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HERITAGE HITS BACK -- HARD!
The Heritage Foundation has come out with
a devastating rebuttal to
Krugman's bigoted New York Times column today. Some choice quotes:
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Krugman cites a 1998 memo from Social Security Administration actuary Steve
Goss criticizing some aspects of the methodology that we used and leaps to the
conclusion our study is nothing but “damned lies.” ...We answered Goss’s
critique (and others) long ago, in our
December 11, 1998, report “Social Security’s Rate of Return: A Reply to Our
Critics.” This paper has been available on our website for many years now
and proves that we did account for Social Security’s progressive retirement
benefits formula, as well as disability and survivor benefits and other
elements of the program that disproportionately benefit minorities.
In short, we used the same benefit formula that Social Security uses to
calculate retirement benefits for our study. We included the cost of a life
insurance policy that duplicates the survivors benefits offered by Social
Security. Most importantly, we treat disability benefits as a separate program
from the retirement and survivors benefit program that we studied.
Indeed, we went so far as to rerun the numbers using an alternate methodology
suggested by Goss and found that it reinforced our initial finding that
African Americans generally receive a far lesser return on their “investment”
of Social Security taxes than whites.
...A major factor in African Americans’ poor returns from Social Security is
the sad fact that so many black workers die before they can receive
significant benefits. When measured in terms of the proportion of a worker’s
pre-retirement income that is paid in Social Security benefits, all lower
income workers receive more than higher income workers do. However, they often
receive these benefits for a shorter period of time.
Krugman tries desperately to minimize, even dismiss, this problem. “Blacks’
low life expectancy is largely due to high death rates in childhood and young
adulthood,” he assures us, before noting that the typical African-American
male who makes it to retirement age can expect to collect benefits for only
two years less than his male counterpart.
However, the difference between receiving benefits for 14.6 years instead of a
white worker’s 16.6 years is 12 percent. A 12 percent “cut” may be no big deal
to Krugman, but it often determines whether workers realize a net gain or loss
from Social Security. ...fully one-third of African-American men will die
between the ages of 50 and 70. Contrary to what Krugman claims, the difference
in Social Security rates of return between African Americans and whites is not
primarily due to high death rates in childhood and young adulthood...
Rather than acknowledge and consider the inconvenient facts, Krugman resorts
to base name-calling. Those who would reform the system to give Americans—and
especially African Americans—a better return on their investment and the
ability to amass a nest egg that can be passed on to their heirs are charged
with “playing the race card” and bigotry.
Paul Krugman was once a respected academic, but sadly, he now stoops to
produce superficial and poorly researched propaganda. Krugman’s January 28
attack is no more than an artfully executed piece of propaganda; Only when one
examines the facts behind his charges does its veneer of reason shatter.
Posted by Donald L. Luskin at 7:27 PM |
JOKE OF THE DAY
Posted by Donald L. Luskin at 4:36 PM |
DOUBLE EDGED BIGOTRY
Matthew Schiros makes a good point about Paul Krugman's column today. At one point, Krugman defends the Social Security status quo by saying that it advantages African-Americans:
...the formula determining Social Security benefits is progressive: it provides more benefits, as a percentage of earnings, to low-income workers than to high-income workers. Since African-Americans are paid much less, on average, than whites, this works to their advantage. Yet a couple sentences later, Krugman blasts George Bush for advocating personal accounts because as advantaging African-Americans who don't live as long as whites, and so don't collect as many benefit payments under the current system:
...it isn't particularly soft to treat premature black deaths not as a tragedy we must end but as just another way to push your ideological agenda. But bigotry - yes, that sounds like the right word. How come it's bigotry to advocate personal accounts by citing the fact that African-Americans don't live as long -- but it's not bigotry to advocate the status quo by pointing out that African-Americans don't earn as much?
Posted by Donald L. Luskin at 3:33 PM |
JUST IN CASE
you need to take a break from thinking about Social Security, check this out! Thanks to Dave Nadig for the link.
Posted by Donald L. Luskin at 9:49 AM |
MORE ON THAT TIMES ATTACK ON CHILE
Here's more on
that New York Times story yesterday attacking Social Security reform
in Chile. It's an analysis by Salvador Valdés-Prieto, professor of
Catholic University of Chile (Ph.D. MIT ’87). Readers, forgive me if this and
my previous posting are more detail than you want. I haven't yet synthesized
this and other responses into a single column. But that Times story was
such a vicious and dishonest hatchet job, I thought I'd best serve the advocates
of reform just be getting all the facts out as soon as possible.
I do not support a number of those government's policies, specially those
related to human rights, but let us look at the facts. In 1981 it was advertised
that the minimum pension (created in 1952) and the assistance pension (created
in 1975) programs would continue their support for the old poor. Rohter presents
things as if the advertisement was that the old poor would not exist under the
It was also advertised in 1981 that for the first time, the self-employed would
be allowed to participate voluntarily in social security. Note that nobody in
Chile proposed to mandate the self-employed to contribute for old age, as the
United States has done for decades. The reason is a social concern: it would be
cruel to force the Chilean self-employed to contribute, because most have low
take-home wages anyway, and because if they ever self-financed a minimum pension
for old age, they would be excluded from the programs that support the old poor.
In 1981 nobody advertised that all the self-employed would have pensions under
the new system, but rather those that wanted to contribute would have one (which
in fact have been very few). Rohter presents things as if the advertisement was
that the self-employed would all contribute under the new system.
I, for one, am proud that we Chilean taxpayers "continue to direct billions of
dollars to a safety net", despite criticism by Rohter. According to the Ministry
of Planning in page www.mideplan.cl, button Encuesta Casen, button Estadísticas,
categoría "Pobreza" (Poverty), the result has been the following (as of the 2000
||65 and more
|sum of both lines
Thus, Chilean social policy has reduced poverty among the old to a third of the
national poverty rate. The children (up to age 14), with a 31.1% total poverty
rate, deserve a higher priority than the old.
2) The Dagoberto Saez example.
Mr. Saez contributed just 24 years out of a 45 year career, so any
earnings-related benefit formula will pay him far less than the target
replacement rate. Therefore, it is a welcome aspect of the new pension system
that it pays Mr. Saéz just $315 a month. This is still a respectable 33%
replacement rate on the last wage and surely a much higher replacement rate on
the average career wage as used in the United States.
What a journalist should be inquisitive about is how does the old system manage
to pay his colleagues $700 a month.
a) Did he check if the colleagues contributed for 40 or so years, rather than
b) Did he check that the old system calculates the pension on the basis of the
average of the last five years of contributions (not 35 as in the U.S. Social
Security), encouraging people to game the formula?
c) Did he check the contribution rate paid my Mr. Saez as a proportion of his
actual earnings? If he was a government employee, then during the 1950-1990
period he would have enjoyed a partial exemption on contributions, granted by
laws that declared that just 25% of the salary was taxable for social security
purposes. This trick allowed short run savings to the employer (the government).
The workers accepted this because their take-home wage increased (i.e. they
could get a bigger increase in the next wage-bargaining round), and in the
understanding that later on, when they approached the pension age, their full
salary would become taxable and reported, i.e. effectively the full salary would
count in the benefit formula based on just the last 5 years of contribution (of
course other workers, who did not enjoy this partial exemption, or taxpayers,
would cover the largesse. This explains also the “pension damage” reported by
Rohter in the last lines). However, if Mr. Saez moved to the new system, where
only actual contributions accumulate, these inequitable redistributions would be
revealed and stopped.
d) Finally, were readers informed that the fact that the old system pays ZERO to
contributors that contribute for less than 10 years, implies that the old system
can direct the contribution revenue extracted from those people (whose
contributions are taxed at 100%), towards the lucky ones that do complete the 10
years like Mr. Saez colleagues? Note that the number taxed in Chile by this
arrangement is much larger than in the United States, because in Chile the share
of people in that situation is large because of the exemption for the
self-employed to contribute - who in turn are about 30% of employment - and
because of many women's interrupted careers when they work at home.
Rohter does not report to readers that Mr. Saez earns 50% more than the average
Chilean wage, so his position in the income distribution is like the one of
somebody in the U.S. earning about $45,000 a year (far above poverty in low
cost-of-living Chile). This may cause a confusion among some readers, because in
the United States $950 a month is way below the poverty line.
3) The remarks of the Minister for Labor and Social Security (Mr. Solari, not
The Minister says that “it is absolutely impossible to think that a system of
this nature is going to resolve the income needs of Chileans when they reach old
age”. This is exact, because no Chilean I know of wants to scrap the minimum
pension, the assistance pension and other safety nets that have reduced the
poverty rate among the old to a third of the general population’s poverty rate.
Nobody expects an earnings-related plan to engage in wealth redistribution,
apart from the fact that pension benefits are fully subject to the personal
income tax, which is highly progressive in Chile. But the Minister is wrong if
he means that the system will not resolve the income needs of the middle classes
when they reach old age, provided that they contribute, of course.
The article reports that “despite initial projections that the system would be
self-sustaining by now, spending on pensions make up more than a quarter of the
national budget”. This is wrong. The overall pension system, including minimum
pensions and assistance pensions, will never be self-sustaining. The transition
deficit in the program of mandatory earnings-related pensions for the middle
classes was never expected to fall to zero after just 24 years of transition,
but only after 40-50 years.
4) The transition cost/deficit
Readers are told that “the annual cost to the government, as guarantor of last
resort, has remained steady at 5-6 per cent of GDP”, just after stating that the
transition period has turned out to be longer and more expensive than
anticipated. This way of presenting facts suggests that the transition cost has
been 5-6% of GDP.
The actual transition cost is much smaller. It is the amount of contribution
revenue diverted to the new pension system. This has been about 2% of GDP, as
shown by the following table:
Cuadro 11.2 Impacto Fiscal de la transición chilena, 1981-1997
(% of GDP)
Recaudación Aportes Déficit de caja
|| Planes Nuevos
Source: Valdés, Salvador (2002) Políticas y Mercados de Pensions: A
University Textbook for Latin America, Ediciones Universidad Católica, Santiago,
Chile. Source of the data series: Table 5, p. 468, in Acuña, R. y A. Iglesias
(2000) "La reforma a las pensiones", Chap. 11 in F. Larraín y R. Vergara
editores, La transformación económica de Chile, Centro de Estudios Públicos,
What explains the difference between the actual transition deficit of 2% and
a) Expenditure on the safety net. This expenditure has risen substantially due
to real increases legislated in the 1990’s. This expenditure is much larger than
the one reported in the fiscal accounts, because the Ministry of Finance has
never broken down the expenditure in pensions made by the old system between
“minimum pension supplements” and “self-financed earnings related pensions”. If
this were done, it would become clear that the sum of expenditures in minimum
pensions (adding both the old system and the new), is much larger than reported.
It is also in a falling trend as a proportion of GDP, because Chilean real
incomes have increased substantially in the last decade, reducing poverty.
b) A static fiscal policy adopted in 1981. The implicit labor tax in the old
pension system was substituted by an implicit increase in VAT (or an implicit
reduction of other expenditures). The implicit labor tax in the old system
appeared as a source of pension revenue in the fiscal accounts, but the implicit
increases in VAT and cuts in other programs are outside the pension budget. This
budget classification issue inflates the “pension related deficit” reported by
the Ministry of Finance.
c) The pension institution for the police and the military runs a permanent cash
deficit. This happens for two reasons: (i) a large share of military and police
pensions are deferred wages, as in the military in most countries including the
United States, and as in many employer-sponsored DB plans, and the plan is
financed on a pay-as-you-go basis. DB employer plans attempt to discourage
quitting of personnel that has been trained at high cost by the employer (if a
jet fighter pilot trained at a cost of $7 million quits to become an airline
pilot, the loss is huge); and (ii) the number of Chilean military experienced a
bulge in the past due to the military regime and specially to the threats of
invasion by Peru and Argentina over 1975-78. After the return to democracy the
number of military has fallen again, reducing contribution revenue in those
d) The creation in the 1990s and in 2005 of new pension programs. They benefited
those exiled by the Pinochet government that returned to Chile, the survivors of
those killed or disappeared by that government, and in 2005 those that reported
being tortured to a National Commission on Torture. The general thrust of these
programs is sound, but their cost should not be attributed to the transition of
the earnings related pensions for the middle classes from PAYG to full funding
started in 1981.
5) The military’s pensions
Mr. Rohter gives credence to claims that the military were “careful to exclude
fellow soldiers from” the new privatized and fully funded pension system. Did he
check whether any country in the world would adopt a pension system for its
armed forced where benefits are fully portable to civilian jobs? All of them
attempt to discourage quitting of personnel that has been trained at high cost
by the employer. If a jet fighter pilot trained at a cost of $7 million quits to
become an airline pilot, the loss for taxpayers, and for national security, is
huge. The reader was misinformed here.
The average military and police pensions in Chile are way below those of Mr.
Saez’s colleagues. Why is this not reported?
6) The system’s administrative cost and the profits of fund management
The reporting here is accurate and cautious, as it should be. The profit rates
are very high, as I have shown in independent work. They rose to the current
high levels in 1998, after the government introduced regulations that allowed
the fund management companies to coordinate in firing their own salespeople, in
exchange for an expected cut in commission rates to workers. The firms passed on
only half of the cost saving. This arrangement failed because the fund
management firms became hostage to political demands because their profits
depend now on the government’s support. For example, as the reform of
competition has been delayed once more in 2005, the government allowed them one
more year of vulnerability to political demands.
It is a fact is that the fund management companies’ profits have never been so
high as in the last 5 years, when Mr. Solari has been Minister for Social
Security. This is a Chilean failure to manage a complex system. I hope other
countries will avoid these mistakes.
Summing up: The readers of the New York Times got much less information than
they deserve, overall.
Posted by Donald L. Luskin at 9:33 AM |
MORE TIMES DISTORTIONS ON SOCIAL SECURITY REFORM IN CHILE
Here's a line-by-line deconstruction of
a scurrilous story that ran in the New York Times yesterday by
Larry Rohter under the headline "Chile's Retirees Find Shortfall in
Private Plan." It's by Mario Velasco, M.A. New York University. I found it
on the web site of the
International Center for Pension Reform.
Deconstructing Larry (of The New York Times)
The same journalist that gratuitously insulted the President of Brazil,
former trade union leader Lula, by calling him "alcoholic" in print in the
NYT, Mr. Larry Rohter (aka Larry Potter for his legendary imagination),
has now insulted the intelligency of NYT readers. In fact, that newspaper
published on January 27, 2005, his article "Chile's Retirees Find
Shortfall in Private Plan", that I will dissect here to expose its
fallacies, misrepresentations, innuendos, spelling errors, and other such
tricks unworthy of an american newspaper.
>Under the Chilean program - which President Bush has cited as a model
for his plans to overhaul Social Security -the promise was that such
investments, by helping to spur economic growth and generating higher
returns, would deliver monthly pension benefits larger than what the
traditional system could offer.
First mistake Larry. A defined contribution system makes no "promises"
about benefits levels, absolute or relative. Those are words of a
>But now that the first generation of workers to depend on the new
system is beginning to retire, Chileans are finding that it is falling far
short of what was originally advertised
False Larry. They only parameter originally
mentioned as a reference (since it is resultant return, not a promised
one), was a 4% real rate of return. Official numbers show that it has been
10.1% real on average during almost 24 years. Indeed, an extraordinary
>For all the program's success in economic terms, the government
continues to direct billions of dollars to a safety net for those whose
contributions were not large enough to ensure even a minimum pension
approaching $140 a month.
The government contribution to the safety net of the private system was
US$ 70 million in 2004, so far from "billions" as Larry from truth in
reporting or as Madonna from chastity.
>Many others - because they earned much of their income in the
underground economy, are self-employed, or work only seasonally - remain
outside the system altogether. Combined, those groups constitute roughly
half the Chilean labor force. Only half of workers are captured by the
As they were in the old system. By design, the private system is only
mandatory for employed workers, as the old one was. The rest save on their
own, as they did before, or do not save, as they did before. Get it
>Even many middle-class workers who contributed regularly are finding
that their private accounts - burdened with hidden fees
Another distortion. There is no "hidden fee" whatsoever. Few financial
industries in the world, if any, are more transparenet than the AFP
industry, as designed by law.
>that may have soaked up as much as a third of their original
The annual average fee is O.66% of assets managed, lower than most
american mutual funds. That is the relevant comparison in a funded
>are failing to deliver as much in benefits as they would have received
if they had stayed in the old system.
Sergio Baeza in a well known study (CEP) has shown that benefits in the
private system are between 50% and a 100% higher, on average, than those
under the unsustainable promises of the old system.
>Dagoberto Sáez, for example,
Here they go. The usual discredited trick of finding one person and trying
to derive general conclusions from his case. Of course, nobody can check
the special circumstances of Mr. Saez, even in he exist. His situation
maybe is explained by special circumstances, that always exist. Given what
happened to former editor H. Raines-fired-Larry's editors should have
abstain from approving this trick after the shameful Jayson Blair case of
pure invention of cases.
>is a 66-year-old laboratory technician here who plans, because of a
recent heart attack,
...the little element of drama of course, irrelevant to the conclusion, to
soften the minds of readers
retire in March. He earns just under $950 a month; his pension fund has
told him that his nearly 24 years of contributions will finance a 20-year
annuity paying only $315 a month.
With only 24 years! So, if he had worked 40-45, the average working life,
and given compound interest, he would have easily achieved a pension
higher than his last wage! You found the very wrong example Larry.
>"Colleagues and friends with the same pay grade who stayed in the old
system, people who work right alongside me," he said, "are retiring with
pensions of almost $700 a month - good until they die.
And how many years have they worked? Omitting that crucial piece of
information in a pension debate is a joke.
>I have a salary that allows me to live with dignity, and all of a
sudden I am going to be plunged into poverty, all because I made the
mistake of believing the promises they made to us back in 1981."
First, there were no promises related to level of benefits as explained.
Second, the choice to opt out was voluntarily. Third, if he recognizes he
made a mistake, in a free society mistakes are paid individually. But
probably he did not made a mistake.
>With many Chileans finding themselves in a situation much like that of
Mr. Sáez, people are still looking to the government, not private pension
funds, to ensure a secure retirement.
How does he knows that they are "many"? How many days did Larry stayed in
Santiago to make that sweeping statement? There are close to 500.000
retirees of the new system and Larry has given us only one case. The
equivalent would be to say that because of Jayson Blair "many" NYT
reporters are outright liars.
>"It is evident the system requires reform," the minister of labor and
social security, Ricardo Scolari,
The man is called Ricardo Solari, not "Scolari", Larry. Can you trust
anything written by a journalist that spend NYT money to dine and drink in
Santiago and then cannot even spell well the name of the Minister? My
>said in an interview here. Chile's current approach based on private
pension funds has "important strengths," he said, but "it is absolutely
impossible to think that a system of this nature is going to resolve the
income needs of Chileans when they reach old age."
What are the "income needs" of Chileans for a member of the Socialist
Party of Chile (a party that still has not dropped, as the Spanish one did
with Felipe Gonzalez, its Marxist inspiration)? Of course, Larry does not
tell NYT readers this "little fact".
>Over all, Chile has spent more than $66 billion on benefits since
privatization was introduced.
That is called "keeping the promises" Larry, paying our grandmothers their
checks, even if the old system was bankrupt. Of course, that amounts to
$2.75 b. a year in a country with a GDP of $ 80 billion. But Larry thinks
he will scare NYT readers adding them over 24 years.
>Despite initial projections that the system would be self-sustaining
Whose "projections" Larry? There are no NYT rules to be explict about
that?. You detect a desperate man when he switches from facts to
"projections". And what is "self sustaining"? You want to kill all the
pensioners from the old system?
>spending on pensions makes up more than a quarter of the national
budget, nearly as much as the spending on education and health combined.
Again, keeping the promises Larry. Why are you so mad about that?
>Faced with the likelihood of the gap remaining as it is or, as Mr.
Scolari said, "perhaps even widening,"
Who is smoking a not entirely legal substance here? You Larry or your
mythical "Scolari"? Unless Chileans will live for ever, that commitment is
going down every year.
>the Chilean government is contemplating a new round of pension
changes. Suggestions that have been floated include many also under
consideration in the United States and Europe, like reducing benefits or
setting a higher retirement age.
So Solari is advocating reducing the benefits of the old system? They have
been winning elections for a decade doing exactly the opposite.
Interesting piece of information (I hope Chilean newspapers ask Solari
about this benefit reduction)
>The problems have emerged despite what all here agree is the main
strength of the privatized system: an average 10 percent annual return on
So, this is a big mystery. A defined contribution system that give you 10%
real return and yet Larry tells us "Chileans dont like it". Very, very
>Those results have been achieved by the pension funds largely through
the purchase of stocks and corporate and government bonds - investments
that helped fuel an economic expansion giving Chile the highest growth
rate in Latin America over the last 20 years.
Of course, Larry, you finally got something right.
>"The great success of the system is its high profit rate, more than
double what was initially projected," said Guillermo Arthur Errázuriz,
executive director of the Association of Pension Fund Administrators. "In
total, workers have set aside nearly $61 billion, which is invested in the
sectors of the economy that show the most potential."
>Among the admirers of the privatized system here is Mr. Bush, who on a
visit in November called Chile "a great example" for other countries. On
other occasions, he has suggested that the United States could "take some
lessons from Chile, particularly when it comes to how to run our pension
A visionary man Larry, despite the NYT endorsing Kerry.
>Mr. Piñera declined repeated requests to be interviewed for this
Maybe he respects President Lula or maybe he has read enough about the
Jayson Blair scandal. Will ask him when he returns from his travels.
>In an article on the Op-Ed page of The New York Times last month,
though, he extolled the Chilean system as one based on ownership, choice
and responsibility and one that is widely popular because it gives workers
a stake in the economy.
What an extraordinary Op Ed Larry! Yous should read every morning and
every night. I love the Op Ed page decision of publishing articles from
different perspectives than the editorial page and your Latin American
"magical realism" dispatches.
>Among other achievements emphasized here by advocates of the
privatized funds are the creation of a modern capital market, cheaper
credit for companies that formerly could turn only to banks when they
wanted to expand, and a brake on deficit spending by the government.
>"What we have is a system that is good for Chile but bad for most
Chileans," said a government official
What a contradictory statement!
>who specializes in pension issues and who spoke on condition of
anonymity, fearing retaliation from corporate interests.
Retaliation to a government official? This is pure nonsense. This is Chile
> "If people really had freedom of choice, 90 percent of them would opt
to go back to the old system."
Well, if he was going to utter such a nonsense, a guess impossible to
prove, I understand his demand for anonymity. But that does not excuse you
Larry for publishing it.
>Among the complaints most often heard here is that contributors are
forced to pay exorbitant commissions to the pension funds. Exactly how
much goes to such fees is a subject of debate,
They are "exorbitant"-Larry knows-but he cannot give a number because it
is "a subject of debate". Patience My Lord, patience.
> but a recent World Bank study
There are staffers of the WB writing studies. Which staffers? Which day of
the week? I can give you contradictory "WB studies" on this issue.
>calculated that a quarter to a third of all contributions paid by a
person retiring in 2000 would have gone to pay such charges.
And those were rebutted by Martin Gerson and Salvador Valdes, and those
staffers had to republish the study (in the private sector their salary or
job would have been at risk).
>But most Chileans are unaware of how much they are paying to the funds
because the lengthy quarterly financial balance sheet they receive "is not
comprehensible," according to Guillermo Larraín, director of the
Superintendency of Pension Funds, a government agency.
But Larrain is in charge of regulating those sheets. So, what is Larrain
doing during his work day that is incapable of solving this infinitisemal
problem, if there is one. I fully understand my statement, but I agree it
must be also understandable to your Chilean friends Larry.
>"It needs to be replaced by a simple and transparent financial
statement," he said, so workers can determine which fund charges the
If so, do it Larrain!
>Government officials like Mr. Larraín and Mr. Scolari acknowledge that
"commissions are high and need to come down." They say that "more
competition is needed" to foster lower fees. But existing regulations
frustrate the creation of new funds -
As Salvador Valdes wrote in El Mercurio, those regulations were put in
place by another Concertacion government, the center left coalition to
which belong both Mr. Larrain and "Mr. Scolari". So they can remove them
easily...if they do their jobs instead of courting leftists NYT
>"The dynamic of the market," Mr. Larraín said, "is one of
consolidation and concentration."
With such a confused Superintendent, and such a socialist Minister, would
you create a new pension fund? Maybe Mr. Sulzberger should come to Chile
to make "exorbitant profits" out of "exorbitant fees". There is total free
entry to the industry by law. Citibank is here, Banco Santander, BBVA, ING,
etc, etc. Come on Larry!
>Some other problems of the Chilean system stem from factors that do
not apply with the same force in the United States and other advanced
economies. Nearly half of Chilean workers, for example, are employed off
the books in the so-called informal sector, while many others are hired as
independent contractors, who are not required to contribute to a pension
account and do not do so regularly because they cannot afford it. By the
government's own calculations, only about half the work force contributes
to a pension fund. "We are aware there is a big hole and that we need to
take corrective measures," Mr. Larraín said.
The other half is saving in their own way, investing in their small
companies, etc, or unemployed due to the rigid labor policies of the
government of Mr. Solari and Mr. Larrain (who incidentally, should by law
be supervising the pension funds rather than entering in public policy
debates about the coverage of the system, a duty of the Ministry but not
of a regulator)
>Because many of the claims initially made on behalf of the privatized
system proved exaggerated or inaccurate,
Which ones Larry? You have not mentioned even one, citing sources of
>the transition period has turned out to be longer and more expensive
than anticipated. The annual cost to the government, still the guarantor
of last resort, has remained steady at 5 to 6 percent of the nation's
False, they are much lower. Keeping the promises Larry. Nothing to do with
the new private system.
>Chile spends about $2 billion a year to pay retirees from its armed
forces, according to Mr. Scolari. The military imposed privatization on
the rest of the country, but was careful to preserve its own advantages
and exclude fellow soldiers from the system.
It is $1 billion a year, only 50% of your figure, a negligible exageration
to you Larry. And the system was introduced as voluntary. The armed forces
damaged themselves by not allowing their members to opt out. They should
have, as it was proposed by the reformers in 1980.
>Despite calls that the military be forced to give up its exemption, no
civilian government has been prepared to pursue that.
The only civilian governments have been those of La Concertacion, the
coalition that includes Mr. Solari. So, why in 14 years they have not
solved this problem? A $1 billion problem?
>Proponents of the privatized system argue that those costs will
diminish in coming years, as those still receiving benefits from the old
system gradually die off. But critics disagree, pointing to the large
numbers of younger Chileans in the work force who either do not
participate or whose contributions will fall short of the amount required
for a minimum pension.
Economic growth during the Lagos years has been 4% on average, down from
7% before, and unmeployment has increased to 10%, due to less growth and
demagoguery in the labor market. So, they create the problem....and then
adscribe it to the private pension system. How intelectually and
>This leaves many Chileans in a situation that has led to the coining
of a phrase: "pension damage." There is now even an Association of People
With Pension Damage, 157,000 members and growing, that consists of
Chileans, mostly former government employees, who find that their
pensions, based on contributions to the private system, are significantly
less than if they had remained in the old system.
...because the government did not pay contributions on the full salary but
on fraction of the salary. They are all government employees.
>"They come to us in desperation," said Yasmir Fariña, the group's
president, "because those who stayed in the government system are often
retiring with monthly pensions twice as large as everyone else's."
Of course our good Larry ends with another handpicked complaint.
Summary and Conclusions: After this sort of reporting, no wonder the
decline of the NYT. As The Economist titled recently a book review, these
are really "Hard Times" for the New York Times.
Posted by Donald L. Luskin at 9:05 AM |
SPOKEN LIKE A WHITE MAN
Krugman today on why Afro-Americans don't get a bad shake from Social
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African-American men who make it to age 65 can expect to live, and collect
benefits, for an additional 14.6 years -- not that far short of the 16.6-year
figure for white men.
So, Paul, can we assume that since two years life is a negligible matter, you
would be happy to give up two years of your life so that an
African-American can live two years longer? Or are two years only negligible
when they are somebody else's -- and especially when that somebody happens to be
Update... Sylvain Galineau notes: "Maybe he'd get it if we put the debate in terms he understands; so let's assume that Social Security benefits are based on height..."
Posted by Donald L. Luskin at 1:31 AM |
MEET "THE CONSERVATIVE PHILOSOPHER"
Our friend Keith Burgess-Jackson has set up a new group blog -- The Conservative Philosopher. It's home to a coven of analytic philosophy academics, with the mission of "defending tradition." Check it out!
Posted by Donald L. Luskin at 11:58 PM |
SOME QUESTIONS ON PERSONAL ACCOUNTS
A well-tempered reply to
my posting about Diane Feinstein's proposal that Social Security
personal accounts be handled as add-ons can be found on
modestly titled blog, "Really Not Worth Archiving." Lynch
concludes with several questions about how personal accounts would work, and I'd
like to try to answer those.
I suggest that if Luskin really wants to demonstrate that the poor will be
better off with privatized accounts than under the current system, I think he
needs to address some specifics:
- How will the transition costs be paid for?
- How will he guarantee the safety of the investments?
- How will retirees who outlive their accounts live, after their accounts
run out? What is the withdrawal schedule going to need to be?
The devil is in all these details. It's not the kind of thing where we can
discuss reform without these details, or it's as vague a promise as "I hope."
Well, we're all eager to see the details. Nobody is going on mere "hope"
here. Whatever happens will have to be written into law, so there will surely be
details coming out of our ears, and we can argue about them then. At the moment,
though, we can talk about these questions in principle.
How will the transition costs be paid for? Fair question, but in the
context of wondering how the poor will be treated under reform, an easy one. We
can be sure the poor won't pay any transition costs, because poor people have no
resources with which to pay them. To the extent that there are any transition
costs, the rich will pay them because, as Willie Sutton said, "That's
where the money is." Chances are that what most people call "transition costs"
will be paid through Treasury debt, which means that ultimately the American
taxpayer will pay them; since the rich pay most of the taxes, the rich will pay
most of the transition costs. That said, we should stop and question whether
there really are any transition costs. I believe there are not, in the sense
that so-called transition costs are just the frank and prompt recognition of
obligations that the system has undertaken anyway.
How will he guarantee the safety of the investments? That's easy. The
Social Security personal accounts would be handled in an independent
government-supervised trust fund environment just the way personal accounts are
handled by the Thrift Savings Plan of the federal government -- the plan
that 3.5 million federal employees, including every senator and congressman,
How will retirees who outlive their accounts live, after their accounts
run out? What is the withdrawal schedule going to need to be? It would be a
simple matter to annuitize the account balance at retirement, either with a
private company or -- if that is not seen as safe enough -- through an agency of
the government. Many reform proposals require this.
Lynch then adds,
As for Luskin's complaint that Feinstein's proposal won't do anything to
improve the fiscal stability of Social Security, neither will private
This is a common misconception, but it is a misconception nevertheless. It is
true that personal accounts don't in and of themselves have much effect on the
system's actuarial solvency, at least not over the intermediate term. But
that's not to say they don't contribute to fiscal stability, which is an
entirely different matter. Surely any plan that pre-funds retirement obligations
has to be seen a more fiscally stable than one that does not -- and the current
system most assuredly does not. What little pre-funding there is runs out in
2042 or 2052, depending on which government agency's projections you choose.
Posted by Donald L. Luskin at 2:08 PM |
CAMO FOR REFORM ADVOCATES
Here's a lesson from friend Dave Nadig on how to get a letter-to-the-editor
supporting Social Security reform published in a liberal newspaper -- just be
sure to bash Bush while you're at it.
...I've never gotten one published. I've written long ones, short ones,
nice ones, mean ones -- all very honest and from the heart. Never seemed to
...But then there is this. As a tactic -- a way to see if I could get it
published -- I deliberately made it a little anti-Bush smarmy. I made it read
like "hey, I hate Bush, I'm a democrat, I hate personal accounts, and I was
against the war" without actually saying all that, just to see if by biasing
my own letter more towards what I perceive to be the local bias, I could get
Well it got published.
And here it is. The first words? "I didn't vote for Bush."
Posted by Donald L. Luskin at 1:33 PM |
THIS IS THE DEM'S "BIG IDEA" ON SOCIAL SECURITY?
Here's Democratic senator Diane Feinstein advocating the idea
of "add-on" Social Security personal accounts. Superficially this is
smart politics for the Democrats -- at least it looks smarter than just digging
in your heals and defending a 70-yead old monstrosity as perfect. And it
comports with some of the "New Democrat" proposals being thrown around
during the Clinton years. But this idea that personal accounts should be
an entirely voluntary addition on top of today's program has two fatal flaws,
From a purely political standpoint, this proposal is a major concession by
the opponents of reform. It's hard to run all the usual anti-personal account
talking points (Wall Street windfall, and all that noise) when one is advocating
personal accounts, albeit in a slightly different form.
And in terms of addressing some of the worst failings of the current system,
the idea of add-on accounts fails catastrophically. Perhaps the single best
argument for diverting some payroll taxes into personal accounts is the idea
that the lowest-earning Americans have virtually their entire savings capacity
sucked up by those taxes. If they can't make personal investments with vested
property rights with those dollars, then they're just never going to make
those investments at all. In other words, just where does Feinstein think that a
minimum wage tax payer is going to come up with the money for personal accounts?
Seen this way, the add-on idea is nothing but a windfall for the rich -- they're
the only ones who will be able to use it. If the solution to that problem is
that the rich should be taxed so that the less-rich can have add-on personal
accounts, then let's hear Feinstein say that flat out.
Thanks to reader Perry Eidelbus for the link.
Update... Reader Don Noone points to a discussion of add-on accounts at CafeHayek. There they ask what, exactly, add-on accounts enable anyone to do that they can't already do on their own? Good question. My answer is: nothing, if you are a working man or woman saving for retirement. But if you're a politician, add-on accounts allow you to claim you have an idea better than the status quo (or at least different).
Posted by Donald L. Luskin at 11:46 AM |
RAND AND THE CONSERVATIVES
I posted yesterday on National
Review's Andrew Stuttaford having
written a conciliatory column on
the centenary of Ayn Rand's birth, recalling -- and, to some extent, recanting -- Whittaker
Chambers' savage 1957 review of
Shrugged. As I noted, that review was essential to crystallizing
Rand's marginalization in the then-young conservative movement -- intellectual
control of which was being hotly disputed between the NR crowd, the
Randites, and the Birchers (all of which is documented in William
F. Buckley, Jr.'s novelized history-written-by-the-victor,
Getting It Right). Reader Tom Scheeler has pointed out
another observation of Chambers' review, by Robert W. Tracinski at TIA Daily. Tracinski trashes
the review on grounds of both form and substance, some of which strikes me as
fair and other elements of which strike me as merely angry (though not, perhaps,
without good reason). Tracinski links to a
republication of the review itself on National Review Online,
which has given me the opportunity for the first time to actually read its whole
text, having merely heard about it for years.
The review is a hatchet-job, pure and simple. The Randites have been right
about that. Certainly Chambers was entitled to his opinion -- and certainly one
competing element of the conservative movement was entitled to criticize other
competing elements. But Chambers' assertion that Rand's vision leads inevitably
to fascism is just plain scurrilous -- and just plain wrong. With the
perspective of almost half a century on the review, it's terribly clear what
this was all about. Rand was an atheist -- she argued for political liberty for
its own sake, as a necessary condition for the flourishing of reasoning human
beings. Chambers and the National Review faction, on the other hand, have
always placed religious faith at the center of the argument for political
liberty. Essentially, Chambers' case appears to be that a moral code imposed
exogenously by religious teachings based on faith is the one and only possible
bulwark against dictatorship. So, ipso facto, any political philosophy
based on atheism -- or anything else other than religious teaching -- must
perforce lead to dictatorship. For Rand, human rationality informing enlightened
self-interest was the bulwark that Chambers asserts cannot exist. Chambers
neither makes the case for why that would not work, or why religious teachings
would work. In fact, the faith-based view always conveniently ignores the
question of what process, exactly, would a state take to make sure that the
right religious morals are at the center of its politics. We could imagine a
set of religious moral teachings that advocate dictatorship (indeed, it's surely
the case that throughout history most of them have). As a practical matter, it's
probably the case that Chambers' particular Judeo-Christian moral code, and the
one that would evolve spontaneously under a Randian state of pure freedom, are
probably very highly overlapping. But this was, on the one hand, a battle of
basic principles -- and, on the other, a battle for political control.
Differences were more important than similarities, so then, just as pundits do
today, Chambers resorted to calling his opponent a Nazi -- just as so
many on the Angry Left do now with President Bush. Since the main purpose
of the review was surely to create solidarity among his faction of the
conservative movement, such a silly strategy was perfectly effective for the
limited use in which it was intended -- to preach to one's own choir.
Setting aside the matter of religion, there was another reason why Rand had
to be expelled from the conservative movement by any means necessary -- her
approach to politics was not practical. What I mean by that is that she
was not very much concerned with the reality of effecting political change by
normal means. She was interested in working from the very roots of political
change -- by changing the very philosophy by which political actors shape their
views and actions. And in this I'd say she has been quite influential, if not
completely successful. But for an activist movement like the one the National
Review faction envisioned, what Rand was trying to do was just a
distraction. That faction was issue-oriented and action-oriented. The last thing
they needed was for any potential follower to take on Rand's Olympian detachment
and disengage from the immediate fray of political strife, in which every
able-bodied soldier was needed.
Stuttaford's column suggests the basic commonality of purpose that Rand
shared with the conservative movement, and it's a good thing to look back now
and appreciate that. But that's always the way it is with battles between
factions within a single movement. When the battle is in full swing, the small
differences seem enormous. When one side or the other has won, and a seemly
amount of time has passed, the old schisms have a way of healing and those old
differences look pretty small. And some of the nasty things that the factions
say about each other and do to each other seem pretty small, too. Or at least,
Posted by Donald L. Luskin at 11:30 AM |
A note from reader Perry Eidelbus:
I was entertaining the thought of attending Paul Krugman's lecture at Fordham, since it's only a train ride from where I am, but it's restricted to "the Fordham University community." It's in an awfully small auditorium, though, especially for a lecture by a supposed Nobel-caliber economist. Only 250 available seats! Whether it's intentional, I'm sure he loves the "Fordham University community" restriction. That way, at least for a night, he doesn't need to be paranoid about you "stalking" him.
This is funny. As of right now, there are no student tickets left. But only 33 faculty, 21 alumni and 19 guests have reserved tickets. Is Krugman's only hope to indoctrinate the young, because the older, wiser folks see right through him and don't want to waste an evening on his lies?
Posted by Donald L. Luskin at 10:18 AM |
COMING TO A TAX-FORM NEAR YOU
Our friends the French call for a global tax to fight AIDS. All you other good causes out there -- sorry, you're fired.
Thanks to reader Perry Eidelbus for the link.
Posted by Donald L. Luskin at 10:15 AM |
MORE ON RACE BIAS IN SOCIAL SECURITY
Social Security reform advocates often point out that the existing system is
unfair to minority groups who have lower life expectancies -- as I mention in
a posting yesterday. One of the frequent comebacks to that from opponents of
reform is that Afro-Americans don't have a significantly different life
expectancy after retirement -- but in
another posting yesterday I showed that, in fact, they do (whites live in
retirement about 14% longer). But the more important point, really, is that
Afro-Americans are less likely to live to retirement at all than whites
are. That means their Social Security contributions over their working lives
produce no benefits at all for them -- only reduced benefits for their
survivors, presuming they qualify under the arcane and arbitrary rules. Here's
on of many emails I've gotten over the last 24 hours on it from members of the
actuarial profession. This one is from Mary Pat Campbell. It's full of
good talking points and intellectual ammunition.
You mention the difference in life expectancy at age 65 between blacks and
whites. Of course, this presupposes a person actually makes it to age 65. It
would be entirely, mathematically possible (though perhaps an odd-looking
distribution) for black and white males to have the same life expectancy at
age 65, but the probabilities of making it to 65 be extremely
Would it make people feel better to know that life expectancy after retirement
age is the same for all the races if a white man has an 85% chance of making
it to retirement age and a black man has a 50% chance?
I think not.
No matter how you slice it, Social Security is a bad deal for blacks. One
could say the same thing for white males (versus white females, who have a
bigger life expectancy gap at age 65), but much of this is offset by benefits
for their wives. The unmarried definitely get shafted by the benefit formulas,
and blue collar workers are the worst-off overall (looking at mortality tables
based on occupation, the life expectancy gap between blue collar and white
collar workers was even wider than the gender gap and the racial gap). Indeed,
a case can be made that the special groups supposedly represented by the
Democrats -- blacks and blue-collar or minimum wage workers -- are the
worst-off groups under present payroll taxes and Social Security benefit
formulas. If one wants to make a political case for personal accounts, these
facts can be brought up.
Posted by Donald L. Luskin at 10:13 AM |
HOGBERG NAILS USA TODAY TODAY
Here's a great post at the American Spectator by our friend
David Hogberg, savaging the
unfair and biased take on Social Security reform that appeared in
USA Today yesterday. If this story was "news," then "Fahrenheit
911" was a documentary. Check it out.
Posted by Donald L. Luskin at 9:24 AM |
TAKE THIS SIMPLE TEST
Be careful how you answer the questions. You might find out something very, very scary about yourself.
Posted by Donald L. Luskin at 9:46 PM |
PAUL KRUGMAN, THE VOICE OF AMERICA
Is this why American radio shows get beamed to Cuba? From the Periodico 26, the daily newspaper of Cuba's Las Tunas province:
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And there’s more red ink to come with the Bush team’s plans to privatize Social Security and push through even more tax cuts. "If this country were named Argentina or Indonesia, it would be a clear candidate for financial crisis any day now," economist and New York Times columnist Paul Krugman said in a recent radio commentary.Krugman is serving as a voice of America for freedom lovers around the world. From Al-Jazeera:
"You cannot...subsidize two losing wars at the rate of over $5 billion dollars per month, and not eventually go broke. Somehow, none of the economic writers in America, aside from Paul Krugman, and a few of us on the internet, seem to realize this."
Posted by Donald L. Luskin at 8:30 PM |
NOTE TO DIM BULBS
Social Security is unfair to Afro-Americans who have shorter life expectancies
-- but who pay in the same taxes during their working years -- ought not to take
too much mental wattage. And speaking of wattage, here's a note from reader
Bob Doyle that makes the matter perfectly clear, even for some of the dim bulbs
Imagine that an Afro-American enters a hardware store with the intention of
buying a 75-watt light bulb. She approaches a clerk and asks where she can
find the bulbs. The clerk points to a bin labeled as follows: "75-watt bulbs.
Average expected lifetime: 1000 hours. Price: $1.00 (Afro-Americans Only)."
Next to this bin is another bin with the label: "75-watt bulbs. Average
expected lifetime: 2000 hours. Price: $1.00 (Whites Only)."
She complains that this is discriminatory and asks why she has to pay the same
price as whites for a bulb that has a shorter expected lifetime than whites
get. The clerk responds saying, "You really have no right to complain since
you are getting a bulb with exactly the same wattage as whites get and nobody
can be sure just how long any given bulb will last. It is quite possible -- in
fact, probable -- that the bulb you buy from the 1000-hour-average bin will
last longer than some of the bulbs whites purchase from the 2000-hour-average
bin. Certainly this discriminates against those whites whose bulbs burn-out
before yours does! Whether you are a white or an Afro-American, you get the
same wattage for the same price for however long your bulb lasts, which is
fair to all."
Flabbergasted and frustrated, she protests, "But that makes no sense! For
every bulb in the 2000-hour-average bin that burns out early, there will be a
bulb from the 1000-hour-average bin that burns out just as early or earlier!
In other words, half the whites and half the Afro-Americans will have the
random misfortune of buying bulbs that burn out before their bulb reaches its
expected lifetime, while half the whites and half the Afro-Americans will
fortuitously buy bulbs that last longer than the average. However, if you list
all whites and all the Afro-Americans by how long their bulbs last, from
shortest to longest, and then pair-up all whites and all Afro-Americans by how
long their bulbs last, virtually every white's 2000-hour-average bulb will
have lasted longer than the 1000-hour-average bulb of the woman to whom he is
paired. In other words, all whites will benefit relative to all
The woman continues, "In fairness, you either have to sell Afro-Americans
1000-hour-average bulbs with more wattage than the 2000-hour-average bulbs for
whites for the same price or cut the price and leave the wattage the same."
The clerk, recognizing the legitimacy of her reasoning explains: "I sympathize
with your arguments, but I can do nothing to help you. It is the law. The
government has decided "fairness" dictates that wattage is the only thing that
matters and that other factors, such as average lifetimes or even obvious
defects that would tend to affect the lifetimes of the bulbs in either bin
must be ignored."
Exasperated, the Afro-Americans exclaims, "Forget it! Where are the oil
lamps?" The clerk says, "Let me show you. But first, let me explain the
government-mandated policy regarding lamp-oil pricing..."
Posted by Donald L. Luskin at 8:25 PM |
LITTLE MAN ON CAMPUS
Paul Krugman will be lecturing at Fordham, on "The Role of Economics in the Political Arena." Instead, he should lecture about something he knows something about from personal experience: "The Role of Politics in the Economic Arena." If he's made a statement about economics in the last dozen years that wasn't influenced by his politics, I missed it somehow.
Thanks to reader Nicholas Perraglia for the link.
Posted by Donald L. Luskin at 4:18 PM |
IT'S IN THE BAG
Look what new tax the son of Nancy Pelosi has cooked up!
Posted by Donald L. Luskin at 3:45 PM |
WHO'S THAT MAN IN THE CHICKEN SUIT?
Editor and Publisher reports that William Safire was offered the job of New York Times "public editor" when Dan Okrent, by previous agreement, ends his tenure in the position. No way. No way. No way. No way the Times would even remotely consider appointing an honest conservative to replace Okrent as figleaf and apologist. The usual metaphor of foxes and henhouses doesn't quite fit here. For the Times, the public editor has to be a fox wearing a chicken suit guarding the fox den. Somehow I can't see Safire looking good in Okrent's chicken suit.
Posted by Donald L. Luskin at 11:56 AM |
RAND AND NATIONAL REVIEW
On the centenary of Ayn Rand's birth, it's good to see National Review's Andrew Stuttaford bury the hatchet a bit:
...the accusation by Whittaker Chambers in National Review that there was a whiff of the gas chamber about her writings is wrong. Rand lived in an era of stark ideological choices; to argue in muted, reasonable tones was to lose the debate. As a graduate of Lenin's Russia, she knew that the stakes were high, and how effective good propaganda could be.When the Conservative Movement was being born in the 1960s, there were bitter divisions between the Goldwater camp (which National Review exemplified) and the competing Ayn Rand and John Birch camps. That quote from Whittaker Chambers was, for some inexplicable reason, devestating. By homing in on Rand's absolutism as its text (and her atheism as its subtext), it gave voice to what makes so many readers uncomfortable about Rand, and makes others so devoted to her. One man's fanaticism is another man's purity of purpose. But that Chambers line became a mark of Cain on Rand as far as the evolving conservative movement was concerned. I can't tell you how many times I've discussed Rand with conservatives, only to find that they haven't actually read her -- and they quote Chambers to justify their not bothering. The Goldwaterites have won, so now they can be generous, I suppose. Too bad it had to be that way, but the reality is that Rand's books sell better today than they did when Chambers made that remark. She's still changing the world.
Thanks to reader Jill Olson for the link.
Posted by Donald L. Luskin at 11:44 AM |
LIFETIME CLASS WARFARE
Here's a typically insightful (and typically acerbic) comment from my
economic guru friend, Bob Ferguson:
Suppose you knew, in advance, that one person will live to be 100 and
another will live to be 70. Suppose both will receive a retirement annuity,
beginning at age 65. Suppose the price of the annuity, paid by each person at
age 65, is the same per person. Who gets the better deal?
There are different classes of people defined by their expected lifetimes.
Women live longer than men. Whites live longer than blacks. Healthy people
live longer than sick people. The social security benefit is like the above
annuity. Thus, the longer you can expect to receive your social security
payments, the more your expected social security payments are worth at the
time they begin (discounted present value). In other words, shorter lifetime
classes receive less value than longer lifetime classes.
To put this in perspective, think of social security this way. At age 65, the
Government gives each new retiree a lump sum to be used to purchase a
retirement annuity. The lump sum is sufficient to buy an annuity that provides
the same monthly income for each lifetime class. The Government also ensures
that the insurance company charges a price for the annuity that reflects the
retirees' lifetime class. All this is "actuarially sound". However, shorter
lifetime classes will receive smaller lump sum payments than longer lifetime
What would be fairer is if all lifetime classes received the same benefit,
i.e., the same lump sum payment. That way, shorter lifetime classes could
afford a higher monthly retirement income than longer lifetime classes. This
is fair because shorter lifetime classes are doing taxpayers the "favor" of
dying sooner. Such favors deserve just compensation.
One amazing thing about this issue is that it isn't obvious to everyone.
Another is that so many liberals are accusing those who advocate changing
social security to eliminate these race, gender, health, and other biases of
being biased themselves.
Two things are clear. First, the social security system is race, gender, and
health biased. Second, those who accuse people who favor eliminating these
biases of bias are either not thinking straight or disingenuous.
Hey Bob -- can't it be both?
Posted by Donald L. Luskin at 11:41 AM |
FUTURE EQUITY RETURNS: ANOTHER VIEW
One of the talking points the Left keeps hammering home in various ways is
that stock market returns will be lower in the future than they've been in the
past, so (they claim) Social Security personal accounts are bound to bitterly
disappoint their owners. Some even argue that personal accounts will,
themselves, cause equity returns to be lower -- because (according to the Left)
ordinary hard-working Americans are too stupid to make good investment choices,
so capital will be misallocated and the economy will grow more slowly.
The Left is entitled to its own view of the intelligence of the American
people, and to its own crystal ball as to the
stock market, I suppose -- but of course leftist pundits like Paul Krugman can't
help lying in order to make it appear that their personal opinions are more than
I've already reported here how Krugman
unconscionably distorted the equity returns forecast of Professor Jeremy Siegel,
celebrated author of
Stocks for the Long Run. But now let's look at an alternate view. Here's
a thoughtful letter from a reader -- proving that you don't have to wait for a
presidential election to see how smart the American public really is. It's from
Jim Allen of Scottsville, Virginia:
Regarding the idea that investment returns will decline if people are
permitted to put a portion of their payroll withholdings into private savings
accounts, there is nothing in the course of recent history that could possibly
lead one think that this would occur.
to John Bogle, market returns over the past 100 years have averaged around
10%. Two elements comprise those returns: investment return (dividend yield
and earnings growth) and speculative return (changes in the market multiples
paid for each dollar of earnings). While the speculative return has bounded
between a negative 7.5% during the 1970s to a positive 7.7% during the 1980s,
the investment return component has remained relatively stable, ranging from a
low of 6.3% in the 1910s to as much as 14.9% during the 1930s. (The only
period of negative investment returns was during the 1920s, when it was a
negative 1.1% because of negative earnings growth, an indication of the bubble
that burst in October 1929.)
Since the 1950s, the investment return component has ranged from a low 8.6% in
the 1960s to a high of 13.4% during the 1970s.
The key, though, is that from 1950 to today, investment returns have remained
strongly positive in each decade, ranging from a low of 8.6% in the 1960s, to
a high of 13.4% in the 1970s. The return for the 1990s was a healthy 10.6%.
Contrary to what the naysayers would have one believe, these returns were
generated during the same period that mutual fund assets — a significant part
of the overall investment market, but hardly all-encompassing — grew from just
billion in 1950 to more than
trillion in November 2004, of which $4.2 trillion is invested in equity
funds, according to the Investment Company Institute. That $7.9 trillion
increase in mutual fund investments amounts to a 313,039% increase, or a 12.8%
compound annual increase over 50 years.
By comparison, if citizens were permitted to put 3% to 4% of their annual
wages and salaries per year into the equities market, the overall increase in
funds invested in the market would be something around $400 to $500 billion
over the first five or so years of personal accounts. That amounts to an
annual increase in funds of about 5% to 6% over what is currently invested in
mutual funds. As a percent of total invested funds, the percentage
would be even less.
To summarize, the naysayers suggest that one reason for not permitting
personal accounts for public pensions is that returns will decline just as
citizens are permitted to invest in the market. Yet the history of mutual
funds over the past 50 years shows that even as mutual fund assets grew by
12.8% per year, returns remained relatively stable. Consequently, it is
anything but certain that a modest increase in mutual fund assets every year
in the future will produce lower equity returns for those fortunate
enough to invest in personal accounts.
Posted by Donald L. Luskin at 11:12 AM |
DON'T NEWSPAPER REPORTERS WATCH TV?
When Tim Russert on "Meet the
Press" Sunday asked House Ways and Means Committee chairman Bill Thomas whether it was proper for President Bush to talk about a Social Security "crisis," Thomas said:
Well, couple of weeks ago, the president had one of his forums in
Washington, and if you'll look at what he said actually at that Washington
forum, he used the term "problem" 27 times. He used crisis zero.
Here's how USA Today's Jill Lawrence reported that
Bush has called Social Security's finances a "crisis." But Thomas,
appearing on NBC, said "I think 'problem' is really what we're dealing with."
Posted by Donald L. Luskin at 1:03 AM |
CBO: THE SOCIAL SECURITY CRISIS IS CLEAR AND PRESENT
The Congressional Budget Office released today
its new annual
Budget Outlook, this time covering fiscal years 2006 to 2015.
Take a look on page 23 -- and you'll find the picture of Dorian Gray. This is
the illusion-free reality of when the Social Security "crisis" actually
begins to unfold.
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According to CBO, the crisis starts in 2012 -- the first year that surpluses
in Social Security tax receipts above Social Security payments start to decline.
Right as the 2012 inflection point is passed, the decline is small and gradual
-- but it will accelerate violently through the middle of this century as the
surplus first falls to zero, and then goes strongly negative as the Social
Security trust funds are drawn down. Here's the discussion accompanying the
Although the budgetary impact of the aging of the babyboom
generation will not be fully felt during the current
projection period, CBO’s baseline provides initial indications of the coming budgetary pressures. Charting the
differences over the next 10 years between projected receipts
and outlays for the Social Security trust funds (excluding
intragovernmental interest payments) illustrates
those pressures. Receipts are projected to exceed expenditures
in each year of the period, but under current policies,
the amount by which they do so will decline from
more than $100 billion between 2008 and 2013 to about
$85 billion in 2015 (see Figure 1-6). At that point, Social
Security outlays will be growing by about 6 percent per
year, but noninterest receipts will be growing by about
4.5 percent. Thus, in CBO’s baseline projections, the
capacity of the Social Security trust funds to offset some
of the net deficit in the rest of the budget—as they do
now—will begin to dwindle during the coming decade.
Shortly thereafter, Social Security is projected to begin
adding to deficits or reducing surpluses.
This is a complete affirmation of what I wrote in a National Review
Online column several weeks ago (see
C-Word: Say It!" January 11, 2005). Note that in that column I had said the
inflection point would be 2009 -- that was based on the slightly
projections of the Trustees of the Social Security Trust Funds. But
2009, 2012, who's counting? The crisis is real, and it's on its way.
Update... reader Mike Lion adds:
I was reminded the other day that the real meaning of the word "crisis" is "turning point." In fact, the first two meanings in my copy of Webster's are in effect the same: turning point or crucial point. The popular usage of "emergency" or "imminent peril" is, in fact, only third. From the graphic you displayed today, it is clear that a turning point will soon be reached.
Posted by Donald L. Luskin at 1:33 PM |
WHY I HATE PRETENTIOUS LEFTIST TWERPS
Ken Waight at Lying in
Ponds points to
posting by Spinsanity's former co-editor Brendan Nyhan on his own blog:
Why I hate elite journalism
a short jab at Paul Krugman last month, ABC's The Note encapsulates
everything I hate about the DC insider journalist perspective:
Paul "Pauly One-Note" Krugman of the New York Times looks at international
examples of privatizing retirement funds and says he isn't buying the
Administration's arguments, saying that privatization cuts benefits and leaves
more retirees in poverty.
Not only is The Note obviously uninterested in actual policy issues like
Social Security (the reason we have politics in the first place), but it
dismisses Krugman with casual disdain as "Pauly One-Note". This attitude is why
desperately to be counter-intuitive -- because elite journalism prizes
being unpredictable above all else. Krugman is consistently anti-Bush; therefore
his writing is dismissed as partisan hackery even when it's not. What's sad
about this is the press has a pitiful level of understanding of Social Security,
and they could learn something from Krugman, one of the top economists alive
(who has written a nice
primer on the issue for the online-only Economists' Voice [196K PDF]).
Here's a case in point: numerous reporters
can't even understand
the percentage of income that would be diverted into private accounts. It's
certainly true that Krugman sometimes bangs the drum too hard or fails to find
fault with liberals, but there's nothing wrong in principle with being a
forceful and consistent advocate for your views.
Apparently for Brendan Nyhan, elite journalism is anything he disagrees with.
Because as Waight proves beyond the shadow of a scintilla of a doubt
in a rigorous and
amusing response to Nyhan, Paul Krugman is Pauly One-Note --
and with a vengeance. So to Nyhan, I suppose Waight must be a member of elite
journalism, too. But who's really the elitist here? Don't be fooled by Nyhan's
groveling brown-nosing of Slate (hoping for a gig, no doubt -- I mean, has Slate ever taken an unpredictable opinion on any issue, ever?). The
elitist here is Nyhan himself -- someone who hasn't earned the slightest shred
of eminence, and yet condescends to share how "sad" he is, how full of "pity" -- as if anyone other
than his mother cares -- about the press's "level of understanding of
Social Security." Where does Nyhan get his understanding? Why, from Paul
Krugman, of course -- "one of the top economists alive." Maybe so -- and maybe
Noam Chomsky is "one of the top semanticists alive," but I wouldn't trust
Chomsky's whacko interpretation of the semantics of media manipulation any more
than I'd trust Krugman's partisan interpretation of Social Security. Check out
that "nice primer" that Nyhan probably hasn't even read. Sure, it looks
on the surface like its published in a respectable peer-reviewed economics
journal -- it uses the same kind of typeface and page layout as real journals --
but does Nyhan realize that The Economists' Voice is
actually a political rag run by three ultra-liberal economists including
Krugman crony Brad DeLong? Does Nyhan think it's appropriate for this
"primer" from "one of the top economists alive" to feature such subjective
non-economic statements as:
The right has always disliked Social Security; it has always been looking for
some reason to dismantle it. Now, with a window of opportunity created by the
public’s rally-around-the-flag response after 9/11, the Republican
leadership is making a full-court press for privatization, using any arguments
And follow Nyhan's link to support his point that "numerous reporters
can't even understand
the percentage of income that would be diverted into private accounts." You'll
be taken to the pages of Media Matters, a George Soros-funded
leftist attack site. And you'll see that all Media Matters has to say on the
subject is that some reporters use the expressions "percent" and "percentage
points" interchangeably -- but none of their examples even begins to suggest
that this semantic error either arises from or causes any misunderstanding.
Thanks to reader Jill Olson for pointing this out several days ago. It
took me this long to write this response because, frankly, superficial wannabe
twerps like Nyhan depress me and sometimes I'd just rather pretend they don't
Posted by Donald L. Luskin at 10:56 PM |
It's a sad commentary on the state of public discourse when you have to
fact-check FactCheck.org -- but
that's what it's come to. The non-partisan project of the
Annenberg Public Policy
Center of the University of Pennsylvania was a reliable guide to the
issues during the last presidential election, even-handedly finding fault and
favor with statements by both candidates. But now that the debate over Social
Security reform has gotten increasingly nasty and complex, FactCheck.org
seems to have lost its way.
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posting last week, FactCheck.org asked "Does Social Security Really Face an
$11 Trillion Deficit?" The answer, in the feature's headline, was: "Bush and
Cheney say yes. But actuaries say the figure is 'likely to mislead' the public
on the system's true financial state."
It's that headline that is "likely to mislead." And you can be sure that the
opponents of reform will seize on it to do just that -- mislead. That headline
gives the impression that the $11 trillion deficit is a number created by
Bush and Cheney in defiance of expert advice to the contrary. In
reality, Bush and Cheney are simply quoting an official deficit estimate of the
Trustees of the Social Security Trust Fund in their
2004 annual reports.
The Trustees relied on the work of actuaries to come up with that deficit
estimate. So, to be fair, the headline should have read, "Actuaries say yes. But
other actuaries say the figure is 'likely to mislead' the public..." But that
wouldn't be an exciting headline, now would it? Battling actuaries is about as
dull as, well, it's just about the dullest thing in the world.
Beyond the headline, FactCheck.org's analysis is also "likely to mislead."
When you get right down to what was really said by the actuaries who differ with
what Bush and Cheney quoted, it's not a matter of the accuracy of the number,
which is the proper domain for actuarial opinion. Instead, the dispute is only
about whether the number is "likely to mislead." If the number is accurate, do
we really care what one or another actuary thinks about how "likely" it is that
it will "mislead the public"? Actuaries are supposed to be experts on mortality
rates -- not public relations.
One of the actuaries cited by FactCheck.org is the American Academy of
Actuaries, who sent
a letter to the Social Security Trustees on December 19, 2003
raising these concerns. I asked Ronald Gebhardtsbauer, the Academy's
Senior Pension Fellow -- and a member of the Academy committee that sent the
letter -- what it was all about. He said it was a response to the Trustees'
adoption in 2003 of a new "infinite-horizon" analysis that examines Social
Security's solvency to perpetuity, not just over the arbitrary 75-year period
mandated by statute. That 75-year analysis shows a deficit of $3.7 trillion, but
by considering the years beyond 75, the infinite-horizon analysis naturally
shows a larger deficit -- and a more honest one: $10.4 trillion.
According to Gebhardtsbauer, while the Committee had concerns about public
perceptions, the new infinite-horizon analysis has distinct advantages:
"Policy wonks can use this to compare different proposals. Any solution that
has effects beyond the 75th year doesn't see those effects included. I totally
understand why they developed this. With private accounts, the system bears all
the costs up front, but the benefits often don't come until after the 75th
A conspiracy theory-minded critic might conclude that the new "infinite
horizon" analysis was cooked up to flatter Bush administration proposals for
personal accounts. But then a similarly minded critic on the other side of the
debate could conclude that seeking to suppress the new analysis is a way of
making personal accounts look bad.
Indeed, Gebhardtsbauer was concerned by the way the Academy's 2003 letter had
been cited in a
New York Times editorial several weeks ago, as justification for
calling the $10.4 trillion deficit number "the closest you can get to pulling a
number out of the air" and "essentially bogus." Both he and the letter's author
Eric J. Kleiber, chairperson of the Academy's Social Insurance
Committee strongly denied that was the meaning of the letter. Gebhardtsbauer
told me, "We didn't say it was a bogus number."
FactCheck.org also cites concerns about public perceptions of the $11
trillion deficit number in the
2003 report of Technical Panel on Assumptions and Methods -- a panel
of actuaries, economists, and demographers appointed by the Social Security
Advisory Board. It recommended that the infinite-horizon deficit figure
should be presented as a percent of payroll, and presented next to the value of
payrolls to the same infinite horizon. This was done in the
Trustees' 2004 report. $10.4 trillion was given as 3.5% of payroll, and
compared to $295.5 total payroll.
If you want context -- so that the public is sure not to be misled -- then
how about this? That $10.4 trillion number represents the value of economic
assets today that would have to be contributed to the Social Security
system to assure its perpetual sustainability, based on the best estimates we
can make at this time. To set things right, then, we would have to contribute
today virtually the entire market value of the S&P 500. We would have to
throw down the gaping maw of Social Security almost every share of every major
company in America today in order to satisfy the hungry beast.
Correction [1/25/2004]... As originally posted, I erroneously added the $10.4 trillion present value of Social Security's unfunded liabilities to the $295.5 trillion present value of total payroll, to calculate the present value of payment obligations. This was a silly error, as of course it is the present value of payroll taxes that must be added to the present value of the unfunded liability to get the present value of the payment obligations. This error has been struck from the text above. It does not affect the thesis of this posting, so nothing else requires correction and nothing else has been modified. Note to Dan Okrent: this is how you do it; everyone makes honest mistakes, and dishonest people make mistakes on purpose -- but only dishonest people refuse to admit their mistakes.
Correction 2 [1/26/2005]... Ron Gebhardtsbauer asked me to amend the word "prepare" to the word "compare" in my quotation of him. My contemporaneous notes show "prepare," and I really don't see how it makes any difference. But he is, after all, an actuary. I have done as he requested in the text above.
Posted by Donald L. Luskin at 3:44 PM |
HOIST ON THE TIMES' OWN REGULATORY PETARD
Ah, yes, the New York Times loves government regulation of the economy. There was that piece Sunday about reregulating the airlines. And there was that Jeff Madrick revisionista op-ed last week about how regulation is good for economic growth. But here's where that rubber meets that road:
Federal antitrust enforcers are reportedly investigating plans by Gannett Co., the nation's largest newspaper publisher, and the New York Times Co. to acquire or invest in local rivals...the Justice Department is investigating Gannett's proposed buyout of HomeTown Communications Network Inc., a Midwest community-newspaper publisher based in Livonia, Mich., and has opened a preliminary inquiry into the Times' plans to take a 49 percent stake in Metro Boston, a free daily that competes with the Boston Globe, which is also owned by the Times. While both transactions are relatively small...they suggest future deals also could face tough scrutiny.Thanks to reader Jill Olson for the link, via Drudge.
Update... Skip Oliva has more on rampant antitrust action against media.
Update 2... Liberty Lover has a view on so-called airline deregulation.
Update 3... An anonymous reader adds:
Your note on the Times' story on airline officials hoping for re-regulation reminded me of a line in John Steel Gordon's An Empire of Wealth; The Epic History of American Economic Power: "In 1978 its [CAB] power to set routes and rates was taken away by Congress, despite ferocious opposition of both airline companies and airline unions (when both management and labor oppose a change in regulation, it's a sure sign that a cartel is in operation)." Emphasis mine.
Posted by Donald L. Luskin at 1:07 PM |
SUNDAY BLOODY SUNDAY NEW YORK TIMES
Reader Neal Phenes bravely makes his way through the Sunday New York Times:
The Sunday New York Times gave us a kaleidoscope of socialism mixed
with historic revisionism and half-truths. In other words, it was a typical
Starting with the least offensive, the Business section featured an analysis of
the airline industry written by Micheline Maynard entitled
"Coffee, Tea or Regulation?" Presidents of key airlines unions were quoted
and all shockingly wanted government to save the industry from capitalism.
One union leader asked, "Are we willing to accept the results of a free
marketplace, or do we think the role of commercial aviation is such a part of
our economy that we have to have government influence?" Focusing on the relative
value of the role of the airlines, I say it depends if I am flying that day. Ten
minutes ago, the role of the cereal and milk industries along with welfare of
coffee plantations meant a lot more to me that the condition of airlines do. And
"government influence" sounds so safe, doesn't it? He doesn't ask for a heaping
helping of government ownership, just a wee bit of "influence". Just a little
pregnant, is she? I bet he'd prefer the former.
While providing ample space for union leaders to carp at the horrors of
deregulation, the best were the quotes from economist Larry Kudlow, whose bags
were lost by an airline. Kudlow said, "You don't want to Post Officize or
Amtrakize the airlines."
The Job market section has Eduardo Porter's piece called
"Factories Rev Up
(At Last) in the U.S." While Porter provided data and explained how the many
U.S. manufacturing jobs that went to China were low end opening up higher
salaried jobs in America and credited free trade with reducing prices of
commodities to consumers, he concluded that trade "may also not be the
Throughout his long analysis of jobs data, he never once mentioned the benefits
of the President's tax cuts. Not one mention that it may have been as effective
as prominently predicted by one nameless party over the past 4 years. Weren't
the 2.2 million jobs created over the past year due to the increased wealth of
investors (us) and entrepreneurs (us) who reinvested into capital-creating
efficiencies that resulted in the need for more workers (us)? Or did I just
dream up those tax cuts that Bush wants to now make permanent? If the Times
doesn't mention it, maybe it never happened.
Then the Week in Review gave us Robin Toner's history behind the institution of
Social Security -- Toner wrote in
Before Social Security: A Great Calamity Has Come Upon Us" how the Great
Depression destroyed everyone's savings requiring the government's helping hand
to save the elderly and indigent. We know the story. Toner relates the economic
freefall for families and the scarcity of jobs.
Historian David Kennedy is quoted, "It's not an accident that only in the
context of that protracted trauma did we get such a departure from our notion of
laissez-faire, rugged individualism." Maybe our context of low unemployment,
massive stock ownership, the fall of socialism and a desire for economic freedom
will allow us to depart from statist domination.
Many writers, notably James Powell in
FDR's Folly, have shown that the initial, likely mild, depression under
Hoover was turned into the Great Depression by FDR that dominated a decade
because of inept fiscal management by the central banks, non-competitive local
banking regulations, tariffs, price controls and unionism. It was these policies
working so beautifully together that protracted and deepened the Depression
destroying jobs, capital, food, production and families.
The essay concludes with Republican Bill Thomas' scary statement that "we are
all children of FDR." Toner says this comment underscores unwittingly "the great
pragmatist's enduring triumph." Hoping that much of the endurance is about to
phase away and without commenting on the great pragmatist's motivation, I wish
Toner would have told us how Thomas was vomiting into a pail when he made that
Posted by Donald L. Luskin at 11:30 AM |
A LITTLE ARITHMETIC LESSON FROM TOM
One of the memes rattling around noisily in the mostly empty skulls of Social
Security reform opponents is the idea that high fees will eat up all the returns
in personal accounts. You know, how reform is going to be a windfall for Wall
Street fat cats and so on. Never mind that the federal government's Thrift
Savings Plan -- the retirement plan that is surely the model for personal Social
Security accounts -- has fees even lower than Vanguard's.
Here's Tom Maguire on the Just One Minute blog, objectively forecasting what
impact realistically likely fees would really have on retirement wealth -- and
putting the lie to absurd exaggerations by Paul Krugman in
his Friday New York
The Earnest Prof has an unsolved arithmetic problem; perhaps
we can help him with it.
And don't miss
blogger Tim Worstall going after more Krugman Social Security lies
on Tech Central Station.
Hmm, since my beer is cold, I know I am not in Britain, so
what might a realistic estimate of cumulative fund fees be here in the States?
...if we take into account realistic estimates of the fees
that mutual funds will charge - remember, in Britain those fees reduce
workers' nest eggs by 20 to 30 percent - privatization turns into a
The CBO, in
their July 2004 evaluation, assumed account fees of 0.30% per annum on
total assets, which seems plausible for the types of comparable funds run by
the Federal Thrift Savings Plan. Shall we try a simple calculation to help the
Suppose we are 20 years old, and our annual contribution will be an even
$1,000 for the next 45 years. Let's keep this real simple, and assume we put
the first $1,000 in a no-interest checking account with a 0.30% annual fee.
This means that my first $1,000 will be charged $3 in the first year. If I had
a spreadsheet (I will in a minute) I would reduce the $1,000 balance by that
amount and calculate a new, slightly smaller fee for the second year. But for
purposes of this estimation, lets just reduce my $1,000 deposit by $3 each
year for 45 years.
In that case, the total fees charged on my first $1,000 deposit are ($3 x 45)
= $135. That is 13.5% of my initial deposit.
But wait! I will also make deposits in subsequent years, and none of them will
be charged fees over a full 45 year term. Good point. The last deposit will be
charged a fee for just one year; taking a quick average of 45 years and 1
year, we can estimate that the average term is 23 years. The average fee is
then $3 x 23, or $69. This is roughly 7% of my $1,000 deposit.
Seems too easy, doesn't it? Well, with a modest spreadsheet, we can vary the
growth rate in the annual deposit, and plug in an annual return on the account
balance. Both of these factors make the account balance, and hence the annual
fee, get larger.
For 0% deposit growth and a 0% account return, the ending ratio, after 45
years, of an account with a 0.30% fee can be compared to a no-fee account. The
result is a bit lower than our 7% estimate, coming in at 6.3%.
For an account with 5% annual deposit growth (that would represent rising
wages), and a 15% account return (that would be an astonishing stock market
run), the expenses consume 8.5% of the "no-fee" account. So the "right" answer
is somewhere in the 6% to 8% range.
But hold on! Didn't Paul Krugman just ask for a "reasonable" estimate, and
throw out 20% to 30% in Britain as a comparison? Based on the CBO number and
some mental math, we came to 7%, which was quickly confirmed by a more
elaborate calculation. Why, oh why is Prof. Krugman off by a factor of 300% to
400%? How can it be that he is misrepresenting the intelligence and hyping his
Posted by Donald L. Luskin at 11:38 PM |
DEAR GOD, WHAT DO FEMINISTS WANT?
You just can't win with these gals. From the Telegraph:
Martha Burke, the chairman of the National Council of Women's Organisations, said: "We've long been concerned that the ultra-thin body image of the fashion industry is harmful to women. So on one hand, we are glad that mannequins are getting some meat on their bones – but on the other, it depends where that meat is going, and what the intent is."Thanks to reader Wim de Vriend for the link.
Posted by Donald L. Luskin at 5:34 PM |
NOONAN THE NUN
Inaugural Bush-basher Peggy Noonan gets her commupance from James Crystal:
With (dis?)respect to Noonan, maybe it's time to call a shade a shade. When she served Reagan by penning soaring speeches, she was at the start of her race to fame, in secret, since we didn't really find out about HER, until much later, probably when she wrote her own book, about being at the 'revolution'. Over the long, gray 8-year line (or was that a police line-up) of Clinton depravities, Peggy provided lots of commentary that helped us make it through the trough filled with the slimiest people a presidency has ever had---at least in my lifetime. Then, in perhaps what should have been her last at-bat (seen in retrospect), she let us in on her own inner thoughts, even before Bush was nominated for the Republican ticket, in 1999 or 2000, that she believed he was very Reaganesque.
However, AFTER W became president, it's all been downhill for Noonan, IMHO. (Ah, I'm back in 1960, after JFK wrapped up the Democratic nomination, when the big question was, "Would he take orders from the Pope, or follow the American Constitution.") Well, folks, since 2001 Peg has been moving one leg after the other down the slope leading to Rome, and the Pope! She's, in effect, a NUN! Hence, so much of her 'wise' opinionating is at least flavored, if not almost totally permeated, by a Roman Catholic perspective. I write from my own personal experience, as I found myself going from an "Oh boy!" to an "I gotta read this" attitude, when finding her latest public 'confessions' (of a sinner?) in the WSJ.
Posted by Donald L. Luskin at 2:08 PM |