Category Archives: Economics

Why Hillary Clinton Is Beyond the Pale

This is a bit off-topic for this blog, but it has to be said: By her calculated failure to take a stand on the Trans-Pacific Partnership, the former secretary of state has made herself absolutely unacceptable as a presidential candidate for working Americans.

It’s crunch time for the Trans-Pacific Partnership (TPP), the most sweeping multilateral trade agreement since NAFTA. Fast-track authority for the president, gussied up with some face-saving amendments to make it look like Congress will have a real debate when Obama submits the deal to lawmakers later this year, has passed out of committee in both the House and Senate. That means fast-track will be decided upon in a matter of days or weeks.

Continue reading Why Hillary Clinton Is Beyond the Pale

The Origins of Pension Privatization: A New Perspective

Starting in the 1970s, governments authorized and promoted individual retirement accounts of various sorts. The commonly accepted explanation was that public pensions were no longer affordable and had to be supplemented or replaced by private saving. The truth, according to a revealing new paper, is that stock exchanges in developed countries promoted tax-advantaged private accounts as a quick way to build up domestic capital markets at a time of increasing global competition. The result has been an underfunded public sector—including cash-starved public pensions—and overfunded capital markets feeding unproductive financial speculation.

A wise person who had observed the private pension industry for many years once told me to remember that none of its structures—public pensions, employer-sponsored pensions, 401(k) plans, and every variation on these themes—are set up for the good of working people. They are products, designed to make money for the bank or insurance or mutual fund company that set it up and collects fees for managing and investing it.

That sensible, “follow the money” approach to understanding pensions informs an excellent new academic paper, “Feed the Beast: Finance Capitalism and the Spread of Pension Privatisation in Europe.” The authors, Marek Naczyk of Oxford University and Bruno Palier of the Centre d’Etudes Européenes at Sciences Po Paris, who first presented it at a conference last July, connect the dots to explain why the financial services industry in Europe first started pushing for pension privatization and why political leaders in these countries went along with the idea.  Continue reading The Origins of Pension Privatization: A New Perspective

“Octomom” and the racial double standard

Social Security’s right-wing critics like to argue that a program guaranteeing a minimal income in old age undermines the family by discouraging working people from having children—and that the resulting decline in the birthrate undermines Social Security. Yet, the right also likes to vilify people of color who have too many children. Could it be that we’ve got a double standard here?

Remember when Nadya Suleman was always in the news ? Perhaps you remember her by her media epithet: Octomom.

Suleman was the 33-year-old Los Angeles mother of six who, in 2009, gave birth to octuplets after receiving fertility treatments, allegedly to qualify for more government assistance and launch a reality-TV career. Single and unemployed, “Octomom” became the focus of bobble-head media outrage in the early years of the Great Recession, a ready target for pundits looking for a way—any way—to deflect attention from the sins of the Wall Street elite. To the reliably quotable Wall Street Journal columnist Peggy Noonan, Suleman was “dizzy, selfish,” the living symbol of America’s national decline. Her statements that she never meant to give birth to octuplets—plausible though they were—somehow never seemed to convince mainstream journalists in possession of what they thought was a story.

What does all this have to do with Social Security? We’ll get to that shortly. But first, an update on one of the more remarkable media circuses of the past few years.

Continue reading “Octomom” and the racial double standard

The Nobody-But-Ourselves-to-Blame Trip

If Americans can’t retire in comfort and relative security, who’s at fault? Increasingly, we’re being conditioned to point the finger at ourselves. It’s a brilliantly underhanded way to keep us from questioning the downsizing of successful, collective programs like Social Security and Medicare.

Every so often, the mainstream media anoints a new public intellectual—the big thinker who explains it all to us in newspaper or Internet columns, bestselling books, or on the Sunday morning chat shows. Sometimes they’re genuinely quite smart and insightful (Paul Krugman, Malcolm Gladwell), sometimes otherwise (David Brooks, anybody?).

The hottest new public intellectual may be Evgeny Morozov, a not-yet-30 scholar who has published two well-received debunking books, The Net Delusion, about the notion that the Internet promotes democracy; and To Save Everything, Click Here: The Folly of Technological Solutionism, a broader-ranging attack on the belief that smart technologies and Big Data are the ultimate problem solvers.

Both books are needed antidotes to the grandiose claims being made for technology, and To Save Everything, in particular, is of vital importance to anyone concerned about the direction of public discourse on the looming retirement crisis in America. If you only have a few minutes, Continue reading The Nobody-But-Ourselves-to-Blame Trip

The Real Meaning of Chained CPI

Switching to a stingier method of adjusting Social Security benefits is supposed to be OK because we can just “substitute” an equivalent good for one that’s become too costly. But what if that substitution becomes permanent? The chained CPI is perhaps the first—at least the most blatant—attempt to write the acceptance of downward mobility into the rules of economic management.

A lot has already been written about President Obama’s proposal to switch to the chained CPI for annual adjustments to Social Security (and many other) benefits. I hope you haven’t reached your limit on the subject, because I want to urge to read just one more, from last month. It’s FDL blogger Masaccio’s vital and bluntly titled piece, “Chained CPI Means You Can’t Have Nice Things.”

Masaccio, who’s been writing valuable economic commentary for years that all us non-professionals can easily understand, starts with a closer examination of the “substitution” concept behind the chained CPI, and then makes some provocative suggestions about what this all means—specifically, the end of the consumer-driven economy and the managing-down of the American standard of living.

Let’s start with the first point. As has been noted endlessly, proponents of the chained CPI assert that the standard Consumer Price Index has been getting it wrong all these years because Continue reading The Real Meaning of Chained CPI

Of Groupthink, Financial Bubbles, and Lance Armstrong

Lance Armstrong got away with ringleading what now looks like a vast doping conspiracy, in part because the sports media refused to investigate what was right under their noses. Why? Because they were too invested in the heroic image that congealed around the Tour de France winner. In much the same way, groupthink in the financial media has repeatedly led our most prominent journalists to valorize hucksters and ignore scandals until they blow up into full-scale catastrophes.

Today’s New York Times includes a fine column by David Carr, taking the mainstream sports media to task as not-to-silent partners in the selling of the Lance Armstrong Legend. Carr gives the sports desk a good spanking. But the problem he describes is actually much bigger, extending deep into the business and economic coverage that is arguably the most critically important information we get from the media nowadays

Let’s review a bit of history. Continue reading Of Groupthink, Financial Bubbles, and Lance Armstrong

Teaching Social Security, With and Without Prejudice

A Young Person’s Guide to Social Security is an excellent tool for teaching students and younger workers how the system works and what’s at stake in the struggle over Social Security’s future. But big money is behind “Understanding Fiscal Responsibility,” a competing curriculum that can’t hide its deep ideological bias.

The Social Security wars are fought on many fronts. One of the newest is for the hearts and minds of younger Americans – high school and college students and even young workers. These people – “future decision-makers,” as they’re sometimes called – don’t always have well-developed assumptions about Social Security, Medicare, and related programs. That makes them either a non-factor in the national debate or else a potentially crucial bloc of votes. Some of them will no doubt go on to influential careers in public policy. And so the messages that are fed to them as students could have an enormous impact in future decades.

Two sets of institutions with very different values and priorities have entered the lists with curricula designed to shape young people’s thinking about Social Security, Continue reading Teaching Social Security, With and Without Prejudice

“Rebuilding the Foundation” of Social Security, Chapter 1

Contrary to the conventional wisdom, “saving” Social Security doesn’t have to just be about making more fiscally “solvent.” It can also link up with efforts to raise wages, make the program more equitable, and even to start rebuilding the U.S.’s crumbling infrastructure – without privatizing it. In fact, there are a multitude of ways to make Social Security more secure – none of which involve cutting benefits for hard-pressed working people and retirees.

I’m giving over this post to John Burbank, executive director of the Seattle-based Economic Opportunity Institute. He lays out a menu of changes that would improve Social Security benefits and pay for them in a way that would make the program – and its funding – more equitable. I met John at the National Academy of Social Insurance conference earlier this month, Continue reading “Rebuilding the Foundation” of Social Security, Chapter 1

The Truth Behind “Managed Decline”

“Managed decline” is one of the favorite catchphrases of the American right. Briefly, it’s an accusation that Democratic politicians and the Obama administration – i.e., the “extreme left” – have decided to let the U.S. decline economically and militarily, with government “managing” that process to protect special interests like unions and public employees.

This argument is now heard everywhere on the right, from radio talk-show hosts to semi-respectable academics to the text of Rep. Paul Ryan’s House budget resolution. Stripped to its specific public-policy recommendations, it’s an appeal to cut Social Security, Medicare, and other social spending and shift those resources to the military.

Let’s tale a closer look at the rhetoric. Because I’m going to make the case that there is some reality behind the notion of managed decline – just not the one most often fed to us. Continue reading The Truth Behind “Managed Decline”

How Much Do We Care About the Elderly?

That’s the real issue behind the Social Security debate – and the deficit fight as well. But it’s almost impossible to have a constructive public discussion about the elderly and the share of the economy they occupy so long as deficit hysteria continues.

Don’t go to Pete Peterson’s Fiscal Times for balanced reporting on Social Security and the federal fisc. That would be like asking Col. Qadaffi for news and analysis on Middle Eastern populism. But every now and then, the miscreants raise an important issue. Perhaps inadvertently, but there it is.

Eric Schurenberg, who purveys politically palatable news to the business community as head of BNET and, published an op-ed in the Fiscal Times last week that purported to demolish the “myths” bolstering “that fiscal fun-house mirror, the Social Security trust fund.” The piece is full of misconceptions that are nicely demolished elsewhere.

But Schurenberg raises an issue that’s been almost entirely left out of the current debate about reducing the deficit and “reforming” entitlements like Social Security and Medicare. “The most destructive myth of all,” Schurenberg writes, Continue reading How Much Do We Care About the Elderly?