30 thoughts on “DC Event – The Hindu Equilibrium”

1. When I clicked on the link of the book, I thought I was going to get to a description on Amazon or Bookfinder or something, not another link to Cato.

   eww.

   Out of curiosity, what part of their terrible work do you like? Anyway, here’s a link to a paper that Lal wrote on essentially the same topic (I think).

2. what part of their terrible work do you like?

   Well, this one’s a favorite:

   … the Bush administration has consistently sacrificed sound policy to the god of political expediency… purchasing reelection votes has consistently trumped principle. In fact, what we have now is a president who spends like Carter and panders like Clinton… … George W. Bush is the most gratuitous big spender to occupy the White House since Jimmy Carter. One could say that he has become the “Mother of All Big Spenders.”

   And then there’s this chestnut:

   … the hawks’ rage against Hussein is based on emotions, not on sound analysis. The ever-changing reasons given for an invasion should lead one to be suspicious about the need for a war against the leader of a small, relatively poor nation. A deeper analysis of the hawks’ reasons for war show that they ring hollow… Even less has the administration proven that Iraq is a threat to the United States. Administration hardliners should not use the Sept. 11 tragedy to settle old scores with Saddam Hussein.

3. Saurav – stuff like this–

   The historical record is clear: the single, most effective way to reduce world poverty is economic growth. Western countries began discovering this around 1820 when they broke with the historical norm of low growth and initiated an era of dramatic advances in material well-being. Living standards tripled in Europe and quadrupled in the United States in that century, improving at an even faster pace in the next 100 years. Economic growth thus eliminated mass poverty in what is today considered the developed world. Taking the long view, growth has also reduced poverty in other parts of the world: in 1820, about 75 percent of humanity lived on less than a dollar per day; today about 20 percent live under that amount. Even a short-term view confirms that the recent acceleration of growth in many developing countries has reduced poverty, measured the same way. In the past 10 years, the percentage of poor people in the developing world fell from 29 to 24 percent. …High growth allowed East Asia to reduce the share of its poor during this period from 26 to 15 percent and the number of poor from 417 million to 278 million people. With annual growth rates of nearly 9 percent since 1979, when it began introducing market reforms, China alone has pulled more than 100 million people out of poverty. The more modest but increasing growth rate in India during the past decade means that the outlook of the poor in the two countries that make up half of the developing world’s population is noticeably improving.

   It’s precisely the type of stuff I enjoy throwing in the face of anti-globolists, arundhati Roy-fans, and anti-market folk everywhere. 😉

4. Yeah, it’s important for an ideologically consistent libertarian group to be speaking to people on the right on a whole host of issues. They’re not smarmy like Family Research Council.

   However, I disagree with their dogmatic emphasis on libertarian pro-business economics at the cost of anything else like here:

   Personal accounts are the right thing to do whether Social Security is solvent or not.

   and in their opposition to dealing with global warming. I think of CATO as on the wrong side of the fence because they’re ideologues. The fact that I can agree with them about some things nowadays says more about how horrendous the Bush Administration is.

   -s

5. heh –

   Personal accounts are the right thing to do whether Social Security is solvent

   This is PRECISELY the sort of stuff I agree with them most on — the debate on soc sec SHOULD be around principles of “ownership” rather than weird actuarial and lifespan tables. It’s almost a “liberal” position – that Rights (to my own $$$) should trump centralized resource allocations.

   Cato doesn’t disagree with global warming per se, they just don’t think it’s a “sky is falling” deal the way Greenpeace et. al. might.

6. V,

   Development and trade is an immensely complicated issue. The problem with the quote you presented and market fundamentalists like Cato in general is that there are no other values that are at play (like relative inequality, the environments, etc.). People like Amartya Sen, who clearly believes in “markets”, has a much more nuanced approach to democracy, development, etc. Why don’t you throw him in the faces of “anti-globalists” rather than Cato?

   Also, there’s a problem with believing that questions of resource distribution, etc, are solely a contest of ideas, rather than a contest of political power. Even people who have the wrong ideas may be representing social forces that will, more often than not, have good ones. And even people who represent destructive social forces will occasionally have some good ideas. It’s not only a couple specific policies that someone’s promoting that matters.

7. This is PRECISELY the sort of stuff I agree with them most on — the debate on soc sec SHOULD be around principles of “ownership” rather than weird actuarial and lifespan tables. It’s almost a “liberal” position – that Rights (to my own $$$) should trump centralized resource allocations. Your position isn’t “liberal”; it’s for transparency in political process (which I do agree with even if it’s unrealistic right now).

   But your substantive argument–well, we’ll have to agree to disagree. It underlies the social security debate at heart–whether social insurance (or as you put it, “centralized resource allocations”) should exist or not.

   It’s just that the Bush crew is generally better at political marketing than you (although in this case, they seem to have royally f$@ked up)–how do you think they got those huge tax cuts through? By telling Americans that wealthy people deserved their money?

   You also raise issues about what money is and whether you have a “right” to it or whether society has some claim over it given that it provides you with roads that need to be maintained, etc.

   By the way, if you want to talk about unfairness in the social security system, how about reducing the amount of money that small business owners have to pay into the system and compensating by increasing the cap after which payroll taxes aren’t taken out. I pay twice as much as someone who has an employer of their own: it’s outrageous; it probably helps stymie small business growth (as well as other kinds of organizations and activities); and we have no advocates who are making it a big issue.

   Wonder why.

8. People like Amartya Sen, who clearly believes in “markets”, has a much more nuanced approach to democracy, development, etc. Why don’t you throw him in the faces of “anti-globalists” rather than Cato?

   Something else we agree on – Amartya Sen is a good dude. This has gotta be one of my fav quotes of alltime from him –

   Reducing corruption in developing countries by opening markets would be reason enough to liberalize, even if no other economic benefits materialized.

9. I totally give Cato mega points for being intellectually honest about GWB, given the quotes Manish cited. But I’m afraid I just can’t shut up regarding this: Cato doesn’t disagree with global warming per se, they just don’t think it’s a “sky is falling” deal the way Greenpeace et. al. might.

   Meh. Not some touchy feely thing to be debated with Greenpeace. Anthropogenic Climate Change (a more accurately descriptive term than Global Warming) is much less in the ken of Cato’s economists and political thinkers and much more in the ken of the scientists with 928 peer reviewed journals in the ISI index. Cato should stick to what it’s good at.

10. Saurav –

    Market fundamentalists? My, my, my. If you don’t support private retirement accounts, can I call you a social security fundamentalist?

    PS: Saheli: If Cato wrote something positive about GW, would they still be ‘intellectually honest’? This is all like how conservatives love Christopher Hitchens now, right? If you agree with a person’s point of view, they are automatically honest and smart and good! Right? Works for me….

    (Sorry, I have to tease. It’s in my desi-American blood 🙂 )

11. Market fundamentalists? My, my, my. If you don’t support private retirement accounts, can I call you a social security fundamentalist?

    No, but you can call me a social insurance fundamentalist. I believe that society has a responsibility to ensure that its elderly don’t end up poor like they used to and privatizing social security and talking about “having a right to our money” is way to avoid doing that. People who object to Social Security and Medicare should really look up what life used to be like for old people in the United States. As well as what it’s like right now for countries with better safety nets.

    As for market fundamentalism, it’s not a term I made up (although I’ll acknowledge it’s used more often than not by critics of business/corporate agendas than not). Here’s George Soros in 1998 (who, remember, made all his money in the market):

    “According to Soros, the chief danger to stability is the emergence of what he calls ‘market fundamentalism’– the belief that the common interest is best served by individual decision-making and that attempts to maintain the common interest by collective action distort the market mechanism. “It is market fundamentalism,” he insists, “that has rendered the global capitalist system unsound and unsustainable.”

12. Cato should stick to what it’s good at.

    Saheli, this is my point. Cato does stick to what it’s good at–pushing a dogmatic ideological pro-business libertarianism that sometimes puts them against Bush policies, sometimes in favor (e.g. on global warming), but always excessively focused on their own ideology, not the empirical realities around them (granted, everyone does this to some degree, but they take it to a different level). I’ll give them props for being one of the only groups in the circuit of the Bush Administration to critique him for the war and some other things (which I thank Manish for pointing out), but I still hold that this is more reflective of exactly how horrible this administration is than that Cato is our Lord and Saviour.

    On an aside, it’s also foolhardy to be a libertarian that’s not suspicious of concentrations of private power (like corporations, among other things) as well as national governments. The former don’t reflect individual enterprise or any of those other so-called values of libertarians any more than government action does.

13. Cato does stick to what it’s good at–pushing a dogmatic ideological pro-business libertarianism

    I think this is a prima facie Good Thing. The “market fundamentalism” of the past 10-20 yrs has been a net good rather than a net bad & Soc Sec is far more than just “welfare for the elderly.” Let’s just agree to disagree for now.

14. I think this is a prima facie Good Thing. The “market fundamentalism” of the past 10-20 yrs has been a net good rather than a net bad & Soc Sec is far more than just “welfare for the elderly.” Let’s just agree to disagree for now.

    Let’s not. You can’t throw out something like “the ‘market fundamentalism’ of the past 10-20 yrs has been a net good” and expect other people not to respond.

    The idea of “a net good” in this context is ridiculous. “a net good” for whom? for what? you’re summing up the effects of this economic ideology on all the things that have happened economically, politically, and morally in the entire world over the past 20 years? If so, please back it up with some compelling, non-ideologically supportive references.

    I’m not an economics expert, but my point is that market fundamentalists don’t seem care that much about economics either–they care about their ideology, which is a pseudoscience masking either blind faith or an agenda to transfer wealth to wealthy people.

    So let’s call a horse a horse and stop pretending that market fundamentalism is really about economics. Dogmatism of any kind is not a “net good” almost ever (at least in terms of policy analysis).

15. Saurav – you do realize that federal employees are already eligible for something similar to the private retirement accounts the Bush administration is proposing?

    It’s called the Thrift Savings Plan. Please explain to me why it’s ok for federal employees to have this plan (including Congress men and women) but not the ‘average Joe?’ It these plans are so horrible and risky, why doesn’t Congress (especially the left side of the isle) propose getting rid of them?

    They won’t, because they are incredibly popular with federal employees.

    http://www.tsp.gov/

16. MD, as someone who has a TSP account let me explain by pointing you to Dan Froomkin’s Daily Whitehouse political brief:

    “But U.S. Rep. Jim Clyburn, D-Columbia, who watched the speech on television and said he could not tell who was clapping, was upset by the applauding lawmakers. “‘The largest and most sustained applause came in the speech where he made the biggest misrepresentation of the facts,’ Clyburn said. ‘I don’t understand why those people sit there and applaud that. They know better.'” Clyburn was referring to the stock line in Bush’s speech where he talks about the Thrift Savings Plan, and says that “if setting up a personal savings account is good enough for a member of the United States Congress, it is good enough for workers all across America.” Bush never points out that the TSP is available only in addition to Social Security and does not replace any part of it, unlike the president’s proposed “carve-out” accounts.

    Wait a minute. Doesn’t that sound like the idea Gore was pushing for in 2000?

17. Ah, I see. I have been misinformed.

    I thought that the ‘carve’ out was voluntary, as proposed? Also, why is it called a carve out. It’s your money. All you are doing is keeping more of it. The problem is how to make up for the funds when some people voluntarily remove their money, right, if you want to keep the benefits the same for everyone?

    Wouldn’t one way to do that be to means test and cut some benefits? Here’s what I don’t understand: why is it ok to raise taxes on someone making over a certain amount, but not cut benefits for the same person making over a certain amount? Hello? SM wonks, step up to the plate.

    This debate, for and against private accounts ‘carved’ out from Social Security, in reason magazine is interesting:

    http://reason.com/0504/fe.jk.the.shtml

    Tyler Cowen against; Jeffrey Glassman for.

    I still would prefer to have more of my own money to do what I want with. I don’t see why that is so unreasonable.

18. Here’s the other thing that freaks me out about SS: Basically, I have no control over what my benefits will be in the future. Whatever the governent decides, I’ll get. Same thing with disability, which praise God, I won’t need.

    So the natural tendency is to think: I’d rather have more of my payroll taxes now so that at least I know I have control over that amount, rather than hoping in the future I’ll get an equivalent (or more) amount back.

    I’m sure this is faulty reasoning and someone will tell me why this is so….

19. I still would prefer to have more of my own money to do what I want with. I don’t see why that is so unreasonable.

    Yes MD, that is because you are an MD. I trust YOU are smart enough and more importantly have the time and access to the information needed to properly invest your money. However, cynic that I am I don’t beleive the general public has the same intelligence, time, and resources as you and I do. Am I being elitest? Perhaps. But…if I am right than those people are going to make bad decisions with their money and blow it. Then they are going to be poor. We can’t ignore the subsequent poor and growing huddled masses, even if they did do it to themselves. That’s socioeconomical darwinism which I bitterly oppose. Personal accounts will help you and me, I have no doubt. The reason I am against them (the way Bush proposes) is that society in general will negate our (mine and yours) modest gains by causing us to eventually compensate for their poor investment decisions. If that’s the case than I’d rather support social security plus like Gore offered.

20. MD, I think Abhi put it well in framing this as a choice for wealthier people between social darwinism and paying higher costs later to subsidize the effects of bad investment decisions.

    I think, however, it’s more the former that’s on the minds of the people who are trying to destroy the program; they don’t intend to ever help out the people who end up suffering from this. The morally problematic part of the “I want to do what I want with my money” is that it totally ignores any sense of collective social responsibility. If you’re in the upper income brackets, you already get to keep more of “your money” than in almost any other wealthy democracy. In addition, if you make more than $90,000 in personal income, you already don’t get any taxes taken out for social security above 90K.

    The carve-out that you’re talking about is an incremental first step in destroying the entire program. It’s a strategy to take some funding away first and give it to people in the name of saving the program. Then, a few years from now, they’ll make the same argument again (“Social Security is in crisis! It’s going bankrupt!”) having helped to undermine its funding sources and in other ways gradually shift funding away from the program.

    That’s why I don’t support Social Security plus either–it would be an attempt to make inroads in destroying the program. Plus, alternatives to Social Security already exist–they’re called IRAs.

    If you really don’t think that collective social insurance needs to exist, then that’s your business, but I’m glad I live in a society where someone who spends 40 to 50 years working will have at least have some portion of their retirement covered by society. And btw, I currently pay twice as high a rate into social security and medicare as most people do (I’m a “sole proprietor”).

    On an aside, this Times magazine piece is the best article I’ve seen on social security and the drive to eliminate the program that I’ve seen in the mainstream media.

21. … if I am right than those people are going to make bad decisions with their money and blow it. Then they are going to be poor.

    What it boils down to is whether you want grandmas with bad financial planning skills dying in the streets again. But then, everything the gov’t touches turns into waste– not just SoSec but also defense. $14 billion per ship— that’s more than entire industries. Who’s paying for this? You are, as job security for Congressional incumbents:

    The Navy… wants more fast boats and aircraft to fight offshore and upriver, a speedier force to counter terror. But Congress, seeking to sustain America’s shipyards, wants as many big ships as possible… “It’s prehistoric,” said Harlan K. Ullman, a senior adviser at the Center for Strategic and International Studies, a research group in Washington that focuses on national security issues. “It’s an unbelievably regulated socialist industry, dominated by politics, not rational judgment. Because there is no competition, it’s very difficult to get efficiencies… It’s a monstrosity.”

    So you want a basic safety net as a civilized society, and retard creeping taxation above that net.

22. Guys, you think I’m worried because I’m an MD? Which are the initials to my name, incidentally 🙂

    Remember (or maybe you don’t since I’ve only mentioned it a couple times) I have a medical condition. That’s why the uncertainty of future government benefits scares me. I am able to earn now, but maybe not tommorrow? That’s why I’m worried. You can talk about safety nets all you want – me, I’d prefer to have the money now instead of thinking I’ll get it back later. You think all this about tax cuts and private investments is just cause I am greedy?

    You do have one point – if people opt out they can’t expect the government to make up for it if the investments don’t work out: which is not reality. They’ll expect it anyway.

    PS: Pankaj Mishra will be at Brookline Booksmith on the 26th I think, in case Boston SMers want to attend his talk.

23. everything the gov’t touches turns into waste

    Some of what appears to be “waste” is actually the government providing services that are not profitable (hence the market doesn’t do it). From what I remember this is a problem in understanding and defending social welfare policy–it’s easier to attack the government and say that the private sector does a better job because the private sector doesn’t deal with the most expensive, least profitable cases.

24. That’s why the uncertainty of future government benefits scares me. I am able to earn now, but maybe not tommorrow? That’s why I’m worried. You can talk about safety nets all you want – me, I’d prefer to have the money now instead of thinking I’ll get it back later.

    I didn’t realize you had a medical condition and I’m sorry if I said anything callous.

    I think, though, you’re missing the point that this part of the safety net is not for you and you alone, but for people in general. You pay all kinds of taxes that fund defense spending, debt payments, schools, roads, etc.; social insurance is just one of those things. From that perspective, the amount that gets taken for social security is a small fraction of what you earn (about 5% of your income).

    Personally, expanding the safety net to include universal health care coverage (like every other frickin civilized country that has the means to do it) would be a good idea. My uninformed guess is that it would probably hold down costs in the long run too, since Americans love to hate on their government (at least with respect to social programs) and constantly accuse it of waste.

25. MD, I’d never accuse you or anyone that believes in Bush’s plan as greedy. I also did remember your medical condition and understand how it plays in to your opinion. My point was simply the one that you pointed out:

    “if people opt out they can’t expect the government to make up for it if the investments don’t work out: which is not reality. They’ll expect it anyway.”

    Yes. And if there expectations aren’t met there will be class warfare. It could be argued that I am actually taking a conservative position on this issue. I don’t want my hard earned money going to poor people with inept financial skills. This is what will inevitably happen (as I see it) under Bush’s plan.

    As a total aside, this is why I actually support junk food and soda taxes. Some people say it is un-American and flies in the face of personal freedom. I say that I don’t want a cent of my hard earned money subsidizing the healthcare of someone who eats too many chips, has had three sodas by noon, and doesn’t excersise like me.

26. hey folks… been out of connectivity for the past few hours so I’m far behind on all the threads here.. but… this one was worth addressing –

    What it boils down to is whether you want grandmas with bad financial planning skills dying in the streets again.

    privitizing soc sec != eliminating welfare

    SocSec is designed to keep you in a certain income bracket well above poverty. Welfare is what keeps grandma from dying inthe street and is a much lower target bar.

27. Let’s not. You can’t throw out something like “the ‘market fundamentalism’ of the past 10-20 yrs has been a net good” and expect other people not to respond. The idea of “a net good” in this context is ridiculous. “a net good” for whom? for what? you’re summing up the effects of this economic ideology on all the things that have happened economically, politically, and morally in the entire world over the past 20 years? If so, please back it up with some compelling, non-ideologically supportive references.

    Aside from the poverty stats above (china = 100M fewer impoverished, india, perhaps half that) which stemmed from globalization, I don’t feel like discussing it it much more detail on this comment thread… we’ll have our chance to spar on this in the future….

28. SocSec is designed to keep you in a certain income bracket well above poverty.

    The average SoSec benefit in 3/05 was $10.4K/year. The poverty cutoff in 2005 was $9.5K/year. Doesn’t seem like it’s ‘well above poverty.’

29. Doesn’t seem like it’s ‘well above poverty.’

    It is cuz Soc Sec is above and beyond whatever other income you may / may not have (e.g. your company pension, etc.)

    You can even collect theoretically SocSec and welfare simultaneously.

    My point is that we need to separate SocSec (designed to be a “pension”) and Welfare (designed to eliminate poverty). You can be in favor of private pensions AND favor that the govt do direct cash handouts to help solve poverty.

30. My point is that we need to separate SocSec (designed to be a “pension”) and Welfare (designed to eliminate poverty). You can be in favor of private pensions AND favor that the govt do direct cash handouts to help solve poverty.

    One of the most irritating things about Americans (from my vantage point) is that, politically, they don’t support means tested welfare programs; that’s why the old-age insurance system was built to provide everyone, rich and poor, with some income. It’s the only way it’s politically feasible in the U.S. Read some of this essay by Theodore Marmor for more detail about this annoying facet of politics in the U.S.(forewarning: I only skimmed the first paragraphs).

    What you’re proposing (a means tested program to alleviate poverty among old people and others) is like AFDC–which used to be the program we called “welfare”. There’s a political reality as to why it no longer exists (as much as I don’t like that reality), and if we took your advice about Social Security, that would be the first step in ensuring that the social insurance system ended too.