Monday, January 31, 2005

Iraqi election results come in...

Associated Press:
Iraqis embraced democracy in large numbers Sunday, standing in long lines to vote in defiance of mortar attacks, suicide bombers and boycott calls. Pushed in wheelchairs or carts if they couldn't walk, the elderly, the young and women in veils cast ballots in Iraq's first free election in a half-century.

''We broke a barrier of fear,'' said Mijm Towirish, an election official ... the mere fact the vote went off seemed to ricochet instantly around a world hoping for Arab democracy and fearing Islamic extremism.

''I am doing this because I love my country, and I love the sons of my nation,'' said Shamal Hekeib, 53, who walked with his wife 20 minutes to a polling station near his Baghdad home.

''We are Arabs, we are not scared and we are not cowards,'' Hekeib said...

The feeling was sometimes festive ... Entire families showed up in their finest clothes...
Financal Times:

With the tanks of the New Iraqi Army keeping watch on main roads and local paramilitaries stationed around polling centres, tightly knit Shia neighbourhoods in the Iraqi capital produced a higher than expected voter turnout yesterday...

In some districts, the relaxed atmosphere was underscored by impromptu football games on streets, bridges and even four-lane motorways left empty by a near-total ban on traffic...

Most voters in the predominantly Shia suburb of Zafaraniya ... seem to have been unconcerned by the prospect of violence yesterday.

[Ahmed] Mahjim... spoke of the elections as a "historic chance" to build a democratic, tolerant, federal state. Shia Arabs, as Iraq's largest social group, argue that they are naturally entitled to majority representation....

... some Sunni districts also witnessed high turnout. In one school in the west Baghdad neighbourhood of al-Ameriya, election officials reported that nearly 50 per cent of the voters on the list had shown up to cast their ballots by midday.

The district lies just across a highway from the headquarters of the Muslim Scholars' Front, Iraq's most influential Sunni religious authority, which had said elections under foreign occupation were invalid and called for a boycott.

Written on the walls of the polling station were guerrilla graffiti threatening voters: "We will kill anyone who goes to the elections. We will kill you for treason and spying."

Sunni residents claimed they were not swayed by these threats, even though their fingers would be dyed with indelible ink that would mark them as voters for several days to come.

"I am a suicide voter," said unemployed Ameriya resident Saad Ahmed. "We need to have steadfastness as a people, because our country needs a future."

New York Times:
Nobody among the hundreds of voters thronging one Baghdad polling station on Sunday could remember anything remotely like it, not even those old enough to have taken part in Iraq's last partly free elections more than 50 years ago...

The scene was suffused with the sense of civic spirit that has seemed, so often in America's 22 months here, like a missing link in the plan to build democracy in Iraq...

At the Darari primary school, east of the Tigris River in central Baghdad, the courtyard teemed with people of all ages, and of all ethnic and religious groups, doing what American military commanders here have urged for so long: standing up for themselves, and laying down a marker, with their votes, that signaled they could not be intimidated into surrendering their rights by the insurgents who have terrorized the country with guns and bombs and butchers' knives...

On Sunday, everything about the voting resonated with a passion for self-expression, individuals set on their own choices, prepared to walk long distances through streets choked with military checkpoints, and to stand for hours in line to cast their ballots.

"A hundred names on the ballot are better than one, because it means that we are free," said Fadila Saleh, a 37-year-old engineer...
and even Salon:
[T]he Iraqi people made a powerful statement Sunday. In cities across the country, voter turnout exceeded even the most optimistic predictions...

Driven by the country's Shiite and Kurdish communities -- accounting for 80 percent of the population -- they flooded the polls with near glee, showing their resilience and optimism after nearly two years of shattering disappointments and decades of oppression and war.

One Shiite voter, holding the hand of his 5-year-old son, told of his desire to show his son a democracy he had never before seen himself. "I want my son to see this," he said proudly...
It's looking like I guessed right, and I'm very glad that's so.

Make prostitution legal and the government unemployment office becomes your pimp.

Such is the news relayed to us by Tim Worstall from Germany, where the combination of unemployment law reform and the legalization of prostitution apparently means a woman now can have her unemployment benefits cut if she refuses to take available work in a brothel.
A 25-year-old waitress who turned down a job providing "sexual services'' at a brothel in Berlin faces possible cuts to her unemployment benefit under laws introduced this year....

Under Germany's welfare reforms, any woman under 55 who has been out of work for more than a year can be forced to take an available job – including in the sex industry – or lose her unemployment benefit...

The government had considered making brothels an exception on moral grounds, but decided that it would be too difficult to distinguish them from bars.
German government bureaucrats can't tell a brothel from a bar?

That country does have problems.

As a result, job centres must treat employers looking for a prostitute in the same way as those looking for a dental nurse...

"There is now nothing in the law to stop women from being sent into the sex industry," said Merchthild Garweg, a lawyer from Hamburg who specialises in such cases. "The new regulations say that working in the sex industry is not immoral any more, and so jobs cannot be turned down without a risk to benefits."

Miss Garweg said that women who had worked in call centres had been offered jobs on telephone sex lines. At one job centre in the city of Gotha, a 23-year-old woman was told that she had to attend an interview as a "nude model", and should report back on the meeting...

Tatiana Ulyanova, who owns a brothel in central Berlin, has been searching the online database of her local job centre for recruits.

"Why shouldn't I look for employees through the job centre when I pay my taxes just like anybody else?" said Miss Ulyanova... [Telegraph]

Smart criminal of the weekend.

What's dumber than leaving your fingerprint at the scene of your crime? How about ... leaving your finger?

A bungling burglar gave cops the finger — literally — and the NYPD is happy he did.

Franco Beaumont, 20, left a part of his severed thumb at the scene of a Canarsie theft Jan. 19, allowing cops to fingerprint the digit and find the hapless suspect ...

Police Officer Richard Collegio ... retrieved the thumb, and cops rolled it in ink, just like they do with any fingerprinting job ...

Police entered the print into a computer database and got a "hit" — the print matched one on file.

On Thursday night, cops from the 69th Precinct showed up at Beaumont's home on East 82nd Street. It didn't take them very long to know they were in the right place.

"Basically, we were looking for someone with a bandage, and once we saw this guy had a bandage on his thumb, we sort of knew he was going to be our guy," said one chuckling law-enforcement official... [NY Post]

Gee, the guy left the place loaded with stolen jeans, sneakers and jackets -- he couldn't take his own thumb too?

"People like us can do more harm than good. Except for us."
Angelina Jolie, the Tomb Raider star voted the sexiest woman alive, said Saturday that celebrities grandstanding as advocates of the poor can do more harm than good...

"Celebrities have a responsibility to know absolutely what they're talking about, and to be in it for the long run," said Jolie, 29, who has spent four years as goodwill ambassador to the UN's refugee agency UNHCR.

Celebrities have taken unprecedented prominence in the World Economic Forum, held in the Swiss ski resort of Davos. Film stars Richard Gere, Sharon Stone and Jolie teamed up with musicians Bono, Lionel Richie, Peter Gabriel and Youssou N' Dour at the business summit to plead for aid to the poor.

In October, a poll in Esquire magazine named Jolie the "sexiest woman alive." That month, she toured Sudan's Darfur region, calling the humanitarian crisis there "unbelievably horrible". [China View]
Is there an odd juxtaposition in this story? Or am I just becoming more of a cynic every day ...?

Bill Gates sucks up to his next market's regulators.

Bill Gates has high praise for China, which he says has created a brand-new form of capitalism that benefits consumers more than anything has in the past.

"It is a brand-new form of capitalism, and as a consumer it's the best thing that ever happened," Gates told an informal meeting late Friday at the World Economic Forum.

He characterised the Chinese model in terms of "willingness to work hard and not having quite the same medical overhead or legal overhead"...

Gates continued by heaping praise on the current generation of Chinese leaders.

"They're smart," he said with emphasis.

"They have this mericratic way of picking people for these government posts where you rotate into the university and really think about state allocation of resources and the welfare of the country and then you rotate back into some bureaucratic position."

That rotation continued, Gates explained, and leaders were constantly subjected to various kinds of ratings.

"This generation of leaders is so smart, so capable, from the top down, particularly from the top down," he concluded. [AFP]

Yes, more of a cynic every day, definitely.

But Bill's learning as he gets older, I'll give him that.

Sunday, January 30, 2005

The New York Times' apology of the week.

The Times's Larry Rohter recently wrote a very negative article on Chile's privatized social security program that has raised a bit of controversy, being described by some as a hit piece, and which has been deconstructed elsewhere. But enough of social secrurity!

The NY Post happily reports some of Mr. Rohter's other recent adventures in journalism...

N. Y. Times Makes Big Fat Mistake

The New York Times is in hot water again. On Jan. 13, the paper ran a story by Larry Rohter on the spread of obesity and illustrated the story with pictures snapped by freelance photographer John Maier on the fabled Ipanema Beach in Brazil.

The only problem, the "fat" Brazilians depicted in the photos weren't Brazilians at all, but were visiting European tourists...

Rohter was reportedly already out of favor with the Brazilian government for a story that discussed the drinking habits of the country's president, Luiz Inacio Lula da Silva.

The government wanted to boot him from the country and yank his press credentials, but were stymied because he is married to a Brazilian. The Brazilian Supreme Court overruled the administration.

In yesterday's story in O Globo, in Rio de Janeiro, one of the women in the photo, Milena Suchoparkova said she was born in the Czech Republic and holds an Italian passport. She visits Brazil for a few months each year.

And she says she is outraged that she was depicted as a fat Brazilian. She calls the reporter Rohter and the photographer Maier "cretins."

She said when she gets back to Prague she plans to hire a lawyer to sue to The Times...

A spokesperson for The Times said it has confidence in Rohter's reporting but plans to apologize...
The Times wouldn't be half as much fun without the Post.

Webcam of the week.

From the sports world's most eclectic football column...
Last week the new $375 million cruise ship Aurora limped back into port after its main engines failed; aboard were millionaires who had paid fares totaling $28 million for an ultra-luxury round-the-world cruise. Aurora had been scheduled to make a globe-circling tour with stops in 23 countries.

Instead the ship left home port in Southampton 10 days late, got only as far as the Isle of Wight, about 25 miles away and then returned, the cruise cancelled.

Note: Aurora has a live webcam intended to provide continuous views of its glamorous ports-of-call. Because the ship is dead in the water, the live webcam currently shows an industrial area near the docks in Southampton.
Yes, but at this moment as the night ends over there the dockyard is all lit up brightly, the morning lights are coming on in the city, and it's really very pretty.

(And it's now Bremerhafen, Germany, not Southampton.)

Turning cock fighting into an Ivy League sport

A new version of the old favorite is coming to us via legal reform and corporate innovators in Oklahoma, which apparently has a "gamefowl industry" to protect.

The participants are all bundled up so there's no possibility of any injury, with scoring done electronically by sensors that tally "hits" to determine the outcome of the match.

They're turning cock fighting into fencing!

"Who's going to object to chickens fighting like humans do?", asks State Senator Frank Shurden (D).

Friday, January 28, 2005

Paul Krugman tells a lie fib in black and white.

In today's column "Little Black Lies" Paul Krugman tries to convince us that all African-Americans die either younger than 25 or older than 65.

This is his response to assertions that blacks receive less from SS than they contribute to it (well everyone young does now, but the claim is they get even less than other people) because they have shorter life expectancies and so don't live long enough to collect as many benefits as others.

His words...

It's true that the current life expectancy for black males at birth is only 68.8 years - but that doesn't mean that a black man who has worked all his life can expect to die after collecting only a few years' worth of Social Security benefits.

Blacks' low life expectancy is largely due to high death rates in childhood and young adulthood. 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. [my emphasis]

Of course, if blacks die young at a high rate before starting to work, then those who do don't pay any payroll taxes that they fail to recover. Krugman is claiming that this is the case.

But is this claim true?

Going to the National Center for Health Statistics life expectancy data ...

We find that black males right in the middle of a working life, age 40, have a 30% chance of dying by age 65. (The corresponding chance for white males is 17%.)

Now let's go back and look at Krugman's purported "high death rates in childhood and young adulthood" for blacks.

Black males alive at age 5 have only a 3% chance of dying within the next 25 years of their childhood and young adulthood, by age 30. (For white makes the figure is 1.9%)

So their death rate during their past-age 40 working years is 10 times higher than "the high death rates in childhood and young adulthood" Krugman ascribes to them. And the risk that a black male age 40 will die before reaching the Social Security retirement age of 65 -- after paying most of working life of payroll taxes but still too young to recover any of them -- is 10 times higher than the risk that one will die as a child or young adult age 5 to 30. (And 77% higher than the risk that a white male age 40 will die by age 65.)

When Krugman sure seems to have claimed exactly the opposite.

It looks to me like Krugman lied fibbed, plain and simple.

Now, as to his quoting of Social Security's chief actuary as saying...

"careful research reflecting actual work histories for workers by race indicate that the nonwhite population actually enjoys the same or better expected rates of return from Social Security" as whites...
... well, one doesn't have to be a preeminent social scientist to realize that the "the nonwhite population" does not equal "the African-American population".

The fact of the matter is that the 1994 Social Security Advisory Commission specifically asked the actuaries to generate and produce exactly this data for African-Americans -- and they refused.

So unless they have done so since then, in a manner that nobody I know of has noticed or cited, I'd say Krugman pulled a fast one here too.

Paul Krugman says Social Security is progressive and so benefits African-Americans and all low-wage workers, of course.

From his last column...
... 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.
Putting race aside, let's see just how much Social Security benefits low-income workers.

Numbers from the Social Security actuaries for lifetime returns on contributions, prepared for the 1994 Social Security Advisory Commission, were quoted here previously.

Let's look again at one of those number sets for the actuarial current value of both taxes paid and benefits received over a lifetime, for persons who entered the work force in 1994, in 1994 dollars...

Single males

low wage: taxes $39,024; benefits $38,004; net - 2.6%
(And, the actuaries note, these formula benefits of course are themselves 30% underfunded -- and if this funding gap is closed by tax increases and/or benefit cuts [as Krugman insists they should be] the workers' net will drop by 30% from there.)

Social Security is progressive. It benefits today's low-wage workers by making them poorer.

OK, Joe Massino fans...

On the basis of just one amusing post made way back last June, Google's algorithms have somehow today made this blog the #3 site listed among more than 1,100 produced when searching "Joe Massino" -- and searches on Joe are bringing twice as many people here as any other.

Try figuring that out.

But OK, if you're looking for the latest news about Joe here it is. And it really is kind of startling.

Never fight the public. I'll turn this site into a Joe Massino shrine if it'll bring in the blogads.

Thursday, January 27, 2005

Is the violence in Iraq enough to defeat the January 30 elections? How does it compare to violence in the US?

The answer to the first question is, of course: I don't know, we'll find out -- but in a moment I'll take a guess.

The second question is interesting. One of the most common of human failings is to make a judgment without first gaining relevant perspective. And when danger is involved people are notorious at this -- both greatly over- and underestimating risk in various circumstances. (In particular, we overestimate risks imposed on us by others while underestimating risks we incur voluntarily, right?)

A couple weeks ago the New York Times reported this...
"In the first two weeks of January, at least 202 people died as a result of the insurgency in Iraq. The killings have been indiscriminate. The dead include Iraqi officials, police officers, civilians..."
... which is certainly bad enough on its face. But how bad is it compared to, say, the risk of being murdered in a US city that its urban residents take on voluntarily by living in it every day? Or even the risk of being murdered incurred by the average American living in the average place? I meant to look it up then, when I saw that 202 number in the paper, but just got around to it today.

Now if you want to talk about a US city where there's a high risk of being murdered then of course the first that comes to mind is the seat of the our US government, Washington DC.

The first decent reference for murder rates in DC that I hit upon presents these numbers: a peak murder count of 482 in 1991 when the population was 598,000, falling to a count of 239 in 2000 with a population of 572,000. (I'm not going to bother looking up post-2000 data -- this isn't about measuring things to decimal points, only looking for scale and obtaining perspective.) OK, so these give murder rates for DC ranging from about 0.0008 to 0.0004 per resident.

As to the killings caused by the Iraq insurgency, I have no idea how accurate the number cited by the Times is, but let's trust the paper in this case and take it at face value. We see that 202 killings in two weeks amount to an annual rate of 5,252 in a country with a population of 25.4 million, for a rate of about 0.0002 per resident.

So that puts the rate of killings caused by the insurgency at one-half to one-quarter the recent murder rate that people have lived with in Washington DC, as it has served as our nation's capital and seat of government over the last 15 years.

Of course this rate is for all of Iraq -- the rate of killings is far worse in some areas, Baghdad and the Sunni triangle, than in others (just as it's worse in some parts of DC than the whole).

But that's pretty much the point. Subtract the concentrated violence that is occurring in a small portion of the country -- in parts of four of 18 provinces -- and the average level everywhere else throughout the other 14 provinces is much less.

Lets guesstimate that outside of Baghdad and the Sunni triangle the rate of killing caused by the insurgency is only half of the total rate including those areas. Then we are talking about a rate of 0.0001 per resident -- which, as it happens, in addition to being only one-quarter of the murder rate in DC in 2000, and one-eighth of the DC murder rate of 1991, is almost exactly the same as the total nationwide US murder rate of 1991, (9.8 per 100,000) -- and for that matter, pretty much the same as the average total US rate for the 15 years until 1991.

Should a level of violence experienced by most people across the nation, aimed at disrupting the election, equal to the average murder rate that we all experienced as Americans throughout 1991, be enough to defeat democratic elections among a populace that by all accounts on the whole -- in those 14 provinces at least -- wants them?

I wouldn't think so, so I'll guess "no". I'll guess that the elections will be a success in most of Iraq, in the 14 of 18 provinces that are Kurdish, Shiite, and away from Bahgdad and the Sunni triangle.

As to how the election will work out in those troubled, insurgent-infested areas, I have no idea.

But if the elections work in 14 of 18 provinces to bring into being the mid-east's first functioning democracy (apart from Israel) they won't only be a success but will risk becoming an historic success, I should think.

But we will see.

What public education is all about.

It seems that a California public school district's recent crackdown on truancy and school absences has left many parents and students speculating that it is motivated by the fact that the district loses money under the state funding formula for every absence.

To them a district official responds....
"We're being bombarded right now with 'it's about the money,' " said Nancy Danziger-Brock, an attendance improvement programs administrator for elementary schools at the San Jose Unified School District.

"Until about two or three years ago, nobody even brought that up. And for me, when I started this program, which has become my passion, it's about kids getting to school, getting fed, getting health care, getting their vision checked, getting their hearing checked, having counseling, getting their two meals a day and getting their education."... [Almaden Times]
Hey, education made the list!

This little bit of snarkiness via

Wednesday, January 26, 2005

The US Supreme Court says lawsuit plaintiffs can lose by winning -- thanks to our ever-growing friend, the Alternative Minimum Tax.

If you are planning to sue somebody, and either pay your lawyer a contingency fee or collect an award of legal fees from the other side, beware -- you'd better talk to a tax lawyer first, or you may lose to the tax man more than you win from the defendant.

The U.S. Supreme Court on Monday upheld an IRS interpretation of the tax law that can hit a court award with a tax bill larger than the amount the plaintiff wins in the case. The key here is something plaintiffs had better not overlook from now on: the Alternative Minimum Tax (AMT).

In a nutshell, the AMT was created by Congress in 1969 after it was publicly reported that on 1967 tax returns 155 people had paid no income tax in spite of having had income over $200,000 ($1.1 million in today's money) due to their use of various legal tax-reduction devices -- deductions, exemptions, credits and so on. (Congress received more complaining letters from the pubic about this that year than it did about the Viet Nam war.)

It was designed to make sure that everybody with high economic income pays some tax. Basically, it applies a flat 28% tax rate to income while not allowing most of the deductions, exemptions and other tax-reducing items allowed under normal rules. If one owes more tax under AMT than normal rules, one owes AMT instead.

Now, the thing that is introducing more of us to the AMT each year is that Congress has never indexed it to inflation -- so it affects persons at a lower income level each year. While originally targeted at persons with income over $1 million (in 2005 dollars) today the amount of income exempt from AMT is $40,250 on a single return and $58,000 on a joint return. Estimates are that by 2010 it will hit 30 million taxpayers, including the majority of those with income over $75,000.

But that will be then -- as to now, and Monday's court decision, the operative fact is that under AMT rules one of the deductions that is not allowed is that for legal fees. Under normal rules legal expenses incurred to receive taxable income -- such as a taxable court award of damages of some sort -- are deductible. But under AMT calculations they are not.

Now imagine you want to sue someone and hire a lawyer agreeing to pay a standard one-third contingency fee, so the lawyer gets one-third of any award you collect. Under the AMT you owe tax on the whole award, including the part you pay to the lawyer (even though the lawyer has to pay income tax on that too). The tax you owe relative to the part of the award you keep, using the 28% AMT rate, will be 42%. And if you live in a state that applies income tax of its own to the award you are out of luck there too -- another deduction not allowed under the AMT is the one for state and local taxes. So just slap the entire state tax bill on top. (Note that you don't just lose the deduction for state income taxes on the court award, you lose your entire deduction for state taxes -- for taxes paid on wages, property taxes, and all else.)

But things can be much worse than that. If one wins a lawsuit and also receives an award to cover the cost of legal fees that are large relative to the amount of damages received, one can find oneself owing the IRS more in tax than the damages one collected from winning the case.

In one noted example, a woman won an award of $300,000 in damages plus legal fees of $1 million and ended up owing the IRS $99,000 more than she collected from winning.

A celebrity victim of the AMT legal fees rule may well have been Paula Corbin Jones, in her case against President Bill Clinton. As James Serven of the University of Denver College of Law wrote at Tax Analysts...
" the widely publicized Paula Jones case, Jones reportedly obtained a settlement of $850,000 from President Bill Clinton but incurred attorneys' fees of almost $650,000. If she is considered taxable only on her net recovery of roughly $200,000, her regular tax liability would be approximately $72,000, and she would net $128,000 after taxes.

"However, if she must report the entire $850,000 award and deduct her attorneys' fees below the line, her AMT liability would be approximately $238,000, with the result that she would be $38,000 out of pocket for bringing the action.

"While this result seems harsh, it is simply the direct result of applying the unambiguous statute as written, a result that has been recognized by some courts as inequitable."
And it can be worse than that. Imagine that you bring a case and win on the law, but the judge finds you weren't really harmed by the wrong done and so grants you only a nominal $1 in damages. But because you were right on the law, the judge also gives you an award of all your legal fees. This happens too.

Victoria Herring, an employment discrimination lawyer in Des Moines, said she had a client who was awarded $15,000 in punitive damages and $1 in actual damages in a job discrimination case. The IRS billed him $67,791 for income taxes under the AMT, because a judge also awarded $170,000 in legal fees for Herring as a result of the extraordinary efforts the other side made to thwart her.

"My client won, but he is far worse off for having brought this case," Herring said.

These results did indeed strike some courts as inequitable, and some bought arguments that saved plaintiffs from this inequitable result while others did not. The result of that was conflicting rulings arising among the federal Courts of Appeals, leading to Monday's Supreme Court decision that resolved them.

And the gist of its decision (.pdf) was very simple: Congress made the law and if the law is broken it is up to Congress to fix it. Until it does, the law will be enforced as written. Too bad for winning plaintiffs with big legal expenses.

So now the question is, will Congress fix the law?

And the answer is: Congress has already acted on this issue -- in what seems to many a bizarrely dysfunctional manner.

In the just recently passed Jobs Creation Act of 2004 Congress explicitly recognized this problem and included new law permitting legal fees to be deducted under normal tax rules notwithstanding the AMT, but only in civil rights cases.

Hello? One blogging tax law professor compared this to having a ship sinking with 3,000 people on board, Congress receiving its SOS, and sending out rescue craft to save a few carefully selected passengers. But selected on what grounds? Campaign contributions? Having the most effective lobbyists? Setting the most effective example to encourage others who want the same treatment to make more campaign contributions?

Does this action by Congress mean it really wants other taxpayers to pay income tax on the reimbursements for legal fees they pay? No Congressional tax writer will say that (and they've been asked). But then why were plaintiffs in all other kinds of cases excluded? No Congressional tax writer will say that either.

Let's just say that judging by its actions of recent years, Congress really, really enjoys receiving the revenue it collects from the AMT in what effectively is still a surreptitious manner regarding the majority of taxpayers who remain unaware of it (until it is too late), and it isn't going to be giving up any of that revenue easily.

So the bottom line is this word of advice for any of you out there who may be considering suing anybody else: make sure you have a tax lawyer who is as good as your tort lawyer, and who is in on the case from the start. You are going to need them both.

Smart criminals of the week

A fine an example of how intelligence of a certain sort runs in families, noted for us by Roland Patrick...
Nicholas Coan, 28, was shot Friday night by his 27-year-old girlfriend during the latest of the couple's many arguments, police and witnesses said. The girlfriend was apparently angry that Coan had brought home a .40-caliber pistol and hadn't told her where he had been.

So, police said, Coan cocked the pistol and handed it to her. She took it and fired ...

Coan "looked at me and said, 'I can't believe she shot me,' " said Coan's roommate, Mathew Mitchell...
And what's Mom been up to?

Meanwhile, Coan's mother, Elizabeth Coan, 45, was arrested Sunday in a separate case and charged yesterday with solicitation of first-degree murder, solicitation of first-degree assault and solicitation of malicious placement of an explosive. She was also charged with two counts of solicitation of witness tampering, a gross misdemeanor.

According to King County prosecutors, Elizabeth Coan had asked Nicholas Coan to arrange the killing or intimidation of five witnesses in her pending identity-theft case... But Nicholas Coan, working with police, recorded several conversations with his mother ... [Seattle Times]
Hey, if you can't trust your own loving, sterling-character, flesh-and-blood son not to rat you out to the police on a murder-for-hire deal, who can you trust?

Tuesday, January 25, 2005

Homeless guy starts fire, knocks out subway service for five years

As of this morning the Eighth Avenue subway C train is out and A train service is cut by two-thirds, for up to five years. It looks like they may be changing the name of Ellington's song from Take the A Train to Wait for the A Train.

You've got to admire the strategic thinking that locates irreplaceable equipment serving 600,000 people daily where the homeless can burn it for warmth.

Five years?? It took only four years to build the entire original subway system back in the beginning.

Update: Now they are claiming they may get service back in a mere six months, although it will take five years to replace the equipment lost. Why millions of dollars worth of critical equipment was kept where a wandering vagrant could torch it, and related queries about lack of backup equipment and contingency plans, will be questions for another day.

An idea for Social Security reform that I hadn't heard before

An economist writes...
... there is only one real problem with social security: the declining ratio of earners paying in to receivers of payments.

This problem results from Congress and social security administrators treating the rules governing individual eligibility for entry into those two groups as two compartmentalized decisions, rather than the single joint decision which is necessary to make the scheme work.

In principle this is an easy thing to fix. If Congress stipulated that the ratio of earners to receivers would remain at some fixed ratio (say 3 to 1), and that eligibility to join the group of receivers would be determined by the availability of slots that did not decrease that ratio, then social security would be sustainable forever.

The beauty of this proposal is that it does nothing to diminish the importance of a national pension system for those who favor such things.

I daresay that there would even be a clamor for such a system if voters understood that receiving social security wasn't a right, but rather something that you had to wait your turn for.

[Via Carnival of the Capitalists]
At age 65, take a number and wait?

I don't know about that "clamor" -- but it sure seems like this would create an incentive towards making the idea of euthanasia more popular among the 50+ set.

I mean, I wouldn't want to be a retiree on life support with a 55-year-old doctor, lest the last words I hear be "Making room for one more!"

When good product names go bad

So much for the Toyota Tsunami. And all those companies with "Tsunami" in their names suddenly have a lot of concern about charitable giving on their home pages.

Wordlab blog has the story. [Also via the Carnival]

Monday, January 24, 2005

Americans save more for retirement than anyone else.

If the US is unprepared for the retirement of the baby boomers -- with the boomers saving too little and government retiree programs underfuned -- well, at least the relative good news is that across the rest of the world the situation is worse.

A new survey of people in 15 nations finds that Americans save more than anyone else for retirement, an average of $687 a month. Americans also start preparing earlier in life for retirement, in their mid-thirties.

In contrast, the savings figure for Italy is $208, the Netherlands $259, France $264, and Japan $381. On average people don't start preparing for retirement until they are in their 50s in Italy and Japan.

Perhaps not coincidentally, the nations where people save the least are those that promise the most generous government-paid retiree entitlement packages. While following the US at the top of the list of nations where people save the most are the other English-speaking nations of the "Anglosphere" where retiree entitlements are smaller.

Yet the much larger entitlement packages of the Continental nations and Japan don't seem to have made their people more happy with their retirement prospects.

For Americans, "the word 'retirement' evokes positive images and, compared to other countries, very few negative images". Americans are more optimistic about their level of retirement income -- and are more open to the idea of delaying retirement age if need be as a necessary reform, with only a minority objecting.

The less optimistic views in the Continental nations may result from their peoples' knowledge that they are more dependent on governmental largess (in France and Italy fewer than 10% report having a pension fund with an employer) -- and that their government entitlement programs are even more deeply underfunded and face even larger coming financial crises than the US ones.

The Continental nations are all atop the list of nations where the most people oppose reforms such as raising the retirement age -- and also atop the list of nations where the most people believe "major retirement reform" is coming.

Lincoln was gay? Well, New York's colonial governor was a transvestite.

A history lesson from the strangest place...

What a drag! The New-York Historical Society is covering up the identity of cross-dressing colonial governor Lord Cornbury.

The NYHS has a famous oil portrait of the gender-bending Cornbury, who was appointed governor of New York and New Jersey in 1701. But you wouldn't know it from the plaque mounted next to the painting, which identifies New York's original transvestite as an "unidentified woman."

Lila Luce, wife of NYHS benefactor Henry Luce III, whose Center for the Study of American Culture houses the portrait, tells PAGE SIX she noticed the omission only recently: "We were looking forward to seeing Lord Cornbury and there it was, but it said it was a portrait of an unidentified woman, which is absolutely extraordinary. He's got a five o'clock shadow! If they said this was the bearded lady, that would be one thing..."

Cornbury's lurid legend began one night in the early 1700s, when a constable arrested what he presumed was a prostitute walking along Broadway. But when the suspect was brought to the stockade, it turned out to be the governor, who enjoyed taking evening strolls in his wife's clothes.

Cornbury also had a fetish for ears, and told visitors to state functions that they were free to fondle those of his wife.

Cornbury's wacky ways eventually cost him his job. He was removed from office by Queen Anne in 1708, and was later thrown into debtor's prison until receiving a sizable inheritance from his father's estate. It enabled him to buy his way out of jail and return to England, where he served in the House of Lords.

Apparently he enjoyed not only strolling in his wife's clothes but also sitting for portraits in them. A model from history for the Christopher Street crowd.

[There is another side to the Lord Cornbury story, but this one's the most fun.]

Sunday, January 23, 2005

Social Security posts.

The most read posts on this site (apart from those on the Mafia and sex) have been the ones relating to Social Security.

Until a decent general index gets added to this place I'll be keeping a list of them here, so they remain available after they scroll off the main page.

These are in the general order of the number of views and links to them, and so presumably in the general order of interest...

[revised 5/6/05]

Social Security, future economic growth, and stock returns. (link)

Is the Social Security Trust Fund worth less than zero? Are the "savings" in it actually worsening budget deficits as we speak? (link)

You thought the 2004 federal deficit was $412 billion? How about $11.1 trillion, by the accounting rules the private sector uses. (link)

NY Times employees get a small taste of the future of Social Security and Medicare. (link)

Social Security privatization basics: How can privatization possibly help? (Or: The "transition cost" fallacy's ugly head rises once more and needs to be chopped off yet again.) (link)

Are promised Social Security benefits a real obligation of the US government, or are they not? Democrats say "yes!" as Democrats say "no!"... (link)

How much will federal income taxes have to increase by the year 2030 to fund Social Security and Medicare -- if benefits aren't reduced instead? Answer: By more than 60%. (link) ... Updated

Paul Krugman commits a cardinal sin of logic regarding Social Security, and repeats it, and repeats it... (link)

Paul Krugman Dowds Jeremy Siegel on stock returns versus bond returns. (link)

Paul Krugman tells a fib in black and white. (link)

Why does the White House keep undercutting its own case for private Social Security accounts? Isn't Karl Rove supposed to be a genius? (link)

The White House undercuts its own case for private accounts in Social Security, part II. (link)

An answer for Michael Kinsley about Social Security -- made in four points, with a question going back to him. (link)

Social Security reform: The simple reason why it's better to borrow to close the funding gap now rather than later. (link)

Social Security: The "Do Nothing Reform Plan" detailed. Feel free to attribute it to opponents of reform who have no plan of their own. (link)

On the nonsense about the Social Security Trust Fund guaranteeing payment of currently promised benefits -- or any level of benefits -- from 2018 on. (link)

How big will the US economy be relative to the rest of the world 75 years from now? Still a giant? Or merely what Sweden is to Europe today? (link)

In anticipation of Michael Kinsley's new & improved proof that Social Security privatization can't work. (link)

What Krugman forgot to mention about the cost of private accounts in Social Security. (link)

Economics lessons cribbed from other blogs. (link)

The Social Security debate's Lewis Carroll arguments, part one: the catastrophe of defaulting on one's debt to oneself. With puzzles for readers. (link)

Imperial Overreach (link)

This Social Security crisis of ours could have unexpected consequences! (link)

OK, that's it. Until I get more news of Joe Massino or pictures of Tara Reid these will have to do. Enjoy.

Saturday, January 22, 2005

Manhattan blizzard blogging

Seventh Avenue looking uptown from 16th St., around 9 pm...

and downtown...

The little white dots are snow ... the big ones too, after they hit the camera lens and melt. The snow was blowing into the camera facing uptown.

Yeah, they're not the greatest pictures -- but I'm an amateur and there's a blizzard going on. And this whole blog is only an experiment.

Around 15 inches with winds up to 50 mph predicted. But the forecasts are always wrong, in one direction or the other.

Update, following day: The NY Times has much better pictures (well, they can afford it) accompanying this story. But they seem to have misnamed the slide shows -- the "across the nation" one is NYC, and the "digging out" one is across the nation. At least as of this writing.

As to "the forecasts are always wrong", I happened to read these words in today's paper...

Mother Nature won't let the city out of her clutches until this afternoon, meteorologists predict, after dumping up to 20 inches of powder on the city and lashing those who dare to go outside with winds as powerful as 50 mph...
... while pleasantly sitting outdoors around noon under a clear blue sky, enjoying a cup of coffee, with nary a breeze to rustle the pages of the sports section.

All right -- which of you is the one trolling for a 20-year-old sexy girl with an e-mail address in Sri Lanka?

You know you're out there. Scanning through the server logs one sees the searches that bring people here, and the one of the day was a Google search...

"sexy + girls + Sri Lanka + over 20 years old + have a e-mail address."

This is not that kind of web site! Oh, wait, I guess it is since Google produced it. And the guy (presumably a guy) came here to check it out. After going through 43 pages of Google listings -- this one was 423rd on the list. I have to think he went to all of them if he clicked on this one.

You know who you are. Sorry to disappoint.

Another interesting thing was a surge of Google searches on "Alexandra Christman", Ben Kingsley's wife, which brought a whole bunch of people to this little space-filling gossip item from a while back. Why? I did a Google news search on her myself and nothing came up. But something's up with her, some gossip is circulating somewhere.

And inexplicably to me the single most lastingly popular post in this whole blog remains the one about the bumbling mafiosi posted way back last June to test cut-and-paste from the NY Post's web edition to Blogger. This just keeps drawing people, through searches and people who link to the post. But why?

Never question what the customers want. I may convert this blog to a Mafia fan site.

Is Israel threatened more by its own statist economy than by its avowed enemies and terrorism?

Somebody who might know thinks so...

Official: Economy Threatens Israel More Than Terror

The former chairman of Israel's National Security Council warned yesterday that the "real threat" to the 56-year-old Jewish state comes not from Islamic terrorists or Palestinian guerrillas but from a high unemployment rate, an insipid annual economic growth rate, corruption, social inequality, and the deteriorating quality of general education.

"The combination of these elements constitutes the biggest threat that Israel is facing - and it's time that we got our act together," the current president of the Zionist Council in Israel, Uzi Dayan, told The New York Sun in an interview.

"I am not worried about whether Israel will continue to exist. The world need not fear that our Jewish democratic state will be extinguished. What worries me is what kind of existence we are going to have, what kind of society we are going to bequeath to our children."

His worries, Mr. Dayan said, flowed from a study of statistics that suggested that Israel's economic well-being may be endangered. For example, he said, there was a cumulative drop of 6% in per capita income, starting in 2000 and continuing through the end of last year.

While living standards in OECD's seven wealthiest industrial countries - America, Britain, Canada, France, Germany, Italy, and Japan - rose by 82% between 1973 and 2003, they increased in Israel by barely 48%, added Dan Ben-David, professor of economics and public policy at Tel Aviv University. Mr. Ben-David accompanied Mr. Dayan on his trip to New York to brief policy-makers...

He said he was particularly troubled by the fact that Israel allocated more than $12 billion of its $45 billion budget on social expenditures, such as subsidized housing and welfare payments to the unemployed - almost 25% more than the figure spent on defense. The country's unemployment rate has been rising steadily since 1973, when it was 3%, to nearly 11% in 2004.

"More than one-third of Israeli families have fallen below the poverty line," Mr. Dayan said ...

Mr. Ben-David said that while it was customary in many Israeli circles to apportion the country's economic woes to the Palestinian Arab intifada ... the economic deterioration began "well before the intifada." ...

Since Israel's founding in 1948, America has given it more than $100 billion in aid, averaging around $2 billion annually. American economic assistance to Israel accounts for almost a third of the aid it provides to developing countries ...

In addition to bilateral assistance, Americans give Israel $1 billion in private philanthropic assistance, as well as another $500 million worth of Israeli bonds. Israel also typically gets short-term commercial loans from American banks of about $1 billion a year.

"The problem is not lack of public money," Mr. Dayan, who has served as an adviser to Prime Ministers Sharon and Barak, said. "The problem is a lack of direction." [NY Sun]

I can see your house. And downtown Kabul.

This new Keyhole satellite imagery-and-data program from Google is truly nifty.

Who knew that the top of the White House is brown?

Friday, January 21, 2005

Krugman Dowds Jeremy Siegel, amid other deception and foolishness.

Yet again Paul Krugman attacks private accounts for Social Security with the claim that returns in stocks will be not high enough and "risky".

And yet again he willfully fails to mention how these not-high-enough returns compare to the negative returns that are assured for today's young workers from Social Security as it is -- as per the numbers from Social Security's actuaries presented here before.

But today he tops such rhetorical misdirection with this outright ... well, what shall we call this?

Krugman invokes the Kinsley argument that going forward returns on stocks will 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 most 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 so that stocks cease to be a more attractive investment than bonds, Krugman quotes Jeremy Siegel arguing exactly the opposite in Forbes, making the case for stocks as a better long-term investment than bonds.

You know, at least Maureen Dowd puts in ellipses [...] where she cuts the words in a quote that reverse the meaning she attributes to it. Do you suppose Krugman might have put in a trailing ellipses for the part of the Siegel quote he cut...
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..."

And by the way, the fall to a "5%-to-6% return on stocks" that Siegel projects in that quote is a fall all the way down from 6.7%. Krugman doesn't give those numbers either.

Does "honest in argument" describe Paul Krugman?

You decide.

As to Kinsley's argument, it was recapped with a couple observations here previously (and before that, in more detail). Does it impress you as much as it does Krugman? You can decide that for yourself as well.

Thursday, January 20, 2005

An itch one can't scratch.

After a morning session with the dentist I return to my office with a jaw so novocained one could stub out a lit cigar on it without my feeling anything.

A little while passes and I get an itch on my jaw, so I scratch it. But I can't feel myself scratch it.

What's this? I can feel the itch but I can't feel the scratch!

Is this some relation to phantom limb syndrome? The itch I feel on my jaw actually is in my head while the scratching sensation that would relieve it comes from my jaw, but can't because all the nerves there are numb?

I have no idea.

But if the Pentagon really is looking for a non-violent method of torture, I have a suggestion.

Satanist is victim of bias attack.

NY Post:
A proud Church of Satan member got a hellish beating during an alleged bias attack in Queens, authorities said yesterday.

Daniel Romano, 20, of Elmhurst, was walking back from a laundry near his home on Sunday when three men drove past him and yelled "Hey, Satan!" The group leaped out of the car and jumped Romano in front of 6001 72nd Street shortly after 2 p.m., police sources said.

Romano — who dyes his hair blue, wears black nail polish and displays an upside-down crucifix at his throat — was punched, kicked and struck in the head with an ice scraper and a plumbing pipe, according to the complaint and law-enforcement sources.

A couple of months ago, Romano, who is in the process of becoming an ordained minister, had boasted to the trio that he was a devil worshipper and belonged to the Church of Satan, police sources said...

Later that night, detectives from the Hate Crimes Squad, believing Romano was targeted because of his religious beliefs, busted two suspects: Paul Rotondi, 18, of Howard Beach, Queens, and Frank Scarpinito, 18, of Ridgewood, Queens.

Rotondi and Scarpinito pleaded not guilty yesterday to charges of fourth-degree criminal possession of a weapon, second degree aggravated harassment and second degree assault as a hate crime, which carries a stiffer penalty than a traditional assault charge...
Now, once you extend legal protection against bias-motivated crimes to one group you have to extend it to other self-identified groups or, well, you are biased.

Suppose a person gets beaten up solely because he's a Communist. It's perfectly legal to have the beliefs of a Communist in this country. Even of the Stalinist variety. So that would seem a bias-motivated crime. And if it's so with a Stalinist why wouldn't it be so with, say, a Neo-Nazi?

I'm waiting to read the Post headline:

White Supremacist Victim of Bias Crime

MIT girl has hissy fit.

Harvard's President forgets to be delicate with the ladies and pays the price.

Full coverage at Scrappleface.

Steven Pinker opines.

One million Rwandans charged with genocide.
KIGALI - An estimated one million Rwandans -- an eighth of the population -- are expected to face charges in traditional or "gacaca" village courts trying perpetrators of the 1994 genocide, says an official... [Reuters]
Imagine 37 million Americans being charged with murder.

Wednesday, January 19, 2005

Question: How much will federal income taxes have to increase by the year 2030 to fund Social Security and Medicare -- if benefits aren't reduced instead?

Answer: More than 60%.

Hey, I wrote this before but some people didn't believe me. Yet the number is simplicity itself to compute, so I'll show it right here.

First, though, why the year 2030?

Well, it's right in the middle of the period in which the Social Security Trust Fund bonds are projected to be being redeemed -- from 2018 to 2042 -- during which so many defenders of the Social Security status quo tell us there will be no problem, all promised benefits are assured.

Also, it's not so far in the future, only 25 years from now. Most people reading this fully expect to be still walking around then. Which means we -- us, you and I -- will either be paying these taxes or depending on somebody else to pay them so that we can get the benefits we've had promised to us and will be depending upon and surely desire.

And, as it's not so far away, there's not a whole lot of uncertainty about it. The "what me worry?" rationalizations that defenders of the status quo produce about 75-year and "infinite" time horizon projections (who knows what will happen? it'll be our grandchildren's problem) don't apply.

Additionally, things get a lot worse after 2030, and I don't want to incite panic and hysteria.

Anyhow, here's how easy it is to figure this number -- although I'll wager you haven't read it anywhere else, not in any newspaper editorials, or in Paul Krugman's column, or from bloggers like Kevin Drum, or anywhere.

Step 1: We look at how much general revenue is spent on these programs today, in terms of GDP.

The Social Security and Medicare Trustees give this number right out (along with the other spending numbers we will use). Currently the amount of net general revenue spending for these programs is 0.36% of GDP.

This consists of -0.56% (a surplus contributing to general revenue) from Social Security, a 0.02% of GDP cost for the Hospitalization Insurance (HI) portion of Medicare, and a 0.9% of GDP cost for the Supplemental Medical Insurance (SMI) portion of Medicare.

Note that both Social Security and Hospitalization Insurance are funded with payroll taxes that have been used to finance Trust Funds that hold federal bonds to finance future benefits. The up-to-15.3% in payroll taxes subtracted from every paycheck consist of 12.4% Social Security tax on the first $90,000 of wages (in 2005) plus 2.9% of HI tax on all wages.

SMI-Medicare in contrast is funded straight from general revenue -- income taxes.

Of course, the redemption of the bonds held in the Social Security and HI-Medicare trust funds to finance future benefits will be financed straight from general revenue -- income taxes -- too, and that's part of the future fiscal rub.

But the starting-point number to remember is that these programs consumed general revenue equal to 0.36% of GDP in 2004.

Step 2: We learn how much general revenue these programs are projected to consume in 2030, in terms of GDP.

The trustees give us this number as well: 5.69% of GDP.

Breaking this down we see it consists of...

Social Security: 1.37% of GDP as the annual cost of redeeming trust fund bonds.

HI-Medicare: 1.06% of GDP as its cost in excess of payroll tax collections (the HI trust funds bonds will have long since been exhausted.)

SMI-Medicare: 3.26% of GDP.

Step 3: Taking the 5.69% of 2030 and subtracting from it the 0.36% of 2004, we find for 2030 an increase in general revenue financing needs of 5.33% of GDP from today's levels.

Step 4: We become able to convert all this into income tax terms by finding the percentage of GDP that income tax collections constitute today.

From the Bureau of Economic Analysis we learn that GDP for 2004 was $11.8 trillion at an annual rate in the third quarter of 2004 (the latest number available, and also the quarter in which the government's fiscal year ends). We also see that total personal and corporate federal income taxes were almost exactly $1 trillion. And thus we see that in our world today federal income taxes equal 8.5% of GDP.

Step 5: Finally, we figure the 5.33% of GDP increase in general revenue needed for these programs that will arise by 2030 as a percentage of the total actual income tax collections of today, 8.5% of GDP, and see the answer is 62.7% -- so we are talking of a 62.7% increase over today's level of income taxation.

Thus, to fund these programs in 2030 income taxes will have to be increased by more than 60% from their current level in the economy, or additional new taxes will have to be introduced as an alternative, or benefits will have to be cut by a corresponding offsetting amount.

QED. Simple.

For the record, here's how that 62.7% increase in needed income tax will be divvied up:

Social Security: 22.7 points of income tax (1.93% of GDP). This consists of 16.1 points of tax (1.37% of GDP) to pay down the Social Security trust fund bonds, plus 6.6 points of tax that the government will have to raise to 'stay even' by making up for the fact that Social Security no longer contributes an equivalent amount (0.56% of GDP) to general revenue after the disappearance of its surplus.

HI-Medicare: 12.2 points of income tax (1.04% of GDP)

SMI-Medicare: 27.8 points of income tax. (2.36% of GDP).

It's worth again remembering that the first two programs, Social Security and HI-Medicare, are financed by trust funds holding US government bonds -- and together they account for 34.9 points of the 62.7 point income tax hike fated for 2030.

Those trust funds are just a great help, eh?

That's our future as it stands, folks.

All this is based on the current best projections of the Social Security and Medicare Trustees. But might the fiscal future be different?

Sure it might. The fiscal condition of Social Security might be modestly better or worse 25 years from now -- but the demographics that drive Social Security are pretty much set over such a short time period, so any great shift from the projections either way is unlikely.

Medicare on the other hand is extremely complex with costs driven by demand. The Medicare Trustees are projecting future growth in expenditures per person that is below the average historical experience, and significant reductions below that seem unlikely. But there is real risk of much greater cost increases due to the uncertain economics of medical technology and potential explosive demand for it (not to mention the inefficiencies of politically directed administration and price setting and so on). Medicare is scary.

The next question is: will we all agree, well before 2030, to pay this 60%-and-steadily-rising income tax increase, to pay ourselves all the benefits we've promised to ourselves then and thereafter?

Or will we find ourselves voting to significantly cut these benefits, well before 2030, to save ourselves some of this tax cost?

Yes, voting even to cut Social Security benefits so early -- as incredulous as the defenders of the status quo and advocates of the trust fund (such as the likes of Paul Krugman and Kevin Drum and their friends and admirers and allies) are at the thought of it.

After all, if we're going to cut something -- maybe in a deal to raise income taxes by only 30% instead of 60% -- why would Social Security be sacrosanct but Medicare not?

If it was your choice, what would you rather lose -- some dollars of walking around money or your health?

And it will be your choice. So think about it now and prepare to lobby for the choice you want -- 2030 isn't so far away.

And while you're at it, you might think about prefunding today some of your Social Security benefits in a private account holding real investments that you own -- so those benefits, at least, won't be a cost to the government available to be cut in 2030.

Tuesday, January 18, 2005

See Dick and Jane sue.

NY Times...
See Dick and Jane shvitz. Shvitz, Dick and Jane, shvitz.

Pearson Education, the publishing company that owns the copyright to the Dick and Jane reading primers, has filed a lawsuit against a division of Time Warner in Federal District Court in Los Angeles claiming that the book "Yiddish With Dick and Jane" violates Pearson's copyrights and trademarks for the familiar characters.

The brisk-selling book examines adultery, drug use and other tsuris that afflict Dick and Jane as adults.
The video version on the web is pretty amusing, as was noted here previously.

When it was published in September by Little, Brown & Company, part of the Time Warner Book Group, Pearson was farmisht and did not take any action. After an Internet video promotion of the book began attracting hundreds of thousands of viewers and the book's sales topped 100,000, however, Pearson decided that the fun was over.

The book, by Ellis Weiner and Barbara Davilman, with illustrations by Gabi Payn, states on the front and back covers, spine and copyright page that it is a parody.

But the lawsuit says the book "is not a parody..."...

Bill Gates, teenage girls' pinup idol?

Did Bill Gates really do a photo spread for Teen Beat magazine in 1983?

I don't know. But that's the story circulating with these pictures, and they're cute enough for me.

Catch those sexy 5-inch disks!

Tsunami dries up local charities

New Yorkers are neglecting local charities in favor of appeals for tsunami victims, according to a new report.

Since the tsunami, contributions have all but dried up at Love Our Children, a New York group that battles child abuse and neglect, according to Crain's New York Business.

"Everything is at risk right now," Ross Ellis, the charity's chief executive told the magazine. "Wherever you turn now, it's, 'Give money to tsunami relief.' People just are not giving to anything else."

At Bailey House, a New York charity that helps homeless people with AIDS, the number of donations dropped by 50 percent since the tsunami. Executive director Regina Quattrochi told Crain's, "I hate to be put in this position of seeming like we're competing with other human tragedies for funding."

God's Love We Deliver — a charity which delivers meals to seriously ill people — lost about $5,000 from two donors who decided to instead give that money to tsunami aid... [NY Post]

We think we've found the cause of your toothache.
LITTLETON, Colo. — A dentist found the source of the toothache Patrick Lawler was complaining about on the roof of his mouth: a 4-inch nail the construction worker had unknowingly embedded in his skull six days earlier...

"This is the second one we've seen in this hospital where the person was injured by the nail gun and didn't actually realize the nail had been imbedded in their skull," neurosurgeon Sean Markey told KUSA-TV in Denver...

"The doctors said, 'If you're going to have a nail in the brain, that's the way you want it to be.'..." [AP]

Monday, January 17, 2005

Paul Krugman commits a cardinal sin of logic regarding Social Security, and repeats it, and repeats it...

That logical sin: looking at an option and condemning it without considering the alternative.

This is now the standard operating procedure of the defenders of the Social Security status quo who denigrate the higher returns that can be expected from real investments in private accounts as being "risky", "expensive" or whatever. As they do this, they never compare such returns to the expected returns from Social Security as they want to keep it. In a moment we'll see why.

Now Krugman is yet again banging out this tune on his one note drum. A little over three weeks ago he wrote in his column that the British system of private accounts is risky and has fees that are much too costly. In his most recent column he wrote that the British system of private accounts is risky and has fees that are much too costly. The difference? This time he quotes from an article in that impartial and esteemed* source of economic analysis, the American Prospect...

"Britain's experiment with substituting private savings accounts for a portion of state benefits has been a failure ...A shorthand explanation for what has gone wrong is that the costs and risks of running private investment accounts outweigh the value of the returns they are likely to earn.... Reductions in yield resulting from providers' charges can absorb 20-30 percent of an individual's pension savings."
Yes indeed. If one's investments earn a 6% average return and one pays an annual 1.5% fee -- entirely plausible -- then returns will be knocked down by 25% and the growth in one's savings will be reduced accordingly. Yes. So if you invest $1,000 when young in a private account that earns an average 6%, then 40 years later when you retire instead of having it grow to $10,286, due to that fee it will be a mere $5,816.

That's 43% less! Ouch!! We don't want to do that! But wait ... maybe we do?

To find out, let's consider the alternative -- the returns provided by the Social Security status quo -- before making up our minds.

The first thing we note in doing so is that the Social Security actuaries say that all annual cohorts of retirees after 2000 will get back from Social Security less than they contributed to it, using the federal bond rate as the discount rate. That is, all will lose money compared to if they had invested in the lowest-yielding, safest investment available, "risk free" government bonds. And this loss grows as the years pass.

Somehow, defenders of the status quo don't consider this loss a "risk" ... perhaps because it is a certainty? It is, as it results from the legislated tax contribution-to-benefit formula.

Now, within each annual cohort of retirees annual return varies according to personal situation (single, married, one-earner or two-earner couple, etc.) We can look at some specific examples.

The Social Security Administration's actuaries projected returns on contributions for the 1994 Social Security Advisory Commission. Here are some numbers for persons entering the work force in 1994 (they'd be about age 30 today).

These are actuarial present values (in 1994 dollars) for lifetime contributions to, and lifetime benefits to be received from, Social Security. Benefits include all benefits, not just retirement benefits...

Single males

low wage: taxes $39,024; benefits $38,004; - 2.6%

Does Paul Krugman, the concerned progressive, tell us that from now on even many of the poor will be made poorer by Social Security?

average wage: taxes $86,720; benefits $62,889; - 27.5%

maximum wage (taxable wage limit): taxes $208,124; benefits $99,789; -52%. Ouch!

Single females (women live longer than men, so they do a little less badly)

low wage: tax $40,778; benefits $46,025; + 12.9%

average wage: taxes $90,620 ; benefits $76,185; - 15.9%

maximum wage: taxes $217,430; benefits $120,801; - 44.4%

Note that among married couples if both spouses work and have near-comparable incomes each will receive benefits on their separate work records -- so these "single" amounts substantively apply to many married persons too.

The relative big winner under Social Security is the working husband with a non-working spouse -- the standard family structure when Social Security was created -- due to the spousal benefit that provides benefits for two lifetimes on one earnings record...

Married male with family

low wage: taxes $39,024; benefits $77,963; +99.8%

average wage: taxes $86,720; benefits $129,863; +49.7%

maximum wage: taxes $208,124; benefits $205,916; - 1.1%

.... but note that even here, less than doubling one's money over 40 years is a pitifully low return, less than 2%. One can get that difference over government bonds just by buying high-grade corporate bonds, with no risk on stocks at all.

And even the most favored person in Social Security, the male bread-winner with the stay-at-home wife plus kids, loses money to Social Security if his income is as high as $90,000 -- which isn't exactly "rich" for a person supporting a non-working wife and children.

Of course there are other personal scenarios in Social Security: if you die before retirement age you take a 100% loss on your retirement benefit. If you are married and work to bring in the family's second income, but your lifetime earnings are low enough so that you claim benefits on your spouse's earning record, you take a 100% loss on the taxes you paid. If you end a marriage in less than 10 years you may take a big loss of benefits ... (These are not risks?)

But when you wrap them all up the actuaries say everybody combined takes a loss compared to investing in government bonds, from this day forward forever more, and the loss grows larger every year.

And NOTE THIS: Even the returns given above for Social Security are all underfunded by 30%. And if this funding gap is closed on a "paygo" method -- through the mix of 'modest tax increases and benefit cuts' as recommended by Krugman, the editors of the NY Times, and other such defenders of the status quo -- then by the Iron Laws of Arithmetic those returns must drop another 30%. (For either a tax increase or a benefit cut further reduces the ratio of benefits to taxes.)

Now the low-income male instead of suffering a 3% loss suffers a more than 30% loss ... the average-wage woman scheduled to take a 15% loss takes a 40% loss ... and the high-wage workers scheduled to take a 50% loss take a 65% loss.

(Maybe now that investment earning 6% that merely quintupled one's money after being knocked down by that heavy 1.5% fee looks at little better?)

There is no way around this if Social Security remains as it is. This is its future. Indeed, there is a real risk that benefits will be reduced by more and sooner.

So perhaps we begin to see why those who condemn returns in private accounts as being too low and risky never actually compare them to the returns guaranteed to today's young workers from Social Security.

Hey, let's be considerate and do that job for them:

Historically, stocks have provided an average real return 5 points above government bonds. But let's say one's private investments earn much less than that, only 3.5 points. Perhaps one is unlucky, or diversifies across lower-return investments such as corporate bonds (even government bonds) for safety.

Now let's take a realistic annual expense rate from real-world American experience -- noting how Krugman searches the globe to cherry pick investment programs that he can most easily present (or misrepresent, various folks would say) as examples of failure, while carefully ignoring successfully managed retirement investment programs that are actually running right now here at home in the U.S. He wouldn't want anyone to form an opinion by looking at those!

Let's take as our model the Federal Thrift Savings Plan which right now manages private retirement investments for government workers with a 0.1% expense rate. If it's good enough for government employees one would think it's good enough for the rest of us.

OK, from our conservative 3.5% annual return we subtract 0.1% to get 3.4%. That's hardly the huge return from stocks that some people talk about. But still, using the bond rate as the discount rate, over 40 years: $1 invested in a government bond gives us $1 ... $1 invested at 3.4% over the bond rate gives us about $3.80 ... and $1 contributed to Social Security gives us less than $1.

Wouldn't it be nice if our low-wage young male worker could get back more than only 98 cents -- or maybe as little as 70 cents (after the funding gap is closed) -- for every $1 he pays in taxes to Social Security? Like a private account that delivers a mere $3.80 would provide?

This is the comparison that Krugman and the other defenders of the Social Security status quo never make -- and the question they never ask, as "progressive" and concerned for such low-wage workers as they pose at being.

Paul Krugman believes private investments are too risky and expensive to place in retirement accounts. It follows he must be saddened that he can't invest more of his own retirement savings in Social Security, rather than be forced to manage them himself at such great risk and expense as he does now. But I will make an offer to cheer him up!

Here's the offer: He sends me his retirement money. I will guarantee him -- pledging my home and all other assets as collateral -- that I will pay him on those funds the exact same less-than-the-federal-bond-rate return that Social Security assures today's young workers. And I will charge him no fee for this service!

Instead, I will merely invest the funds he sends me in a broadly diversified portfolio of market investments, and hope to eke out some return for myself from the difference between market returns and the sub-federal-bond-rate I must pay him. I will assume all the risk! On his behalf.

If he's serious in his beliefs, he'll e-mail me.

In fact, if Krugman is right, my offer will be universally attractive and I'll make it to anyone. I'll market it to everyone! I've found a market failure to exploit! I'll set up a mutual fund to safely duplicate Social Security-level returns, and wait for the cash to come pouring in from all those who only wish they had a safe, risk-free, efficient way to lose money on the way to retirement...

Nah, I don't think so, that's being disingenuous, I'm just kidding.

The other aspects of Krugman's non-kidding disingenuousness on this subject in his column of three weeks ago, in all its glory, were covered previously.

* fn. I'm teasing, of course. Going to the American Prospect's masthead right at the top we see the names "Robert Kuttner" and "Robert Reich" -- two fellows Krugman famously used to savage on a regular basis for what he deemed their analytical incompetence and factual ignorance regarding things economic. You'll have no trouble googling up some enjoyable exchanges.

Now Krugman recycles completely credulously -- breathlessly, even -- material they provide as the proof of his own beliefs. It seems the overwhelming liberal political imperative to assure that even low-wage workers will be made poorer by Social Security creates strange bedfellows.

Saturday, January 15, 2005

"Deep Impact" launches for real.
NASA Launches Spacecraft To Smash a Hole in a Comet

A NASA spacecraft with a Hollywood name - Deep Impact - blasted off yesterday on a mission to smash a hole in a comet and give scientists a glimpse of the frozen primordial ingredients of the solar system.

With a launch window only one second long, Deep Impact rocketed away at the designated moment on a six-month, 268-million-mile journey to Comet Tempel 1. It will be a one-way trip that NASA hopes will reach a cataclysmic end on the Fourth of July.

"We are on our way," said an excited Michael A'Hearn of the University of Maryland, the mission's chief scientist...

Scientists are counting on Deep Impact to carve out a crater in Comet Tempel 1 that could swallow the Roman Coliseum. It will be humans' first look into the heart of a comet, a celestial snowball still containing the original building blocks of the sun and the planets.

Because of the relative speed of the two objects at the moment of impact - 23,000 mph - no explosives are needed for the job. The force of the smashup will be equivalent to 4 1/2 tons of TNT, creating a flash that just might be visible in the dark sky by the naked eye in one spectacular Fourth of July fireworks display.

Nothing like this has ever been attempted before.... The resulting crater is expected to be two to 14 stories deep and perhaps 300 feet in diameter....

The scientists came up with the Deep Impact name independently of the movie studio, around the same time, neither knowing the other was choosing it, even though some members of NASA's Deep Impact team were consultants on the picture.

Deep Impact is carrying the most powerful telescope ever sent into deep space. It will remain with the mother ship when the copper-fortified impactor springs free... [NY Sun]
The NASA Deep Impact site... and cool "play with 'em" graphics over at the University.