I'm writing to you to see if you can help get the word out about my 3-day old son who desperately needs a heart transplant. Its late here and my wife and I have been through so much these past few days that I can't relate the whole story right now -- but a nutshell version is on the website I created for him before he was born: http://www.jordanzane.com. I know the blog community is tight and can get the word out.

Krugman invokes the fatuous Kinsley argument that going forward, especially with private accounts in Social Security, returns on stocks must fall and those on bonds rise -- with the diminished spread between them defeating the entire purpose of private accounts.

[reformers] point out that stocks on average were a very good investment over the last several decades ... But high returns always get competed away, once people know about them: stocks are no longer cheap...

And who does Krugman choose to invoke as an authority for his argument. Why, who could be more impressive than the academic world's noted advocate of stocks as a long-term investment, Prof. Jeremy Siegel of Wharton...

That's why even Jeremy Siegel, whose "Stocks for the Long Run" is often cited by those who favor stocks over bonds, has conceded that "returns on stocks over bonds won't be as large as in the past."

But a very high return on stocks over bonds is essential in privatization schemes... Yet wait a minute! With Krugman (not to mention the other NY Times op-eders) you can never trust a quote. Let's do a quick Google search.

Yes, here's what Siegel actually said ...

"I agree that returns on stocks over bonds won't be as large as in the past. But I'm more optimistic than Rob. Looking over the next quarter-century, I see a 5%-to-6% return on stocks, adjusted for inflation. I'm pessimistic about real bond returns. I think they're likely to be in the 0%-to-1% range over the next five years, and closer to 3% after that..."

My gosh! In support of his argument that the spread between bond and stock yields must close, bond yields must rise and stock yields fall, he quotes Jeremy Siegel saying exactly the opposite, as he makes the case for stocks as a better long-term investment than bonds.

Looking over the next quarter-century, I see a 5%-to-6% return on stocks, adjusted for inflation. I'm pessimistic about real bond returns. I think they're likely to be in the 0%-to-1% range over the next five years...

By the way, the "5%-to-6% return on stocks" that Siegel projects in that quote is a fall all the way from the 7%. Krugman doesn't give those numbers either.

The administration's approach to history is at odds with what has been described by a communications adviser to the president as the "reality-based community." A dumb phrase...

Why does the federal government need unions? The Left's conception of government it that it is (a) benevolent (b) competent and (c) has everybody's best interests at heart. That is the central claim to enlarging the role of government in our life.

But if that is true, what possible role is there for unions in the government? Unions imply an adversary relationship with the employer. If the government is such that employees need a union to represent their interests, what about the public?

Eight in 10 said their trusts had been forced to reduce their activity, and three quarters complained the centres were not value for money.

Some 61% said the Department of Health's approach was prescriptive, while 37% said it amounted to bullying.

Senator Judd Gregg, the New Hampshire Republican who is chairman of the Senate Budget Committee, said he would like to have seen a bipartisan commission come up with proposals.

Tsunami-hit Thais told: Buy six planes or face EU tariffs

TSUNAMI-struck Thailand has been told by the European Commission that it must buy six A380 Airbus aircraft if it wants to escape the tariffs against its fishing industry. ...trade authorities in Brussels are demanding that Thai Airlines, its national carrier, pays £1.3 billion to buy its double-decker aircraft.

A conservative legal group has accused billionaire investor George Soros of violating federal election law.

The National Legal and Policy Center (NLPC) on Tuesday filed a 41-page complaint against Soros with the Federal Election Commission, alleging "extensive apparent violations of the Federal Election Campaign Act."

NLPC is alleging that Soros did not file the transportation and administrative costs associated with his October political media campaign with the FEC. The NLPC says those costs included telephone, photocopying, commercial press release services, subsidies for groups hosting Soros, and press luncheons.

Soros also allegedly failed to disclose the cost "to purchase or rent the mailing lists required for the two million-piece mailing of a brochure entitled, 'Why We Must Not Re-elect President Bush,' according to NLPC.

The number of Americans filing initial claims for jobless aid unexpectedly plunged 48,000 last week, the largest drop in more than three years, according to a government report on Wednesday...

CRIMSON: From what psychologists know, is there ample evidence to support the hypothesis that a difference in “innate ability” accounts for the under-representation of women on science faculties?

PINKER: First, let’s be clear what the hypothesis is—every one of Summers’ critics has misunderstood it. The hypothesis is, first, that the statistical distributions of men’s and women’s quantitative and spatial abilities are not identical—that the average for men may be a bit higher than the average for women, and that the variance for men might be a bit higher than the variance for women (both implying that there would be a slightly higher proportion of men at the high end of the scale). It does not mean that all men are better at quantitative abilities than all women! That’s why it would be immoral and illogical to discriminate against individual women even if it were shown that some of the statistidcal differences were innate.

Second, the hypothesis is that differences in abilities might be one out of several factors that explain differences in the statistical representation of men and women in various professions. It does not mean that it is the only factor. Still, if it is one factor, we cannot reflexively assume that different statistical representation of men and women in science and engineering is itself proof of discrimination. Incidentally, another sign that we are dealing with a taboo is that when it comes to this issue, ordinarily intelligent scientists suddenly lose their ability to think quantitatively and warp statistical hypotheses into crude dichotomies.

As far as the evidence is concerned, I’m not sure what “ample” means, but there is certainly enough evidence for the hypothesis to be taken seriously.

For example, quantitative and spatial skills vary within a gender according to levels of sex hormones. And in samples of gifted students who are given every conceivable encouragement to excel in science and math, far more men than women expressed an interest in pursuing science and math.

CRIMSON: Were President Summers’ remarks within the pale of legitimate academic discourse?

PINKER: Good grief, shouldn’t everything be within the pale of legitimate academic discourse, as long as it is presented with some degree of rigor? That’s the difference between a university and a madrassa.

CRIMSON: Would it be normal to hear a similar set of hypotheses presented and considered at a conference of psychologists?

PINKER: Some psychologists are still offended by such hypotheses, but yes, they could certainly be considered at most major conferences in scientific psychology.

CRIMSON: Finally, did you personally find President Summers’ remarks (or what you’ve heard/read of them) to be offensive?

PINKER: Look, the truth cannot be offensive. Perhaps the hypothesis is wrong, but how would we ever find out whether it is wrong if it is “offensive” even to consider it? People who storm out of a meeting at the mention of a hypothesis, or declare it taboo or offensive without providing arguments or evidence, don’t get the concept of a university or free inquiry.

Critics complain that, in assessing Social Security and Medicare's long-term deficits, the program's trustees assume a U.S. growth rate about half the historical average. True enough, but the projected growth rate is not-so-oddly similar to that actually experienced by Western Europe in the past two decades, our best example of a high-tax, high-unemployment economy.

For years the Democrats have been claiming that real wages have been stagnant for decades. They make this claim in order to argue for increased taxes and increased government spending. However, since the suggestion was made to index Social Security benefits to inflation, rather than wage growth, these same Democrats are now saying that constitutes a "benefit cut." Setting aside the fact that reducing a planned increase is not a cut, the Democrats don't seem to notice that if real wages are not rising, then there would be no difference between indexing at inflation or indexing at wage growth.

Throughout the nation, a fierce debate rages over Social Security. One side, led by President Bush, says the system is in crisis and must be saved via "partial privatization." The other side says the system is basically sound and can be saved with a little tinkering.

Both sides, however, agree on one absolute: Social Security should be saved. While it may have financial problems, they believe, some form of mandatory government-run retirement program is morally necessary.

But is it?

Social Security is commonly portrayed as benefiting most, if not all, Americans by providing them "risk-free" financial security in old age.

This is a fraud.

Under Social Security, lower- and middle-class individuals are forced to pay a significant portion of their income--approximately 12%--for the alleged purpose of securing their retirement. That money is not saved or invested, but transferred directly to the program's current beneficiaries--with the "promise" that when current taxpayers get old, the income of future taxpayers will be transferred to them. Since this scheme creates no wealth, any benefits one person receives in excess of his payments necessarily come at the expense of others.

Under Social Security, every aspect of the government's "promise" to provide financial security is at the mercy of political whim. The government can change how much of an individual's money it takes--it has increased the payroll tax 17 times since 1935. The government can spend his money on anything it wants--observe the long-time practice of spending any annual Social Security surplus on other entitlement programs. The government can change when (and therefore if) it chooses to pay him benefits and how much they consist of--witness the current proposals to raise the age cutoff or lower future benefits. Under Social Security, whether an individual gets twice as much from others as was taken from him, or half as much, or nothing at all, is entirely at the discretion of politicians. He cannot count on Social Security for anything--except a massive drain on his income.

If Social Security did not exist--if the individual were free to use that 12% of his income as he chose--his ability to better his future would be incomparably greater. He could save for his retirement with a diversified, long-term, productive investment in stocks or bonds. Or he could reasonably choose not to devote all 12% to retirement. He might choose to work far past the age of 65. He might choose to live more comfortably when he is young and more modestly in old age. He might choose to invest in his own productivity through additional education or starting a business.

How much, when, and in what form one should provide for retirement is highly individual--and is properly left to the individual's free judgment and action. Social Security deprives the young of this freedom, and thus makes them less able to plan for the future, less able to provide for their retirements, less able to buy homes, less able to enjoy their most vital years, less able to invest in themselves.

And yet Social Security's advocates continue to push it as moral. Why?

The answer lies in the program's ideal of "universal coverage"--the idea that, as a recent New York Times editorial preached, "all old people must have the dignity of financial security"--regardless of how irresponsibly they have acted. On this premise, since some would not save adequately on their own, everyone must be forced into some sort of "guaranteed" collective plan--no matter how irrational. Observe that Social Security's wholesale harm to those who would use their income responsibly is justified in the name of those who would not. The rational and responsible are shackled and throttled for the sake of the irrational and irresponsible.

Those who wish to devote their wealth to saving the irresponsible from the consequences of their own actions should be free to do so through private charity, but to loot the savings of untold millions of innocent, responsible, hard-working young people in the name of such a goal is a monstrous injustice.

Social Security in any form is morally irredeemable. We should be debating, not how to save Social Security, but how to end it--how to phase it out so as to best protect both the rights of those who have paid into it, and those who are forced to pay for it today. This will be a painful task. But it will make possible a world in which Americans enjoy far greater freedom to secure their own futures.

For the last several years, Bruce Western has been studying the rising number of Americans who are serving time in prison. The [Princeton] professor of sociology has examined how higher incarceration rates have impacted families and how the effects reverberate in labor markets...

"It took me a long time to get up the courage to study American society," he said. "But the longer I live in the United States, the more urgent America's social problems seem to me."

A man ran off, leaving his girlfriend to drown, after their car crashed upside down into a Connecticut pond, authorities said.

Francisco Loaiza, 29, was charged with manslaughter with a motor vehicle in the death of the 21-year-old woman, a Russian exchange student whose name was withheld...

"I believe alcohol and speed were factors in this crash," said Sgt. Andrew Gallagher, adding that the couple was not wearing seat belts.

The spin in Washington is that President Bush's Social Security reforms will split the Republican Party in two... So far this rebellion is coming up short on actual rebels. Indeed, the theory of a coming split in the party is likely more of a myth than a reality, a myth meant to scare President Bush out of pushing for serious reform.

...the Republican caucus is mostly divided over how, not whether, to reform Social Security...And serious reform does have a leader: President Bush. It's now becoming clear that he intends to use the supporters he recruited during the presidential campaign to press members of Congress. One of the benefits of not running an "anybody but" campaign, is that the president now has legions of individuals who worked for his campaign--not just to defeat the opposition but to see specific reforms enacted into law. With 1.4 million unpaid campaign volunteers and hundreds of thousands of district captains, contributors and other dedicated, politically active people, Mr. Bush now sits at the head of a political army with advance teams spread throughout the nation.

Sure enough, The New York Times reports that under Mr. Biggs's direction, employees of the Social Security Administration are being forced to disseminate dire warnings about the system's finances - warnings that the employees say are exaggerated.

Krugman has not only lied, he has lied about what his own newspaper has reported.

Will public figleaf Dan Okrent do anything about it? Why should this time be any different?

Posted by Donald L. Luskin at 1:19 AM | link    

Monday, January 17, 2005

Posted by Donald L. Luskin at 5:14 PM | link