J. C. Bradbury notes that early-season weather and home runs hit, while it is noted in comments that the decline is primarily in the American League and some suggestions on developing a model are made.
(No, I'm not turning this into a baseball blog. There are purposes to these posts. All will be revealed.)
by Ken Houghton (noreply@blogger.com) on May 18, 2008 05:34 PM
Well I am just going to lift the following from my little visited blog. In my defense a commenter back in April suggested publishing it on Angry Bear, at the time I didn't have posting privileges.
People who follow Social Security issues understand that in addition to the Intermediate Cost Alternative whose dates and numbers are universally reported in the press that the Trustees also present two other models called Low Cost and High Cost. Low Cost is typically depicted as being more 'optimistic' while High Cost being more 'pessimistic'. But that depends on your perspective. In reality Low Cost is better depicted as 'hotter' in economic terms and High Cost as 'cooler'. Now for most purposes the a relatively hotter economy than current Intermediate Cost assumes would be a good thing, all kinds of things are possible given higher levels of productivity and GDP, but for the specific purposes of Social Security it is possible that you can get too much of a good thing.
by Bruce Webb (noreply@blogger.com) on May 18, 2008 04:29 PM
25*30 = 750
104/750 = 13.9%
For those more conversant in the "disincentives of enforcement" literature than I, can you back into the Rational Expectation of Enforcement Practices that would lead nearly 14% of a population to conclude it is maximizing utility?
And, given your calculation, what would that say about the Management Practices of the organization?
by Ken Houghton (noreply@blogger.com) on May 18, 2008 03:41 PM
Greg Mankiw reports on the difficulties US beef producers are having selling in the Japanese market.
He blames it on Australian competition.
Does he not know that the problem is that Team Bush will not allow American beef exporters to inspect their beef for mad cow disease?
Does he really have such a low opinion of the readers of his blog that believes he can get away with stuff like this?
No wonder he does not allow comments.
We all feel this at times, when our ideas come together and form a wonderful pattern that would 'work'. Writers sometimes shine as their works strike a chord in readers, and we have a grasp on reality.
Then the light moves on. Often it happens in adolescence based on where we live and under particular conditions, and the power of the pictures of reality formed are quite strong, and last a long time. But the light moves on, and we adjust, and search under new conditions and a new day.
Just saying.
I have a horse race to watch so this will be short and in the form of a intellectual challenge.
In any year that Social Security is in surplus, as it is now and is projected to be until 2017, cutting benefits actually increases total federal debt and so worsens the overall financial outlook going forward. The result is to a striking degree counterintuitive but it is in fact true, if you sit down and think about the implications of investing the entire Trust Fund in Special Treasuries. Which same fact makes revenue increases through such things as a cap increase transform into long term debt.
The arithmetic seems beyond the best efforts of Cosi and tends to baffle Obama supporters who think that a cap increase is progressive (it isn't) and would somehow help Social Security (it doesn't). Not everything in life is intuitive, for example it is simply absurd how much of modern mathematics and engineering depends on the use of the square root of negative one ('i').
(http://en.wikipedia.org/wiki/Imaginary_unit) and lets not even get started on Schroedinger's Cat. Social Security financing is not as baffling as Quantum Mechanics but it does has its quirks, and this is one of them.
Cutting Social Security spending near term creates long term Federal debt. Discuss.
by Bruce Webb (noreply@blogger.com) on May 17, 2008 08:08 PM
Rock the Vote clues young voters in:
President Bush has nominated von Spakovsky -- a champion of voter suppression -- to serve on the Federal Election Commission.
Because of his work promoting photo ID requirements for voters, hundreds of thousands of students, low income people and seniors may be turned away from the polls in November.
And that's not all. At the Department of Justice he tried to force states to keep voters off the rolls for typographical errors or other mistakes made by election officials.
May 2008 // Washington, DC – Today, Citizens for Responsibility and Ethics in Washington (CREW) and VoteVets.org released an e-mail obtained from a Veterans Affairs (VA) employee directing VA staff to refrain from diagnosing soldiers and veterans with Post Traumatic Stress Disorder (PTSD).
On March 20, 2008 a VA hospital’s PTSD program coordinator sent an e-mail to a number of VA employees, including psychologists, social workers, and a psychiatrist stating that due to an increased number of “compensation seeking veterans,” the staff should “refrain from giving a diagnosis of PTSD straight out” and they should “R/O [rule out] PTSD” and consider a diagnosis of “Adjustment Disorder” instead. The e-mail is available at www.citizensforethics.org.
This week, CREW sent a Freedom of Information Act request to the VA asking for all records pertaining to any guidance given regarding the diagnosis of PTSD.
Via Mark Thoma comes a very good discussion from Don Pedro. Don dismantles some utter nonsense written by Thomas E. Brewton entitled Obama’s Excremental Economics where the thesis seems to be that reversing the Bush tax “cuts” (more deferrals) will lead to a recession. Its secondary theme is:
The basic thrust of Keynesianism is the belief that control of the economy must be collectivized at the Federal level, because private business is incapable of providing full employment, and because the proper goal of economic policy must be thwarting greedy businessmen to attain so-called social justice: equal distribution of income and wealth, without regard to merit, capability, or hard work. Not surprisingly the New York Times editorial board and the Times’s propagandist Paul Krugman are prominent Keynesian enthusiasts. In practice (in the 1930s Depression and in the 1970s stagflation) Keynesian economics caused devastating harm to every citizen.
The View from 1776 presents a framework to understand present-day issues from the viewpoint of the colonists who fought for American independence in 1776 and wrote the Constitution in 1787.
David M. Herszenhorn and David Stout report:
The Senate voted overwhelmingly on Thursday to approve a five-year, $307 billion farm bill, sending it to President Bush for what is expected to be his futile veto. The 81-to-15 Senate vote, like the 318-to-106 House vote on Wednesday, attracted broad bipartisan support and received far more than the two-thirds that would be needed to override Mr. Bush’s veto, should he keep his pledge to wield his pen.
Even though $300 billion is a big burden on American taxpayers, it’s apparently not big enough to change the political calculus of farm-subsidy supporters in Congress, as this week’s votes indicate.
Lifted from comments cactus style:
Reader juan suggests:
Econmagic
Charts
Bloomberg News
IT’S NOT EASY TO SIZE UP THE influence of the index funds. But based on their known cash commitments in certain commodities, and the commodity indexes their prospectuses say they track, it is possible to estimate the size of their commitments in all commodities they buy. Using this method, analyst Briese...estimates that the index funds hold about $211 billion worth of bets on the buy side in U.S. markets.
Applying a similar method, but with slightly different assumptions for indexes tracked, Bianco Research analyst Greg Blaha puts that figure at $194 billion. Either figure is enough to turn the index funds into the behemoths of the commodity pits, where total bullish positions now stand at $568 billion.
[...]
That this large, bullishly oriented group of funds is flourishing is partly a result of a regulatory anomaly. In recognition of the fact that the commodity markets are too small to absorb an excess of speculative dollars, the Commodity Futures Trading Commission, in conjunction with exchanges, imposes position limits on speculators. But the agency has effectively exempted the index funds from position limits.
[...]
The speculators, now so bullish, are mainly the index funds. To see how their influence on the market has become outsized, just look at how they operate. Nearly $9 out of every $10 of index-fund money is not traded directly on the commodity exchanges, but instead goes through dealers that belong to the International Swaps and Derivatives Association (ISDA). These swaps dealers lay off their speculative risk on the organized commodity markets, while effectively serving as market makers for the index funds. By using the ISDA as a conduit, the index funds get an exemption from position limits that are normally imposed on any other speculator, including the $1 in every $10 of index-fund money that does not go through the swaps dealers.
The purpose of position limits on speculators, which date back to 1936, is clearly stated in the rules: It’s to protect these relatively small markets from price distortions. An exemption is offered only to "bona fide hedgers" (not to be confused with "hedge funds"), who take offsetting positions in the physical commodity.
The basic argument put forward by the CFTC for exempting swaps dealers is that they, too, are offsetting other positions — those taken with the index funds.
There's really no question unless one rigidly adheres to a type of efficient market thesis.
Greg Sargent reports on one of the many attack themes coming from Team McCain:
On a conference call with conservative bloggers this afternoon, John McCain launched what may be his most direct attack yet on Barack Obama's national security credentials, saying flat out that Obama is incapable of protecting America and lacks the necessary traits to keep it secure from foreign threats. In a reference to Obama's declared willingness to meet with the leader of Iran, McCain said: "I think [it] is an unacceptable position, and shows that Senator Obama does not have the knowledge, the experience, the background to make the kind of judgments that are necessary to preserve this nation's security." That seems like an unequivocal declaration that Obama is incapable of protecting this country. In the past, McCain has raised doubts about Obama's national security cred, but to our knowledge has never taken the step of declaring outright that he's unfit to defend the country. McCain's comments also go considerably farther than McCain did in his comments this morning about Bush's Israel speech attacking Dems.
Andrew Samwick posts "one of the most depressing graphs [he has] ever seen."
Recall the simplest formula Tom used: Savings = Personal Income - Personal Taxes - Personal Consumption Expenditures [PCE]
by Ken Houghton (noreply@blogger.com) on May 16, 2008 03:25 AM
I’m no fan of Chris Matthews — not by a longshot — but we need more of this (video via TPM). When some pinhead — and I don’t care if he’s from the left, right, or center — goes on and obviously doesn’t know what the hell he’s talking about, he needs to be called on it. And when somebody uses rhetoric that’s obviously bullshit, that needs to be pointed out, too.
Now if only more of the media would do it, and do it less selectively. I long for a news media where guests know that they’d better not go on expecting to be able to parrot talking points, and where they know that they’d better know what the hell they’re talking about. But I’ll never see that day, I’m sure.
In response to some vigorous discussion in the comments last week, the other Bears and I decided to host a blog seminar in 'Savings 101,' and I was duly nominated (i.e. drafted) to get the ball rolling. This installment will primarily cover the definition of personal savings and major features of how it's measured for the purposes of the U.S. National Income and Product Accounts (NIPA). I liberally and without other citation draw on a number of methodology papers posted by the Bureau of Economic Analysis, get them here. A second installment will discuss rationales for savings and financial "innovations" that may affect savings behavior. As demand warrants, later installments may discuss savings of firms and governments.
We'll get the ball rolling after the jump.
1. Defining Personal Savings
A simple definition of personal savings, which also happens to be the NIPA definition, is whatever's left over from personal income after taxes and consumption:
Savings = Personal Income - Personal Taxes - Personal Consumption Expenditures [PCE]
From the NIPA accounting perspective, this definition relates sources of personal income with uses of the income; "savings" is the term makes the accounts balance. At least in the short run, PCE may be greater than income after taxes and savings will be negative. To make a little more sense out of it than the accountant's desire to balance ledgers, net savings may also (and relatedly) be considered as a flow of funds to or from stores of wealth. Indeed, the BEA handily provides a comparison of NIPA and flow-of-funds savings measures, and they track each other pretty well. (The latter series is a lot noisier.)
In addition to personal savings, NIPA also counts savings by businesses in the form of retained earnings and by government in the form of unspent tax dollars. In 2006, essentially all of the net savings recorded in NIPA, around $250 billion, came from businesses' retained earnings of some $400 billion. That year, personal savings were $39 billion, and the government sector dissaved to the tune of nearly $196 billion thanks mostly to the federal government's unified budget deficit. (State and local governments, which commonly operate under balanced-budget constraints and also may maintain small rainy-day funds, were net savers.) You may compare these to 2006 GDP of $13,195 billion, personal income of $10,983 billion, business income of $5,814 billion, and government revenues of $3,935 billion as you'd like.
2. The NIPA Measurement of Personal Savings
The basic relationship defining personal savings above may be simple enough on its face, but it does beg the questions of just what constitutes personal income (PI) and what is included in PCE (and how it's measured).
PI is a bit more straightforward than PCE. By far the biggest component of PI is wages, salaries, and benefits. Next is dividend and interest income. Then comes transfers, mostly from government benefits programs. Then comes income from business proprietorship, and finally a small amount of rental income.
Contributions to government social insurance programs (read, Social Security and Medicare) are subtracted from PI and added to government receipts. So accumulation of social insurance trust funds is considered savings in the NIPAs, though government rather than personal savings. Of course, as seen above the Social Security program's savings currently serve to offset in part dissavings elsewhere in the government sector, i.e. the "on-budget" federal deficit.
The other big question is, what is included in PCE? PCE tries to measure personal consumption quite broadly, covering consumption of durable goods (which have an expected useful life of three years or longer), non-durable goods, and services. Non-durable goods and market services are straightforward, at least in theory, in that those basically involve current expenditures for current consumption. For housing and other durables, the NIPAs offer something to make everyone a little mad, since those measurements involve a variety of assumptions and imputations that aren't necessarily innocent.
The big imputation relates to owner-occupied housing, a/k/a "owner's equivalent rent." The idea here is that houses and other residential structures are forms of fixed capital and the consumption is of shelter services produced using that capital. Renters pay for those services in market transactions, but owners — while they consume similar shelter services to renters of comparable dwellings — don't literally charge themselves rent. However, the rent that could hypothetically be obtained by renting out a house instead of occupying it is an opportunity cost of owner-occupation. That opportunity cost amounts to owners' implicit expenditures on shelter services. Importantly, there's no reason to view owners' mortgage payment(s), or lack thereof, as having any particular relationship to that implicit shelter expenditure.
The rent imputation helps make the measurement of housing services less invariant to how people obtain them. Think of two identical houses next door to each other, one of which rents for $10,000/year and the other of which is occupied by an owner who owns the house outright. In the absence of the imputation, PCE would measure only the $10,000 in market rent. If instead the owner rented the house next door, and rented out her or his house for the same $10,000, measured PCE would increase to $20,000 even though all we've done is move families between two identical houses.
Finally, and importantly for savings measurement, the imputation of rent effectively splits housing outlays into savings and consumption components. To the extent actual outlays exceed the imputed rent, the excess is treated as saving.
Economists of a reasonably orthodox bent shouldn't take issue with owner's equivalent rent at a conceptual level, but the actual measurement involves a fair amount of sausage-making. In particular, the owners' rent is extrapolated from market rents. While the rental-extrapolation method is based on the presumed existence of "well-developed" housing rental markets, in many cases those markets are quite thin in units comparable to the owner-occupied housing stock.
If you think the PCE methods are too economically pure for housing services, the BEA's methods are more expedient than correct for other consumer durables (e.g. autos). PCE simply includes the full selling prices of durables at the time of durable-goods sales. This would tend to make durable-goods PCE more volatile than actual durables consumption. This may also make NIPA savings appear relatively low during durables booms and high during durables busts.
A final large category of imputed consumption is for financial services provided without explicit charges. These services aren't free, of course; the associated expenses are usually subtracted off investment income before it's paid by the financial services providers. In this case, the NIPA methodology imputes both the value of the services and an addition to personal income for the subtraction, so it's on both sides of the savings equation and doesn't affect the measured level of personal savings.
A lot of criticism of the standard definition of personal savings boils down to potential differences between aggregate personal savings and an equation that shows the direction of personal assets:
Change in Assets = Net Cash Flow + Investment Earnings + (Unrealized) Gains or Losses from Asset Price Changes
The NIPA methodology explicitly declines to include the last term in income, regarding it as "reflect[ing] a change in wealth rather than a change in productive activity." However, changes in and levels of wealth are widely regarded as interacting with expenditures and savings behavior, so it's hardly irrelevant. We will turn to that in Savings 101b.
The industrial production report this morning was muddied by the auto parts strike. Overall
manufacturing output fell 0.8%, but excluding auto and auto parts manufacturing output fell
0.4%. Because the auto output is being distorted, and will generate a snapback of output when the strike ends, manufacturing output will not be giving clear signals for months.
To get around this I looked at manufacturing output excluding autos and auto parts. The compound, smoothed three month growth rate for this series is -2.0%. The three month growth rate of this series is a good, but not perfect recession indicator. But if the US is not going into a recession this was be the largest false signal this series has generated.
Jerry Bowyer is mocking that mythical character named recessionista again:
Retail spending dropped very little last month, and it didn’t drop at all if you exclude autos. Meanwhile, consumer spending has consistently been up compared to the same time last year. The consumer will simply stop spending? Hasn’t happened.
Oh, and gas prices will never, ever, ever reduce retail spending since gas is a component of retail spending. Chain stores own gas stations. More money spent on gas is not a subtraction from overall consumer spending, it’s a transfer from one retail department to another.
Basing big-picture assumptions on Case-Shiller is a faulty approach, too.
The following is a reworked version of a piece originally put up immediately after the release of the 2006 Report in response to what seemed a very worrisome development. After a long series of years of continual improvement in Social Security long term outlook, suddenly progress stalled and actually reversed, the payroll gap went from 1.89% in 2004 to 1.92% in 2005 to 2.02% in 2006. Cause for concern? Absolutely. Cause for action? Well lets do the numbers.
Can we quantify the price of inaction on Social Security? My starting point is this table from EPI Changes in Trustees Projections Over Time.
Note these are not EPI numbers, these are official numbers from the Annual Reports: "Source: Annual Reports of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Disability Insurance Trust Funds, 1996-2004." With the help of reader Paul in comments I can now present a series that is filled in and longer.
Report Date:::Payroll Gap:::Trust Fund Depletion
1996:::2.19%:::2029
1997:::2.23%:::2029
1998:::2.19%:::2032
1999:::2.07%:::2034
2000:::1.89%:::2037
My fundamental views about Social Security crystalized in the 1999-2000 period. Anyone looking at this number series and drawing the conclusion 'Man we got to start moving on this crisis, and soon' is simply innumeric. Maybe something would need to be done down the road but as it stood Trust Fund depletion was retreating at a rate of two years per year, suggesting it might never come. Now the Bush years and a more complicated story.
2001:::1.86%:::2038 (Reader Paul supplied these, and the series after 2004-thanks Paul)
2002:::1.87%:::2041
2003:::1.92%:::2042
2004:::1.89%:::2042
This is where President Bush entered the battle. Clearly progress was being made, Depletion was still being pushed out in date and this even true in 2004 when taken by month, I think there was about a nine month improvement over the course of the year. This progress didn't show up as much on the payroll gap side, but properly understood this is all the more cause for Inactivity. Doing Nothing in Bush's first term was the effective equivalent of a tax cut averaging 1.89% in each year, and all from the first dollar and not the last, for wage workers the Cost of Inactivity was money left in their pockets. Absent a better deal than what they were being offered they really had no reason to move. As it turns out Bush's implied preference, the Posen Plan did not in fact offer that deal, a point that was hammered home by Lee A. Arnold in a clever animation Econolanguage: Social Security now available on YouTube.
2005:::1.92%:::2041
2006:::2.02%:::2040 (this is what percipitated the early version of this post, that was not pleasant news)
2007:::1.95%:::2041
2008:::1.70%:::2041
Now let the fun begin. My oh my plenty of numeric fun to be added. Below the fold.
Lets take this as if it were a betting game, me betting my current dollar against some lost dollars going forward. Now clearly in any year that shows an absolute improvement in either magnitude of the gap and/or Depletion moving out in time is a winning bet for Nothing. As are a series of years with that same result. For example we could take it by term:
1996:::2.19%
2000:::1.89%
2004:::1.89%
2008:::1.7%
Winner, winner, chicken dinner!! Each term left four years of taxes not taken in peoples wallets and ended up with a cost per year going forward that was equal or less that the starting point of the term. The people who insist that 'There is no time to wait' 'Sooner is better than latter' and 'If we delay, if will only cost more in the end' in fact have no numeric evidence to back any of that up. Now certainly it is possible for this trend to reverse, in fact the outlook got considerably bleaker in the mid-ninties, things looked a lot better in 1993 then they did subsequently in 1997, which in the event showed 'crisis' at its peak. But that is just where the game gets interesting.
Lets say the 2009 Report shows a jump back to 1.95%. Does this make Nothing a losing bet, should we act this year after all? Not necessarily, you have to calculate the Cost of Inactivity for each individual. And moreover decide over what period you want to measure that. Moreover the effects are not necessarily reciprocal, at least over the short run. If the payroll gap actually goes up due to worse than projected current year results, that simply suggests the previous 'fix' would not in fact have fixed the entire gap, whereas when the gap moves down that current year dollar is real as real. But for the sake of argument lets say you could show that the entire uptick was due to failure to collect that one current year payroll dollar. How many years would it take to have that become a financial negative for any given individual. Well if you look at a situation where you have a level real wage when measured in constant dollars the calculation is pretty simple:
Amount of increase multiplied by years to retirement minus previous year payroll gap. For me in 2005 that worked out to:
.03 x 17 = .51 - 1.89% = -1.38%. That is over my working life Nothing in 2005 still worked out as a tax cut, just a little less than I might have hoped for. How about 2006?:
.10 x 16 =1.6% - 1.92% = -.32% Well kind of nets out as a skinny tax cut but one that works to one degree or another for everyone within 20 years of retirement. And of course the improvement from 2.02% to 1.95% meant Nothing was an absolute win short term and equally medium term. Take any year you like and multiply its payroll gap against the number of years between then and now. That is your cummulative tax cut equivalent for that span. Then use a variation of the equation to calculate how long it would have to be before that became a losing bet. The figure rapidly hits the hundreds of years.
Lets turn the bet on its head and look forward. What level of increase in payroll gap would actually make Nothing a losing bet? The calculation is a little more simple: Current year payroll gap divided by years to retirement or in my case 1.7% divided by 15 or .11%. Could the gap increase by that much? Well maybe, the jump in 2006 was close to that but even then I break even. Now if I was 22 and starting my first job I might take a little different attitude. I didn't see any benefit from the dollars not taxed. On the other hand if I was 28 and still struggling to pay off my student loans that roughly 2% a year not taken out of my paycheck probably looks pretty good.
From my perspective any year where the payroll gap is less than the 2.23% of 1997 is a call for Nothing as a plan. Certainly we want to take a hard look if the numbers start trending upwards year over year, but as long as the number is fluctuating around the 2% level there is really nothing to worry about. Once you calculate the Cost of Inactivity against the current utility of that payroll dollar. After all doing nothing in 2008 will leave the median household with about $1000 or close to the amount of the current stimulus check. 'Fixing' Social Security would then be the fiscal equivalent of taking away the punchbowl right as the party was scheduled to start. Nothing smart about that.
by Bruce Webb (noreply@blogger.com) on May 15, 2008 07:52 PM
Matthew Hay Brown gives me yet another reason to praise the Speaker of the House:
The oblique references continue. Some believe President Bush was alluding to Barack Obama this morning when he criticized "some people" who "seem to believe we should negotiate with terrorists and radicals." Now House Speaker Nancy Pelosi appears to be calling on John McCain to distance himself from the remarks Bush made before the Israeli Knesset. "You know, we have a protocol, sort of, a custom, informally, around here that we don't criticize the president when he is on foreign soil," Pelosi told reporters this morning. "One would think that that would apply to the president, that he would not criticize Americans when he is on foreign soil. "I think what the president did in that regard is beneath the dignity of the office of president and unworthy of our representation at that observance in Israel, and I would hope that any serious person would disassociate himself from the president's remarks, who aspires to leaderhip in our country." Asked if she was referring to McCain, the presumptive Republican nominee for president, the California Democrat repeated: "Any serious person. Any serious person."
Saying he takes Bush at his word that he wasn't speaking directly of Obama, McCain said, "It does bring up an issue I will be discussing with the American people, and that is why does Barack Obama, Senator Obama want to sit down with a state sponsor of terrorism?" McCain said in the back of his campaign bus. "What does he want to talk about with, with [Iranian President Mahmoud] Ahmadinejad who said that Israel’s a stinking corpse, who said that he wants to wipe Israel off the map, who’s sending the most explosive devices into Iraq, killing Americans?" he said. "The point is that peace through strength is the way we achieve peace in the world. That’s the point. I will debate this issue with Senator Obama throughout this campaign." Going farther, McCain continued to connect Obama with Ahmadinejad and highlight the Iranian leader's incendiary comments about Israel. "I think Barack Obama needs to explain why he wants to sit down and talk with a man who is the head of a government that is a state sponsor of terror that is responsible for the killing of brave young Americans and wants to wipe Israel off the map and denies the Holocaust," McCain said. "It is a serious error on the part of Senator Obama that shows naiveté and inexperience and lack of judgment to say that he wants to sit down across the table from an individual who leads a country that says and says that Israel is a stinking corpse, that is dedicated to the extinction of the state of Israel."
The report in yahoo news presents an odd twist in relation to government regulation and testing. For me it brings to focus the less than idealogical intent of our current administration.
The Bush administration on Friday urged a federal appeals court to stop meatpackers from testing all their animals for mad cow disease, but a skeptical judge questioned whether the government has that authority.
The government seeks to reverse a lower court ruling that allowed Kansas-based Creekstone Farms Premium Beef to conduct more comprehensive testing to satisfy demand from overseas customers in Japan and elsewhere.
Less than 1 percent of slaughtered cows are currently tested for the disease under Agriculture Department guidelines. The agency argues that more widespread testing does not guarantee food safety and could result in a false positive that scares consumers.
"They want to create false assurances," Justice Department attorney Eric Flesig-Greene told a three-judge panel of the U.S. Court of Appeals for the D.C. Circuit.
But Creekstone attorney Russell Frye contended the Agriculture Department's regulations covering the treatment of domestic animals contain no prohibition against an individual company testing for mad cow disease, since the test is conducted only after a cow is slaughtered. He said the agency has no authority to prevent companies from using the test to reassure customers.
"This is the government telling the consumers, `You're not entitled to this information,'" Frye said.
Chief Judge David B. Sentelle seemed to agree with Creekstone's contention that the additional testing would not interfere with agency regulations governing the treatment of animals.
"All they want to do is create information," Sentelle said, noting that it's up to consumers to decide how to interpret the information.
Larger meatpackers have opposed Creekstone's push to allow wider testing out of fear that consumer pressure would force them to begin testing all animals too. Increased testing would raise the price of meat by a few cents per pound.
Mad cow disease, or bovine spongiform encephalopathy, can be fatal to humans who eat tainted beef. Three cases of mad cow disease have been discovered in the U.S. since 2003.
The district court's ruling last year in favor of Creekstone was supposed to take effect June 1, 2007, but the Agriculture Department's appeal has delayed the testing so far.
History: How the US Grew the Military Industrial Complex.
The size of the US national security (war) machine is not related to threats to the nation nor any reasonable or efficient response to those wildly inflated threats. Threats are overstated and the solution to the fake insecurity is always the most expensive and profitable, neither effective nor efficient. Those are engineering specification terms never used to describe warfare state value.
Good to whittle beaks for profits and keeping the trough filled.
The US DoD outsourced weapons making after WW II. During WW II for profit industries: Chryser, General Motors, Kaiser Aluminum, et al, mobilized for the war effort made military weapons work and mass produced very good quality. Some may conclude that the mobilized private sector took defense firms' and arsenals' products to greater heights of quality and efficiency.
After the war the congress, National Security Act of 1947, decided to use private companies for arming a vaguely defined continuous mobilization. A largely unneeded and overly profitable arms establishment grew from the politics and greed.
Instead of being like the commercial companies which produced the weapons that won World War II, these nationall security industries quickly became for profit arsenals not as good as pre war public arsenals but more expensive with profits and enough money to buy congress. In 1961 Eisenhower called it the military industrial complex.
The motive for perpetual mobilization and long war is profit. In the 1940's the Air Force became the first and subsequently main customer of RandD Inc. We know it as RAND. This think tank is responsible for such concepts as Mutually Assured Destruction (MAD) and other plans to wage nuclear armageddon. Some think their analyses created the bloated military industrial complex. They advocated arming ourselves to the teeth while the Soviets were collapsing economically.
Other think tanks arose in RAND's image all funded by military industrial complex war profits and all selling the freightfully insecure alternatives of not buying all the unneeded super weapons.
Why does the US have for profit arsenals which are not effective? Short answer is the stuff is as related to security as wooden beaks strapped to the general's faces.
The think tanks sold the most expensive, unneeded solution and no one asked if any of it is "worth the taxpayers' dough" because there was a lot of money to be made. The useless war machine took funding from better uses that the poor and meek needed.
Then the "supporters" equate patriotism with militarism, masked by propaganda and war profits funded media blitzes.
Think tanks falsely defining the "strategy and structure" of the warfare state estabishment is one way to keep the trough filled with gold. Building on the services' "strategic investment objectives" is another.
None of it is worth the taxpayers' scarce money. But it is good for the military industrial complex, the trough.
Next week I will discuss how the think tanks sell "continuous mobilization" to keep them all whittlin beaks.
-------------------------
Another piece by ilsm
Yes.
This has been another version of Simple Answers to Simple Questions. Although, as some wag once noted, once is history, twice is parody, but the third time is a trend.
by Ken Houghton (noreply@blogger.com) on May 15, 2008 03:12 AM
The Trustees Report intermediate projection for Medicare costs in
2085 is about 11% of payroll.
This is on a bigger payroll than Social Security because currently
the Medicare tax is not capped. (If I were a rich person and looking
at that uncapped Medicare tax, I'd be lobbying for a cap and a
slightly larger tax tax rate up to the cap.)
By 2085 or so the real income of workers is projected, at 1.1% growth
per year, to be about 2 and a quarter times current income.
So, an average worker would be making about 90 thousand per year.
Out of that he would pay 11% or about 10 thousand per year for Medicare.
Sounds like a lot and is a lot. But note that his real income has
increased about 50,000 dollars a year from what it is today.
And of that he would be paying 10,000 to cover his old age medical
costs, which are expected to be... one would calculate about 400,000
dollars. Not that every worker would have such high expenses, but
that maybe one in ten workers would have 4 million dollars worth of
expenses, perhaps. And presumably you would have no way to know if
you would be the one.
But assuming everything worked out as predicted, you would still be
about 40,000 dollars better off each year PLUS have enough money to
pay for enormous medical costs that would presumably keep you
healthier and give you a longer life after you retired. And there is
no way you can avoid the medical costs. Either Medicare or private
insurance will cost essentially the same.
This is, of course, in addition to the Social Security costs that
would rise a much smaller amount just to pay for groceries over that
longer life expectancy.
So before you cut your head off and scream that Medicare is going to
bankrupt the nation and burden our youth, please look at least at the
actual costs we are talking about.
About a 5% increase in soc sec for the worker... or a total Soc Sec
and HI cost of 30% of payroll, of which the worker would pay half...
so 15% or about 13,500, leaving about 76000 for personal expenses,
investments and other taxes... or about 35 thousand more than you
have today. Your boss would pay another 13,500... but that is money
you would never see anyway and comes out of his share of the joint
value added from the worker-boss partnership. He's not getting hurt.
It's a lot of money, and wise people would work to cut the costs.
But it is not crippling and may be a better way to enjoy our higher
standard of living, by living longer and in better health, than by
buying a new Lexus and taking a trip to Las Vegas every year.
And remember, this is you paying for yourself. Our "youth" will pay
for their own benefits. Try not to be confused by pay as you go.
That is the way nature works.
----------------------
This one by coberly
Tom Dispatch has an opinion piece on something we have not really considered. The US military has a huge appetite for oil and products. We have not quantified this on the blog. The Bush Administration I suppose has not asked for a volume discount for oil or services, but it made me curious...
Every day, the average G.I. in Iraq uses approximately 27 gallons of petroleum-based fuels. With some 160,000 American troops in Iraq, that amounts to 4.37 million gallons in daily oil usage, including gasoline for vans and light vehicles, diesel for trucks and armored vehicles, and aviation fuel for helicopters, drones, and fixed-wing aircraft. With U.S. forces paying, as of late April, an average of $3.23 per gallon for these fuels, the Pentagon is already spending approximately $14 million per day on oil ($98 million per week, $5.1 billion per year) to stay in Iraq. Meanwhile, our Iraqi allies, who are expected to receive a windfall of $70 billion this year from the rising price of their oil exports, charge their citizens $1.36 per gallon for gasoline.Is the general thrust of the argument reasonable as the price of oil rapidly increases? How does a military totally dependent on access to oil deal with prices that are its lifeblood? What are the obligations in the ME, and does this square with our rhetoric??
When questioned about why Iraqis are paying almost a third less for oil than American forces in their country, senior Iraqi government officials scoff at any suggestion of impropriety. “America has hardly even begun to repay its debt to Iraq,” said Abdul Basit, the head of Iraq’s Supreme Board of Audit, an independent body that oversees Iraqi governmental expenditures. “This is an immoral request because we didn’t ask them to come to Iraq, and before they came in 2003 we didn’t have all these needs.”
Needless to say, this is not exactly the way grateful clients are supposed to address superpower patrons. “It’s totally unacceptable to me that we are spending tens of billions of dollars on rebuilding Iraq while they are putting tens of billions of dollars in banks around the world from oil revenues,” said Senator Carl Levin (D-Michigan), chairman of the Armed Services Committee. “It doesn’t compute as far as I’m concerned.”
Certainly, however, our allies in the region, especially the Sunni kingdoms of Kuwait, Saudi Arabia, and the United Arab Emirates (UAE) that presumably look to Washington to stabilize Iraq and curb the growing power of Shiite Iran, are willing to help the Pentagon out by supplying U.S. troops with free or deeply-discounted petroleum. No such luck. Except for some partially subsidized oil supplied by Kuwait, all oil-producing U.S. allies in the region charge us the market rate for petroleum.
Update: See Naked Capitalism on Wolf Becker and Posner on oil"
Take that as a striking reflection of how little credence even countries whose ruling elites have traditionally looked to the U.S. for protection now attach to our supposed superpower status.
Think of this as a strikingly clear-eyed assessment of American power. As far as they’re concerned, we’re now just another of those hopeless oil addicts driving a monster gas-guzzler up to the pump — and they’re perfectly happy to collect our cash which they can then use to cherry-pick our prime assets. So expect no summer tax holidays for the Pentagon, not in the Middle East, anyway.
Worse yet, the U.S. military will need even more oil for the future wars on which the Pentagon is now doing the planning. In this way, the U.S. experience in Iraq has especially worrisome implications. Under the military “transformation” initiated by Secretary of Defense Donald Rumsfeld in 2001, the future U.S. war machine will rely less on “boots on the ground” and ever more on technology. But technology entails an ever-greater requirement for oil, as the newer weapons sought by Rumsfeld (and now Secretary of Defense Robert Gates) all consume many times more fuel than those they will replace. To put this in perspective: The average G.I in Iraq now uses about seven times as much oil per day as G.I.s did in the first Gulf War less than two decades ago. And every sign indicates that the same ratio of increase will apply to coming conflicts; that the daily cost of fighting will skyrocket; and that the Pentagon’s capacity to shoulder multiple foreign military burdens will unravel. Thus are superpowers undone.
Heather Timmons reports:
When it comes to trade, Western farming subsidies undercut agricultural production in fertile areas of Africa, India’s commerce minister, Kamal Nath, said in a telephone interview, repeating the point that Americans waste more food than people in many other countries.
Of course the problem is that food prices are too high, causing people to go hungry. The truth is that the U.S. and European subsidies that cause the Post, the NYT, the World Bank and many NGOs to get apoplectic have the effect of lowering world food prices. That means that fewer people go hungry than would be the case without these subsidies. This isn't rocket science, it's almost definitional. The U.S. and European effectively pay their farmers to keep farming, thereby producing more food than otherwise would be produced. This may have negative consequences for farmers elsewhere in the world, but it does mean that supply is greater and prices are lower than they would be in the absence of the subsidies.
Mark Duggan and Fiona Scott Morton published a paper at NBER with this general conclusion:
Using data on product-specific prices and quantities sold in each year in the U.S., our findings indicate that Part D substantially lowered the average price and increased the total utilization of prescription drugs by Medicare recipients. Our results further suggest that the magnitude of these average effects varies across drugs as predicted by economic theory.
Lipitor, Zocor, Prevacid, Nexium, Zoloft, Epogen, Celebrex, Zyprexa, Neurontin, Procrit, Effexor, Advair, Paxil, Norvasc, Pravachol, Plavix, Allegra, Wellbutrin, Oxycontin, Fosamax, Vioxx, Singulair, Protonix, Actos, Ortho, Aciphex
According to Part D regulations, there are six “protected” therapeutic classes in which PDPs must be less aggressive with their formularies than in other therapeutic areas. All products in the HIV, anti-cancer, anticonvulsant, immunosuppressant, antipsychotic, and antidepressant categories must be included in all Part D formularies. While a PDP cannot exclude any drug in these categories, it can create financial incentives or administrative hurdles to affect a patient’s choice of drug....We do not know whether the restrictions applied to these classes have a measurable impact on the behavior of PDPs because in the first year of the program it was not clear how much CMS would oversee formularies. If restrictions are binding, their effect will be to reduce Part D’s effect on the substitutability among drugs (lower [gamma-sub-g]) and therefore reduce the PDP’s ability to extract manufacturer discounts.
To the extent that plans become more or less successful at negotiating prices in future years, the results may of course change. Secondly, we are unable to measure any ex post rebates which PDPs may have been able to negotiate and which affect net prices to PDPs. Such rebates do not appear on the invoice, which is the source of IMS data, and might be causing prices to be even lower than those measured here. If rebates are present, our estimates are a lower bound to the price reductions achieved by PDPs.
The other rebates that we do not measure are Medicaid rebates paid by manufacturers to the Medicaid program. Dual eligibles’ pharmaceutical purchases under Medicaid automatically generated this rebate. Once dual eligibles move into Medicare Part D plans, their pharmaceutical purchases occur at different prices, which is what we document here, but they no longer trigger automatic rebates. Any study of the total cost of Part D to the government would want to consider both sets of rebates.
by Ken Houghton (noreply@blogger.com) on May 14, 2008 04:09 AM
In the last post and particularly in comments there was some discussion of Present Value more fancifully described as Infinite Future Horizon in relation to Social Security solvency. Which raised the question: Why should current workers care about the interests of retirees in year 2041 or indeed 2086? as opposed to say the interests of uninsured children in the here and now? Because in large parts these populations overlap, today's 10 year old sick school kid will be 2055's new retiree (assuming he survives the illness). Given that under current assumptions he will be getting a better benefit in real terms than a similarly situated retiree today, why exactly is this particular policy matter elevated to the top of the agenda?
The key I think is to understand that advocates of Social Security privatization overlap with advocates of 'tax cuts in all circumstances' which in turn overlaps with the Norquistian 'drown it in the bathtub' people all of whom are starting from the ideological position 'Big Government is not the Solution, Big Government is the Problem'. These folks simply don't believe in Social Democratic solutions to anything, including Retirement Security. Never did, never will. I have to conclude that when someone tells me with a straight face that he is deeply concerned about retirement checks in 2086 but is simultaneously against funding SCHIPS because some insurance company might miss out on a premium dollar along the way that he is just trying to con me.
Movement Conservatives demonstrate every day that they simply don't believe in social solutions to social problems, instead they will continually assert that all solutions should start with the individual in the marketplace. Well the problem for them is that society perceived in the case of Retirement Security and Health Care market failures. Social Security did not solve the entire Retirement Security problem nor did a combination of Medicare and Medicaid solve Health Care. But both were and are tremendously popular because they moved the ball forward on these issues. Much to the alarm of people who do not draw a line between Social Democracy and State Socialism, believing fundamentally with Hayek that one leads to the other right along the Road to Serfdom. Social Security Privatizers taken as a whole are just Movement Conservatives. They can protest all they like, they can try their best to appeal to liberal guilt about future generations, but in the end it is all about rolling back the New Deal.
Present Value calculations showing a $10 trillion dollar additional theoretical funding gap beyond 2086 are simply a gimmick to disguise the fact that these people have a whole different set of Present Values. Those calculations are a recent innovation simply designed to allow Movement Conservatives to undermine trust in the Crown Jewel of the New Deal, that is Social Security. They cannot afford to have Social Security be perceived as a success, that would just to them be another step towards Serfdom, who knows the next step might be Universal Single Payer Health Care. Unfortunately for them they may well be right, at least about the next step. The road to Single Payer runs right through Social Security solvency, they are right to be afraid.
by Bruce Webb (noreply@blogger.com) on May 13, 2008 06:12 PM
we develop computer simulation models to investigate such issues. Over the past couple of years we've worked with economists and farm leaders to model the corn economy. The insights are sobering. For the past several decades, despite changes in Congress, different presidents, and new farm bills, net income from farm sales of corn has hovered near zero. Some years are better, of course, but these tend to be the exception, caused by draughts or events like the Soviet grain deal of the 1970s.
Farm income is like the water flowing through a faucet into a bathtub. Some of the flow of income is from selling crops and livestock, and some comes from government support. The problem for farmers is that this bathtub has a big drain, and farm families only get to live on what stays in the tub. If money flows in really fast, as in an unusual year, the water stays high for a while, but it always drops down to the level of the drain.
The flow through the drain is determined primarily by the costs of land and technology required for farmers to stay competitive (as long as they're on the commodity treadmill). Of all farm production expenses in 2000, 43% went to externally purchased crop inputs, 23% to livestock and feed expenses, and 23% to land related expenses and interest. Farmers have little choice but to pay these costs because of their weak bargaining position with landlords and large companies.
Since the inception of Freedom to Farm in 1996, $62 billion of its direct government payments have been used by farmers to pay higher land prices. Land values account for one-quarter to one-fifth of net cash farm income. Furthermore, $38 billion of the $62 billion increase in land values accrued to the balance sheets of non-farmer landlords.
Farm income doesn't have to flow down the drain, pulling rural communities along with it. Instead of following the examples of the biggest farms with the most specialized production, we might want to learn from farms with rotations that reduce inputs, and we might look for markets that gain a higher proportion of consumer dollars. Instead of continually turning up the faucet, we might instead try to reduce the drain.
While larger farms comprise a relatively small proportion of farm households, they account for a large proportion of agricultural production (the 18 percent of farms with sales of $100,000 or more produce about 88 percent of total farm sales) and rely on farm profits for a higher percentage of household income than smaller farms. Over 80 percent of farm commodity program payments go to farming operations with sales of $100,000 or more. Government payments accounted for 5 to 8 percent of total gross cash farm income over the last several years. For larger farming operations that received Government payments in 2004, these payments dropped from roughly 10 percent of gross cash farm income for farming operations with $100,000 to $250,000 in sales to 5 percent of gross cash farm income for farming operations with over $500,000 in sales.
The well-being of farm households is not determined solely by the annual income of their members. Household wealth can play an important role in alleviating the impact of sudden changes in income, and most of the wealth of farm households is in the form of farm business assets, particularly farmland.
Spatial Price Index
Despite the importance of the CPI and all the discussion about it one of the things we do not have is data to compare the price of living in one city or state as compared to another.
Well the Federal statisticians are working on it and the BEA just published a working paper by Bettina H Aten on Estimates of State and Metropolitan Price Levels for Consumption Goods and Services in the United States, 2005 http://www.bea.gov/papers/pdf/aten_estimates_state_metro_2005.pdf
The paper construction Spatial Price Indices (SPI) for the 50 states and Washington, D.C..
Moreover, in the index is also publishes a SPI for some 363 Metropolitan Statistical Areas.
Second it uses the SPIs to adjust estimates of real per capita personal income and real per capita GDP.
The results do not contain many great surprises, but it nice to get reliable data comparing the cost of living and to make realistic comparisons of living standards across the country.
For example, as we all knew the most expensive places to live in the US or New York, California, Boston and the Washington, D.C. area.
SPI PER CAPITA GDP
(US average = 100)
New York-New Jersey-Long Island 146.6 ..........85.5
San Jose - Santa Clara....................... 143.4 ........118.5
San Francisco.......................................139.9 ........112.2
Bridgeport-Stamford-Norwalk........ 134.7........ 143.5
Honolulu ..............................................131.4 ..........82.9
Boston-Cambridge-Quincy.............. 124.8 .........112.6
San Diego ............................................122.4 ...........98.9
Los Angles - Long Beach ..................120.5 ...........98.5
Manchester-Nashua NH ..................120.3 ...........94.0
Washington-Arlington-Alexandria .118.7 ..........133.5
Salinas CA.......................................... 118.5 .............81.7
Santa Barbara ....................................117.7 ............89.3
In Chicago the SPI is 107.1 and adjusted real per capita GDP is 109.2 while in Philadelphia they are 107.3 and 113,4, respectively. I’ve put a table comparing different cities under the fold. The message that comes through is that the places in the country with high real per capita gdp and lowest prices are the mid-sized, interior cities. Denver has an SPI of 95.5 and GDP of 139.6. Other cities with good numbers are Indianapolis with an SPI of 93.5 and GDP of 136.9.; Nashville SPI=94.2 & GDP=122.8. Minneapolis-St.Paul-Bloomington SPI=101.8 & GDP=128.3.
But sometimes numbers can be misleading or distorted. For example, Houston has an SPI of 98.5 and a GDP of 146.4. But the high GDP reflects the impact of oil. In contrast, real per capita personal income in Houston is only 115.5. Where I first noticed it was for New Orleans when it had a real GDP of 125.1 of the national average. For the entire state of Louisiana it raised the GDP to 113.0 and making it the eleventh wealthiest state. But per capita income was only 84.1, the second lowest state –Hawaii was the lowest state with per capita income of 76.7. Casper Wyoming had the highest GDP at 238.2 of the national average – how many oil wells do they have in Casper?
When you compare adjusted real per capita gdp by state there are several points that stand out.
First, the range is much narrower. In both cases Delaware is the wealthiest state and Mississippi is the poorest state. In Delaware it does not make much difference as it is 161.5 before adjustment and 160.1 after. But it makes a big difference for Mississippi, lifting it from 65.7 to 79.1. Before adjustment, Delaware is 2.5 times Mississippi but afterwards it is only two times.
The other big changes are for New York and California. New York falls from 107.7 to 80.2 while California falls from 119.3 to 89.3. The study does not publish detailed data on rural areas or small towns, but it shows the real per capita income, real gdp and the SPI in these areas are around 80. Because Los Angles and New York have below average GDP it does not offset the low living standards in the rural areas of the states. But apparently rural New York has its own problems as one of the lowest GDP I spotted was Kingston,NY with a GDP = 53.7. The lowest was Lake Havasu City, Az at 48.5.
After adjustment a bloc of Midwestern states with relatively low population density are ranked very high. They are Wyoming, North and South Dakota, Iowa, Nebraska, Minnesota and Colorado. I suspect a major factor here is that they do not have urban slums. Massachusetts falls
from 119.2 to 100.7 while Texas increases from 103.4 to 110.9. But otherwise, it is very hard to make broad generalizations about the impact of the SPI adjustments.
The Washington, D.C. real GDP data is significantly distorted by commuters. The output of workers commuting into the city are counted in GDP but they are not included in the population.
Public Agenda, is calling for submissions for another of their blog carnivals, this time on Medicare. If you want to submit an entry, we can put it up here at Angry Bear today.
Ben Evans reports that Robert Barr will run as a Libertarian:
Former Republican Rep. Bob Barr launched a Libertarian Party presidential bid Monday, saying voters are hungry for an alternative to the status quo who would dramatically cut the federal government ... If he wins the White House, he said he would immediately freeze discretionary spending in Washington. He also would begin withdrawing troops from Iraq and consider slashing spending at federal agencies such as the departments of education and commerce _ as well as at overseas military bases … "This notion that government owes something to people just because they're here does not resonate with me," he said. "This is not a charity." Barr, 59, quit the Republican Party two years ago, saying he had grown disillusioned with its failure to shrink government and its willingness to scale back civil liberties in fighting terrorism. He has been particularly critical of President Bush over the war in Iraq and says the administration is ignoring constitutional protections on due process and privacy.
Surely a hedge fund specializing in "adult industry investments" is either a sign of a recession or a sign of the Apocalypse.
(I'll be contemplating this at youporn.com [h/t Erin] for the rest of the day.*)
*Actually, I won't, and not just because I'm on a public computer. Too much Really Cool Stuff to read (all links gated; if anyone can find free links, e-mail me or post them in comments).
by Ken Houghton (noreply@blogger.com) on May 12, 2008 09:06 PM
Cactus has caught Stephen Moore lying to the readers of the Wall Street Journal again:
For most of the past 30 years, Mississippi has ranked as one of the poorest as well as one of the most litigious states. The two statistics are related … Shortly after winning election in 2003 by running on a tort-reform platform, Mr. Barbour stitched together a coalition of doctors, business groups, taxpayers and even unions to roll back the trial lawyer lobby … Almost overnight, the flow of lawsuits began to dry up and businesses started to trickle in … About 60,000 new jobs have arrived in four years – not a small number in a workforce of about 1.3 million – and a sharp improvement from the 30,000 jobs lost in the four years before Mr. Barbour took office … Thanks to Mr. Barbour, the state's unemployment rate is down to about 6% from nearly 9%. Last year, Mississippi's per capita income growth was 6.7%, third highest of the 50 states and well above the national average of 5.2%. Mississippi tort reform is making the poor richer
Louisiana grew 10.5 percent in 2007, down from 20.6 percent in 2006. These growth rates are substantially higher than any other state's. The rental income component of Louisiana's personal income was boosted in 2007 by $5.4 billion of Road Home subsidies from the U.S. Department of Housing and Urban Development (HUD). The subsidies are to persons whose homes had been destroyed or damaged by Hurricane Katrina. Mississippi, whose Homeowners' Assistance Program was funded $1.5 billion by HUD, grew 7.4 percent in 2007 up from 6.0 percent in 2006.
Per capita income. U.S. per capita income grew 5.2 percent in 2007, down from 5.6 percent in 2006, but equal to the average of the last four years (2004-07). Louisiana's per capita income was up 9.2 percent or $2,935. Much of the gain in Louisiana is accounted for by the Road Home subsidies which averaged nearly $1,250 per Louisiana resident. In Mississippi, housing subsidies added $530 to per capita income.
Tom's working on explaining Savings 101, so this is specifically to deal with the "issue with" retirement accounts.
Via Lawrence G. Lux, we find the A.P. (and maybe the NYT) highlighting a "study" by an investment management firm that "discovers" problems with the way people manage their 401(k)s:
Some of the diversification problems stemmed from concentrated holdings of company stock. Experts urge savers to hold no more than 10 percent to 15 percent of their accounts in company stock, pointing out that they could sustain significant losses if the company runs into trouble or goes bankrupt.
The Financial Engines study found that among savers eligible to receive company stock, more than one-third had more than 20 percent of their holdings in the company's shares. Some older workers had more than half their holdings in company stock, and workers with salaries under $25,000 also held a disproportionate amount of company stock, the study found.
On the level of savings, the study found that just 7 percent of 401(k) participants were saving the maximum allowed.
Look, Maw, those damned Kids don’t know how to manage their (401)k Funds. When are they going to learn that they have to spend 20 hrs. per Week evaluating good potential Investments. Listen to them complain that they don’t have the time–between raising children and working a 50-hour Workweek. (italics removed)
Nearly two-thirds of those earning less than $25,000 a year don't contribute enough to get the full company match, the study found. But 24 percent of those earning $50,000 to $75,000 a year and 12 percent of those earning more than $100,000 a year didn't get the full match, either.
Only slgihtly more than one-third of those earning less than $25,000 a year have enough disposable income to get the full company match, the study found. Meanwhile, 76 percent of those earning $50,000 to $75,000 a year and 88 percent of those earning more than $100,000 a year were able to qualify for the full match.
You don't invest in the market until you have money you can afford to lose.
by Ken Houghton (noreply@blogger.com) on May 12, 2008 06:26 PM
I mentioned this at Marginal Utility, but agree with rdan that it's worth mentioning to the (somewhat larger) AngryBear readership.
Kathryn Cramer has done some work with Wikipedia's External Links tool. The results are interesting, and I suspect the more tech-savvy (or persistent) than I will be able to leverage the work.
Discuss amongst yourselves.
by Ken Houghton (noreply@blogger.com) on May 12, 2008 05:53 PM
Came across a couple of videos. This first one is an issue of perspective on the thought of what is terroism or what is a terroist act.
This second one is just plain funny (at least to me). It spoofs on the Annie Oakley comment by Senator Obama.
On the economy side of things using my GFP (gross flower production), things were not as good as last year. What started off as a year with a bang, is now looking to be equal to last years numbers. We were up 21% end of March. End of April we were up 4.7%. As of Mother's Day, 2.6% on the year. Interestingly, looking at credit card use for the holiday months Valentines was up 23%, Easter was up 13% and now Mother's Day is down 27%. This is the shift I saw starting last August. But, cash sales are up for May 33%. They were up for January and February, but cash sales were down both March and April.
by Divorced one like Bush (noreply@blogger.com) on May 12, 2008 05:44 PM
LMS: the Liebman-MacGuineas-Samwick Non-Partisan Social Security Reform Plan.
Above we see Tables 1 & 2 of LMS. Its authors are interesting for a couple of reasons. One they are connected at pretty high policy levels to Administrations past, current, and future. In their own self description from LMS:
"The three of us – former aides to President Clinton, Senator McCain, and President Bush – did an experiment to see if we could develop a reform plan that we could all support. The Liebman-MacGuineas-Samwick (LMS) plan demonstrates the types of compromises that can help policy makers from across the political spectrum agree on a Social Security reform plan."
Which is well and good except that in this case 'spectrum' seems to span everything from (barely) left-center to right. This is bipartisan in the Lieberman sense, lets agree to slightly moderate a conservative position and call it good. Second coming of FDR it decidedly isn't. But back to the authors. Prof Jeffrey Liebman (of Harvard's Kennedy School of Government) is particularly interesting in that as well as being a former Clintonista he is currently one of the top three economists on Obama's economic team. When Social Security policy is being discussed in what I hope is an Obama Administration he is more than likely to be sitting at the table, something I view with a certain unease. And then there is Professor Andrew Samwick who around the time this plan was being drafted was Chief Staff Economist at the Bush Council of Economic Advisors (CEA), now and then a Professor of Economics at Dartmouth as well as maintaining an active blog presence through his old blog VoxBaby and his new one Capital Gains and Games. He is highly regarded by the Econobloggers generally as being an 'Honest Conservative' and has his stuff crossposted at EV, DeLong, and here. He is a nice guy but one with policy views on Social Security that are in my view profoundly worker unfriendly. Which is the topic of this post. I gave Prof. Samwick a heads up about this post and an open invitation to comment. Hopefully he will.
Why worker unfriendly? Discussion below the fold.
Lets start with Table 1. It is a matrix with twelve cells in four columns. The first column is kind of confusing, it represents a rather odd intermediate stage of LMS so we can put it aside for now and examine the three end state situations. As those who have followed this series along will remember, under the 2008 Intermediate Cost alternative Social Security is projected to return 78% of the scheduled benefit at Trust Fund depletion. This figure is up fairly significantly from the 2004-2005 timeframe in which LMS was drafted, a fact that justs adds more difficulty to their argument. If we examine the other nine cells we see a curious feature of this 'reform', in four out of nine cases it does not supply a 100% result. If you subtract out 'Two earner widowed' that drops to four out of six with a fifth at 101.6% being rather marginal. Which means that for whatever positive policy goals come out of LMS it is not exactly a 'fix' from the perspective of most workers. Indeed for the low income one earner it is barely a partial fix, closing as it does only a third of the gap.
But something is better than nothing isn't it? Hmm, not necessarily. Let's take a look at Table 2 and figure out what that 'Something' will cost. First we should point out that LMS proposes a 1.5% across the board increase in payroll tax in addition to the figures shown in Table 2. That 1.5% doesn't show up because the funds never hit the Trust Fund, instead they are placed in a PRA, a Personal Retirement Account, Table 2 in contrast represents the scored results of LMS on the Trust Fund itself as scored by the SSA Office of the Chief Actuary. So the total cost of LMS breaks down as follows:
1.5% payroll tax increase across the board
1.0% payroll equivalent by lifting the
