Monday, February 28, 2005
Satisfied now, Thomas?
PARKERSBURG, W.Va. Feb 26, 2005 — The Social Security trust fund really does exist -- nestled in the bottom drawer of an unremarkable government file cabinet.
It's in a pair of white loose-leaf notebooks holding plastic page covers.
Each caresses a piece of paper representing a bond worth a staggering amount of money. Say, $8,577,396,000.00 ($8.577 billion), due on June 30, 2013, with 6.5 percent interest.
"The paper is symbolic," says Pete Hollenbach, spokesman for the U.S. Bureau of Public Debt, the creation of a 1994 law that anticipated the current debate about Social Security's solvency and whether the trust funds held anything more than IOUs.
As the computer era flowered, Congress passed legislation requiring the Treasury to create a "physical document in form of bond, note or certificate of indebtedness, rather than accounting entry."
"I viewed it as somewhat Biblical ... like doubting Thomas," says Andy Jacobs, the former Indiana congressman behind the law.
In an interview, Jacobs said he wanted to rebut the "disingenuous assertions" that there was no trust fund, even though there was, in fact, no vault stuffed with cash to pay benefits... [AP]
Steroids in baseball during the 1980s.
There weren't any. So say members of the 1986 Mets World Series Championship team who got together this weekend in New York to promote the opening of the new season.
No steroids for them?
That's as easy to figure out as turning on a TV.Yes, probably.
"All you have to do is watch our games on ESPN Classic," said Ron Darling, noting how much smaller players looked.
Darryl Strawberry said, "We weren't juicing up. We were a bunch of drunks, probably." [NY Post]
Ah, memories of baseball the way it oughta be.
No publicity is bad publicity, as long as they get the name right.
It looks like Barnum was on the money even for the electronic age.
And, of course, we all remember how Paris Hilton herself gained the celebrity to become a celebrity endorcer.
Socialite's nightmare is a cell phone company's dream.
T-Mobile stores in New York are selling out of Sidekicks (a handheld device that stores information online) despite — or more likely, because of — the fact that celebrity phone numbers and naughty pictures were stolen off one belonging to bad-girl heiress Paris Hilton.
"We had an unusually high demand this week," said one Manhattan store employee.
The fact that Hilton currently appears as a celebrity endorser in TV commercials for the Sidekick only added to the attention.
If it turns out that an X-Rated video of Fred Durst that was posted online Friday also came from a Sidekick (the source is unclear), the company will enjoy the kind of brand recognition you can't buy these days.
Marketing experts say T-Mobile, far from being embarrassed, should spoof the incident.
T-Mobile wouldn't be the first company or product to gain widespread exposure through an infamous incident, high-profile crime or compromising situation. The history of marketing shows that such notoriety rarely results in damage to a brand, and more often than not helps.
Chicken of the Sea signed pop star Simpson as a spokeswoman after she seemed puzzled as to whether it was tuna or chicken on an episode of her reality show "Newlyweds."...
... the O.J. Simpson trial helped put Bruno Magli shoes on the map. The company's sales shot up 30 percent after prosecutors claimed Simpson wore the shoes, and Simpson denied it ... . [NY Post]
The future of Europe, such as it is...
Three years ago The Economist in a special report looked at the demographic differences between Europe and the US, and the implications thereof.
Its conclusion was that the future of Europe is dimming, while that of the US is still glowing...
"In other words, you ain't seen nothing yet. These trends suggest that anyone who assumes the United States is now at the zenith of its economic or political power is making a big mistake.Now, as French unemployment hits 10%, the subject is making its way in a perfect little storm across the blogosphere, and even the mainstream media.
"There are plenty of other ways in which America could weaken itself economically or politically, but demography will offer a fine basis for future growth, and strength...
"In short, the long-term logic of demography seems likely to entrench America's power and to widen existing transatlantic rifts.
"Perhaps none of this is altogether surprising. The contrast between youthful, exuberant, multi-coloured America and ageing, decrepit, inward-looking Europe goes back almost to the foundation of the United States.
"But demography is making this picture even more true, with long-term consequences for America's economic and military might and quite possibly for the focus of its foreign policy."
Mark Steyn (if you don't read him, you should if only for the fun of it) expands in Austin Bay's comments section upon some thoughts he expressed in a recent column...
That was edited -- as they say, "go read the whole thing".
... right now, the only European country breeding at replacement rate is Muslim Albania.
Declining population isn’t necessarily a problem - my own New Hampshire town, for example, survived a 130-year population decline from 1820 to 1950 ... But New Hampshire’s entire social structure wasn’t founded on a welfarist model dependent on continuous population growth to sustain state benefits...
There are two ways you could deal with this - either reform of the welfare states or massive immigration higher than America at its pre-World War One immigration peak. No European politicians have the courage to address the former (openly), so they’ve signed on to the latter (silently).
In the end, the idea of using the Third World as your surrogate mother isn’t a long-term solution either: in 2020, a skilled educated Indian, Chilean, Chinaman, Singaporean will be able to write his own emigration ticket anywhere on the planet. Is it likely he’ll want to choose a part of the world where the basic tax rate will be 60%?
That means Europe will be almost wholly dependent on the Muslim world for immigration - and one of the features of super-tolerant anything-goes post-Christian Europe is that it radicalises hitherto moderate Muslims.
Look at the number of Islamist terrorists who are creatures of the Euro-Canadian welfare systems - Richard Reid the shoe bomber, Zac Moussaoui, Ahmed Ressam, even Mohammed Atta’s political character was formed in large part by his time in Germany.
A senior Dutch cabinet minister told me in 2003 that what really scared him was that young Dutch Muslims were more Islamist and less assimilated than the grandparents who’d arrived in the early Seventies....
There are two likely longterm outcomes of all this:
a) Europe will simply become Muslim, as is already happening in secondary Scandinavian and Benelux cities;
b) ... Europeans will see their declining economic fortunes, increasing crime, unaffordable welfare systems, etc, within the context of their demographic transformation, and some will react in the traditional European way - ie, violence, massive destabilisation, etc. Will this work in the long run? I doubt it. Like the “Take Back Vermont” campaign of five years ago, once you’re talking about taking it back you’ve already lost it...
... we’re already seeing the start of a continent-wide equivalent of the “white flight” from US cities in the Seventies: the Netherlands is now a net exporter of its own people.
So: you tell me how we get to the happy ending.
Progressive secular welfarism is a great life - but only for a generation or two. After that, it’s a death cult.
Meanwhile, Steyn has come out with a follow-up column, and the NY Times on the same day runs a story on white flight from the Netherlands.
And, simultaneously, a much longer article observing the Dutch situation in a good deal more detail appears in London's Sunday Times Magazine, offering among its lessons that this is what happens when a major tide of Muslim immigrants arrives in a nation with a society grown so permissive that ...
a magistrate ruled recently that an armed robber was entitled to a tax rebate on the cost of his gun as a tool of his trade-- a bad combination, that.
My own personal friends and aquaintances in Germany and Sweden say much the same: the Swedes telling stories of Muslims that fit right with the above, and the Germans saying they they need immigrants but all the first-class ones go to what is still the land of opportunity, America -- Germany has grown uncompetitive even at attracting immigrants.
This is all well-worth remembering when facing up to the US's own social problems and future challenges in financing Medicare, Social Security and so on while maintaining growth and competitiveness in future generations.
Those are real enough, to be sure -- but the comparable problems facing Europe and Japan are much worse. (And those already in the pipeline for China may be worse yet, but that will be for another post).
So don't get down on the US just because it has some problems, while neglecting the larger perspective.
As The Economist said, it may well be that "you ain't seen nothing yet", the best for the US remains yet to come.
Sunday, February 27, 2005
First civil rights lawyers argued that there should be equality between the races. Then they argued for preferences between races. Now they want to pick "first among equals" within races...
More Africans Enter U.S. Than in Days of SlaveryAnd now we see the argument for race based affirmative action, as opposed to the need based variety, turning to devour its own tail.
Since 1990, according to immigration figures, more have arrived voluntarily than the total who disembarked in chains before the United States outlawed international slave trafficking ... and more have migrated here ... than in nearly the entire preceding two centuries...
"Historically, every immigrant group has jumped over American-born blacks," said Eric Foner, the Columbia University historian. "The final irony would be if African immigrants did, too."...
Many speak English, were raised in large cities and capitalist economies, live in families headed by married couples and are generally more highly educated and have higher-paying jobs than American-born blacks...
[But] the growing proportion of immigrants may further complicate the debate over programs envisioned to redress the legacies of slavery...
Professor Charles J. Ogletree Jr., who teaches at Harvard Law School and has warned colleges and universities that admitting mostly foreign-born blacks to meet the goals of affirmative action is insufficient.
"Whether you are from Brazil or from Cuba, you are still products of slavery," he continued. "But the threshold is that people of African descent who were born and raised and suffered in America have to be the first among equals."... [NY Times]
Students do better with teachers of their own race, says NBER study.
Teacher's Race May Play a Role in Student Achievement
Matching students with teachers based on race may improve pupils' academic achievement, according to a new study released by the National Bureau of Economic Research.
The paper, titled "The Market for Teacher Quality," uses statistical and economic analysis to investigate differences in teacher quality and what accounts for them. The bureau, based in Cambridge, Mass., is a nonprofit, nonpartisan economic research organization.
The study, which was first made available last Friday, was written by a Hoover Institution fellow, Eric Hanushek; a professor at Amherst College, Steven Rivkin, and the University of Texas at Dallas's Daniel O'Brien and John Kain.
... For example, the researchers concluded that on average black students with black teachers "would be boosted 2-4 percentile points," Mr. Hanushek said in an e-mail.
"What we concluded, holding constant the overall quality of the teachers, was that it did make a difference that black kids have a black teacher, and white kids have a white teacher," he said in a telephone interview yesterday.
"What policy should come from that," he added, "is not obvious."... [NY Sun]
The precocious spy?
The Times today carries the obituary of Robert W. Kearns, former Professor of Engineering at Wayne State University, who passed away at age 77.
Dr. Kearns' claim to fame was winning one of the most famous of patent cases where the little guy took down the big guys. He invented and patented the intermittent windshield wiper mechanism for use in light rain or mist and tried to interest the big auto makers in it, but they all rejected his idea. Then when they all afterward installed intermittent wipers on their cars he sued them all for patent infringement and took them all for the big bucks. But that's another story.
The obit says Dr. Kearns had a second accomplishment:
He was a member of the Office of Strategic Services, the forerunner of the Central Intelligence Agency, during World War II.Hmmm... Given his age of 77 this year (birth confirmed at March 10, 1927) he was 14 years old on the date of Pearl Harbor, didn't turn 18 until two months before the war in Europe ended, and still was only 18 when the OSS was dissolved in October of '45. So I assumed the OSS reference was a mistake.
But apparently not, for it is in other reference pages about him as well, and he even later served as a member of the Board of Directors of the Veterans of the Office of Strategic Services.
So enough about windshield wipers -- what does it mean to be "a member of the Office of Strategic Services" at age 17? (or 16? 15??).
My first guess would be something like he enlisted in the Army young and got assigned to an OSS mail room sorting letters -- but does that make one a "member", and set one up to be on the future Board of Directors of the Veterans group along with Bill Casey?
No further explanation given. Throw away lines like that in obits drive me batty.
(Maybe it was his OSS bretheren who arranged to get all that money out of GM?...)
Saturday, February 26, 2005
Road Kill candy becomes road kill
New, cool shape from Trolli! Gummi Trolli brings back the fun of Gummi Candy with an off beat twist on animal shapes.
Trolli Road Kill is three animals: a snake, a chicken and a squirrel, each with a tire track down the middle of the piece!
It's not an adult's gummi candy, that's why teens/tweens love it!
TRENTON, N.J. (AP) - Production of candy shaped like roadkill has come to a screeching halt. The decision, announced Friday by Kraft Foods Inc., was the result of an outcry by New Jersey animal rights activists who said the candy encouraged children to be cruel to animals...
Kraft plans to stop production as soon as possible and then sell off remaining inventory, Baumann said.
The fruity-flavoured Trolli Road Kill Gummi Candy - shaped like flattened snakes, chickens and squirrels, complete with tire treads - hit store shelves last summer and was supposed to be another offbeat and unusual addition to Kraft's Gummi candy line.
But the nonprofit New Jersey Society for the Prevention of Cruelty to Animals thought differently. Earlier this week, it threatened petition drives, boycotts and letter-writing campaigns.
Stuart Rhodes, the organization's president, said he never thought his group's efforts would be so successful.
"Did I think it would happen as fast as I did? No..." [AP]
No joy for tweens.
Hey, whatever happened to those ruthless greedy capitalists of the good old days who would have run over their own mothers on their way to Latin America to destabilize a government for a buck? When did they become such intimidated weenies?
And as far this president of the Society for the Prevention of Cruelty to Animals is concerned -- do you suppose he might have used those "petition drives, boycotts and letter-writing campaigns" to save real animals, instead of candy ones, from being hurt?
How many real animals had to die for his humorlessness?
(Heh, heh, I would have enjoyed being in the product development meeting when they came up with the idea for that one.)
Anyhow, if you see any bags of candy road kill, stock up -- they're collectors items now.
An economist predicts the Oscar winner.
Why not? Economists are picking presidential races, running casinos, writing political columns, running baseball teams, and doing everything else in the world apart from economics.
So Professor Andrew Bernard of the Tuck School of Business at Dartmouth, fresh from predicting how many medals each nation would win at the 2004 Olympic Games, has produced his Index of Oscar Worthiness for the films nominated for best picture. (Notwithstanding his noting in today's Wall Street Journal that he hasn't seen any of them.)
To get the technical details follow the link. If you just want to see his odds before making a friendly wager with your friends, he gives the probability of winning the best picture award as...
The Aviator, 85%
Million Dollar Baby, 13.2%
Rest of the Field, 1.8%
Tradesports has The Aviatior at only 61%, so if you think you can believe an economist's back-tested data mining, get your money down!
Update: And the winner is ... Million Dollar Baby.
So much for data mining, back tested or not.
At least it wasn't Sideways.
X-Rated legal opinion of the week.
Sort of a
Man Can Sue Woman For Sperm Theft Distress
A woman accused of using her lover's sperm to impregnate herself without his knowledge can be held liable for the unwitting father's emotional pain, the Illinois Appellate Court has ruled.
In the ruling released Wednesday, a three-judge panel reinstated part of a lawsuit against Sharon Irons, a doctor from Olympia Fields... Irons was sued by her former lover, Chicago family physician Richard O. Phillips, who accused her of a "calculated, profound personal betrayal" of him after a brief affair they had six years ago.
Phillips alleges that he and Irons, who practices internal medicine, never had intercourse during their four-month affair, although they did have oral sex three times.
His suit contends that Irons, without his knowledge, kept some of his semen and used it to impregnate herself...
Nearly two years later, Irons slapped Phillips with a paternity suit...
Phillips then sued Irons, claiming her actions robbed him of sleep and caused him to have trouble eating. He is haunted by "feelings of being trapped in a nightmare," ...
Irons responded that her alleged actions weren't "truly extreme and outrageous" and that Phillips' pain wasn't bad enough to merit a lawsuit. The circuit court agreed and dismissed Phillips' suit in 2003.
But the higher court ruled that, if Phillips' story is true, Irons "deceitfully engaged in sexual acts, which no reasonable person would expect could result in pregnancy, to use plaintiff's sperm in an unorthodox, unanticipated manner yielding extreme consequences."
But the judges agreed with the lower court's decision to dismiss fraud and theft claims against Irons. They agreed with Irons' lawyers that she didn't steal the sperm.
"She asserts that when plaintiff 'delivered' his sperm, it was a gift -- an absolute and irrevocable transfer of title to property from a donor to a donee," the decision said. "There was no agreement that the original deposit would be returned upon request"... [AP]
Friday, February 25, 2005
We now have a fifth federal court decision holding that the federal tax on long-distance telephone service is being collected illegally by the IRS in many, if not the great majority of, cases these days.
This time the refund is more than $1.25 million, and once again -- as in three of the other cases -- the decision is by summary judgment, meaning the court decided the IRS didn't even have an argument worth listening to at a full trial. [Honeywell International, Inc. v. U.S., No. 03-1915T, Court of Claims]
Once more the court gave the IRS a lecture about how "and" does not mean "or" -- explaining that the Tax Code imposes a tax on long distance calls that are individually billed by time and distance.
In today's world few long-distance plans bill like that any more. However the IRS has nevertheless continued to tax all calls on the logic that Congress intended to tax all calls, deducing that therefore the word "and" in the Tax Code has evolved over time to come to mean "or", so it can tax calls billed either by time or distance -- an argument that the courts have thus far found unpersuasive.
While the big companies are fighting this out with the IRS the same logic applies to everybody's tax bill. If you have a small business, or even significant personal long-distance charges, it may pay to protect a refund claim for yourself.
Full references to the other cases and to legal analysis that can help your tax advisor do this for you (you really can't do it yourself unless you are a tax professional) were given previously.
People in the industry say refunds could total $6 billion and growing. Go claim your share!
Social Security saved! (?)
Sabo to introduce Social Security planAh, now if you are smarter than the Congressman and can see why increasing the interest rate on the bonds in the trust fund won't contribute a whit towards covering the government's cost of financing Social Security, then you can see why the current interest rate on the bonds in the trust fund, and indeed the bonds themselves, do not contribute a whit towards covering the government's cost of financing Social Security.
U.S. Rep. Martin Sabo, D-Minn., announced today that he will introduce a bill in Congress that he says will guarantee Social Security solvency through 2080 by increasing the interest rate on Treasury bonds in the Social Security trust fund... [StarTribune]
On the other hand, if you think increasing the interest rate will ease the future cost of financing Social Security, hey, then don't be piker about it -- increase the rate enough so the trust fund will cover the cost of Medicare too. Then we'll all be home free with our retirements!
It's safer to just die of exposure and not risk it.
Hunter fined $18 million for forest fireAn $18.2 million fine for a misdemeanor? What's the going rate out there for a felony these days?
REDDING, Calif. - A lost hunter who started a forest fire in northern California while trying to keep warm was ordered to pay $18.2 million in restitution Wednesday. The fire in the Mendocino National Forest burned 6,058 acres...
Jason Hoskey, 26, of Willows, lit a campfire when he got lost hunting on Sept. 27, 2003. The fire spread after he fell asleep.
Hoskey pleaded no contest in September to a federal misdemeanor of leaving a fire burning or unattended.[AP]
Doughnuts, not cheeseburgers, dummy.
Cops say suspect offers cheesy bribe
Steven T. Denton, 32, was charged with a felony count of attempting to bribe a law officer after he allegedly offered to spring for McDonald's cheeseburgers in exchange for his release. Denton was taken into custody following a fracas at the Dockside Lounge on Sombrero Boulevard.
"Denton told me that if I would drive him to McDonald's, he would buy me two cheeseburgers if I let him go and did not take him to jail," reported Deputy Mark Eastty of the Monroe County Sheriff's Office. [Keynoter]
Thursday, February 24, 2005
That was the chant picked up by Harvard faculty members in a meeting with University President Larry Summers yesterday.
February 23, 2005 -- CAMBRIDGE, Mass. — More than half of Harvard's professors disapprove of embattled President Lawrence Summers — and a third want him to quit, a poll revealed as faculty members gathered yesterday to debate his future... [NY Post]I'll have only one comment on this whole circus at the moment.
Remember when not so long ago yet another survey found that on the faculties of leading universities Democrats/liberals outnumber Republicans/conservatives by some ratio like 7,000 to 1?
And remember when university representatives replied:
"That's no evidence of discrimination against non-liberals here. We are all professionals, and whatever our own political beliefs may be we would never discriminate against non-liberal candidates for faculty positions on the basis of some sort of liberal political correctness..."
Another liberal being mugged by reality. Do you suppose he'll emerge from the experience a neo-conservative?
By the way, why isn't Bill Clinton speaking up for him?
(OK, that was three comments, sorry.)
Doug Wead wakes up with a horse head in his bed.
An old friend of President Bush who secretly recorded their private conversations and released them to the media said he has regrets and is turning the tapes over to Bush.Why just on Monday Mickey Kaus was reading Wead's statements as warning off the Bushies: "Don't mess with me. I have the goods."
"Contrary to a statement that I made to the New York Times, I have come to realize that personal relationships are more important than history," Wead wrote in a letter to [TV show] host, Chris Matthews...
"I am asking my attorney to direct any future proceeds from the book to charity and to find the best way to vet these tapes and get them back to the president to whom they belong"... [AP]
Let us all learn from this not to go messing with professionals.
Earlier, Eric Fettmann had a couple of observations about the Wead affair.
Bob Dylan attacks younger musicians.
Bob Dylan has launched a withering attack on contemporary rock bands in the programme notes for his latest American tour.One thing about my generation: we've always known the other generation sucked.
"I know there are groups at the top of the charts that are hailed as the saviours of rock'n'roll and all that, but they are amateurs. They don't know where the music comes from," he wrote, adding, “I wouldn't even think about playing music if I was born in these times... I'd probably turn to something like mathematics."... [NME]
Scott Ritter, still in the news.
Writing for Aljazeera, when not making public appearances...
SCOTT RITTER SAYS U.S. PLANS JUNE ATTACK ON IRAN, ‘COOKED’ JAN. 30 IRAQI ELECTION RESULTSPortentious revelations... I'd like to know what got into that guy's head.
Scott Ritter, appearing with journalist Dahr Jamail yesterday in Washington State, dropped two shocking bombshells in a talk delivered to a packed house in Olympia’s Capitol Theater. The ex-Marine turned UNSCOM weapons inspector said that George W. Bush has "signed off" on plans to bomb Iran in June 2005, and claimed the U.S. manipulated the results of the recent Jan. 30 elections in Iraq.
Olympians like to call the Capitol Theater "historic," but it's doubtful whether the eighty-year-old edifice has ever been the scene of more portentous revelations... [UfP]
There's another Carnival in the blogosphere....
The Carnival of Education. Check it out.
Wednesday, February 23, 2005
An interesting article in the New Yorker. Some excerpts...
There's also a good amount on the history of how Hollywood got where it is.
...In 1946, weekly movie attendance was a hundred million. That was out of a population of a hundred and forty-one million, who had nineteen thousand movie screens available to them.
Today, there are thirty-six thousand screens in the United States and two hundred and ninety-five million people, and weekly attendance is twenty-five million...
About ten or fifteen years ago, it became dogma in the movie industry that you could make a movie for ten million dollars or for a hundred million dollars, but there was no profit in anything with a budget in between.
One reason for the Hollywood budget gap is above-the-line expenses—that is, the cost of the talent, as opposed to the cost of the crew, sets, travel, promotion, and so on ... the safe thinking is that only a handful of stars can open a movie worldwide. These stars command a healthy portion of the budget, and they usually take their money in the form of an advance against a percentage of the gross. If the movie doesn’t "make back," the star gets to keep the advance...
Thomson believes that profit participation has done the movies a lot of damage, because it allows people to profit from the success of an investment with no risk to themselves on the downside. He also thinks, more provocatively, that "creative control" is another source of trouble. When United Artists gave Michael Cimino the right of final cut on “Heaven’s Gate,” in 1980, it meant, Thomson says, that Cimino "owned a thing he had not paid for." He could indulge himself with other people’s money. “Heaven’s Gate” is, canonically, “the movie that killed the New Hollywood.” It almost killed United Artists, too....
[But] the risk of opening without a name is too great to take. The actors who provided the voices for the animated characters in “Shrek 2”—Mike Myers, Eddie Murphy, and Cameron Diaz—were paid ten million dollars each for a few days’ work in the studio. No prosthetic attachments; no early calls. Stars are brands.
So, of course, are names from the pop-culture universe—Hulk, Spider-Man, King Kong—and sequels, such as the “Die Hard”s, the fourth of which is scheduled to shoot this summer. These are all ways of preselling the picture, before the reviews can unsell it.
The key to the system is marketing.... The all-consuming desire is to get as many ticket buyers as possible into the theatre on the first weekend, and, amazingly, people oblige.
The crowds at the opening of a blockbuster are a fascinating window on mass psychology. If people just wait a couple of weeks, they can have their pick of seats. But when they get back to school or to the office no one will want to hear what they thought of the picture...
Deals are therefore made with the theatre chains which give the studio a large percentage, sometimes ninety per cent, of ticket sales in the first week, with a rapidly declining percentage in subsequent weeks. The theatre gets ... a hundred per cent of the income from sales of popcorn, soda, candy, video games, and anything else it can cram into the lobby. Concessions account for thirty-five per cent of the revenue in the major theatre circuits. This explains the three-dollar water.
“Hulk” set a record with a seventy-per-cent decline in ticket sales between its opening and the second weekend, but the average drop-off for all movies is fifty per cent...
Marketing costs for the “Matrix” sequels exceeded a hundred million dollars. The reason that those movies had such enormous grosses, despite terrible reviews and negative word of mouth, is that each opened on eighteen thousand screens simultaneously worldwide. As Shone says, about the typical blockbuster, “By the time we’ve all seen that it sucked, it’s a hit.”...
"Troy,” which is considered a failure, has grossed just under half a billion dollars. The poor reviews for “Troy” didn’t matter, because seventy-three per cent of its box-office revenue came from overseas.
Foreign box-office income started exceeding domestic box-office income for Hollywood movies in 1993. For the typical top-ten box-office hit, sixty per cent of exhibition revenue comes from overseas. This is a reason that the women don’t have much dialogue, and the men are too occupied with driving, wrecking, and leaping to utter more than an occasional mal mot....
The ideal product to market is a “four-quadrant” picture, a movie that appeals to men and women in both the over- and the under-twenty-five age groups. That’s one reason performers with high adult recognition—Robin Williams, Eddie Murphy, Billy Crystal, Robert De Niro—are paid so much for cartoon voice-overs...
Blockbusters today aspire to be “tent-pole franchises”—centerpieces for multiple spin-off products, from lunchboxes to soundtracks, comic books, children’s books, arcade games, and computer games. “Batman” earned three times as much from merchandise as it did from ticket sales ... Blockbusters today are commercials: they’re commercials for themselves.
They also include commercials, in the form of product placement. The all-time record for product placement appears to be owned by the Bond film “Tomorrow Never Dies,” which sold screen time to Visa, Avis, BMW, Smirnoff vodka, Heineken, Omega watches, Ericsson cell phones, and L’Oréal...
The blockbuster is a Hollywood tradition, but blockbuster dependence is a disease. It sucks the talent and the resources out of every other part of the industry. A contemporary blockbuster could almost be defined as a movie in which production value is in inverse proportion to content. “Troy” is a comic strip, but what a lavish, loving, costly comic strip it is.
The talent, knowledge, and ingenuity required to make just one of the battle scenes in that film, or one mindless James Bond chase sequence, interchangeable in memory with almost any other Bond chase sequence, would drain the resources of many universities.
But why doesn’t anyone put more than two seconds’ thought into the story?...
After all, as the article points out, the basic economics of movie making haven't really changed since profit participation was handed out in the first blockbuster, "Birth of a Nation", and since Charlie Chaplin, Douglas Fairbanks, Mary Pickford, and D. W. Griffith, formed United Artists to secure the profits of and creative control over the films they were providing the talent for -- Dreamworks 1919.
So what started off there as a slowish book review turned into a good read, worth following the link to get the full story if you are interested in such things.
(The dismissive treatment of George Lucas's baby is worth it by itself, IMHO: "Not that people haven’t tried, God knows, but there is just nothing serious to say about the larger implications of 'Star Wars.'")
Could the US have bought its way out of the Civil War?
Brian Gongol (who deserves kudos for what he's contributed to facilitating the Carnival of the Capitalists) has an interesting post (available through this week's CotC) speculating that everyone would have been better off if back before the Civil War the slavery issue had been resolved by the federal government simply buying the freedom of all slaves at market price.
I'll do his interesting and informative presentation a disservice by boiling it down to its gist:
The logic, in brief, takes the average market price of a slave at the time, multiplies by the number of slaves, and compares the resulting total to the cost of the war. Finding that the war was more costly than that, the conclusion is that things would have been better if the government had just bought all the slaves at market price (or maybe a little higher, to give slave owners an incentive to sell) to end the institution voluntarily without bloodshed.
Well, taking the view of people walking around in 1859 one can think of various practical problems that probably would have made implementing such a proposal impossible (and probably in fact kept it from being proposed on a national scale). Such as: few expected any coming conflict to be anywhere near as costly as it was, so the cost comparison was not visible; and if the South had been made largely whole (or better than whole) by the purchase of its slaves, as would be necessary for it to go along voluntarily, then the entire expense of ending slavery -- comparable to the actual cost of the Civil War -- would have fallen on Northern taxpayers alone, who probably would have been quite reluctant to see somebody else's vice so rewarded at such huge cost to themselves. Among others.
But putting all that aside, I suspect the basic calculation is wrong. The market price for a slave in 1860, like the free market price for anything anytime, was the marginal price at a given level of supply. But once the federal government started buying slaves and removing them from the market, the supply would diminish -- so by standard supply-and-demand the price would go up. And a quick look at the standard textbook supply-demand curve (interactive!) shows that as supply diminished towards zero, price would goes up a lot as the supply curve shifted all the way left.
The thing is that while the scheme reduces the supply of slaves, nothing about it reduces the demand for them -- and when supply steadily diminishes while demand stays the same price goes zoom.
(And this could lead to a complicating problem -- an ever-growing financial incentive to re-supply the market with slaves brought in from the Caribbean, to sell at an ever-increasing premium to the government or whomever as the market price rose. Britain outlawed slavery in its territories in the 1830s, but in 1860 slavery still continued right next door in Cuba, Puerto Rico and other Caribbean areas. Importing slaves to re-sell at profit would of course be illegal, but all it would take to accomplish it would be smuggling and paper-forging -- and how would an 1860s-era federal government stop it? )
Ever-rising price would probably quickly reveal the entire exercise to be futile. That is, assuming it was conducted through voluntary market transactions.
As an alternative, we might imagine (for we are getting far from historical political reality here) the North making a carrot-and-stick offer to the South -- offering to pay $X, the market price of a slave at the time multiplied by the total number of slaves, for all of them -- and threatening to emancipate them by dictate and necessary force if the South did not accept.
The problem with this proposal is that it does not make the Southern slave owners whole -- and probably wouldn't even come close to doing so.
Again, this is because the market price of a slave was the value of the marginal one brought to market at a given time -- many others, worth much more to their owners, wouldn't be brought to market except for a price that was far higher. Thus, an offer from the North to pay only the lower price for all slaves would cause slave owners to in fact suffer a big loss -- and so naturally would be rejected.
If the consequence of rejection was the North following through using the stick by taking steps to end slavery, then we'd be back to where we wound up anyway, at Fort Sumter.
But all this is quite an interesting mental exercise, entirely relevant to various current attempts to resolve social problems by market means today, some examples of which are given by Mr. Gongol.
The Carnival is always full of all sorts of posts that are worth reading, so check it out.
Tuesday, February 22, 2005
Fine ... but they should first apologize to the parents and taxpayers of New York for taking their children and $12 billion of their tax money annually to run a school system in which this can not only happen, but when it does the school principal's instinctive first defense is: "We would never censor our sixth graders". A school system that, no matter how much its spending goes up, remains utterly devoid of accountability.
The city Department of Education, red-faced over Brooklyn sixth-graders who slammed a GI with demoralizing anti-Iraq-war letters as part of a school assignment, will send the 20-year-old private a letter of apology today.
Deputy Schools Chancellor Carmen Farina, who has a nephew serving in Iraq, plans to personally contact Pfc. Rob Jacobs and his family. Jacobs is stationed 10 miles from the North Korean border and has been told he may be headed to Iraq in the near future...
Filled with political diatribes, the letters — excerpts of which were printed in yesterday's Post — predicted GIs would die by the tens of thousands, accused soldiers of killing Iraqi civilians and bashed President Bush.
Teacher Alex Kunhardt had his students write Jacobs as part of a social-studies assignment....
One girl wrote that she believes Jacobs is "being forced to kill innocent people" and challenged him to name an Iraqi terrorist, concluding, "I know I can't."
Another girl wrote, "I strongly feel this war is pointless," while a classmate predicted that because Bush was re-elected, "only 50 or 100 [soldiers] will survive." A boy accused soldiers of "destroying holy places like mosques."
Jacobs said he would welcome a letter from the Department of Education and the teacher... [NY Post]
Soldier Stunned By Letter Kids' Rants
Pfc. Rob Jacobs of New Jersey said he was initially ecstatic to get a package of letters from sixth-graders at JHS 51 in Park Slope last month at his base 10 miles from the North Korea border.
That changed when he opened the envelope and found missives strewn with politically charged rhetoric, vicious accusations and demoralizing predictions that only a handful of soldiers would leave the Iraq war alive...
One Muslim boy wrote: "Even thoe [sic] you are risking your life for our country, have you seen how many civilians you or some other soldier killed?"
His letter, which was stamped with a smiley face, went on: "I know your [sic] trying the terrorists but you are also destroying holy places like Mosques."...
... nine of the students made clear their distaste for the president or the war.
The letters were written as a social-studies assignment.
... the school principal, Xavier Costello, responded with a statement:
"While we would never censor anything that our children write, we sincerely apologize for forwarding letters that were in any way inappropriate to Pfc. Jacobs. This assignment was not intended to be insensitive, but to be supportive of the men and women in service to our nation." [NY Post]
Of course, nobody in the NYC public school system would ever censor students' assignments ... or even use them to teach students how to spell.
They don't collect $12,000 per student per year to do that.
And that's all you really need to know.
How big is Instapundit's pot of gold?
Tim Worstall estimates what all bloggers dream waits for them at the the end of the rainbow ... the income Instapundit pulls in from blogging.
How much? Go see. I'll just say that, in light of the average law professor's salary, being one of the early ones to try out that new blogging business in one's spare time wasn't such a poor idea.
Drudge headline, Monday evening:
We know Matt enjoys how some think of him as being a bad influence, but maybe he's getting a little full of himself?
Monday, February 21, 2005
Capitalism marches on...
Well, now we know what Vegas-types value for getting money from NASCAR-types. I mean, a bidding contest topped by a lawsuit!
A pregnant woman in Roswell, Ga., is being sued over advertising space on her stomach...
Elisa Harp, of Rosewell, Ga., offered ad space on her stomach this month on the eBay auction Web site.
Although SunPoker.com placed the highest bid to put their name on Harp's stomach, she chose to offer her stomach to another online casino because they offered her a spokewoman job...
"The highest bidder at first was SunPoker.com but I decided after the auction ended not to go with them and decided to go with The Golden Palace Casino," Harp said.
Harp, who is due to give birth next month, faces a lawsuit by SunPoker.com for violating eBay rules [that say] once bidding ends a product must go to the highest bidder... [local6]
Ms. Harp attends the Daytona 500 auto race to do marketing for the Golden Palace ... [video report]
The singing prophylactic.
Medical science marches on ...
Well, I can imagine how the sound of such music could come as a surprise ...
A scientist has come up with a musical condom that gets louder as the sex gets more vigorous.
The singing protective is designed to be a laugh for couples who want to make their own sweet music, says Ukrainian inventor Dr. Grigoriy Chausovskiy.
Different lovemaking positions determine what tune is played by the condom, which also works like a normal contraceptive.I can't wait until we get a Top 40 list of music downloads for these things.
The rubber has tiny sensors connected to a mini electronic device that produces the sounds.
"But there is no danger of being electrocuted," said Dr Chausovskiy, who has teamed up with a manufacturer to export the condoms to Britain.
They will cost about 20 per cent more than normal condoms. "But people will pay for the extra stimulation," he said.
The university professor wants people to tell him what tunes the condoms should play... [The Sun]
Dog reincarnated as firewood.
A couple were stunned to find the mirror image of their beloved pet dog -- embedded in a log.That's very impressive. But the way I always understood reincarnation was that if you lead a good life you'll come back as a higher-order being, and if you lead a bad life you'll come back as a lower-order being. So what kind of life does a dog have to lead to come back as a stick of wood?
Terry Wright and wife Joan were amazed to see a colour vision of their beloved labrador Bess, who died three years ago, set into the grain of a poplar tree.
Terry, 66, was about to throw the log on the fire at their 200-year-old cottage at Antrobus, near Knutsford, when Joan spotted the resemblance...
"I asked if she'd been drinking whisky, but when I looked at the log I was amazed...
"I've been offered money for the log but no amount will persuade me to part with it.
"Bess has come back to us in the most amazing way and this time she's staying right by our side forever." [Ananova]
Saturday, February 19, 2005
As soon as Alan Greenspan endorsed private accounts in Social Security we all of course knew the attack column would not be long in coming. And here it is.
It doesn't disappoint. Krugman uses guilt by association,
In his labors Krugman mentions "Iraq" five times. Now, it's hard to see exactly what either Social Security reform or the Federal Reserve Chairman's recommendations regarding domestic economic policy has to do with Iraq -- except via an attempt to tar them by association with what Krugman must assume his readers take to be shameful American failure there (see: "democratic elections, recent"). And to associate two such unrelated concepts in mind does of course take repetition: "Social Security reform? Iraq! Iraq! Iraq! Iraq! Iraq!"
Still, that ploy costs the column about 140 words -- and aren't the Professor's fans always complaining about how he is handicapped by being limited to only 700 to write in?
Then, when in the remaining 560 words Krugman gets to reporting what Greenspan actually said ... hey, he missed it!
In 2001, Mr. Greenspan offered a convoluted, implausible justification for supporting everything the Bush administration wanted. This time, he offered no justification at all...Hmmm... Krugman says Greenspan offered "no justification at all" for supporting privatization. None at all. How lame!
Mr. Greenspan offered no excuse for supporting privatization.
Yet that's very odd, as news reports elsewhere had Greenspan giving so many reasons for his favoring of private accounts...
The normally placid Greenspan rose almost to the threshold of passion as he made a class-based argument by contending that private accounts would allow low-income people to become mini-capitalists — in his view, a very good thing.All of which Krugman helpfully summarizes for his readers as: "Greenspan offered no excuse for privatization".
"When you have assets which you own, which you can bequeath to your children, (assets) which have your name on them, I think it is highly desirable thing, because you give wealth to people in lower- and middle-income groups who have not had it before".
The Fed chairman predicted private accounts would be "extraordinarily popular," and "if they are I think it is a very important addition to our society because, as you know, I’ve been concerned about concentration of income and wealth in this country ... This, in my judgment, is one way you can address that."
Greenspan said he prefers the private accounts structure because it allows the prefunding of future promised benefits [which allows them to be financed now, instead of when deficit will be much worse, later]
He argued that a system with accounts over the long-term has the potential to boost the national savings rate, which, in turn, can help spur economic growth.
"The central core of productivity increase is capital investment. And to have capital investment, you need to have savings," he said.
He also said he believes individual accounts offer future retirees a better chance of achieving the standard of living they will expect.
"We have been utterly unable in the pay-as-you-go system to create the necessary savings to finance the capital investment that we're going to need for the future to create the goods and services that retirees are going to need," he said.
et cetera and so on... [msnbc] [Reuters] [CNN] [DowJones] [...]
Gee, you know, if Krugman was honest he could have reported the excuses Greenspan actually gave for supporting private accounts, and then have tried to argue against them on the merits.
Instead of reporting that Greenspan didn't give any.
You know, in my mind that brings a three-letter word: "f - i - b". What do you think?
The Professor continues ...
Mr. Greenspan ... painted a dark (and seriously exaggerated) picture of the demographic problem, and said that what we need is a "fully funded" system. He then conceded that Bush-style privatization would do nothing to improve the system's funding.Hello? When I read illiteracy like this I'm tempted to believe what an academic economist e-mailed me some while back: that the real pre-2000 Krugman is to be found bound and gagged in a basement somewhere in Princeton and these columns are being written by Robert Kuttner, if not by something that climbed out of a pod sent over to the Times by the Democratic National Committee.
One doesn't have to be a preeminent social scientist to know that "funding" a retirement plan means financing it with savings -- instead of just using transfers, as per the status quo. And of course, obviously, self-evidently, creating private accounts funded with savings increases the system's funding. Over time, one could move from a 0% funded plan to a 100% funded plan this way. (How else could you do it?)
Yet Krugman (or whoever!) says:
"privatization would do nothing to improve the system's funding."Krugman here is intentionally trying to confuse the issue with something different. To wit: If at the time that you start funding a plan it already is underfinanced -- because Congress has promised far more in benefits through the plan than it has any way of paying -- that financing shortfall may remain totally unchanged by the introduction of funding. That's true enough, but it is an entirely different issue. And it does not mean you don't get the benefits from funding!
To see how the benefits that Greenspan talks of -- increased wealth for retirees, increased national savings, and the benefits of prefunding -- can be obtained through private accounts that increase funding while having no effect on the financing shortfall, here's an illustrative example.
Krugman in this column plays a bait-and-switch that he uses throughout his columns against private accounts. It goes like this: Advocates of private accounts say such accounts will provide numerous benefits. But private accounts won't close the financing gap that exists in the status quo -- which is the only thing that Krugman will admit counts. Therefore private accounts will provide no benefits!
He hopes you won't notice.
Mr. Greenspan went on to concede that the opponents of privatization are right to worry about the huge borrowing that Bush-style privatization would entail...Or maybe not. For some reason Krugman doesn't report that Greenspan ...
... also suggested that in determining interest rates and bond yields, the financial markets may already have accounted for the $16 trillion in unfunded liabilities of the Social Security and Medicare programs ...... in which case prefunding them would have no effect whatsoever on the financial markets.
After all, these liabilities for promised benefits already exist whether any bonds have been issued for them or not. The markets are not supposed to know they exist? If the markets do know they exist, and thus have already accounted for them, then why would the government's merely admitting they exist on its books change anything?
Moreover prefunding these liabilities, as we have seen from the above-mentioned example, changes their net current value by exactly $0. What's so huge about that? All this doesn't sound like such an outright "concession" as Krugman claims.
In fact, Greenspan said privatization could lead to a reduction in interst rates...
... if financial markets at least partially discount the transition costs for personal accounts with the reduction of future unfunded liabilities from the current system, then interest rates might fall as the debt outlook improves, he said.How come Krugman didn't report Greenspan saying that?
(And is the actual number that Greenspan talks about -- a $100 billion annual swing in temporary borrowing, less than 1% of GDP -- really such a "huge" amount in Krugman's mind, after all the many much larger swings we've seen ever since the Reagan years?)
Privatizers claim that financial markets won't be disturbed by all that borrowing because the Bush plan prescribes offsetting cuts in guaranteed benefits for the workers who open private accountsBecause, as we've seen in the example mentioned above, moving to funding is a wash as far as the government's liabilities are concerned, increasing them at current value by exactly $0.
And it is an advantage of pre-funding that it operates by moving the cost of financing future Social Security benefits forward in time towards today -- because today it is as a whole lot easier to finance them than it will be in the future.
Remember, when today's 30-year-old workers retire around 2040 either annual deficits will be approaching 20% of GDP -- macthing the entire federal government's expenditures today! -- or income taxes will be increased by more than 80% from today's levels to cover the costs of Social Security and Medicare. Of that 80%, more than half, 46%, will be needed just to cover the operations of the trust funds, the Social Security actuaries say. (Those trust fund bonds aren't going to pay off themselves you know!)
Here's a graph that may help convey the meaning of these words.
Without pre-funding, Krugman wants all these boomer benefits to have to be financed then, as that graph line shoots straight up.
But if Krugman thinks privatizers would disrupt the financial markets by borrowing $100 billion a year to prefund benefits today when the borrowing is easy and rates are low, then just what does he think status-quoers propose to do by trying to finance the same $1 trillion in the financial markets around 2040 when both deficits and taxes will be at record levels and still shooting higher?
So once more we see Krugman indulging his favorite cardinal sin of logic -- not comparing alternatives.
Yes, Greenspan did say there is risk in increasing current debt to prefund Social Security -- but he went on to discuss something Krugman never, ever will: the risk in the status quo.
"It is risky," Greenspan said [of prefunding private accounts] But, he added, "It's risky doing nothing. It's risky doing any other solution. ... I know no way to resolve this without risk."How come Krugman didn't report the second part of Greenspan's comment on risk? On the risks of the status quo?
Does Paul Krugman ever write about the status quo risk of hitting the financial markets for an extra trillion in 2030s? Or of the status quo risk that today's Social Security participants will be the first ones ever to get back less from it than they put into it -- being made poorer by Social Security on a lifetime basis? Or the status quo risk that, facing huge income tax hikes after 2020, taxpayers and Congress will vote to cut benefits?
Of course not. The uniform party line is that there is no risk in the status quo, it is perfectly safe. Ha! ha!
Yet the chairman managed to avoid admitting the obvious - that borrowing on the scale the Bush plan requires would substantially increase the risk of a financial crisis.Perhaps because it's not so obvious in light of what's been mentioned above -- especially in comparison to risks of the status quo alternative, which Krugman will never discuss.
Yet did not Krugman himself write a short while back that he was taking out a fixed-rate mortgage -- and paying more up front to do so -- because he expects interest rates to go way up in the future?
Krugman on why he paid a higher cost now for that fixed rate mortgage:
"Think of the federal government as a gigantic insurance company (with a sideline business in national defense and homeland security), which does its accounting on a cash basis, only counting premiums and payouts as they go in and out the door. An insurance company with cash accounting . . . is an accident waiting to happen." So says the Treasury under secretary Peter FisherSo, to avoid exposuring himself to soaring interest rates in the future due to the the "train wreck" he forsees, Krugman thinks its smart to secure his own wealth by paying more up front.
How will the train wreck play itself out? ... my prediction is that politicians will eventually be tempted to resolve the crisis the way irresponsible governments usually do: by printing money, both to pay current bills and to inflate away debt. And as that temptation becomes obvious, interest rates will soar.
But as far as your Social Security benefits are concerned, prefunding them when rates are low is a bad idea -- he wants you to depend on having them all financed for you after the train jumps the track and rates soar!
Go figure. ;-)
And the headlines didn't emphasize his concession that crucial critiques of the Bush plan are right. As he surely intended, the headlines emphasized his support for privatization.Yes indeed, Greenspan got the headlines to carry the message he believes, and that he intended them to carry about his beliefs -- not Krugman's message. The treachery!
By repeatedly shilling for whatever the Bush administration wants, he has betrayed the trust placed in Fed chairmen, and deserves to be treated as just another partisan hack.Ah, the obligatory closing name calling.
But speaking of a "shilling ... partisan hack" what would you call someone who, in a twice-weekly newspaper column, hasn't published even one significant criticism of the Democrats or of any name Democrat, nor even one approving column of any Republican or Republican proposal, in more than five years??
And now we see the single rhetorical technique Krugman failed to use in attempting to debunk Alan Greenspan's comments:
Giving an honest report of what Greenspan said, and trying to answer it on the merits.
A simple illustration of how private accounts in Social Security can provide benefits as described by Alan Greenspan, despite the objection of Paul Krugman.
[An illustration for the accompanying post.]
Let's say you are a typcial 32-year old male, working hard, paying 12.4% Social Security tax on your earnings, and expecting the 0% return promised by Social Security to those like you on your contributions. That is, for every $1 in tax you pay today, 35 years now from at retirement age you will receive a benefit worth $1.
[Caldwell et. al.]
(In reality your statutory benefits under the status quo are 25% underfinanced, so if the program remains as-is you will receive a benefit worth only 75 cents for your dollar -- but we'll forget that for the moment.)
Because the status quo is system unfunded, 35 years from now the government will have to tax somebody $1 (or borrow $1) to pay your Social Security benefit of $1 to you.
Now let's imagine that you have the alternative option of investing your $1 today in a private account in the Social Security system.
The Social Security actuaries estimate that private accounts will earn an average of 4.6% annually after expenses. At that rate 35 years from now you'll have $4.83 in the private account for your $1 contribution today.
But under the status quo the government has already made plans to currently spend every cent of the Social Security tax you pay, upon one thing or another. So if it doesn't act to reduce its spending (which certainly would be the desireable option!) then if you shift $1 into your private account it will have to borrow an extra $1 dollar today to maintain its spending.
The actuaries estimate government bonds will pay 3% in the future, so as a result 35 years from now the government will have to tax somebody (or borrow) $2.81 to pay off that borrowed dollar.
Of course, you can't expect the $1 you shift from regular Social Security into your private account to earn regular Social Security benefits too. So your regular benefits must be reduced by some amount, correspondingly.
The current White House proposal would reduce regular benefits by $1 compounded at 3%, the federal bond rate, until retirement age for every $1 shifted into a private account. So your $1 contribution to a private accound will reduce the value of your regular benefits received 35 years from now by $2.81.
The end result to you is that when you retire you have $4.83 in your private account while your regular benefits are reduced by $2.81 -- so you end up with a net benefit worth $2.02 compared to only $1 under traditional Social Security.
And, of course, you own the $2.02, giving you much more power to use it as you wish -- and securing it from the whims of future voters who may feel, for example, that they are overtaxed to fund transfers to seniors, resulting in actions to reduce such transfers.
The final result to the government is that the reduction in its future liabilities for regular Social Security benefits exactly covers the earlier cost to it of borrowing the $1 -- so 35 years from now the transaction ends up a wash to it. Funding the private account changes the current value of the government's total liabilities by exactly $0.
However, the timing of the payment of the goverment's liabilities is changed. The government's cost of financing regular, traditional Social Security retirement benefits that it owes to you will begin 35 years from now, when you reach retirement age, and last the rest of your life from then.
The government's cost of financing your contribution to a private account begins today when you make your contribution and it must thus borrow $1 to maintain its spending, and ends 35 years from now, when you reach retirement age and its borrowing is paid off. From that point on your retirement benefits are funded with savings in your private account, at no further cost to the goverment.
Thus, while the net present value of government liabilities changes by $0 as a result of you putting your $1 in your private account, compared to the status quo they will be reduced after 35 years pass, while until the 35 years pass the government's debt will be increased. In effect, the payment of the government's liabilities is moved forward in time.
In addition, your $1 contribution to your private account in the end creates a benefit to the nation in the fact that national savings are increased, which as Greenspan emphasized in his testimony is essential to increasing the future productivity of the nation to meet material needs -- especially those of future retirees. Your investing $1 in the private account in the end increases national savings by up to $2.02 -- your final $4.83 in the private account when you retire minus the government's $2.81 of offsetting borrowing then.
Summing up, the net results of your placing that $1 in a private account in Social Security instead of in the traditional program are ...
* You wind up with $2.02, rather than $1, in benefits at retirement age.
* You own that $2.02. So you have much more freedom to do with it as you wish, can bequeath it, and -- not least, considering the government's projected finances -- aren't going to have it reduced by any future government cutback in regular Social Security benefits that is forced by a future fiscal crisis.
* The government incurs $0 net cost total. The arrangement is a wash to it (except to the extent it collects income tax on your net increase in benefits of $1.02 -- a modest fiscal benefit that we'll ignore.)
* National savings are increased -- from $0 under the status quo to as much as $2.02.
* The "extra debt" of $1 that must be incurred up front is actually a benefit -- because it is not extra debt at all, but only pre-funding for a liability that will be much harder for the government to finance after 35 years from now through either borrowing or taxing.
Defenders of the status quo keep willfully ignoring this last point. But you should remember that in 2040 either the annual deficit will be reaching 20% of GDP -- equalling the size of the entire federal government today -- or income taxes will have to be increased by more than 80% from today's level (and will still be rising) to cover the cost of retiree benefits -- both Social Security (those trust fund bonds don't pay themselves off!) and Medicare.
Or, some other major cost-saving measures will have to be taken -- such as cutting Social Security benefits!
Prefunding your benefits today will reduce this future fiscal pressure on the government because it leaves the benefits payable to you after you retire already funded with savings -- eliminating the need to tax or borrow to pay them then, when it may be extraordinarily more difficult to do so than today.
In short, the so called "transition cost" we always hear of regarding private accounts consists only of prefunding benefits when rates are low -- and that's a benefit!
So the five bullet points above give us four solid benefits and a wash from private accounts, compared to the status quo.
Now let's add another fact to the scenario...
Let's say that at the time these private accounts are first set up, Social Security has already promised $10 trillion more in benefits than it has the resources to pay ... or $100 trillion more ... or $1 quadrillion more -- it doesn't matter, Congress can promise any level of future benefits without providing the means to pay them, creating a financing gap of arbitrarily large size.
Thus, at the time private accounts are created, Social Security faces a future financing gap of $X trillion.
What is the effect of private accounts on this funding gap?
Well, we know from the points above that private accounts net out as a wash to the government in the end. Thus, the answer is $0 -- private accounts have zero effect on the original financing gap.
The original pre-existing inability of the original system to pay all promised traditional benefits remains, exactly unchanged. Under the status quo this financing gap of $X will have to be closed with either higher taxes or cuts in traditional benefits or both, and after the introduction of private accounts this fact remains exactly unchanged.
So we have a fifth bullet point:
* The effect on private accounts on Social Security's financing gap is $0 -- it remains unchanged from what it is in the status quo.
Now, what does Krugman do? He looks at this one last bullet point, says only closing the financing gap matters, then concludes that since private accounts don't close the financing gap they must fail.
To him, the four advantages of private accounts that acccrue to benefits that are financed -- increased retirement wealth, greater ownership of it, increased national savings, and prefunding of benefits when it is more affordable to pay for them -- don't exist.
Therefore, when Greenspan lists them before Congress as his reasons for supporting private accounts, Krugman reports that: "Greenspan offered no excuse for supporting private accounts."
Maybe the Professor has so separated himself from reality that instead of that being a conscious
Friday, February 18, 2005
The phrenology of buttocks:
Yes, that's the same Pravda that was the official organ of the Soviet Communist Party, though it seems to have undergone some editorial changes since I was a student over there reading it back during the golden age of Brezhnev. I don't remember that Pravda having such "fun reports".
... A man with a nice muscular butt is considered to be strong, persistent and enduring in bed. A girl with a cute little round bottom is sexually active, albeit material and unkind.
Symmetrical wrinkles underneath the buttocks stand for reliable, steady and calm individuals, whereas asymmetrical wrinkles expose selfish and greedy people.
Those who have buttocks with so-called "ear-like bulges" on both sides are usually faithful people in love and marriage. Men and women with such buttocks are hopelessly mediocre individuals, though.
Girls with saggy square-shaped buttocks are very kind in their nature: they make very good wives and careful mothers.
Those people, whose left buttock is larger than the right one, have to contract marriage as early as possible - it is terribly unhealthy for them to stay single. On the other hand, the people, whose right buttock is larger than the left one, will have to face a lot of serious problems in their lives...
Hairy buttocks speak for very kind and agreeable people, although they also expose their genetic predisposition to illnesses of pelvic organs, first and foremost. One should also bear in mind the fact that parents who have hairy buttocks give birth to psychologically unbalanced, short-tempered children.
The combination of red hair on the head and black hair on the buttocks may occur for talented and highly emotional people. Grey bottom hair is a vestige of premature impotence for men, whereas red hair reveals their depraved nature... [Pravda]
They say Putin's taken over the press in Russia. Maybe so. But he's willing to share: Four photo spreads highlighted across the top page in today's Pravda were: Olympic Erotica, Maria Shapova, Sexy Stars, and Putin's Inauguration.
He's also willing to let them run an artcle on how he wears a $60,000 watch compared to George Bush's $50 Timex. (Although also mentioning Silvio Berlusconi's $540,000 Constantin Vacheron makes Vladimir seem rather proletarian by comparison.)
I looked up Izvestia for old time's sake and it's online too, but only in Russian. My foreign language skills, such as they were, are long gone, so I'm afraid there'll be nothing from there via me.
You want hockey? Here's your NHL hockey!
Using state-of-the-art gaming technology,G4techTV is simulating the entire NHL season and providing you, the fans, with all of the stats, hits, and replays you've come to expect from professional hockey. Statistics will be updated online by period as virtual games are being played...They even have video highlights! Who needs ice?
And looking at the standings we see the Rangers are in last place and going to miss the playoffs. So we can't knock the realism.
Another apple-pickin' benefit of having a federal government that the Founders never foresaw...
What man-made packaging could improve on an apple picked fresh from the tree?OK, so it's an old idea, previously researched, that McDonald's is already using. That explains the need for a new taxpayer-funded study of it.
Enter a federally funded study [of] the feasibility of processing and marketing fresh-cut apple slices in New England. The results of the study will be shared by the region's six states and their roughly 150 apple growers.
Additional federal money is available to fund a pilot project testing the popularity of packaged apple slices...
Steve Lacasse, chairman of the New England Apple Growers Association, is enthusiastic about the study and about the future for sliced apples.
"It's a wide-open field. It's going to take off like wildfire," the Keene apple salesman said. "Studies have shown children will eat more apples if you cut them in slices."
It's not a new idea, those in the industry say. McDonald's has been selling apple slices with a caramel dip for children...
The study, if approved, would be conducted by the Cooperative Development Institute Inc. of Massachusetts, which works with many farming, energy and food cooperatives to help them with business planning.Ah, well, that sort of research effort surely is beyond the capacity of the profit-motivated private sector, absent government subsidy. 'Nuff said.
"We should be able to tell the (New England) apple industry if this is a good idea or a bad idea and put some numbers to it," said Lynda Brushett, the project manager. The results of the study should be available in spring, she said...
"Like we'd call food service directors at schools and ask 'how do you think kids would like this?'" Brushett said... [AP]
Thursday, February 17, 2005
For all you aggregators out there, and by popular demand, there is now an atom feed for this blog. At last. Lots of other things were intended in the original plan of having a regular web site here. But self-employment, family ... It looks like the "under construction" sign will be up for a while.
Nobelist Ronald Coase on Social Security.
Steve Antler reports...
I chaired a guest lecture last night at Roosevelt. At one point I asked our speaker -- the one and only and very intrepid Ronald Coase -- whether he'd like to weigh in on Social Security reform.Wow, anybody who's that close to Coase goes on the blogroll. EconoPundit.
His answer was quick and simple: "No!"
The purpose of a system is what it does.
As applied to airline security.
... of "Jim Glass, a critic of all things liberal with whom I agree on virtually nothing..."
But we did agree on some things. He appreciated that I recognized the White House's intent to take 3% out of workers' returns from its proposed private Social Security accounts when other were denying it, and that I took a critical shot at that myself.
Now about the same time, as the anti-Social Security reformers in various forums were going on-and-on about how low returns in private accounts could be, I challenged those I could to be honest enough to admit that returns from Social Security for workers are slated to be even worse, even outright negative for some. "I'm looking for a liberal honest enough to admit it!" I'd say. No takers on that. Not a one.
Then to my surprise I read at Max's...
"Preemptive response to critics of SS: yes 1.3 or worse is a lousy rate of return..."He spoiled my fun! Now I'm going around saying, "I'm looking for a second honest liberal, besides Max Sawicky..."
Well, if cats and dogs can agree on the same factual reality then they have at least a chance of being able to work something out between them. While if they can't even agree on the facts...
So Max Speaks is on the blog roll.
No honest testimony goes unpunished.
During the government's Balco steroids investigation Jason Giambi of the Yankees went before the federal grand jury and told the truth, he took steroids. Before and after he did, many of the game's other most famous players were called before the same grand jury, swore to tell the truth, and testified that all those "paid in full" receipts from the Balco company on the dresser were spit up by the cat, or some such.
As Giambi's reward for his honesty his testimony was leaked to the papers and he's been savaged by the New York press ever since. Meanwhile, all those other guys who all swore that they'd thought they'd bought suntan lotion from Balco are walking. OK, such is life.
But, gee whiz, one of those taking shots at Giambi now is his own Yankee teammate Gary Sheffield, for crying out loud, who's calling Jason a "cry baby".
Gary appeared before the grand jury too. What did he say under oath?
"I said I didn't know I took steroids, the bottom line was I thought it was rubbing cream on my legs." [NY Post]
Wednesday, February 16, 2005
It's rather ironic that out-of-control growth of government spending is a lot more effective at driving privatization of government services and assets than all the well-reasoned policy recommendations of all the free-market economists in all the world...
Well, they'll have to put a toll on the Brooklyn Bridge first -- but that can be done.
Pataki Taking a Cue From Sale of Chicago Skyway
Faced with a giant projected budget gap and a wobbly credit rating, the city of Chicago decided to pull the trigger last year on a plan it had been contemplating for nearly a decade: the privatization of an eight mile toll road known as the Skyway.
A Spanish-Australian consortium paid Chicago $1.83 billion to operate the road and collect tolls on it for 99 years. It was the largest cash transaction in city history, easily closing the projected $220 million budget shortfall...
In New York, where health-care costs eat up a larger and larger share of tax revenue each year, state officials have followed the Skyway project with interest. As a sign that Governor Pataki liked what he saw, the executive budget he issued last month included a proposal allowing for the privatization of toll roads, bridges, and tunnels...
Hey, maybe when the federal government's unfunded $41 trillion liability for Medicare, Social Security, and US government employee retiree benefits has to be paid down for real around 30 years from now ($41 trillion today, it will be a heck of a lot more by then) Congress will sell a 99-year lease on the Grand Canyon to Great Adventure and America will finally become libertarian.
Despite reports that the Triborough Bridge and the Queens Midtown Tunnel may be on the auction block, aides to Mr. Pataki said the governor has not yet identified specific assets for privatization...
Mr. Leslie, executive director at Macquarie Securities, a Manhattan-based subsidiary of the Australian firm ... cited the New York State Thruway as an asset Macquarie might want to lease. Preliminary estimates suggest the state could fetch $6 billion for rights to run the 641-mile highway.
At a recent meeting with leaders of the United Federation of Teachers, the Senate majority leader, Joe Bruno, a Republican, suggested using proceeds from the proposed privatization of the state-run Health Insurance Plan of New York toward state spending to resolve the school-financing lawsuit.
Mr. Bruno, insists that the state will not raise taxes to cover the more than $20 billion extra that New York City schools are to get in the next five years...
[The president of] Civic Federation of Chicago, a nonprofit government watchdog, Lawrence Msall, said few people in Chicago complain about the overall impact of the Skyway deal. He said that Chicago got far more money than he and others had anticipated, and that the infusion was not only desperately needed as a source or revenue but also helpful in freeing the city from an asset that is better operated by a private entity.
"The city had a mounting long-term debt problem, and the credit agencies were warning them about it," Mr. Msall said. "Ninety percent of our property taxes were going to debt and pensions. I think Governor Pataki in New York could share the same kind of financial benefit most rational people would say we got from the Skyway deal."
A recent report from the New York State comptroller, Alan Hevesi, painted a grim picture of the state's financial situation. It said that despite legislative efforts to control debt in recent years, the state's total debt has grown to an estimated $49 billion today from $14.4 billion five years ago... [NY Sun]
[Hat tip to Roland Patrick for hitting the post button before me. Now stop doing that.]