Monday, September 3, 2007

RAISING THE ROOF

by the Sandwichman

It's interesting that Barkley should bring up raising the ceiling on Social Security contributions as an example of a possibly progressive change that he would steer away from for fear that it would open the door to all sorts of regressive changes. Years ago (12), when I started my analysis of policy on working time, one of the first angles I came up with was the idea that eliminatiing the quasi-fixed (see note below) characteristics of payroll taxes and other employer-paid fringe benefit contributions would remove an obstacle to redistributing working time.

I suppose it might be a good tactic at times to hunker down around the status quo to prevent an opponent from using any progressive change as an invitation to ransack it. It can't be a good long-term strategy, though.The opponent will persistently probe for vulnerabilities and if defenders of Social Security "do nothing", then that passive conservativism will itself become a vulnerability. A program or policy that doesn't adapt to changes in its environment eventually becomes a liability to its defenders and erstwhile beneficiaries.

This is not to say that raising the ceiling on Social Security contributions is necessarily the best way to respond to changes in the workplace and in the employment policy regime since the 1930s. Take Back Your Time, an organization I'm involved with, has a campaign to add vacation entitlements to the Fair Labor Standards Act (that's not necessarily my personal choice of priority either). All I'm saying -- for now -- is you can't move forward by standing pat, especially when the ground you're standing on is under attack.

"quasi-fixed": this is a bit of economists' jargon the Sandwichman will elaborate on in a subsequent post. In a nutshell, it refers to employment costs that (supposedly) don't vary in proportion to the number of hours worked.

60 comments:

Anonymous said...

sandwich

this is very dangerous. and also wrong.

you have, apparently, a theoretical idea that may or may not be interesting, and you want to attach it to a successful program that you apparently do not understand.

social security is a program that allows workers to save a part of their own pay, safe from inflation and market gyrations, so they will be assured of at least the necessary minimum income in their old age. it does a number of other things also.

it is not useful to think of it as a "tax"... and therefore because of a kind of kneejerk word association in the minds of liberals...therefore a tax that needs to be made "progressive."

the program is already progressive, and while you can take you ph.d.-l.s.d. and and imaginate the "tax" as separate from "the benefits," in fact they are not separable.

no more than you can separate your bank deposit from your subsequent bank withdrawal.

i have lot more to say about this, but i'll give you a chance to try to make your case.

well, first, i need to say the "need" to do anything at all about Social Security is entirely a result of the lying propaganda of the would be destroyers of that program. Social Security is just fine as it is.

if we start to live longer lives without wanting to work into deep old age, we will need to save a larger percent of our income while working in order to have enough money to last that longer retirement.

the actual amount, according to the Trustees intermedicate projection would be either:

seven dollars a week starting today, or

fifteen dollars a week starting in 2040 (when the average worker will be making two hundred dollars more per week), or

increasing the payroll tax less than ONE DOLLAR PER WEEK each year from 2016 to 2036, during a time the average worker's wage will be increasing TEN dollars per week each year.

there are details here, complications, that i will need to explain, if you ask, but i am going to hope you can absorb this before we get into those details.

in other words, don't think you have to "change" Social Security to look good to the bad guys.

Anonymous said...

sandwichman says,

"... payroll taxes and other employer-paid fringe benefit contributions "

grammatically at least this would imply that Social Security is "employer paid" and a "fringe benefit."

the funny thing is the non partisan expert paid liars are running around the country telling the people that the "employers" share is "really" the workers money..."most economists agree." i think they got those "most economists" in the same place they found those "nine new york doctors..."
but the fact is that they only say this to the workers in order to make the workrs think that they don't get much of a return on their Social Security "investment." when they are among themselves, the bosses say "it's all our money, we write the checks."

Sandwichman appears here to be agreeing with the bosses.

back to that in a minute.

what are "fringe benefits" ? optional extras the boss "gives" out of the goodness of his heart to the workers, revokable any time the boss can no longer afford to be so generous?

back to this: just exactly what part of the value added by the cooperation of worker, management, financiers, and government IS "the workers share." ?

there are those who would argue: what the worker is able to get in "the marketplace for labor." or those who argue it's all the workers'; profit is theft.

and the comeback: taxes is theft.

now, me, i take the unorthodox view that it's all the product of the cooperation and how it gets divided is mostly a question of power. the power of government, the power in the marketplace, and of course the power of management to relocate to china. so i think "it's really the workers money" is a meaningless answer to a meaningless question.

which leads us back to the real world. in the real world we enter a situation where all the parties are at a temporatry equilibrium.

and in this equilibium a real genius (Franklin Roosevelt) solved a real problem. The problem was poverty in old age.

a problem that was not being solved by "the markets".

at least in the industrial age, workers attempted to provide for their old age by saving as much as they could from their wages. but inflation, bank failure, sickness,... a host of ills that cash is heir to... including just outliving their savings... meant that there were many old people living in dire poverty.

Roosevelts solution was to provide the workers with a way to save a portion of their wages in a government insured savings account, made inflation proof by pay as you go and wage indexing.

he couldn't get this enacted into law unless he called it a tax. and in fact, it would not have worked unless it was made mandatory, because people in general don't understand it, certainly had no faith in it when it began, and it was attacked immediate by people who may have been more or less sincere in their fears and objections.

now, after seventy years, the sincerity is dubious at best. and the people have great faith in Social Security...except when the liars scare them with stories about it "going bust" and the academics lend credence to the liars by supporting "progressive" changes.

i'll stop here for now. except to observe that "you can't move forward by standing pat, especially when the ground you're standing on is under attack" amounts to

"General Walker, Sir, the Barbarian is at the gates. What should we do?" "Hmmm. I know, give him the key."

Or, you go to the doctor with a head cold, and the doctor calls in a couple of consultants and they argue: "Best to bleed him, I always say." "No, No,
he needs to sacrifice to the gods: cut off his thumbs." "But, silly, it's not his thumbs that the gods want. Cut off his nose!"


you will pardon this worker if he thinks "standing pat" is an excellent idea.

Anonymous said...

thought experiment:

you have read the Trustees Report very carefully (we can always hope) and you realize that there are several ways to approach the projected shortfall. so you try them out:

go to the workers and shout "the sky is falling the sky is falling. social security is going bust. the only thing to do is cut granny's benefits [lovely word, "benefits."] by three hundred dollars a month."

or


go to the workers and shout "the sky is falling the sky is falling. social security is going bust. the only thing to do is tax the rich guy over there an extra two hundred dollars a month."


then go to the rich guy and tell him the same story. then tell him the first story, and tell him the choice is his.


or


go to the workers and tell them: we are going to raise your pay ten dollars a week, but then we are going to take one dollar of that and put it aside for your retirement when it will come back to you as four dollars per week.


where's the fun in that?

rosserjb@jmu.edu said...

S-man,

I think your argument about ss involves somehow things going bad with ss. But, if what most of think is going to happen, then things will not go bad. The system will just continue to run large surpluses, even if the size of those surpluses begins to decrease somewhat within the next year or two. Anyone paying any attention should notice that medicare is already running deficits that are rapidly rising. That is why all these "entitlements crisis" assholes need to be called on everytime they open their mouths and then start yapping that "somethign must be done about social security." Just plain BS. There is no reason to believe that we are going to wake up in five or ten years and start going "oh dear, why did we not do something about social security back in...!?"

Barkley Rosser

Anonymous said...

hi coberly (did i spell that properly?),

in an effort to at least temporarily put this to rest, let me try to recall what i'd posted to you just before maxspeak blacked out.

where we agree:

-ss is not in crisis.

-ss payments are at least mildly progressive.

-ss has a disability insurance component that's important but often ignored by both defenders and privatizers.

-use of ad hominems like 'stupid' is a good method not to convince but 'turn off' or aggravate.

where we disagree:

-the ss tax is regressive, which does not mean that ss as a whole is regressive, but that as income rises above the cap the percent of that income paid to ss declines. it is steeply regressive.

-that ss is a forced savings, so does and should be expected to return to those who paid but that there is a meantime during which that savings, as multi-trillion dollar surplus, can be/is used for more general purposes.

-that this surplus can be seen as facilitating lower personal taxes for those higher income groups who pay the lowest percent of their income as ss tax.

-that, given the real assymetery of economic power, employers can offset their 'contribution' through lower wages and/or marginally higher prices.

-that ss is embedded within a larger and class divided system and is not immunized from this; that, and even if we have fallen for partnership ideologies, class and related use of the 'fiscal crisis' stick play a part.

-that struggling to save ss has been necessary but, going forwards, defense needs some offense.

Anonymous said...

Juan

glad you are still talking to me. i hardly know how to spell it myself, so don't worry about that.

before Max closed I left you a satirical essay, and an apology. I know the difference betwen attacking an idea and attacking a person... especially a good guy.

so here's the apology again: i know you are a good guy, better educated and smarter than i am.

nevertheless you have got behind some ideas that are wrong. seriously wrong.

i will try not to use the "stupid" word, but if i let myself down, try to remember that it's because i grew up in a bad neighborhood, it does not mean anything about you. but i need another way to say an idea is wrong, fundamentally wrong, that does not offend, and that does not take a large amount of energy in diplomatic circumloqution, and that does not make us so polite we stop talking about anything meaningful.

back in a minure on the substantive points.

Anonymous said...

juan

i agree about all the agreed parts, and about most of the other points (that is i agree with you about things you think we disagree about) you make, with these exceptions:


it is meaningless to talk about the ss tax as regressive. the tax does not exist without the benefits. it is best not to think of it as a tax at all, but simply as an amount deducted from your check to be saved for you, with interest, until you retire. now there are all sorts of quibbles you could make with that.... most of which do not amount to changing the fundamental nature of Social Security: it is a savings and insurance plan for workers. taxing the better off in order to turn a savings account into something more "progressive" is politically disastrous. and worse, from my point of view, the workers, morally disastrous.

right now Social Security is my money, dedcuted from my pay and saved for me, with protections, for my old age. i do not want the damned rich mans charity or coerced contribution.

you may fight the class war wherever you choose, but by choosing to fight it by attaching your "progressive taxation" ideas to the best thing that workers have achieved since the industrial revolution is irresponsible.

[second] whatever happens to the money in the trust fund is no more relevant than whatever happens to your savings account in your local bank. hint: your bank lends the money to rich people who use it to make money with, lots more money than the interest the bank pays you.

this may sound unfair to you, but it's the way money works. and it's the way the present capitalist economy works. i frankly can't imagine money working any other way, but i am willing to listen to ideas...ideas that have a chance of becoming reality and that won't cause more harm than they save. meanwhile, i rather enjoy the dignity of having my own money, which i can lend at interest, and get back, protected from inflation and market losses, when i am too old to work.

i like that idea much better than having a troop of commisars roaming the country shaking down rich men so they can leave a hundred dollar bill under their plate when they beg for dinner at my house.

i undertand all that about asymetries of power. and will be glad to help you find the cure for them.

but meanwhile the best defense of social security is to understand what we are talking about.

here's your offense: tell the people that because they are going to be living longer, and they don't want to spend their old age working, they are going to need to save a little more of their own money while they are working. not much more.
about a dollar a week more each year, each year they should be earning about ten dollars a week more.

get them to understand that and the social security "crisis" will disappear. having been laughed to death by the workers.

Anonymous said...

coberly

not meaningless to point out real regressivity if this helps bring out the real larger inequities.

to say 'the tax does not exist without the benefits' is, so far, true but somewhere between tax and benefits it seems that a very large pool has, as intended, developed. And in your opinion it makes no difference who this is used by for what. fine, you then must favor not just ss exactly as it is but also the system-as-a-whole in the perfection of its neoliberal decay. which, we know, could never impact ss.

not a matter of what 'sounds unfair to [me]' but what it is, why it is, where its going.
'hint', juan already has an idea of how money and the 'present capitalist economy work' and the illusions attached to these.

Anonymous said...

coberly,
In no way is the social security deduction a form of savings. It is more along the lines of an insurance premium. What we pay in social security "premiums" today is used to pay social security benefits to the current elderly and eligible. The extra contributions which are supposed to be building up in the "trust" fund were added on about 20 years ago due to the concern that there would be a disproportionate number of elderly in the future(what is now and later.) The word trust is something of a misnomer in this case. Can we trust that the Trust Fund is not being squandered in the name of preservation of the wealth of the wealthy? I think not. As Juan has pointed out, the Trust Fund is being used to make up for the untaxed wealth of the wealthiest participants. I think you're right to point out that social security is not in the dire straights that the liars are all screaming about. I think you're a little off the mark regarding the true intention of our SS contributions. Those of us who may feel that social security may not be adequate to meet our future needs should simply be saving more of their current cash.

Anonymous said...

juan

we are not getting anywhere. but i can repeat my point as often as you repeat yours.

i am aware the "whole system is regressive."

i am all in favor of your fighting that.

just don't fight the battle on top of social security. you will kill the best thing the workers have going for them.

no, i do not favor the whole system as it is... and yes, the bastards are perfectly capable of stealing the trust fund. but only if you let them. and the best way to let them is to fail to teach the people exactly what social security does for them and what it costs. and to scare them with language like "neoliberal decay."

i am pretty sure you know more about economics than i do. i am also pretty sure there are experts in economics who literally do not know what they are talking about. when you talk in terms of "neoliberal decay" you are uttering meaningless noises. when you can talk in terms of dollars and where they come from and where they go, we can begin to make progress.

i hope this is not too harsh for you. but i wish that liberal theorists would go off and talk to conservative theorists in high sounding abstractions, and leave us workers to put our money into an insured savings account so we have something to rely upon for our old age.

you see, for you it's just an intellectual game, with nothing at stake except your feelings. for us, it's the difference between tolerable security, and begging in the street.

Sandwichman said...

coberly,

I do understand Social Security and have spent quite a bit of time studying the history and economics of social insurance. I'm not an expert but I'm well enough informed to be able to distinguish between the experts and the passionate amateurs.

I can't really reply to the substance of your comments because it's clear that you don't understand or want to understand my position. The unflattering conclusions you jump to about what I must think are a strong incentive for me to ignore the rest of what you say.

First, my position has nothing to do with either saving or destroying Social Security. It has to do with considering a complex of inter-related issues and policies. If it's possible to address the broader issues without touching Social Security, that's fine with me. If defending the SS status quo means supporting the given workplace policy regime right down the line, count me out.

From my point of view, the debate about Social Security is a sideshow. Saying that may infuriate you. But what I mean is that if you really want to defend Social Security, you have to think the issue back to the core problem of working class solidarity and mobilization. If that's too radical for you or seems too remote from politics-as-they-actually-exist, then your defense of SS is going to be superficial and ultimately ineffectual.

In short, it seems to me that if Social Security is the best workers can ever hope for -- ever, then Social Security is doomed. If taking a big step forward politically might involve tinkering with Social Security, then it becomes reactionary to insist on the program's absolute inviolability.

But none of this is to advocate a particular position at this time. I'm simply posing a hypothetical case. If you think Social Security is so vulnerable that it's dangerous to even think about changing it in any way, then you must not have much confidence in the persuasiveness of your own ideas.

Anonymous said...

jack,

yes. it's an insurance premium. it is also a savings account. in fact, it's an insured savings account. a very well insured savings account.

as an insurance premium it is a very high percent of the "benefit," because the probablity of becoming eligible for the benefit, the insured event, is very high. when you you are putting that much money into an "insurance account" with a high probability of getting all of your money back... then it's a savings "vehicle."

try not to to be confused by words. understand the underlying reality.

it sounds like you are confused by "pay as you go."

let me tell you a little secret. when you buy a stock or bond, you are participating in a pay as you go savings/retirement plan. the money you put into the piece of paper you get goes immediately to pay for someone else's current expenses. and the dividends or interest that you collect years from now comes out of the then current earnings, sales, of the company whose stock or bond you bought.

and that's what "fully funded" means. it means you own enough shares of ENRON to pay your pension. Unlike, say, owning "shares" in the United States of America, which has no way to make it's debts good.

so, yes. your payroll tax today goes to pay someone else's benefits today. but you get a credit, see, on the books of the Social Security administration, that will "entitle" you to a benefit some years from now that will miraculously equal in real value exactly what you put in.

now, America could go bankrupt, or reneg on it's promises. but if it does that, who will enforce your claims (none) on your stock, or (some) your bonds?

again, stop confusing yourself with words. try to understand the reality behind them.

and saving your current cash would expose you to the ravages of inflation and whatever moths are under your mattress.

rosserjb@jmu.edu said...

Well, I am the publicly announced "defend Social Security to the Death!" curmudgeon.

1) Jack is right. It is social insurance. We do not demand that life insurance or theft insurance or fire insurance give us a positive net return, nor do we compare them with investments in risky financial assets in terms of expected returns.

2) I do not see taking my position as ruling out major or serious improvements more broadly in working conditions, relations, and all that.

3) The system is on net progressive as a whole. The progressivity of the payments side offsets the definite regressivity of the tax side, at least that is what the last study I saw indicated, although I do not have a quick cite or site to link to.

4) Maybe it is defeatist to some extent to take the position I do, but I would say that I want to see that broader progressive takeover or whatever before I would change to talking about fooling with SS. In the meantime, it is by far the largest and most important social safety net program in the country, and while the situation is somewhat more progressive in Congress and elsewhere than it was prior to the 2006 election, the situation is still pretty scary for any reasonable changes to SS, especially with the massive amounts of ignorance among the public out there (most of which buys the scary rhetoric, even if they do not want to do anything about it, our best hope), while the bipartisan Wall Street crowd that has been pushing privatization so hard for so long is very much ready to jump in the minute the door gets opened to any kind of "reform." I am not ready to open that door until those bastards are put out of their misery, and they are chock a block in the Hillary apparatus, and some of Obama's advisers also seem to buy into this "entitlements crisis" crap as well.

Anonymous said...

Sandwichman

i am used to a little rougher style of discourse, perhaps, than you are. it has something to do with what is at stake.

i have no doubt about your qualifications. but i also know that even brilliant people who have not thought something through, or had the benefit of conceptualizing it correctly, can be wrong. very persistently wrong.

that doesn't mean that i can't be wrong. but if you want me to understand your position, you actually have to state it. i have lost track somewhat of who said what here. but if "you can't stand still when attacked" is your idea of a meaningful argument about Social Security, then I am afraid I can't follow you.

i don't know what "complex of interrelated issues and policies" you are talking about, and I have no interest in "supporting the given workplace policy regime right down the line."

i am only pointing out that piling your desire to tax the rich on top of Social Security is a good way to kill Social Security. And if you want to help the workers, it would make more sense, it seems to me, to help them "demand" higher pay. Tax transfers are not currently very popular, even among the workers.

Try that again: I am not attacking your fundamental worth as a human being. I am screaming that your casual "raise the cap" is threatening the only bit of security that workers currently have.

as to the persuasiveness of my own ideas, i have been a teacher too long to have any illusions about my ability to persuade most people that two plus two equals four. but i keep trying.

i don't mind your talking about changes in SS. I just feel a duty to tell you when the changes you propose are dangerously ill thought through.

you should really look at your argument and see how many times you stray from what i said to extensions which may perhaps seem logical to you.

that is the huge problem with intraspecies communication. everybody makes unconscious automatic associations with every input, so they are NEVER thinking about what the speaker is thinking. unless they can get past their egos and actually think. a word used to mean two different things.

now, i, at least, will go back and read what we both have said and see if i can find where we are missing each other. as for my "unflattering conclusions," i think you are tougher than that.

try to think of me as working class.

Anonymous said...

barkley

thank you.

you are right on all counts. the progressivity of the program is well established. unless of course you want to do as Juan does, and count all the untaxed (payroll tax) income of the rich and want to fold that into the benefit formula.

which would break the system.

of course you (he) can play games with words and count whatever he wants to count and call it whatever he wants to call it ("the employers share is "really" the employees share")

but the actual facts are these: 6.2% is deducted from the emploees paycheck. the boss pays in a matching amount. up to an amount just less than a hundred thousand dollars a year.

upon retirement, the average income for all workers for each year the employee reported earnings (and was taxes) is divided into the average earnings for all workers in the current year. this number is multiplied by the nominal earnings the employee reported for each year ( different ratio for each year). this is the "adujusted wage." the adjusted wages are added up and divided by the number of months for the best 35 years of the workers career. this is his average ajusted wage.

the first five hundred dollars (nearly) is multiplied by 95% (possibly 90%, i am doing this from memory), the next two thousand dollars is multiplied by 30%, and the next 6000 dollars is multiplied by 15%. those results added together are the workers "base" pension.

that is a very "progressive" formula.


and the only way you can call it "regressive" is to forget what it is for: it is a savings....insurance...for retirement...for workers. not for capitalists. not for rich college professors. for workers.

we are very sorry rich college professors are not allowed to participate over a hundred thousand a year. but you see, we don't want their money.

now the funny think, most rich college professors are smart enough to look at that benefit formula and realize they would get nothing for any contributions they made on an income over a hundred thousand a year. so if some kind class warrior insists on increasing the "progressivity" of the payroll tax, they will just say to hell with the whole thing.

so you can see why i am not too careful about hurting their feelings.


and now i have to say, because i have learned from experience, i hope barkley can tell it wasn't him i was just yelling at.

i am terrified of the men with soft voices who will sell out the poor in their own self love for their pet theories....all the while claiming to be supporting "working class solidarity."

Anonymous said...

some typos and writing inelegancies may make parts of the above hard to understand.

Sandwichman said...

coberly wrote,

i am used to a little rougher style of discourse, perhaps, than you are.

Oh yeah? Well you know what that trashcan icon is for that shows up on MY screen but not yours?

so you can see why i am not too careful about hurting their feelings.

Oh yeah? Did I mention the trashcan icon that shows up on MY screen but not yours?

i am terrified of the men with soft voices who will sell out the poor in their own self love for their pet theories....all the while claiming to be supporting "working class solidarity."

Get lost, jerkoff. You want a "rougher style of discourse"? I can do that.

Anonymous said...

not hard to understand.

let me try this again -

-ss tax is regressive...ss payout side is progressive. combining the two results in a mildly progressive system.

but one which at the same time, via the 'saving graces' of the post-'83 surplus build, inhibits greater overall progressivity. i have already stated why but you might want to think of it in a sort of micro/macro context, the former is within the latter; the combination is dynamic. iow, i'm trying to talk about two (or more) things at once, not just ss, which may explain 'miscommunication'.

but, from the innuendo, i suspect there's more to it and, having spent years in daily life and death conditions with 'them', take very substantial offense to your 'sell out the poor' remark.

Sandwichman said...

juan,

re: coberly's innuendo:

Max's comment rules were to let people run on as long as they liked but he drew the line when interpersonal attacks got nasty without being entertaining. Those sound to me like good rules.

I don't see much entertainment value to c's men-with-soft-voices innuendo. I'll leave it up for the time being as an example of the kind of self-styled "rough discourse" that isn't welcome on my comment threads.

Anonymous said...

It seems so very unfortunate that even amongst people who seem to have the same, or at least similar, goals there is such discord regarding the means by which those goals may be reached. Yes, I do agree with Sandman, juan and Barkley in regards to the social security issue. It is difficult to understand why coberly sees the argument in the way that he does.

Coberly, No one here is looking for a fight amongst ourselves. The goal in regards to social security is to preserve its present form, not subjecting it to the tampering of the ill willed set. In fact that is a political task. One which has almost no direct connection to the single issue of the social security system. As is usually the case those who would seek to benefit from some modification of that system hold other equally obnoxious agendas off the stage. The change that is needed is a change of character as it relates to those we send to represent our interests in government.

Anonymous said...

Sandwichman

you are too sensitive. i don't know what innuendo you got out of my "soft voices" comment. it is well understood among working people that the bosses never raise their voices while they are screwing you.

since i have seen much rougher language coming from regular posters than i ever use myself, i have to think it's because i am hitting a nerve that you are objecting.

i am trying to blunt my style. and i am not interested in a fight. but i am also intensely aware that it is not the quality of my argument that is deficient, it is that i am saying things from a point of view that is different from yours and i am not showing proper respect.

jack,

i agree with everything you said. except i agree with barkley and not with sandwichman. so if you agree with both of them, you are agreeing about some sub issues which are different from the sub issues about which they disagree with each other.

and yes, a change in character is most needed among those who represent us in our government.

but meanwhile it would help if the left understood Social Security clearly enough not to give the right an easy path to destroy it.

Anonymous said...

juan

yes,

no doubt you see the big picture while i only see the small.

but it would help if you would follow the argumet about the small instead of taking offense at imaginary insults.

(clarification: some "insults" are not imaginary. making fun of an idea, or even by implication, the holder of an idea, is pretty much the way us ordinary people talk to each other. you and Sandwich are reading much deeper insults into what i say than i ever intended. And in my neighborhood we consider ourselves too well brought up to call each other "jerkoff.")

There is something going on here that I do not understand. And i will only make it worse by trying to understand it.

But I will say that ugliness is in the eye of the beholder.

Anonymous said...

poor coberly gets on the elevator in the basement of the Home Econ building with a note from his mother in his hand. coberly is one of the littlest of the little people.

just as the door starts to close a big man... a big man, like Schwarzennegr times ten with Einstein hair...gets on. he is wearing blue tights and a red cape with a big S on his chest. and he is carrying a heavy briefcase. a very heavy briefcase containing the cares of the world..

which he sets on coberly's foot.

coberly says, uh, your briefcase, sir, it's hurting my foot.

the S man says, wait there a minute son, i have to go save the world.

but, cries coberly, but it hurts.

i don't like the tone of your voice, says the S man.

owwww, says coberly...


listen, jerkoff, says the S man, i haven't got time for your innuendo, i have to go save the little people. see these elevator buttons? if you don't shut up i will just press a button and you will disappear.

now the question is, if a coberly falls in the elevator and shuts up does it matter if he disappears

and what about that note from his mother?

Anonymous said...

Juan says

" having spent years in daily life and death conditions with 'them', take very substantial offense to your 'sell out the poor' remark."

oh, god, i'm sorry. i didn't know. how could i have known?

"Theology!" said Mr. Straik with profound contempt. "...theology is talk -- eyewash -- a smoke screen -- a game for rich men. It wasn't in lecture rooms I found the Lord. It was in the coal pits, and beside the coffin of my daughter."

If I had known I would never have spoken so carelessly. But you see, I didn't know. I couldn't know. All I knew is that you are a poster on a blog who tells me that in order to save the poor I have to force the rich to contribute to the workers savings account. I have to forget that Roosevelt worked hard so that Social Security would not be a welfare program.

But when you proved that Social Security was "really" a welfare program for the rich, and you showed how you could peel the face off the stamp and prove that it was regressive, that only the glue was progressive...

well, to me that sounded like saying that the Persons of the Holy Trinity were so separate and distinct that they could play Bridge together without cheating. And that offended my Moslem sensitivites. We know that there is only One God.

And now we must have a Holy War, because you have disrespected the One God, and i have disrespected You.

And god just shakes his head in sorrow. unless of course He has a sense of humor.

Bruce Webb said...

Well a lot of energy being expended here, which is a little odd because everybody seems pointed in the same direction.

My quarrel with Juan would be political. The fundamental strength of Social Security is that it is walled off from Capital. If Social Security neither draws from or contributes to Capital then Capital can just keep their hands off. Social Security 'Crisis' was an attempt to breach the wall. By suggesting the system was in financial trouble then Capital was free to suggest a capital based solution, not only gaining control of the income flow but scoring an important ideological victory along the way.

The Cap is a feature and not a bug. If you want more progressivity and more delivery of social goods then go to the income tax and capital gains. Properly seen the Cap is our friend, it is a carefully calculated political buffer and not to be tampered with under some generalized notion of regressivity.

My quarrel with Sandwichman is more tactical. He thinks that inactivity on SS is almost fatal.
"In short, it seems to me that if Social Security is the best workers can ever hope for -- ever, then Social Security is doomed." Well I don't see it, and I have been looking at this for a long time. A Social Security system that is not only solvent but is suddenly perceived to be solvent represents a potent political weapon, all the more potent because no one sees it coming. Despite recent worrisome productivity numbers, actual Social Security receipts are holding up and Intermediate Cost is cracking under the strain. In my opinion the numbers game cannot be prolonged past 2009 or perhaps 2010. For the cognoscenti: Low Cost is Out There. Two more years of defence and we should be able to go on offence, the Road to Single Payer and other worker friendly legislation runs right through Social Security Solvency. A program that has been the poster child for government failure is about to be revealed as a huge, and solvent, success story.

Nothing is not only a Plan, it is a very fine plan indeed. In fact you can numerically calculate The Cost of Inactivity on Social Security In each of the last 12 years the economic savings in doing nothing (dollars left in pocket) far outweigh projected taxes going forward. If Social Security were actually in danger the reverse should be true, the cost of an unaddressed fix should be larger. Well that is not how it is trending, even in the two years when the payroll gap ticked up (2005 and 2006) Nothing penciled out for almost all workers, a bet that was more than validated when the gap moved from 2.02% in 2006 down to 1.95%. In fact we are not far from getting back to the 1.89% low point we were at in 2000 and 2004 EPI: Changes in Projections In fact the case for Nothing will remain good for any year that the payroll gap remains below 1997's 2.23% (and depending on your income and years to retirement even after that). The cost of inactivity has meant a cumulative cash savings exceeding 20% of my annual income.

2009 seems a pretty opportune time to spring this news on the American people, and the political environment is such that we are in a position to take advantage. The New Deal is back, indeed it never really went away, just had a bad PR team.

Bruce Webb said...

Well this could use some clarity:

"the economic savings in doing nothing (dollars left in pocket) far outweigh projected taxes going forward"

Social Security crisis is defined as the gap between scheduled benefits and current payroll tax and expressed as a percentage of that. If for simplicty we asked the question "What would it take to achieve a tax based solution?" The answer is "Immediately raise the payroll tax by the current gap". Now if the economy were static and/or fully predictable the cost of Nothing would be strictly calculable and would vary by age with delay being more favorable to those approaching retirement, the ultimate winner being the guy who retired the year before the tax increase went into effect.

Indeed the rhetoric around Social Security has built this assumption in, that Selfish Boomers are simply dragging out the clock and leaving the mess for others. But it ain't necessarily so. Mainly because the economy is dynamic and the current models on balance too pessimistitc.

In 2004 the projected payroll tax gap was 1.89%, in 2005 it ticked up to 1.92%. Proof we should have acted in 2004? Not necessarily. If your houseold income was $50,000 and all drawn from wages the cost in 2005 to 'fix' Social Security based on 2004's number would have been $945, by waiting a year and 'fixing' it for 2006 based on 2005's 1.92% is $960 dollars. Ignoring for the moment either the current utility of that $945 or the interest you could earn on it, how many years would it have to be before Nothing became a bad bet? Well take your $945 not taken in 2005 and divide it by the $15 per year extra paid in 2006 and all subsequent years and the answer is 63 years.

That is for everyone in the current workforce doing Nothing in 2004 put you current dollars ahead in 2005 without increasing your total liability going forward. And of course in 9 out of the last 11 years the payroll gap actually shrunk making the math even more stark. The payroll gap was 2.02% in 2006. If we had raised taxes it would have cost that $50,000 household $1010 this year, and since you can bet they would leave the tax as is on a 'better safe than sorry' position (and digging that extra surplus in the short term). On the other hand doing Nothing left that money in place and presented a new obligation of 1.95% or $975. Constant dollar savings? Try $35 times your years to retirement.

So for those 27 year olds out there complaining that Boomer Geezers are blocking progress, well I say you owe ol Bruce a drink. Because over your remaining lifetime I just helped save you big money. If you are making $50,000 it pencils out to $1400 in constant dollars, much more if adjusted for inflation.

And by gum I am doing my darndest to do it again next year.

Bruce Webb said...

Coberly this isn't AB and these people are not CoRev or Marek or RaP.

My take is that Max kind of enjoyed a little street fighting and so tolerated quite a bit more than would be appropriate say in a Seminar room.

There is a time and a place for everything, and not every argument on Social Security is derived from malice.

The Sandwichman is engaging at a very high level with labor theory and the history of the same, and in doing so tends to leave the rest of us behind sometimes. If you see him saying something apparently hostile to worker interest then you probably are not understanding his argument at all.

Anonymous said...

Coberly,

The tone of your voice doesn't bother me but just as I need better understanding of the small, you need to better understand that the large and small are not divorced from one another but, while contraries, are also combined.

I am overly sensitive to, still too easily upset, about casual reference to 'the poor' most often made by those who merely imagine to know what that is. Perhaps that explains.

Anon,

If Mr Straik had been a political conservative who, besides naive, had been working as a project engineer for a chem/mining co., but found himself in the midst of a civil war that he could not comprehend beyond which side was in the right, a comprehension that finally provided Mr Straik with admission to the sanctums of prisonland where executions and tortures took place, where most inmates were guilty of nothing but inability to bribe and their ethnicity, where suffering, pain and death were so daily at the doorstep, where the screams could be heard into the late hours, where trying to save a suspected-to-be-communist friend's post-torture suffering meant no more than being able to sit with his hours long death,,,where even the grand Mr Straik felt the barrel against his head while being taken to bartolina (what an idiot he had been to be convinced that his particular citizenship could allow him to obtain potentially beneficial publicity for his comrades, but an idiocy that in at least one case worked),,,
as it turned out though, Mr Straik remained alive and through friends of friends of friends, was even freed. but since an absolute hatred of injustice had been fully acquired along with some insights into the pure hypocrisies of foreign policy , this was no longer the same Mr Straik. it was instead one who felt the need to stay and fight but as urgently to leave and answer the so damn many unanswerables. Mr Straik must have been a coward since he did the latter but at least was able to inform a few people of what was in fact taking place in the name of 'anti-communism', a minor effort which took him to the pristine halls of university so many years after he had left, but this time the science of society not mechanics and chemistry. Mr Straik found the lord in two places, Guatemala and Indiana.

Mr Straik was not talking about a 'paradise' of redistribution but the necessity to end what is an inherently destructive socioecon/political system of our own creation and reproduction; the larger prison that we are all in but fail to comprehend.

Mr Straik is not so stupid to believe this can be done overnight but he is very sure that it must be done and that there are many ways to 'march together'.


Bruce,

I fail to see how SS is 'walled off from capital'.

Anonymous said...

Bruce

you are perfectly right.

but i keep wishing people could see that so am i.

i am perfectly ready to believe that Sandwichman knows more than I do. And so does Juan.

But i would be happier to see that they understood what am saying. Or even that my different point of view might be legitimate.

I spent some time in graduate seminars myself. The first was at F---- where the rule was about what you seem to expect here: solemn respect for the professor. The second was at M---- where the professors had more self confidence and a better sense of humor.

Anonymous said...

juan

anonymous was of course me. when i coudln't get a post to take under my name, i thought that Sandwich had pushed the button.

Although my Straik comments were meant satyrically, if you have been in terrible circumstances, then you could take them as perfectly sincere: i am sorry. if i had known i would not have spoken so carelessly.

but understand, i am a worker. a member of the desperate poor class. i have a perspective too.
and a style that, while not as rough as Sandwichmans, is probably not the way i should talk to the queen of England. though it might be the way John Lennon would.

there is no way i could know about your "larger picture" unless you tell me. might not be worth your time.

what worries me is that in several thousand words neither you nor sandwich saw the point i was trying to make, but saw every "innuendo", even the ones i did not mean.

rest now.

Anonymous said...

coberly.

even if i had been more specific in months earlier posts, you owe me no apology and certainly should not feel sorry for me.

we simply have different perspectives; neither/none of us can or should ever claim absolute truth.

'bigger picture' is a movie being made by six billion and some odd people, i'm one of the odd ones who thinks we can all also be directors.

Sandwichman said...

Bruce,

I don't know that we have even a tactical difference. You said, " A Social Security system that is not only solvent but is suddenly perceived to be solvent represents a potent political weapon..." If SS can be as you say a "potent political weapon" then clearly it's not "the best workers can ever hope for -- ever."

I am not advocating a increase in the SS ceiling. I was talking about considering it as a policy option. If defending SS means we can't discuss tactical and strategic alternatives then welcome to the U.S.S.R., comrades. I have advocated increasing the Canada pension plan ceiling, which, unlike the US Social Security, is lower than median income and frozen. And at the time I was making my pitch, the CPP was not facing any immediate political threat.

Anonymous said...

juan

thanks. if you have a story to tell, and it sounds like you do, you should do it in a better forum than blogsites. a book.

and, if i may, in simple language.

Anonymous said...

Sandwichman said,

"If defending SS means we can't discuss tactical and strategic alternatives then welcome to the U.S.S.R., comrades."

If I may risk an observation. I thought that is what I was doing.

Bruce Webb said...

Sandwichman the possibilities for a Social Security system post Solvency have not even been tapped. An iPhone is not the ideal tool fot html, if you are interested I have a post at the bruceweb called "Invest or Divert: Lets do Both".

To get to Juan's question about the 'Wall' orthodox theory asserts that all contributions to Social Security come out of compensation, that none of it comes out of returns from capital, that essentially it is not a drag on profit but simply a substitute for compensation, just as they insist that employer paid health care is just a measure of "Real Compensation" and so the true measure.

As such Capital is not by their definition contrIbuting, they really can't have it both ways. More tomorrow if necessary, this iPhone thing being cool but not exactly conducive to my usual 50 cps typing speed.

Anonymous said...

it would be helpful for all to recognize that social security income means very different things to the various people on the receiving end of that income. coberly seems to think that it is primary retirement income for all. Maybe I'm interpreting his comments incorrectly. Bruce Webb, in another post, corrected me when I suggested that SS was originally intended as the supplement for miserly or none existent pensions, the safety net that is so often referred to. I believe that his description indicated that the system was initiated at a time when pensions for the working class were virtually non-existent. My confusion was that my familiarity with SS dates from that time when defined pensions were the norm in industrial America. Social security was persistently described as either the supplement to a pension and/or savings or the safety net for those without same. Well guess what? In modern industrial America we're beginning to see that there are a great many people losing their defined pensions, or who have never had one.

So social security has taken on a much greater significance to the working class. We're having some trouble recognizing that because of the changing significance of SS to our financial health in the senior years. Let's try to understand the differences that there may be in our understanding of the role of social security, and begin to be more unified in our quest to fend of the vultures of the corporate class. They and their representatives in our government are the guys in black hats. They are the ones looking for new ways to skin our cat. They are the enemy in a class war that they have been perpetrating for a long while now. Don't fear the term. Fight the real enemy,. not one another.

Sandwichman said...

Bruce,

There are three concepts that I see as touching on the issue of where the contribution comes from: social overhead costs, quasi-fixed costs and tax incidence.

The most venerable is John Maurice Clark's analysis of the economics of overhead costs and the appropriateness of treating labor as an overhead cost for society rather than a variable cost for the firm. Walter Oi's discussion of quasi-fixed costs refers back to the Clark analysis in some respects but one can begin to detect a waffle where firms respond to those overhead costs as costs they would prefer to shift elsewhere. The payroll tax incidence literature tends to go overboard in treating the cost-shifting maneuvers as total -- claiming a tax on employers is a deduction from total compensation.

I would favour triangulating between these three concepts and recognizing that the overhead/variable equation and tax incidence is always in flux. In the Great Transformation, Polanyi argues that labour is a pseudo-commodity and that the attempts to totally marketize it lead to economic and social crises that are only resolved by re-socializing. Frankly, it seems to me that the time for another transformation is overdue.

Maybe bursting of the housing bubble and subsequent bailouts and interventions will finally put the Social Security crisis meme to rest.

Anonymous said...

Bruce,

Thanks for the clarifying paragraph.
Somewhere above, one of my points was not that SS was a cost to capital but, with a trust fund overflowing into the general fund, the contrary in the sense that this can facilitate govt mediated direct and indirect subsidies to capital.

Anonymous said...

Jack

i hadn't thought i was thinking it was "a primary retirement insturment for all." i was thinking it was a safety net for all workers.

i would say, knowing it is futile in advance, that there is great danger here in thinking "in words."

of course that is unavoidable...and necessary if there is to be any communication at all. but behind the words there is a real world of cause and consequence. and if you let the words slide too easily over the real world you end up talking nonsense, or at least missing the point.

Sandwichman...

surely there is a great gulf fixed between us. I cannot match your level of sophistication. I can only plead, at this point, that you find a way to think, or talk, at a level that corresponds to the workers reality.

from this workers point of view: i need to save for my retirement. Social Security provides me a way to save, safe from inflation and market losses, an amount just sufficient to cover my basic needs when i am too old to work. It doesn't cost anybody else anything.

All of the intellectualizing of the issue that i have seen has only the purpose ... or unintended result... of obscuring the basic reality of Social Security (not meme...the reality) for workers.

and let me add, despite my real modesty here, i am not at all modest about what i know about social security, and about the logic of some assertions. and while i cannot penetrate all academic language, i have found often enough that its authors, while pursuing some no doubt valid and interesting theory, have left the workers behind.

Bruce Webb said...

Currently the Social Security system is in surplus. Given trend growth (2.1% productivity is all that would be needed) it will continue to be in surplus for years longer than currently projected and assuming that the assets in the Trust Fund are honored will be solvent through the 75 year window. As such discussions of raising the cap are largely solutions in search of a problem and given the ongoing struggle between orthodoxy and heterodoxy counterproductive.

What needs to be discussed is how to right the power imbalance in worker compensation generally and how to restore progressivity to the tax code overall. To the extent that the Laffer Curve has any non-voodoo reality it is pretty clear we are on the wrong side of the curve.

In operative terms there is not a lot of difference between raising or eliminating the cap and increasing top marginal rates, each would have the result of increasing cash flow to the Treasury to fund General Fund obligations, the only difference being that raising the cap creates an intermediate step of crediting the Trust Fund with Special Treasuries. But this is just to create a Kabuki dance. If we need more revenues for the General Fund and we want to raise it in a progressive fashion why would we possibly want to wash those funds through what is pretty clearly an already solvent Social Security system? All you are doing in raising the cap is to increase class friction between the upper middle class and workers, meanwhile Capital is laughing.

What I am suggesting is that we are fighting the wrong battle on ground prepared by the enemy, Instead we need to take the fight to them. Suggesting an increased tax on high income wage workers while ignoring the vastly privileged returns on capital is to miss the forest for the trees. Whether you see it as progressive or regressive Social Security is working fine for the task it was created, time to let it alone.

Let me post this and then change the subject slightly.

Bruce Webb said...

Two questions are being blurred here.

One. Is Social Security as currently configured and funded likely to fall short of full payment of scheduled benefits? Well for a couple of decades the assumed answer to this question was "Yes, and what if anything should we do about it?' The problem is that framing the question in this way fed the notion that Social Security was in some sense a 'failure' and as such a validation of the 'government is the problem' position. Well examination of the data and the models suggest that the real answer to this question is "No, given normal growth Social Security will function exactly as designed, government is not the problem, in fact for this particular problem set as defined, government was the solution."

Seen in this light asserting Social Security solvency is as much an ideological argument as economic. As such it is a crucial first step for progressives and workers.

Two. Then we have the question of whether Social Security as designed is in fact the ideal instrument for accomplishing the goals it faces. And here I think the answer is "No, we can transition to a Public Pension system that more fairly distributes the gains from produtivity than one simply based on lifetime earnings". And in doing so we would need to take a hard look at current FICA rates, for example are they needlessly punitive on the working poor? We could equally take a look at scheduled benefits. Do we really need to be aiming for a benefit in 2041 that is 160% relative to current or is 120% reasonable? If the latter it would suggest cutting FICA today. And certainly we should be examining diversification of the Trust Fund. Long term is might make perfect sense to take Social Security truly off budget and make it look a lot more like CALPERS.

But we can't do any of that from within the 'crisis' model. To do so is to concede too much ideological ground to the people who fundamentally don't believe in social solutions to social problems to start with. They need Social Security it be a proven failure, I need to show on the other hand that it is working fine. Throwing in a discussion of how to improve it just serves to throw dust on the underlying question:

New Deal? or No Deal? Well I want to take New Deal. And start from a position of strength.

Anonymous said...

Bruce

you are my father and my mother.

you are right. i agree. except...


and the problem for me is how to disagree with you about the little bit without making enemies.

for now i will just shut up.

[except to note that the New Deal solution works for me.

and forty years from now that 120% isn't going to look so good to granny when all of her neighbors are living in a 160% economy. especially if she knows that all she had to do was increase her payroll tax 2% while her standard of living was rising 160%.]

rosserjb@jmu.edu said...

coberly,

You want to go out the door, but you keep propping it open with all these weird remarks about payroll taxes. If Granny is getting only 120%, then so will her neighbors. Or they will all get 160, or whatever. It is not going to be one person here and one there with differently individualized payroll taxe increases under anything like the current system, although if we replace it with some kind of privatized and individualized system, well, who knows how granny or her neighbors will do.

And that is what Rosser of "the Law," says, :-).

Anonymous said...

Barkley

If the real income of her working neighbors has gone up 160% -- and I believe that is the only way her SS benefits could go up 160% in real value under the current benefit structure -- but she is only getting benefits equal to 120% of current real value because SS settled for a 25% benefit decrease in order not to have to raise the payroll tax by 2% --

then she will notice. not by comparison with other SS recipients but by comparison with the soiciety she lives in.

i used the example before: suppose my grandmother worked all of her life in an economy in which cars were rare and not a necessity. she walked to the store. she took a bus to see the doctor.

now that she has retired, she finds herself in a society in cars are universal, and the economy has changed to "expect" them. there is no longer a store on the corner. there is no longer a bus that will take her to see the doctor.

but, tough, says Mike Boskin, a car is a standard of living increase, not a cost of living increase, so granny has to live without one. even though the world has changed in such a way that that is no longer practical.

Rossers law, while a good point to make in the course of educating the people, would ignore granny's plight.

and forget that she, and she only, would be the person paying that 2% increase in the payroll tax (oh, yeah, her boss, but he says it's "her" money.)

so now i wonder why is it all the experts are so anxious to save "social security" some money, but they don't want the people who pay the tax and count on the benefit to know how much it would cost them to keep a benefit that will enable them to live in whatever the future looks like?

and, at some risk here, let me say that this is the kind of thing that exasperates me. everyone talks as though "socialsecurity" were some kind of abstract idea that we might or might not have to pay for, or change in some way that satisfies one theory or another, and no one is able to just sit down and say "exactly what are we talking about here?"

what we are talking about is me. or future granny. saving a small percent of her pay (6% now, maybe 8% if she is going to live a lot longer than me) so that she will have enough to live on, if all else fails, when she is old.

it has nothing to do with "the government." or "taxes" or "the old being a burden on the young", or "the regressivity of the capitialist system"... or , or , or.... but i am getting too close to hurting feelings again.

and the hell of it is i know that nothing i just said will make a bit of difference. except to make people mad at me.

Bruce Webb said...

My Mother lives in a comfortable condo today but raised four boys in 2 & 3 BR housing, and prior to that almost starved in 1947 working for JC Pennies in Chicago. My neices,nephews, great nieces, and great nephews are growing up in households where the primary breadwinners are a surgeon and an executive. Me I am kind of middling. But do I resent the fact that my brothers' children and grandchildren will have lifestyles I never dreamed of? Hell No!

My Dad and his father grew up in environments that I would put up against anything Dale could put up. I have cousins that lived on welfare their entire lives. Would my dad and Grandpa Bill be proud as Punch to see a great grandchild and a great-great grandchild in positions where upper education choices were simply that? Hell Yes, they made more sacrificies just putting food on the table.

Anonymous said...

Bruce

it is not impossible that your mother knew my mother. i can't remember for sure if she worked at Penny's. she worked at Campbell Soup, and a couple of other places before we headed west.

Don't think twice about those lifestyles. My daughter is married to a rich farmer. Makes more in a year than i did in ten of my best years. NOTHING to envy there. Her kids watch a lot of television and have all the things money can buy. I was a lot happier wandering around the North Woods, and later Los Angeles' streets, finding what i could find.

But don't confuse me with RaP's relatives. We were poor but proud. so damn proud bosses are always telling me to wipe that look off of my face.

My mother was a great believer in education. Was sure that if I got a "scholarship," I would do well. I can't tell you how bitter I was after getting the scholarship and finding the schools were just playing games. KInd of a cross between a cattle drive and "guess what I have in my pocket.

Bruce Webb said...

Well I am out the door with a parting shot.

Coberly while a retirement check that allows future retirees to share the real gains being made is a reasonable policy objective (i.e. 160%) it is far from clear that retirees would perceive that directly, to some degree your check is what it is. And as Barkley points out all of their actual peers would be in the same boat. Now I suppose a retiree could look and see some guy in the same job he had only twenty years younger and say "I never could have afforded x at his age"

The question of whether scheduled benefits have actually been set at the right level compared to the current utility of the wage has not been openly debated, probably because until recently it has been a moot question, few people thinking we would get there anyway.

Well now it looks like we might hit the target or even overshoot it. Which means taking a look at FICA and perhaps at the benefit schedule.

Here is a theoretical for you. Would you accept a future 120% if it meant universal coverage for kids today? There can be an honest debate about how to slice the current and future pies. It does require a better understanding as to the size of that future pie. But there is no reason to simply to assume that the current pie slicing rule is ideal.

Anonymous said...

Bruce

here is an answer to your theoretical that you won't like. my answer is no.

health care comes out of a different account than retirement.

if i can save enough for a minimally decent retirement (safety net) by putting 8% of my present wages in a protected account, i am more than happy to do that.

if i can find a way to provide decent health care for kids, i will work for that. but that is another can of worms altogether.

and the terrible mistake you are making is still thinking of the payroll tax as "the government's money."

what would work, i expect, is another government sponsored program in which people set aside a percent of their wages (looks like it might settle in at around 10% plus or minus) to create a life time health insurance policy. the idea being that during your working lifetime you set aside enough money to meet all your "expected" health care expenses for your whole life cradle to grave.

then you, or your elected representatives' hired agents, would work very hard to control the costs of that health care.

now it looks like the citizen would put aside around 20% of his income to take care of his own health care and his own retirement. this is not government spending. add to that perhaps another 20% of real taxes to pay for real government costs, like armies and judges.

now, if you are a libertarian you start to cry real tears, " sixty percent of my money shot to hell and i haven't even bought my first mercedes."

it's a question of sane priorities. where does it say in the Bible that "thou shalt not spend on consumer goods less than 40% of an income that is ten times higher than anyone dreamed of before Roosevelt spoiled everything."

or, stop looking at the percents of that pie, and look at the sheer size of the slices, and what those slices actually mean in terms of real value to real people.

Anonymous said...

"And as Barkley points out all of their actual peers would be in the same boat"

yes, but you are missing the point i keep trying to make. by the time the average income has increased to 160% of today's, the way of living will have changed so that some new expenses become unavoidable.

and you are forgetting, that it is granny herself who will pay for her 160% benefits, by paying, brace yourself, a 160% tax.

for some reason that causes people to go crazy.

i think it's because they can't wrap their minds around the fact that 160% of 6.2% is still 9.9% of payroll. and that it would be a perfectly reasonable amount of money for a person to set aside who expects to live 20 years or longer after she retires.

or that after paying the tax, she will have 156% of what she has today to spend on "current" expenses. (yes, some of those current expenses include current taxes.)


let's see. today i make 100 dollar and pay 6 dollars to Social Security. the rest, 94 dollars, goes to other taxes, doctors, lawyers, landlords, stock brokers, grocers, car dealers.

when i retire i can expect about 40 dollars of this in a pension check, where this comes from is 6 dollars from me, 6 dollars from my boss, multiplied times 3.3 because that's how many workers there are for each retiree... or, which is the same thing, i will be retired for one year for each 3.3 years i worked.

now, some years in the future a worker just like me will be making 160 dollars (real dollars) where i only made 100. i could pay 9.60 (6% of 160) to my social security, and have 150 dollars left for current expenses, compared to the 94 dollars todays worker has.

but when i retired, i'd get 38 dollars... that is, my 9.60 plus the boss's match, times 2, because i am going to be living longer, one year for each 2 that I worked (or what is the same, only two workers to each retiree.)

meanwhile i am trying to live in a world in which the personal jet pack has been perfected and now the only way to get into a building downtown is through the roof. but jet packs are an increase in standard of living, not an increase in cost of living, so i can't get my pension increased. so now i can't afford to go into tall buildings.

or, i could decide to pay 6.4 dollars more into my payroll tax savings account and insured retirement scheme...for a total of $16. This would leave me
$144 for current expenses .

now 16 times two times two is 64 dollars, or 160 percent of what today's SS benefit is.

for an extra six dollars in "tax" i get to buy that jet pack (or that internet connection that does everything) and live like a white person.

or a team of politicians and economists could decide to "save" that six dollars (for whom?) and i could walk in a town where everyone else is flying.

and no, it won't make me feel any better to know that all the other grannies are walking too.

the arithmetic in this example was created for this example and contains huge rounding errors and don't match all the other published numbers because of details left out for clarity. you can work out the right numbers yourself. they won't change anything.

once you get the idea.

Anonymous said...

This conversation keeps meandering back to a blur of speculations regarding what is required now to assure that some target % of current income is achieved in the future. Given that the thrust of the SS argument has more to do with the likelihood of SS being even solvent in the future, discussing how much to collect now to assure some better benefit in the future seems like little more than a willful effort to confuse the issue. I fully agree with Bruce Webb regarding what battle to fight at present. The SS "problem" is only a smoke screen which serves several purposes for the moneyed class. It's a diversion from the more basic issues of wage imbalance and distorted taxation. In both cases the wage earner is on the short end of the stick. The other unspoken agenda in the SS "crises" is to scare the wage earner into thinking that the financial community can better oversee his retirement savings than can the SS Administration. Privatization!!! Better known as a new source of fee revenue to the financial industry, to say nothing of a new and larger source of rubes to fleece.

On another note, I'm going to go out on a limb and note that the long repetitive rants that coberly is fond of posting are getting boring. Going back through several threads it seems as though those postings are beginning to dominate every discussion, and no matter what point is made by someone you, coberly, seem unable to resist repeating endlessly your own perspective. Frankly, I don't know where anyone could find the time to dominate a blog as thoroughly as you have. I've often enough agreed with some point that you've made, but there's no need to persist as though the last word is the only truth.

Anonymous said...

Jack

sorry you are bored. i am frustrated.

my comments are not "speculation." they are, although the last was somewhat hasitly thrown together, rather careful explanations of exactly what the"intermediate projection" implies by strict arithmetic.

i am not one of those who claims there is a crisis. quite the contrary, i try to show that by their own numbers there is no crisis.

there is no question of solvency. The Trust Fund is not Social Security.

Well, I don't want to wander too long for you, Jack. My guess is that you are one of those who snored through Algebra.

But you have made your point. I tried to teach a subject like Algebra to the not best and not brightest in two Universities. I don't seem to be having any more luck here.

Anonymous said...

Jack

on a pay go basis there is no need to "collect more" now to assure some target payment in the future.

the collections will be what they need to be to pay the target benefits at the time the benefits are needed.

i have only predicted what that amount will be so that the sky is falling folks will be refuted by their own claims.

i am more sorry that you cannot understand this than you can imagine.

as near as i can tell from reading your comment you know absolutely nothing about Social Security, but have a lovely ideology that helps prevent thought.

Anonymous said...

some here (no names, they are people i like and respect) don't even understand that they are so charmed by their own intresting discovery that they are advocating exactly what Bush is advocating: a benefit cut.


but i have, repetitively, tried to explain that.

Anonymous said...

jack

in case it's not clear, neither is the Trust Fund bankrupt. not even when it has been paid out.

as for the repetitions: with the good students you just point at the problem and they go home and solve it. with the less good students, you explain the problem and show them the solutions. with poor students , repetition is the key.

Anonymous said...

I guess that series supports my point.

Anonymous said...

-160% is based on what assumptions?

-trust fund surplus has been/is being used for what?

-when, years from now, redemption of ss securities begins, who will pay?

using forced savings by primarily employees to mitigate the fiscal crisis of the state has no doubt been beneficial, but lets not pretend it some final and perfect solution to what is systemic.

Anonymous said...

anonymous

160% is based on Rossers law. I assume he gets it from a study of the future benefits payout in the Trustees Report. I can get the same number by assuming, as do the Trustees, a 1.1% in the real wage for 43 years.

trust fund has been borrowed by the general fund to do whatever the general fund does. note, "borrowed." if they don't pay it back, which seems very unlikely, then "stole" might be the word, though with government spending it's even hard to assign that a useful meaning.

when redemption of Trust Fund Securities begin, the general taxpayer will pay. This is arguably a more high-end crowd than the payroll tax payer, but my guess is that most of the cost of the higher taxes will be shifted to the workers in the form of higher prices and lower wages. so, yes, you might say "stolen all along." except it doesn't matter. we are talking about a dollar a week raise per year.

would never pretend that borrowing the savings of the baby boomers was a final solution. whether the money is stolen or truly borrowed, it does have the effect or equalizing the taxes/benefits ratio across the boomer and buster generations.

if you have a final solution to all the injustices of American capitalism, go for it. I will even vote for you. But don't ride your solution on top of Social Security. SS already works for the worker.. It doesn't need fixed. It certainly doesn't need to be a card in some political game.

Anonymous said...

Jack

do you have any idea how long the Lincoln Douglas debates ran?

Anonymous said...

in my field we go back and forth until we understand each other. maybe even agree with each other. it can take years.

but we use real numbers. and we care about the subject

and the truth.

Anonymous said...

Projected numbers are never real. That's why they are called projections. They are subject to change for any reason that the future may hold. Projection is another word for assumption. The margin of error is growing as we speak. Rosser's law is one of those laws of economics that has nothing to do with certainty and all to do with assumptions and extrapolations. That is the nature of economic projections.

Going back and forth is fine. Repeating the same point continuously is simply attempting to bludgeon your antagonists. There is an assumption of certainty in what you say that is virtually impossible to attain in any discussion of what the future may hold. There's that old assumptive argument again.

Frankly, what ever is your central point gets lost in the plethora of words which make up each of your posts. There is simply too much, and what truths there may be in those posts gets lost in the slide.