Social Security’s Problem

Let me synopsize my reactions to multiple opinion pieces I’ve read on the Social Security system like this. I agree that the Social Security needs reform. I think it is suffering from the failure of some of its operating assumptions.

Its operating assumptions, not generally recognized, are that the United States would have a rapidly rising population and real median wages. Those were pretty good assumptions in 1935—we had experienced both for nearly a century then. Now we have neither. Eliminating FICA max would alleviate its problems temporarily. IMO the only way to fix the Social Security system is to ameliorate the failure of its operating assumptions. We can’t accomplish that by importing large numbers of entry level workers especially if they remain entry level workers due to lack of skills, education, and/or training.

Privatization is not a solution. It is simply untrue that equities always rise in value. The same is true of all investments. Periods of high inflation can wipe out savings. We will need some form of government-based social security for a large percentage of the population.

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State of the Union 2023

Last night I fell asleep as I waited for President Biden’s 2023 State of the Union message. Not entirely surprising since I rise at 5:00am. Apparently, I missed some fireworks. I take it as a sign of the declining collegiality and decorum of the House. Prediction: the same action by a House member now that got a House member censured ten years ago will have no repercussions today.

Here is my questions. Did President Biden accomplish what the White House said was his objective in this SOTU message, to present a unity agenda that would move the country forward?

So far the retorts I’m seeing to the Republican response amount to “I know you are but what am I?”, fine as a playground taunt. I would expect more, however, from serious analysis.

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“The World” Has Rejected the Rules-Based Order

In his Wall Street Journal column Walter Russell Mead laments that the world has rejected the “rules-base order”:

Liberal internationalists around the world believe that global institutions (like Wilson’s ill-fated League of Nations) can replace the anarchic, often deadly, power struggles between nations with a system of orderly management that brings the rule of law to a weary world. Institutions like the United Nations and the International Criminal Court, as well as agreements like the Paris climate accords, reflect efforts by diplomats and politicians in the U.S. and abroad to create the kind of world that Wilson sought.

For Wilson’s modern heirs, technocratic governance through rules-based international institutions represents humanity’s last, best hope to avoid cataclysmic disruptions ranging from world wars to climate change. From this perspective, Mr. Putin’s defiant international rule-breaking threatens the foundations of Wilsonian order. If a great power gets away with breaking the rules this egregiously, humanity falls back into a nuclear jungle.

Mr. Putin’s challenge to Wilsonian order is why so many liberals, especially in the U.S. and Europe, have become uber-interventionist on Ukraine. Many expected traditional national-security hawks would rally to oppose Mr. Putin’s assault on his neighbor. What was more surprising and, given the politics of the Democratic Party and the Biden administration, more consequential for American foreign policy, was the response of Wilsonian liberals to the war. Normally dovish columnists and members of Congress now cry “praise the Lord and pass the ammunition!” as they urge Western governments to step up shipments of advanced weaponry and supplies to Ukraine.

Within the Biden administration, the struggle is among three groups: liberal internationalists, who want America and the West to do what it takes to ensure that Russia loses the war; pragmatists who want to check Russia but fear Russian escalation and believe that the war will inevitably end in a compromise peace that falls short of Wilsonian hopes; and Asia-firsters who worry that U.S. support for Ukraine reduces America’s ability to face the more consequential and long-term threat from China. President Biden has tried to stay in the middle, giving Ukraine more support than the pragmatists and Asia hands prefer, but dribbling it out more slowly than the Wilsonians would like.

For Wilsonians, world politics today is less about great-power rivalries between the U.S. and rivals like China and Russia and more about the struggle between principles and selfishness, order and chaos, democracy and authoritarianism. Wilsonians hailed the recent wins of a pro-Western candidate in the Czech election and of Lula da Silva over Trump ally Jair Bolsonaro in Brazil as victories in the global struggle for liberal order.

Last week German chancellor Olaf Scholz visited Lula to celebrate his victory over Mr. Bolsonaro—and to ask Brazil to send ammunition to Ukraine. Lula accepted the congratulations but turned down the request. Brazil, like India, South Africa and much of the rest of the world, wants nothing to do with Wilsonian crusades.

While I think it brave of Dr. Mead to acknowledge the obvious, that rather than the entire world rallying to oppose V. Putin’s attack on Ukraine, only a handful of American and European countries have done so but I think he’s wrong. It’s not the “rules-based order” that the world is rejecting but a “rules-based order” that does not bind the United States as well. I would put the major nails in the coffin of the rules-based order over the last 30 years as:

  • U. S. invasion of Grenada
  • China pegs the yuan to the dollar
  • U. S. bombing of Serbia
  • China granted most favored nation trading status and admitted to the WTO
  • U. S. invasion of Iraq
  • U. S. use of armed drones in multiple countries without Security Council authorization
  • U. S. campaign against Qaddafi government in Libya
  • U. S. support for the rebels in Syria
  • China’s “One Belt, One Road” program
  • U. S. withdrawal from Afghanistan
  • Russian invasion of Ukraine

just to hit the high spots. There was never a global consensus in support of a rules-based order. Dr. Mead mistakes U. S. hegemony for a rules-based order and most countries in the world have chafed under that hegemony.

My list may seem like a hodge-podge but it’s actually coherent. U. S. military dominance is downstream from U. S. economic dominance and it is that dominance that made us the “policeman on the beat”. Whatever the illusions of some Americans, we cannot preserve economic dominance on the basis of banking, retail, and services, relying on other countries to manufacture what our retailers sell. Without economic dominance we cannot preserve military dominance and without U. S. military dominance there is no rules-based order.

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Tribal Politics in Chicago

In a Wall Street Journal op-ed Joseph Epstein remarks on the upcoming Chicago mayoral primary election:

I love Chicago. It is the city of my birth and upbringing. But after listening to nine mayoral candidates engage in three hours of political debate in two 90-minute sessions, I have concluded that, were I younger, I would have to think seriously about leaving. With one exception, all the candidates stressed the city’s crushing crime, unfair taxation, increasingly unaffordable housing and dismal educational institutions. The exception, of course, was the incumbent, Mayor Lori Lightfoot. Over the past four years she has amply demonstrated her unfitness to govern yet has thrown her fedora back into the ring, hoping for another term.

He continues:

Seven of the candidates for mayor are African-American. One is Hispanic and one white. Chicago is no longer a white town, run by white politicians. The city is roughly a third black, a third Hispanic and a third white. The Irish political mafia is no more. All those Kellys, Kennellys and Daleys, who once ruled the city with a combination of corruption and competence, are gone. Increasingly, the city’s official faces—chief of police, chief of the fire department, head of the public schools—are people of color and women.

Of the current crop of candidates for mayor, all but two have held office or worked in government: in the city council, on the Cook County Commission, in the state senate, in the educational system, in U.S. Congress. All agree that Lori Lightfoot has to go. On a show of hands, all further agreed that, if elected, they wouldn’t rehire Police Superintendent David Brown. To hear Ms. Lightfoot tell it, however, things are looking up and every day in every way getting better and better for Chicago.

In a very narrow sense things are getting better. Last year was better than the previous year. But the last three years have been the worst with respect to many crimes including homicide and carjacking of any three year period in Chicago history. Here’s the track record for carjackings:

Not only are crimes spreading beyond the South and West Sides, they’re spreading into the adjoining suburbs. Last week there was an attempted carjacking a block and a half from where I’m sitting and this is one of Chicago nicest neighborhoods.

However, if you look at the overall official crime statistics, crime is down. Why do people think that crime is up? I think it’s because police responses are sufficiently phlegmatic that many crimes aren’t even reported any more. That’s borne out by the 911 call statistics.

The latest polling information is interesting.

I’ve highlighted the four candidates polling the highest. Interestingly in the same poll Willie Wilson, the only candidate who isn’t a apparatchik, is the second most favorite candidate of 16% of voters, the highest of any candidate (Paul Vallas is the second highest) with Lori Lightfoot half that.

Only the two top voter-getters will go forward to the general election. I hope that Lightfoot doesn’t make it but I suspect that the general election will be between Vallas and Lightfoot.

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If They Can’t Defend Themselves

Michael Peck makes a really crucial observation at Business Insider:

Interestingly, Cavoli pointed to Ukraine’s surprising battlefield successes as evidence that “precision can beat mass.” But there’s a catch: It takes time for quality to beat quantity, and “that time is usually bought with space. To use this method, we need space to trade for time. Not all of us have that, and we have to compensate for this in our thinking, our planning.”

For Russia’s smaller neighbors that lack strategic depth — such as the Baltic States — that’s an admission that NATO may not have time to come to their rescue should Russia invade.

They must be prepared to defend themselves if only briefly. They can’t depend solely on the U. S. coming to the rescue. That pertains to Germany, too.

If they can’t defend themselves, we can’t defend them.

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Question About Health Care Reform

I’m seeing quite a few opinion pieces today that deal with health care reform in one way or another—pieces about physicians “burnout”, the impending catastrophe of the Medicare trust fund, etc.

In my opinion any health care reform worthy of the name would result in reducing Medicare compensation rates. It’s a simple matter of mathematics.

I don’t think that can or should be done in a hurry but gradually and carefully. That’s not the direction in which we are presently headed. Whether you’re a Bernie Sanders “Medicare for All!” supporter or an advocate for the complete privatization of health care, people are talking about massive overnight changes. IMO whatever their form such would be catastrophic.

What form should health care reform take? My predisposition is towards a public health approach with a fairly limited menu of procedures covered by a common insurance program and not much else. Greatly reduced rates accompanied by forgiveness of med school student debt. Since such a plan would satisfy practically nobody I don’t expect anything of the sort to be accpeted.

What form should it take?

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Question About Defense

There’s still a lot of fulmination going on about the Chinese balloon that traversed the entire United States and some of Canada before it was shot down over the Atlantic. I have a question. At present we spend nearly $2 trillion on defense when all is said and done. Why can’t we detect and intercept a foreign aircraft (a balloon is, indeed, an aircraft), when it enters U. S. airspace rather than after it has traveled several thousand miles?

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Teaching History

Back when I was in college which is now some sixty years ago, I had a luxury that many of my fellow-students did not enjoy. Due to my excellent high school preparation I entered college with, essentially, two full years worth of credits. I took no introductory classes in English, chemistry, mathematics, physics, or foreign languages. However, since were I to graduate I would probably be drafted and I was basically paying my own way (1/3 scholarship, 1/3 student loan, 1/3 out-ot-pocket which I paid by working nearly 40 hours a week) I allowed myself to take four years to graduate.

One of the things I did with the extra time was audit courses simply to gain knowledge. Isn’t that what college is supposed to be about? One of the courses I audited was Contemporary African History. The professor was a prominent black South African activist. I was very nearly the only white kid in the class.

Is there a word that means something between amused and appalled? That was my reaction to the course. It was informative, largely because I was so ignorant of the material but the class was something between a struggle session and a consciousness-raising exercise.

Towards the end of the class, one of the teaching assistants approached me on behalf of the professor. Noting that I probably had the best attendance record, I was asked to take the final exam despite my just auditing the class and not required to. I agreed. Somewhat to their surprise (I think) I aced it.

All of this to highlight that I am intimately familiar with ideology being taught as history. That didn’t start in the last few years, you know.

At City Journal Max Eden declaims about the protests over the College Board’s African American History Advanced Placement test:

The final framework for the course has excised the ideology-laden units and replaced them with the type of lessons that Americans of all races want students to be taught. Here’s what’s gone: “The Black Feminist Movement and Womanism,” “Intersectionality and Activism,” “Black Feminist Literary Thought,” “Black Queer Studies,” “‘Post-Racial’ Racism and Colorblindness,” “Incarceration and Abolition,” “Movement for Black Lives,” “The Reparations Movement,” and “Black Vernacular, Pop Culture, and Cultural Appropriation.” And here’s what’s new: “The Growth of the Black Middle Class,” “Black Political Gains,” “Demographic and Religious Diversity in the Black Community,” and “Black Achievement in Science, Medicine and Technology.”

The recommended readings no longer contain a parade of far-left academics. No more Angela Davis, bell hooks, Audre Lorde, Michelle Alexander, Eduardo Bonilla-Silva, Robin D. G. Kelley, Patricia Hill Collins, or Kimberlé Crenshaw.

The perspective of comparable units has also changed dramatically. In the earlier framework, the unit on religion focused exclusively on black liberation theology. The final framework emphasizes religious diversity. In the earlier framework, the section on science and medicine focused on “inequities.” The final framework emphasizes “achievement,” recommending the study of a “wide range of African American scientists and inventors.” The “Black Political Gains” unit features not only Barack Obama and Kamala Harris but also Colin Powell and Condoleezza Rice, specifically recommending an excerpt of Rice’s 2012 speech at the Republican National Convention.

It is, in short, exactly the sort of unsparing yet aspirational, mainstream, apolitical African-American history course that DeSantis’s critics accused him of opposing. And now that the College Board has tacked back to the middle, DeSantis’s far-left critics have dropped their masks.

I think the complaints have multiple facets. To some extent they’re a turf battle. How dare anyone who isn’t himself an academic criticize what we, the specialists, have decided should be taught! To another extent it’s battlespace preparation. If they can define Ron DeSantis before he can define himself, it will be an enormous advantage.

But I suspect it’s also because they’re chagrined that ensuring that high school African American History classes can’t just be something between a struggle session and a conscious-raising exercise.

Ironically, I think that African American History is a legitimate academic pursuit. It really is distinct from ordinary American history in a way that other interest studies history classes are not.

I do think that facts should be emphasized in such history classes and clearly distinguished from opinions. Also, mainstream thought should be distinguished clearly from fringe thought, cf. the “1619 Project”. One can always dream.

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Reform Medicare and Social Security Now—Before It’s Too Late


The editors of the Washington Post say something I definitely agree with:

House Speaker Kevin McCarthy (R-Calif.) announced last week that cuts to Social Security and Medicare are “off the table” in negotiations over raising the debt ceiling. In so doing, he deprived Democrats of a political talking point and reduced the likelihood of national default. Raising the debt ceiling — and thereby preserving the full faith and credit of the federal government — should proceed without negotiations or strings, let alone a contentious debate about third-rail entitlement programs.

Yet the discussion needs to happen sometime, and sooner rather than later. These entitlements — which already account for about a third of federal spending — remain on unsustainable trajectories, and protecting them for future generations is too important to keep reform off the table indefinitely.

Medicare’s trust fund is projected to run short by 2028, and Social Security will exhaust its reserves by 2034. When that happens, seniors face an immediate 25 percent cut in benefits. Clamoring for bailouts will be intense, but the country will struggle to afford them — especially in the looming era of higher interest rates, which make it more expensive to service the national debt. The longer Congress puts off fixes, the more painful they will become for the 66 million seniors, and growing, who receive monthly Social Security payments and the approximately 59 million people enrolled in a Medicare plan.

and the more damage will be done to the national economy. As I’ve said the next Social Security Trustees Report, due in May, will be interesting. I expect it to pull both trust fund depletion dates forward (from 2028 and 2034, respectively).

Simply doing nothing will cause the Medicare reimbursement rates and monthly Social Security retirement checks to be decreased sharply. Paying the shortfall out of the general fund will inevitably monetize the shortfall and will contribute more to our present bad balance sheet. That both should be abolished and we should let the market provide is a fantasy. We already know what happens when the market provides. Many seniors are left with a choice between health care and eating. Raising the tax rates is regressive and, honestly, there aren’t enough workers who pay the tax as it is. It will increase the temptation to pay workers “under the table” in one way or another, e.g. employing illegal immigrants who don’t pay those taxes at all. There are no really good, attractive options which is why even talking about reform is a “third rail”.

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About That Labor Market


The editors of the Wall Street Journal are encouraged by the latest Bureau of Labor Statistics monthly unemployment situation report:

The U.S. labor market is proving to be remarkably resilient, which may be both good and bad news for the Federal Reserve. Employers added 517,000 jobs in January while the unemployment rate fell to a 53-year low of 3.4%, according to the Labor Department’s monthly report.

Recent jobs reports had signaled that hiring was slowing, especially in retail, manufacturing and warehousing as consumers spent less on goods. But the January report showed broad job growth, mostly in services, including leisure and hospitality (128,000), trade and transportation (63,000), healthcare (58,200), temporary services (25,900) and construction (25,000).

Information lost 5,000 jobs, which dovetails with layoffs in the tech industry. But most businesses continue to hire. The average workweek for private workers rose by 0.3 hours and overtime increased by 0.1 hours. As a result, average weekly earnings increased by 1.2% last month.

Wage growth seems to be slowing somewhat. Average hourly earnings increased by 0.3% last month and 4.4% over the past year. That means wages still aren’t keeping up with inflation, but they also aren’t evidence of a wage-price spiral.

but Mish Shedlock does a deep dive into it and isn’t as impressed:

  • The divergence between jobs and employment continues for the tenth month but lessened in December of 2022 and January of 2023.
  • The full time employment divergence is still huge.
  • The divergences between jobs and employment date back to May.
  • The BLS announced huge annual revisions in jobs and employment.
  • Finally, even discounting the revisions, there is still a huge divergence between jobs and full time employment. We do not know how it evolved because the BLS doesn’t say.

with this important observation:

Please see revision details below because of the 894,000 rise in employment in January, 810,000 was due to annual revisions. And the BLS does not say what months were revised.

Fifteen years ago I used to report the monthly employment situation reports faithfully. When I began to understand just how they were constructed I realized that they were statistically suspect and not much could be derived from them. So I generally stopped reporting them. I want to remind my readers (both of them) that the BLS tends to bundle up a lot of errors in previous reporting and dump the errors into the report they just issued. I don’t believe that much can be inferred from the BLS empsit generally but particularly not this one.

Nowadays I go more by something like the “Mule Test”. When I was a kid down in the Ozarks they used to sell crude mule figurines with pieces of twine tacked to the hindquarters for a tail, captioned: “Mule’s tail dry: fair weather; mule’s tail wet: rain; mule’s tail frozen: cold; mule’s tale buring: hot; mule’s tail blows off: tornado”. If it feels like employment is good, it’s good. If it doesn’t, it isn’t.

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