he wished he still had Saddam Hussein to kick around. He subsequently described the Treasury securities in the Social Security trust fund as "empty promises," while offering that private account holders could hold nice safe Treasury securities in their private accounts as "real assets, real money." I leave it as an exercise as to whether a private account invested in Treasury securities can overcome the guaranteed benefit offset after fund management expenses.

Or, as Josh Marshall ably put it:
There was so much bamboozling going on tonight in that press conference that it was easy to miss one essential contradiction in the president's argument. You don't have to worry about private accounts, he said, because if you want you can fill your account with US Treasury bonds which have no risk at all. They're backed by the full faith and credit of the US government. But he says that the very same Treasury notes, when they're in the Trust Fund, are just worthless IOUs.
It's amazing, with this bunch, how in the span of just three months something I used to impugn the intellectual integrity of a right-wing think tank ends up issuing from the mouth of the president.

Brad DeLong
, meanwhile, tries to figure out whether "[t]he plan... preserves the defined-benefit component of Social Security in the long run," and answers a tentative maybe.

That's a tough one. The relevant quote appears to be:
As a matter of fairness, I propose that future generations receive benefits equal to or greater than the benefits today's seniors get.
At the first reading, I read "benefits today's seniors get" as "current-law benefits," in which case this would effectively constitute an endorsement of the Ryan-Sununu flavor of the plan, i.e., the fiscal armageddon version of privatization.

At second reading, however, I'm inclined to see it as an indication that guaranteed benefits will be frozen at current (real) levels, presumably by benefit indexing changes. So, what Bush is saying is that there will be big guaranteed benefit cuts relative to current law. Since it's possible to get a total offset of the guaranteed benefit — which at least in some cases will not be made up with the private account proceeds — I conclude that the administration has made no progress on the defined benefit issue, and if anything is cementing the rollback of Social Security's retirement safety net. (Update: this is also Kevin Drum's conclusion; he also notes Bush's mention of "enhanced" low-earner benefits. "Enhancement," in this case, seems to mean "no worse than current law," unless you're a low earner who becomes a medium-low earner, in which case benefits won't be enhanced.)

I also conclude that the latest apology owed is from to John F. Kerry.

(*) "Arrested Development's" allegory of the Bush years alone should install it in the Pantheon of underappreciated television comedy.

Thursday, April 28, 2005

Bushism #5: Bushisms Go To Bamboozlepalooza

by Tom Bozzo

This one, from Bush's Bamboozlepalooza (TM) event in Texas, does involve mangling of the language, mathematics, or both.
For example, if you're a worker making $35,000 over your lifetime, and your -- the government allows you to take a third of your payroll taxes and sets it aside in a conservative mix of bonds and stocks that earn, say, 4 percent, that money will yield $250,000 over your lifetime, which is a heck of a good nest egg for a lot of folks. That's money you call your own.
Clearly, Harvard Business School will give anyone an MBA. If you earn $35,000 "over your lifetime," you're lucky to find shelter space in lieu of a permanent roof over your head.

But presumably what the president meant was to describe someone earning $35,000 per year over a working lifetime. So let's consider his example.

One third of current-law Social Security payroll taxes is 4.133% of that. Let's also assume that the $35,000 is in constant (inflation-adjusted) dollars, that the 4.133% of $35,000 is invested at the start of the year, and that the 4% return is on top of inflation and compounded annually. Under those assumptions, mathematics you can do in a spreadsheet will show that you'll reach the quarter-million dollar balance — after a 53-year working career. Happy retirement in your early-to-mid 70s, hope none of that time was spent working at Wal-Mart!

Since the Bush plan would take the principal plus a 3% "clawback" out of traditional Social Security benefits, it's highly disingenuous to suggest that the hypothetical worker is actually better off to the tune of $250,000 under privatization.

The Bush quote was en route to promoting the alternative retirement plans of some Texas municipalities, which are sometimes advanced as a model by privatizers, but which actually constitute no privatization miracle at all. (I've been meaning to post on the subject for a while.

For one thing, the cost of the Texas alternative plans is just under 14% of payroll, versus 12.4% for Social Security; Bush has said that the tax rate is absolutely, positively, foot stomp, the one parameter of the existing system that won't change under his watch.

Then there's the investment mix, which is deliberately conservative, to the extent that the Texas plans don't yield the 4% over inflation from the hypothetical following Bush's example. Earning the Texas plans' 3% historical return on top of inflation, instead of 4%, knocks the 53-year nest egg down by 27%, yielding $1,160/month in a partly inflation-adjusted annuity at age 70 according to the Thrift Savings Program's current terms. The Texas plans' guaranteed return is a mere 0.75%-1% on top of inflation. The guaranteed minimum return also trades away the prospect of earning the outsized historical stock market returns that privatization proponents use to promote the greed of would-be marks.

The bottom line is that low earners and middle earners are likely to be better off under traditional Social Security. Shockingly, high earners will tend to benefit from the alternative plans, according to a 1999 GAO analysis. So, the plans would make great policy if everyone were above average.

See also Economist's View for mention of a more recent study of the plans.

Wednesday, April 27, 2005

Three Cheers for Specialization and the Division of Labor

by Tom Bozzo

By exchanging money with men who own big tools, I just turned at least a solid weekend's shrub removal drudgery into something that happened in the interval of time from when I got out of the shower to when I'm leaving for work (which I haven't yet done). Yay, economy!

Schadenfreude Alert

by Tom Bozzo

Wisconsin Public Radio is reporting this morning that Rep. Jim Sensenbrenner (WI-5) enjoys travel on the dime of corporations with business before his committees (not a completely new story, apparently). Hello-delay!

Things Implied By The Infallibility of the Medium Lobster

by Tom Bozzo

At Fafblog!
Taking the fight directly to the idea of terror, the Bush Administration has cleverly opted to abandon talk of Iraq and terrorism in order to let the very concept of terror fade from the public consciousness. Indeed, the President has gone so far as to spend weeks flying across the country filling the airwaves with thousands of hours of meaningless prattle on Social Security privatization, all to distract Americans from terror, driving the very notion of Islamism from the mental landscape, until it becomes impossible to even conceive of terror as an abstract principle.
At first, I thought that without the Global War on Terror to scare people into voting for them, such an effort on the administration's part would be self-deconstructing. Without this anxiety medicine for the masses, three or four percent of the voting public might well decide that they didn't like hand-holding with Saudi royalty (*) and did notice that billionaires were picking their pockets (and didn't like that, either). Could the Medium Lobster possibly be wrong?

Since the Medium Lobster is a higher being with knowledge beyond space and time, the doctrine of infallibility can only imply one thing: the true situation underlying "Bushism #3" from the other day is vastly worse than I could think just sitting here in Madison reading the "MSM." For as fixée as its idées fixes can be, the administration is moderately adept at running away at light speed from its failures that fail so badly as to become potential political liabilities, deflecting the blame to the "overzealous Republican staffer" in its ongoing parody of accountability and responsibility. If they're suppressing evidence of progress in the area where the public has broadly supported them, then things must be well and truly f***ed.


As for Pope Benedict, who only thinks he's infallible in certain circumstances, it surely can't be a good sign that in the wake of a host of stories (example) describing his efforts to either secure the papacy himself, or failing that to amass a coalition behind another individual of his liking, he's claiming to have prayed not to be selected. Perhaps Time was right in listing Bush as a "fellow traveler."

(*) DLC types owe Michael Moore an apology.

Tuesday, April 26, 2005

GM and Health Care: Don't Look Behind That Curtain

by Tom Bozzo

GM has received plenty of blogosphere attention over its latest round of financial woes, attributed in part to its retiree health benefit cost burden, in part for the optimistic interpretation that corporate America might ultimately find that some more socialization of medicine is actually preferable to the burning airplane about to crash into a train wreck that we presently enjoy.

My assessment of the optimistic view: dream on. If there's an overarching theme to Bush domestic policy initiatives, other than buying the support of core constituencies through government debt issuance, it's the transfer of risk from institutions — corporations and government — to individuals. This is a common theme of U. of Oregon's Mark Thoma over at the excellent Economist's View (see, for instance, this early post).

While corporate health care bills may yet have some major firms crying uncle, the likely response under the present direction is a cocktail of health savings accounts plus mandatory purchase of private insurance to cover major medical expenses. (That's the Gary Becker plan for universal health care, in a nutshell.)

But I digress. I don't actually believe that GM's health care costs, however large or fast-growing, are the real issue. Rather, invoking the health care crisis strikes me as a bit of strategic misdirection from GM's main problem, which is that much of its product line remains second-rate and its forward-looking product strategy is an incipient disaster.

An Automotive News story from this morning makes the basic case: GM's North American revenues for the first quarter were off $3.7 billion compared to the previous year's quarter. GM's health care bill for 2005 is expected to increase by $400 million.

Back a few months ago when Pub Sociology's Brayden King and I were really excited about executive pay issues, I raised the question of whether GM vice chairman and design guru Robert Lutz was worth his $6.5 million annual pay. Could be, I suggested, if famed "car guy" Lutz's influence could eat into the huge discounts needed to move GM's metal, it could be. Since then, Lutz has been stripped of his direct responsibility over GM's North American product lines, though he is still charged with global product strategy or something like that. Overall, the verdict on Lutz is turning thumbs-down.

Here's a snippet of Lutz's vision thing from last Saturday's New York Times:
"Everybody thinks high gas prices hurt sport utility sales," said Robert A. Lutz, the vice chairman of G.M., in an interview last month. "In fact they don't."

Mr. Lutz said most buyers of big S.U.V.'s were highly affluent. For "the median income of, say, a Suburban or a GMC Denali buyer, probably the best demographics of any vehicle we have, or a Cadillac Escalade, you're looking at people with a household income of $150,000 to $200,000," he said. "Do they care whether their gasoline bill goes from $20 a week to $40 a week? The answer is no."
While my household income isn't in the territory of the prime Escalade demographic, it's far enough along that I can say that you can't take $1000/year out of my pocket without attracting my attention. I also caught, via the Daily Kos Cheers and Jeers, a great Bill Maher quip:
Of course, the Hummer is made by General Motors, the owner of other gas-guzzling F***-You-mobiles like the Escalade and the Suburban. And they just lost a billion dollars in one quarter. Because it suddenly got a lot less sexy to drive one of these fake macho vehicles now that it costs a hundred bucks to fill it up...
And as it happens, while GM's truck sales are faring better than its car sales overall (see here for the gruesome details), its insanely profitable midsized and large SUVs are faring poorly, with Yukon and Suburban sales down 25-30% and even the Escalade mildly off over the year-earlier quarter.

Even GM's relatively desirable car models, such as the 'Art & Science'-themed Cadillac cars (for which I confess to harbor a certain attraction), can't — unlike the foreign competition — command anything like their MSRPs: the fine print of a recent ad for lease deals on the well-regarded CTS and STS models made it clear that a few thousand dollars' discount is typical, in line with GM's $4000-plus average incentive per vehicle sale.

According to the Automotive News article, GM loses around $2,000 on a typical mid-size car sale. Based on its average incentives, it follows by advanced math that if their cars were more nearly marketable at something close to their asking prices, GM's bottom line would benefit enormously. Taking the car lines to break-even would add something like $3 billion to GM's net income. If GM could live on Honda or Toyota incentives, they could actually make money on cars!

Lutz's contributions to that goal, however, appear grossly inadequate. A lot of effort has been lavished on a handful of low-production "halo" cars, like the new GTO (a flop) and small convertibles for Pontiac and Saturn. Even if successful, those cars can produce only so much contribution to the company's overhead on their own. Without a stronger backup cast, it's hard to imagine customers drawn into the showrooms for the Solstice and Sky forgetting to stick their hands out for rebate checks when they settle for a G6 or an Ion.

GM's near-term hopes really are pinned on the next-generation large SUVs, due in about a year. Should oil prices not moderate, look out below.

Meanwhile, the marketing signlas are dire. Trying to move a warmed-over Century with an ad campaign suggesting that hot babes dream on about them is just a cry for help. Plus, as Jeremy notes at the link (and with apologies to readers of a certain age), the geezer rock and geezer car demographics are rapidly converging.

Still, there's no reason that good product can't turn things around. I don't especially care for the Chrysler 300, but it sells. Even Boeing, whose commercial business was looking dire and whose management seemed to want to deal with anything else, now seems to be getting significant traction with the forthcoming 787.

Monday, April 25, 2005

Bushisms #3 and #4

by Tom Bozzo

The new Bushisms: mangling reality required, mangling the language optional. Both of today's are from the 4/23 radio address.

Bushism #3:
As Iraqis assume increasing responsibility for the stability of their country, Iraqi security forces are becoming more self-reliant and taking on greater responsibilities. Today, more than 150,000 Iraqi security forces have been trained and equipped, and for the first time, the Iraqi army, police, and security forces outnumber U.S. forces in Iraq.
Grim reality:
Meanwhile, officials describe setbacks in the security situation in the Sunni Muslim city of Husaybah on the Syrian border, near the area where fighters tied to al Qaeda had staged the second of two well-planned attacks on a U.S. military installation this month. An Iraqi army unit that had once grown to 400 members has dwindled to a few dozen guardsmen "holed up'' inside a phosphate plant outside of Husaybah for their protection, a Marine commander said.

Maj. John Reed, executive officer for the 3rd Battalion, 2nd Marine Regiment, which has a company in Husaybah, said the Iraqi guardsmen retreated to the phosphate plant compound with their families after insurgents attacked and killed scores of people in recent months.

"They will claim that they've got hundreds ready to come back and fight," said Reed, whose company seldom patrols inside Husaybah. "Well, there are no more than 30 of them on duty on any given day, and they are completely ineffective...

In city after city and town after town, security forces who had signed up to secure Iraq and replace U.S. forces appear to have abandoned posts or taken refuge inside them for fear of attacks.

Washington Post, "Insurgent Violence Escalates in Iraq," 4/24/05. See also "Iraqi forces desert posts as insurgent attacks are stepped up," Daily Telegraph.


Bushism #4:
Sustaining America's prosperity requires restraining the spending appetite of the federal government. That's why the 2006 budget I submitted to Congress holds the growth of discretionary spending to 2.1 percent -- below the projected rate of inflation...

The principle is simple: Taxpayer dollars must be spent wisely, or not spent at all.
Grim reality:
Despite their brave talk about the need to control the red ink, President George W. Bush and Congress are marching in the opposite direction. At Bush's urging, lawmakers are about to approve an additional $80 billion to fund the war in Iraq for 2005. The House has voted to repeal permanently the estate tax -- at a staggering 10-year cost of nearly $1 trillion. Congress is abandoning a White House request to trim farm subsidies, and lawmakers are balking at modest cuts in Medicaid...

Even GOP strategists concede that deficit reduction will go nowhere unless tax hikes are in the mix. Trying to eliminate deficits on the spending side alone is "completely insane," says Ron Haskins, a senior fellow at the Brookings Institution and former House GOP aide.

"Washington's Deficit Plan: Nada", BusinessWeek online, 4/25/05.

Feel free to nominate unwise Bush administration pet expenditures in comments. My nominations: the Iraq war (remember Larry Lindsey getting canned for among other things suggesting that the war could cost $100B-$200B? "Fact-checkers" tut-tutting Kerry over the claim that the war would cost $200B? Those were the days!), ballistic missile defense, the new human space exploration "vision."

Friday, April 22, 2005

El Camino

by Tom Bozzo

I saw a very, very ("Slingshot") yellow Chevrolet SSR out the office window, going through the McDonald's drive-through next door.

There's good retro and bad retro. The SSR is not good retro: the website pictures don't do justice to the weirdness of its huge flat-sided fenders. Plus, the damned thing is $45,000, which will get you a perfectly nice C6 'Vette among many other things.

No wonder GM is in trouble.

Bushisms #1 and #2: Remarks

by Tom Bozzo

1. "If someone does not pay his or her debts, the rest of society ends up paying them."

A big part of the bankruptcy bill's sales pitch is that it will make life cheaper for everyone by eliminating a supposed cross-subsidy of bankrupt debtors by the creditworthy, as President Bush's statement above implies.

The problem with the argument is that lenders assess credit risk in various ways and price accordingly — unless, as a family member of mine in the business might tell you, the marketers run amok and start giving money away. (And whose fault is that?)

In any event, through the extraction of default risk premiums (not to mention by selling explicit credit insurance), lenders ensure that people with high default risk pay for their own defaults in an insurance-pooling sense.

Good bankruptcy reform might reduce those risk premiums. But did Bush sign a good reform bill? Not bloody likely. Plus, it can't do much to help those of us who aren't paying much of a premium to begin with.

An additional note is that people like me are basically getting paid to use our credit cards (i.e., we pay no finance charges and get around 1% of the transaction volume kicked back in the form of frequent flyer miles or other perks). The question is, how do card issuers make money off us?


2. "Offering young workers a 1930's-era retirement system is like trying to persuade them that vinyl LPs are better than iPods."

Ken Houghton knocks this one nicely down the middle of the fairway in comments: discerning ears prefer vinyl records on quality playback equipment to digital music.

The iPod is a great gadget, particuarly for the ease with which it's possible to haul a huge music collection from home to car to office (or a suitable modification for students and big-city dwellers with more pedestrian routines). But pure sound quality isn't its forte. At one cut, the President's comment amounts to saying something like, "Apples are better than ketchup."

Then there is the question of whether the intended analogy is legitimate. As we've been over before (among many other bloggers), there are two basic flavors: pig-in-a-poke (the basic carve-out plan with additional benefit reductions to reduce program cost), and pie-in-the-sky (Ryan-Sununu, with its government insurance of financial market returns among other things small-government conservatives should just adore). My analysis: Steve Jobs should not be happy about the iPod's halo being used this way.

See also a good take on this at Economist's View.

Random Ten: This is Last Friday's Playlist, Which You Wouldn't Know If I Hadn't Told You

by Tom Bozzo

Fire up your hardware or software MP3 player, set to shuffle, and report the first ten tracks.

A Certain Ratio

Wild Party (Way Out West Mix)
Looking For A Certain Ratio
The Mighty Lemon DropsLike An Angel

Happy Head & Out of Hand
The House of Love
RoadThe House of Love
Marquee Moon
LunaThe Owl & The PussycatRendezvous
Heidi BerryArielHeidi Berry
The Weather ProphetsLike Frankie Lymon
Diesel River
The Pastels

Baby Honey

Up For A Bit With The Pastels
ManifestoE Dub
Pale Saints

A Thousand Stars Burst OpenIn Ribbons

This playlist, which I actually heard in its entirety as my iPod churned it out, turned out uncannily like a typical start of one of my old WXDR (now WVUD) radio shows from the late '80s.

Among others, I occupied a Thursday evening time slot between "Club 91three," the R&B/dance music show, and the "Reggae Sound Splash," whose then-host Jamie McLaren considered its 8-10 P.M. slot the "unofficial start of the weekend." Jamie left the show in the early '90s, not long after I set off for higher education glory, but his late-'80s occasional co-host Ako Mills soldiers on with the show; for that matter, you can also still hear my former co-host Steve Klinge's "All Tomorrow's Parties," Tuedays from 8-10 (Eastern) on the WVUD internet stream, in case you don't live within a 20-mile radius of Newark, Delaware.

I would usually lead out of Club 91three with a bit of what is now often called electronica, but which was then just alternative dance music. DJ Farshad, who occupied the slot before mine, would often be visibly horrified by what I thought constituted matching beats per minute between tracks(*), but probably would have found the A Certain Ratio remix satisfactory on its own (listen to a 1-minute clip here [Real Audio], or for the whole thing, scrub to the 1 hr. 58 min. mark in this WFMU Real Audio stream). ACR also show up in various forms in the mockumentary "24 Hour Party People," an indispensible video for fans of the Manchester music scene (Joy Division, New Order, Happy Mondays, and many more).

The transition into guitar indiepop is quick here — the iPod loves the Mighty Lemon Drops — but that was not an unusual follow-up for a lengthier dance track, with back-announcement of the intro song to cover an otherwise jarring segue. From the Lemon Drops to Heidi Berry, the tunes' pace progressively grinds to a near-stand still, but starting with The Pastels' neo-psychedelic drone, the last three tracks successfully kick things back into gear. Way to go, random track selection!

(*) Though he was not as disgusted as Duane of "Psychedelic Flashback" would be if I was in a position to lead into his show with the Durutti Column's cover version of "White Rabbit" (scroll to FAC 184).

Thursday, April 21, 2005

I Laughed, I Cried

by Tom Bozzo

Anatomy of the fake town hall meeting, at The Daily Show.

Bushisms #2: A Tester for Conservative Audiophiles

by Tom Bozzo

This one (via Dan Froomkin's White House Briefing) goes out to Joe Malchow.
Offering young workers a 1930's-era retirement system is like trying to persuade them that vinyl LPs are better than iPods.
One thing that confuses me about the new "modernization" label for Social Security privatization (administration motto: if privatization private personal accounts doesn't work, try try again) is that I'd think conservative audiences would be particularly attuned to the issue that newer is not necessarily better.

Update 4/26/05: Joe responds and describes himself as an "audio liberal." I have to give him that one and say that I'm basically an audio conservative with some libertarian tendencies (i.e., I won't begrudge youth their newfangled playback technologies, and I use some of them myself).

However, I have to say that for true retirement savings choice, my suggestion is also on the conservative side: open an IRA, select suitable investment(s), and put saved money in the account.

Bushisms Mark II, #1

by Tom Bozzo

I've seen some conservative bloggers complain about the declining amusement quality of Bush II's assault on the language. Fair enough. I'll suggest instead going after the content of the non-mangled statements.

From Bush's remarks at yesterday's bankruptcy bill signing:
"Bankruptcy should always be a last resort in our legal system," Bush said. "If someone does not pay his or her debts, the rest of society ends up paying them."
The first sentence, I basically agree with, though I'm at a loss as to the Bush policy contribution to making bankruptcy legal but rare.

Spot the fundamental conceptual error(s) in the second.

Q: Has There Been a Miraculous Marian Apparition Under the Kennedy Expressway?

by Tom Bozzo

A: No.

Tuesday, April 19, 2005

Kissing Up to the Boss

by Tom Bozzo

From the Diocese of Madison:
Bishop Robert C. Morlino welcomed the election of Pope Benedict XVI on April 19 and told a press conference following the news Tuesday that he was "pumped up" about the new successor of St. Peter.
And Pope Benedict is the kindest, bravest, warmest, most wonderful human being I've ever known in my life (link).
Morlino said: "He is one of the most brilliant theologians in the history of the church. He will lead us all into a deeper friendship with the Lord, which involves knowing the truth about Jesus. He can articulate it, speak it, and show it. He has the ability to pull it all together for us."

"I am confident Pope Benedict will be a singular blessing for the church," said Morlino. "I welcome him with love and promise him our loyalty in the days ahead."
But seriously, hoist a Ratzinger Zinger(*) or two, and read this fair and balanced 1999 article from the National Catholic Reporter (link via Pharyngula commenter 'Bistroist') for everything you'd ever need to know.

(*) I'm still trying to figure out what this should be and whether I'd want to drink it. Just what is the German contribution to the cocktail world?

Monday, April 18, 2005

The Frontrunner

by Tom Bozzo

Hans Küng on Ratzinger: "His ideology is a medieval, anti-Reformation, anti-modern paradigm of the church and the papacy." Oh, joy.

Ratzinger is still the individual frontrunner in the TradeSports papal succession market — yesterday's Times had reports on background suggesting he had amassed a bloc of just under half the electors — though the late move in the market has been to a combination of Francis Arinze and the "field" (i.e., everyone for whom no contract is defined). With no news on the wires at this writing, I'm curious to know if any real information is reflected in the move.

I'll let Jeremy report on how the moves in the market have affected him so far, but it looks like he has some paper profits as the PAPACY.ITALY contract has plummeted and the PAPACY.FIELD contract has soared since he placed his wagers the weekend before last.

Update 4/19/05, noon CDT: Cardinal Ratzinger is now Pope Benedict XVI. Oh, joy. At least Jeremy should have come out ahead in his papal succession market operations.

A Statement I'm 1,000-Percent Convinced is Bu**sh**

by Tom Bozzo

"I'm 1,000-percent convinced of this: The president cares the most about this $10-an-hour person," said Allan B. Hubbard, director of the White House National Economic Council.
From the Washington Post, via MaxSpeak.

Saturday, April 16, 2005

"Security Theater"

by Tom Bozzo

To Oscar, I say: damn straight. (In the event you are not a regular Columnist Manifesto reader, click through and read the whole thing. NOW!!)

The quote Oscar excerpts could use some annotation:
"A lot of people will be shocked at the billions of dollars we've spent and the results they're going to see, which confirm previous examinations of the Soviet-style screening system we've [the Bush administration and Republican-led Congresses] put in place [and took credit for, in painting the Democrats as weak on terrorism issues in the 2002 midterm elections]," Rep. John Mica, R-Florida, told The Associated Press on Friday.
It is refreshing, though, to see some acknowledgment of what some of us have long suspected: that portions of the Bush executive branch are run like a Soviet-style bureaucracy.

A Correction

by Tom Bozzo

The Medium Lobster says that I am wrong about the estate tax:
The estate tax isn't just a wanton infliction of state violence upon Paris Hilton's God-given right to a tax-free mountain of money; it does not merely desecrate the solemnity of a loved one's stock portfolio; it is a dangerous regulation of the cosmic forces of Life and Death - and one that can only end in apocalyptic destruction...

For if income tax dissuades the living rich from being rich, then the death tax can only dissuade the dead rich from dying. Indeed, the more the government taxes our nation's most resourceful robber barons' estates upon their deaths, the greater incentive they have to not die at all - or worse, to rise from their graves and feast on the flesh of the living...
Since the Medium Lobster's ex cathedra pronouncements transcend fallibility, I defer to my epistemic better and confess my previous error.

Friday, April 15, 2005

April Blogger Dinner Recap

by Tom Bozzo

Last night, Suzanne and I hosted the April dinner with friends who sometimes blog. This time, we had B, C, F, and O, plus my dad who was visiting.

Since I spent most of the gathering hour cooking, I get to point to someone else's pictures for a change, here at Ocean. (Would I throw the pie? A thousand times no, and certainly not at Nina.) Jeremy also notes a couple of conversational highlights, and says some nice things about the food, too. Thanks! It was great to have everyone over!

As for dinner, here's the menu.

Stravecchio Gougères. We modified this recipe from to use native cheese; I understand the Silver Palate cookbook's version is substantially the same. This was perhaps the one miscalculation, as they came out of the oven a little to far in advance of the guests' arrival. On the plus side, the excess reheated farily well this morning.

Chicken roulades with spinach, blue cheese (from Dane County Farmers' Market veterans Hook's), and walnut filling; basmati rice; roasted asparagus. The main dish is the second recipe I've had from Charlie Trotter Cooks at Home. This one wasn't difficult, but was maybe a little too labor-intensive for everyday. A more ferocious mallet for flattening the meat would have helped quite a bit. It was delightful in any event.

It makes me wish that Condoleezza Rice would promptly sign an oath that she wasn't going to run for President in 2008 (not obvious why she'd want to scrap with the likes of Newt and Bill "send me your feral cats" Frist), so Nina and I could close out the relevant portion of our wager and start looking for a suitable pretext for trying Charlie Trotter Cooks at Charlie Trotter's.

Apple pie with spiced crust. The crust is the slightly sweet butter-and-lard crust (with vegetable shortening filling in for the lard) from Pie Every Day, plus a spice mix from a spiced crust recipe elsewhere in the same book. The latter made a very hard-to-work dough, so I was looking for the flavor without the hassle.

Thursday, April 14, 2005

Best Estate Tax Post Ever

by Tom Bozzo

Kash at Angry Bear reduces the estate tax repeal down to its foul essence: big tax increases for (living) people with decent incomes but not taxably large wealth — i.e., essentially the entirety of the middle and upper-middle classes. Why the anti-repeal debate wasn't originally framed as tax increases for you and me so that the country's Paris Hiltons can live tax-free is beyond me.

What the easy passage (in the House, at least) of a Bush policy so bad that it even loses the Wisconsin State Journal's editorial page means for the prospect of fiscal sanity under the Republicans is left for an exercise.

Some of the tax increases will evidently come from non-reform of the Alternative Minimum Tax. Citing a New York Times article, Mark Thoma notes that AMT "reform" will at best bring about a new and improved AMT. From interviews with commissioners, Bush's tax "reform" commission has too narrow of a remit to recommend major net changes (a not uncommon feature of these Bush-era commissions, BTW). That is, AMT reform has to:
  1. Be revenue neutral (against a baseline that includes exploding AMT payments), and
  2. Assume the current income tax rates are made permanent.
Not many degrees of freedom there!

I'll go out on a little bit of a limb and say that this is not necessarily the worst thing. Obviously, a return to those growth-killing tax rates of the late '90s would be simpler and arguably fairer. However, if non-policy political concerns take that option off the table, then an improved AMT does the trick of raising desperately needed revenue from people who by and large can afford to provide it.

I'd emphasize that the biggest problem with AMT is not the mere idea of putting a floor on income taxes for higher-income taxpayers, so much as its bizarre rules for forms of income most people probably didn't know existed. In the light of Nina Camic's tax travails, I'd suggest as another exercise reading the instructions for IRS form 6521 with a stopwatch at hand. Time how long it takes you to either black out or reach for a very large and stiff drink. Take out the crazy income and deduction rules and AMT is just a flat-ish tax, which some conservatives are supposed to love.

That all makes the heroic assumption that the "reform" won't be massively screwed up.

Wednesday, April 13, 2005

Wednesday Pie Blogging: Woe Is Pie!

by Tom Bozzo

This may look like an apple pie with spice crust whose only flaw is the excessive caramelization on the right point of the top tulip. There is a seemingly ironclad law of blogger dinners that some food shall be burned in the cooking process that I won't escape this time.

Alas, that is not the case. Somehow or other, I managed to breach the bottom crust in testing the pie for doneness, or something like that, and as I had the pie in for a few moments' additional browning, I heard liquid from the filling bubbling over in the oven. So, darnit, the bottom crust is going to be soggy and the dessert presentation will be less than pristine. Apologies in advance to tomorrow's guests. It probably will taste OK anyway.

Meow Ahead, Make My Day

by Tom Bozzo

The feral cat hunting measure passed the Wisconsin Conservation Congress by a 6800-to-5200 vote. (A propos of this Pub Sociology item, Madison's "MSM" headlined the story "Majority of Public Supports Hunting Feral Cats.")

I was mulling the merits of moving to Minnesota, which allows concealed firearms but where the Republicans have perhaps overreached their way into a period of relative decline, when I saw Jeremy Freese's related post in my regular morning blog scan. Jeremy makes a good case that farmers have legitimate interests in controlling feral cats that may not be met in other ways.

Considering that hunting is unsafe in urban areas, and the trap-neuter-release alternative could be difficult (and very costly) to implement on sufficient scale in rural areas, I'm persuaded that there's a legitimate urban-rural divide.

As for cat hunting, the vote is advisory and the Department of Natural Resources doesn't have much interest in pursuing it. The issue is ultimately up to the state legislature, where if John Gard(*) turns out to have a soft spot in his right-wing lunatic heart for feral kitties, I'd be really surprised.

(*) Who is presumably delighted that certain Wisconsin Democrats are squabbling over how "uncool" it was for a group led by a liberal Madison alder and a local labor leader to alter a Madison Deaniac group's endorsement for state party chair. Please, Stacie Rosenzweig, help patch things up (note: I admit to having no professional opinion on how best to do this) and move on!

Tuesday, April 12, 2005

Totally Jargon

by Tom Bozzo

Over at The Columnist Manifesto, which I've been sadly neglecting to link lately, Oscar yesterday uncorked a truly great line:
In fact, I think "term of art" is a term of art.
This was en route to a discussion of an academic dinner out where Oscar reported:
I felt increasingly challenged to follow the conversation, a feeling which reached its apex around the moment when one of my dinner companions rolled out the world "totalizing."
"Totalizing" was totally new to me, though that's not too surprising as I'm not an academic and only recently have branched out in my economics journal reading beyond the Journal of Econometrics, the substantive portions of which are written in math.

Oscar's analysis is that terms like "totalizing" amount to "gang symbols" for intellectuals, and in comments Wendy (link?) observes that "totalizing" has a uselessness — to the extent we understand what it means, it's covered by pre-existing vocabulary — and artlessness "more deserving of the MBA crowd." That just about nails it.

That's not to say there isn't good jargon out there. In blogging jargon, "trackback"(*) is efficient (compared to "link on blog A generated by blog B's blogger that signals that blog B has linked blog A") and broadly descriptive of its function. My favorite is perhaps Max Sawicky's "Blogistan" ("the right wing of the blogosphere") for its poetic-allusive character, though it is sufficiently esoteric that Max usually provides an in-line concordance when using it on MaxSpeak itself.

If only one of us had cooked up the term "man date" for the Madison male blogger get-together of a few weeks ago...

(*) "Trackback" is additionally interesting as it seems to have evolved from the name (as "TrackBack") of a feature of the Movable Type blogging software to generic jargon.

Monday, April 11, 2005

Monday Baby Extra: "Mmmmm, Food" Edition

by Tom Bozzo

Hold the presses!

Julia is ready for something...

...and here goes, yummy rice cereal (*) down the hatch.

John says, "Eating, what's the big deal?"

(*) Actual culinary delights to come.

Sunday, April 10, 2005

"Economic" Evaluation of John Paul II

by Tom Bozzo

While it's nice to be wanted, I really hadn't intended to touch the legacy of the late Pope in this forum with — ready rimshot! — a ten-foot pole.

As the Bishop of Madison is, among other Catholic Church luminaries, rushing to put the "John Paul the Great" appellation in circulation, I'd like to see a counterfactual analysis of the John Paul II papacy myself. (That is, evaluate John Paul II in comparison to the job that hypothetically would have been done by best candidate that the electors could have chosen in the alternative.)

For as little as is known about the causal mechanisms underlying economics, it looks like a comparative snap to evaluate Alan Greenspan in such terms.(*) It's technically possible to find an eligible candidate to remedy nearly any complaint, given the enormous latitude Canon 332.1 provides the electors in selecting a Pontiff. The response of the human institution would seem on the intellectual turf of my sociology pals. I will say that I agree with Kristof in today's Times that reforming the priesthood to include women and married men is warranted (if not overdue), and less troublesome on balance than the current-law alternative of having vanishingly few notionally celibate male priests.

Jeremy also wonders about the information content of the online betting markets' quotes on papal candidates. This is a case where the wisdom of crowds appears to be substanitally worthless, unless you happen to be part of one particular crowd. I'm inclined to agree with Jeremy that the Italian candidates are overpriced, and would add that the 'field' of other individuals is arguably underpriced, but what do I know?

I won't be at all happy if Ratzinger or a Ratzinger protégé is elected.


(*) As the follow-up post on Greenspan suggested, Paul Volcker's actions departed much more from simple monetary policy rules than Greenspan's (and everyone else's), implying that Greenspan's contributions are not likely to have been indispensible.

Saturday, April 09, 2005

Random Ten: At Least I Got the Track Listing on Friday Edition

by Tom Bozzo

Fire up your hardware or software MP3 player, set to shuffle, and report the first ten tracks.

Front 242Quite UnusualOfficial Version
The Mighty Lemon DropsTurn Me RoundHappy Head & Out of Hand
Cocteau Twins
Ella Megalast Burls ForeverBlue Bell Knoll
AdorableSunshine Smile
CD single
Dif JuzSilver PassageExtractions
ColourboxLooks Like We're Shy One Horse/ShootoutColourbox (MAD 315 CD)
BellyThe BeesKing
New OrderParadiseBrotherhood
SlowdiveSome Velvet Morning
The Durutti Column
FrancescaAnother Setting

The iPod serendipity fails a little for this playlist, mainly since I've started adding a bit of electronica to the music database. There's no way a human programmer would ever segue from Belgian syntho-industrialists Front 242 (note: Flash-heavy site) to C86'ers like The Mighty Lemon Drops. In the old days, I'd probably have buffered Front 242 from the rest with the reggae-ish track from Colourbox, and used the metalloid Adorable to lead into the Lemon Drops from there. The rest would almost work as is.

(Edited for increased linkiness.)

Friday, April 08, 2005

Some Things You Probably Didn't Know About Econometric Analysis of Mail Sorting Costs Unless For Some Reason You Click Through to Find Out

by Tom Bozzo

A side effect of working in postal economics is taking occasional guff to the effect of it being your fault that stamp prices are going up.

"Direct Testimony [176KB PDF] of A. Thomas Bozzo on Behalf of the United States Postal Service" concerns the (Postal Service) cost rather than the price side of the rate filing. That's very approximately all I can say here, versus through official channels [another PDF].

The Mess on the Desktop

by Tom Bozzo

You may have seen this "transparent desktop" thing (if not, it's cool, follow the link) — pictures of computers with desktop images that seamlessly display whatever is behind the screen, as if the screen had been removed. It seems to have originated as a Mac thing, but has been linked by BoingBoing, possibly among other high-traffic sites. Some are so seamless that they've raised questions as to whether they're "real" or just digital image editing trickery (i.e., pasting an image over an image of the screen).

The PowerPage linked a MacMerc tutorial that demonstrates a "no cheating" method employing a three photograph process:
  1. Photograph the background.
  2. Place the computer (or its display, if a desktop) in the vignette. Photograph the computer from the same position as the first picture.
  3. Engage in some Photoshoppery, using the screen from the second image to crop the first image to make the desktop image for the computer and transforming the result back to a rectangular image.
  4. Make the result of step (3) the background image, and re-photograph the computer. Done!
Step (3) struck me as cheating a little, and anyway I don't have Photoshop, so I wanted to see if steps (2) and (3) can be eliminated, for a two-picture process. MPoS (*) that I am, I experimented; the answer is yeah, pretty much.

Marginal Utility Central:

This isn't nearly as nice as the images in the Flickr slideshow — color matching is a big issue (the desktop image was taken with a flash), and my composition would have been more interesting if more of the mug were behind the screen — but I can report that the only image editing step for the image above is a crop in iPhoto. Plus, look at the time stamp on the post (not fake).

Here's my simplified process:
  1. Line up a shot of the background that's approximately the width of the LCD. (I zoomed in on the LCD, closed the computer, then tried to take the background image from the original position.
  2. Crop the excess from the top and bottom of the background image according to the LCD aspect ratio. Set the result as the desktop image.
  3. Try to photograph the computer from the original viewpoint. A tripod and/or a digital SLR would be very useful for this step, though not completely essential. (I couldn't use the flash with the anti-glare coating on the LCD, so a tripod would help keep the camera still in addition to making it much easier to replicate the original photograph's angle.)
Meanwhile, you can see why in real life, my background is a tiled a wildflower image from this collection at Jenn's Web Garden (by Jennifer Forman Orth of the Invasive Species Weblog).


(*) I know what you're thinking. It's for Madison Person of Science.

Un-Mac-Like Behavior

by Tom Bozzo

Software: iTunes 4.7.1, Mac OS X 10.3.8.

Action: Load music CD, select tracks in iTunes, click "Import."

Result: Non-selected tracks are also imported.

There's always room for improvement...

Thursday, April 07, 2005

Secret Handshake for New Dads?

by Tom Bozzo

A picture post at Bryan Smith's mostly baby weblog sent me back to November 5, 2002 (at left). Note the slightly stunned look at T + 5 days. I was walking up and down those stairs in the background a lot to soothe our sometimes fussy boy.

Of course, we should wash our hands after handling the Diaper Genie contents and before the secret handshake.

Friday Baby Extra: Unofficial Start of the Weekend Edition

by Tom Bozzo

The warm and sunny weekend weather finally put the kids in the stroller sans coats but with their sun-hats on.

Somewhere along the Southwest Bike Path, however, the hat stopped working for ate Julia.

Wednesday, April 06, 2005

Republican Economics Profs on Social Security Privatization: A Critique

by Tom Bozzo

A couple days ago, my mother pointed me towards this pro-privatization op-ed from the Wilmington News Journal by professors Stacie Beck and Eleanor Craig of the University of Delaware economics department. Mom wanted to know what I thought about it — request-blogging lives!

It not uncoincidentally happens that I hold a B.A. in economics from Delaware, and moreover was hired by Eleanor Craig in 1995 to teach three sections of the course that in my days was called "Money, Credit, and Banking" but had by then been revved up to something like "Introduction to Monetary Economics." My personal experience of Eleanor Craig was a nice person and good boss. I don't know Prof. Beck. I will try to be tough only on their arguments below.

They both are conservative partisans to the extent of having signed a letter in early 2003 endorsing Bush administration budget policies as fiscally responsible, along with two other Delaware profs. That obviously hasn't turned out so well. Since the department has 27 full-time profs, that's pretty high uptake (several much larger top-tier departments only provided one or two signatories each); the Delaware econ department was on the conservative side.


The op-ed itself is of the variety where privatization will make everyone richer, smarter, and keep rabbits from eating their perennial gardens — unless you're over 55 in which case the important thing is that you should be reassured that you're getting none of it.

Beck and Craig lead off with one of my favorite privatization howlers:
You could own your own retirement assets if Congress passes President Bush's plan to guarantee the solvency of Social Security and establish personal retirement accounts.
Wow, I could own my own retirement assets? Makes me wonder what all that mail I get from Vanguard is about. Naturally, nearly everyone can own their own retirement assets through the relatively simple expedient of opening a traditional IRA or Roth IRA and putting some money in it.

Of course, there is doom-mongering:
[Social Security] is projected to start losing money in 2018, and will become bankrupt in 2042.
The "worthless IOU" canard is implicit, otherwise the tapping of the trust fund, projected to happen in 2017 by the Social Security Trustees (evidently, the News Journal deadline hit prior to the 2005 Trustees' Report), is the sort of thing that any prefunding anticipates — the need to draw down previously acquired assets. Not mentioned is the latest Congressional Budget Office reading, which puts the dates for trust fund tapping and trust fund exhaustion at 2020 and 2052, respectively.

All bankruptcy is relative, though:
Keeping these promises will require drastic increases in payroll taxes (from 12% to 18%) or in other taxes. The alternative will be for Congress to reduce promised benefits by 25%.
The second sentence contains a material sin of omission: scheduled benefits when the trust fund is exhausted in the Social Security Trustees' "intermediate cost" scenaro are considerably higher in 2005 dollars than current retirees' benefits. They are so much higher, in fact, the benefit cut needed to avert "bankruptcy" would leave future benefits higher in inflation-adjusted terms than they are now.

Well, back to worthless IOUs:
If workers could use Social Security taxes to fund personal retirement accounts, their money will finance their own retirements rather than having it spent by Congress, which is the case right now.
Josh Marshall notes today that the incremental public debt incurred under the actual and projected Bush budgets is large enough to have "paid back" the entire Social Security trust fund. Much of that debt has been incurred to the (maybe temporary) benefit of wealthier income tax payers. Hmmm. See also DeFazio on the House floor, via Atrios.

I also wonder if Profs. Beck and Craig have any U.S. government debt in their own private retirement accounts...
On the other hand, the long-term rate of return on stocks has been nearly 7%. A conservative estimate of the return on a balanced portfolio of stocks and bonds is 4.6%, after inflation.
That rate of return assumption is only "conservative" by assertion. There is ample scholarship suggesting otherwise, notably Shiller's recent work suggesting that forward-looking equity returns are not likely to match past performance, and Baker, DeLong, and Krugman [PDF] on the inconsistency of forward-looking returns with the long-range economic assumptions used to set the trust fund expiration date. Other things equal, stock returns of historical magnitudes imply that the market price-to-earnings (P/E) ratio would increase to levels greatly exceeding the 2000 peak of the bubble in 2000 around mid-century and increase from there without bound.

Now they move on to a numerical example. Their numbers don't tie to the Social Security Trustees' projections, so there are considerable nitpicking opportunities, but I'll try to focus on the more substantive problems.
For example, an average person entering the work force today gets a benefit of $19,600 a year in today's dollars. If he put one-third of his payroll taxes in a personal retirement account, his government check would be $12,600, plus he would have assets of $165,000 in an account.

Placing those assets in an annuity would add $18,200 a year to retirement income, for a total of $30,800 -- more than 50% greater than Social Security would provide.
Assume that the "average person" is a 22-year-old earning the "average wage index" amount and retiring at 67 in 2050. The expected annual current-law benefit for that scenario (intermediate cost) is $24,440 in 2005 dollars according to the Social Security Trustees' Report. So if Beck and Craig intend to refer to current-law benefits, they're materially understating what Social Security would offer.

If the Trustees' intermediate trust fund balance forecasts are right, the payroll tax will generate sufficient revenue to pay 75.2% of OASDI benefits in 2050. Per CBO, the benefits would be fully payable in 2050, with the payroll tax covering 78% of current law costs in 2053. It's anyone's question how benefit formulas would be adjusted, but clearly the benefit could be at least $18,379 (with rounding, 75.2% of $24,440; $19,584 under CBO's less pessimistic assumptions), again in 2005 dollars. So if Beck and Craig meant "payable" benefits under the Trustees' assumptions, in the absence of any other program changes, they're more-or-less on the mark.

But it should be noted that the "bankrupt" system can pay 20% more, in real terms, than today's system, which provides a yearly benefit of $15,335 in this scenario. People wondering whether Social Security can "be there" in the future should take note.

I used the CEPR Accurate Benefits Calculator (ABC) to check on the private account figures, along with some back of the envelope calculations of my own. In the ABC, I specified a single person, born in 1983 and retiring in 2050 (at 67), earning the default wage (which is insignificantly different from the Trustees' 2005 average wage index forecast) added 0.25 percentage point to the return to match Beck and Craig's 4.6%, and de-selected the "enhanced low-earner benefit" option. Per the ABC, the private account would grow to $167,213.76 gross of fees at the worker's retirement.

If the account is half debt (at the CBO's 3.3% real interest rate) and half stock, the implied 5.9% real return on stocks implies, other things equal, a market P/E of 63.9 in 2050.

Significant problems arise with the claimed private account benefits.

First, $165,000 cannot be turned into a $18,200 yearly annuity payment at present market terms. A single participant in the federal Thrift Savings Program, which according to CBO offers better annuity terms than the open market, could today turn $167,213.76 into $15,372/year without inflation adjustment (inflation would erode the value of that payment to the equivalent of less than $9,000 after 20 years), or $11,580/year with an inflation adjustment. Those are 84% and 64%, respectively, of the amount claimed by Beck and Craig.

Second, in addition to materially overstating the private account annuity, they likewise understate the effects of guaranteed benefit offsets and reductions in the Bush "plan." There are two expected sources of benefit reductions: a change in the benefit formula to freeze "real" benefit levels (not present in plans such as Ryan-Sununu that don't address the actuarial balance issue), and a benefit offset to pay back the borrowed money that goes into the accounts.

The $7,000 guaranteed benefit reduction is not quite enough to pay back the borrowing to fund the private account. Using the CBO's interest rate projections, the ABC figures the required benefit offset for the borrowing at $9,293/year. Beck and Craig are closer at the Social Security Trustees' lower real interest rate assumption (3% versus 3.3%).

An additional benefit reduction whammy of roughly equal magnitude arises from the benefit formula change, another $8,986 per the ABC. Between the two, the guaranteed check is not $12,600, but rather $6,829. (Note, this subtracts from the ABC's $25,108 figure for current-law benefits, which is the CBO-assumption analogue to the $24,440 from the Trustees' Report, not from Beck and Craig's $19,600.)

Add back an inflation-protected annuity (to be comparable with Social Security benefit terms) and the grand total benefit from this privatization scenario is $18,409 — 40% lower than the figure Beck and Craig cite, 26.6% lower than the current law benefit, and just about what the Social Security payroll tax can pay on its own without other changes to the system. Reducing the benefit offset rate and lowering annuitization costs from the TSP's low levels could get back maybe half the difference.

There is no privatization miracle, though, even under the aggressive assumptions regarding the private account returns. More plausible stock returns would decimate the privatization case.

And there's the free lunch:
Finally, the long-run budget impact is zero or positive. The cost of diverting payroll tax dollars into personal accounts today will cover [sic] future retirement benefits.(*) Because the new plan will increase savings, investment, productivity and economic growth, in the long run there will be more government tax revenue for other programs or tax cuts.
This, I'll admit, is the theory. However, the plan will involve no net additional savings in the near term, since every dollar "saved" in a private account will be offset by a dollar of borrowing from the public. With no net savings (or tax reductions), there's no reason to expect additional investment and associated economic growth in the near term. The market has to believe that today's new debt truly will be paid with future spending reductions, and future Congresses can't bail out seniors who fare poorly under the plan or do anything else that turns thirteen or fourteen figures' worth of privatization transition costs of privatization into a reality. Alternatively, pigs might fly.

So, Mom, the bottom line is that if you overstate the benefits by at least half, and assume away the transition difficulties, privatization looks great. In the real world, this sort of argument should not get a very good grade in an undergraduate economics class.


(*) This seems to be an artful way of saying that the cost of diverting payroll tax dollars today will be covered by future reductions in government-paid retirement benefits.

Tuesday, April 05, 2005

Becker and Posner Go Bankrupt

by Tom Bozzo

It's not just me. At the Talking Points Memo Bankruptcy Bill section, Elizabeth Warren takes on the unrealism of the Becker-Posner Blog's bankruptcy reform debate.
I expected a real treat, but their recent comments on the pending bankruptcy bill are so out of touch (and out of date) that I was amazed to see them advanced. Posner and Becker’s entire discussion rests on the standard chestnut that the bankruptcy bill will benefit consumers because it will reduce creditors’ risk and therefore cut interest rates. That argument not only ignores twenty years of data; it also perpetuates a plodding “perfect markets” model of consumer credit that most theorists have long since abandoned.
Read the rest!

More on Social Security Privatization Polling

by Tom Bozzo

The short blogging break (due to a family visit followed by sick child) almost caused me to miss this Dartblog item, where Joe Malchow figures that I'd object to Fox News/Opinion Dynamics poll language that finds 60% support (28% opposed, 12% not sure) for an item worded:
Do you favor or oppose giving individuals the choice to invest a portion of their Social Security contributions in stocks or mutual funds.
I guess I can consider it a major blogging achievement that it strikes a conservative blog pal that a Fox News poll might not be neutrally worded, even if he's a little sarcastic about it. The preceding item in the poll, BTW, asks respondents whether or not they understand that they'd have the "choice" to participate, which I'd view as leading respondents to a positive response to the main private accounts question.

Joe's conclusion is not uncontroversial:
But we know what America wants. Now, Congress needs to find a way to serve those desires.

Questions of the Fox poll's variety tell us rather less about what the public wants than Joe would seem to be suggesting. My counter-interpretation: offered a free lunch, the public is willing to take it by a 60-28 margin. The relevant policy question is whether it's in the power of Congress to provide a free lunch.

An implication of my previous discussion here is that while the nascent Bush "plan" may be structured to have plausible deniability for being a free lunch (if you don't look too closely at its probable details), it has several failure modes that would turn it into a multitrillion dollar boondoggle. Amazingly, knowing things like this reduces support for the plan, as the latest Pew poll shows:
In general, opposition to the plan to allow private accounts is much higher among people who have heard a lot about it than among those who are less familiar with it. Overall, people who have heard a lot about the plan oppose it by 52%-41%, while those who have heard little or nothing favor it by a 47% to 30% margin.

Next: Not all academics are liberals. Two conservative economics profs from my undergraduate alma mater's right-leaning department shill for privatization in the Wilmington (Delaware) News-Journal (hat-tip: Mom). We'll take a look at the misleading rhetoric to which otherwise respectable profs must resort put lipstick on the pig, before cycling back to the Texas alternative plans.

Friday, April 01, 2005

Limits of April Foolery

by Tom Bozzo

I was going to write a post entitled something like "I Want To Be Mrs. George W. Bush," (dripping with sarcasm, of course) but... can't do it.

Friday Nearly Random 10

by Tom Bozzo

The origin of this long-running meme seems to have been lost, but I first saw this at Pharyngula, thence Feministe and Rox Populi. Fire up your hardware or software MP3 player, set to shuffle, and report the first ten tracks.

This list excludes two tracks from the opera section of my database that didn't make any programmatic sense on their own.

LushSweetness and LightGala
ChillsDreams Are FreeSunburnt
David KilgourFineSpiritual Gas Station EP
Spacemen 3Walking With JesusThe Singles
Velocity GirlMedia CoreSimpatico
New OrderBroken PromiseBrotherhood
Mitch & MickeyBallad of Bobby and JuneA Mighty Wind Soundtrack
FeltTrain Above the CityTrain Above The City
Ralph's WorldWe Are AntsThe Amazing Adventures of Kid Astro
The Jesus and Mary ChainNever UnderstandPsychocandy

Not a bad mixtape for nearly random, though "Ballad of Bobby and June" isn't for everyday listening.

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