Dean Baker and Mark Weisbrot, Social Security: The Phony Crisis — February 15, 2014

Dean Baker and Mark Weisbrot, Social Security: The Phony Crisis

Badly PhotoShopped-together images of various things, including a clockwork and a $50 bill

I should never forget about Dean Baker. He and Paul Krugman are in the same corner, constantly taking a numerical hatchet to conservative presumptions about the economy. In [book: Social Security: The Phony Crisis], Baker and Weisbrot show conclusively that conservative ideas about privatizing Social Security just don’t make numerical sense. The stock market, for one, won’t guarantee huge returns unless the economy as a whole is growing at a stellar rate; and if the economy is growing at a stellar rate, then each of our pocketbooks will be engorged; and if each of our pocketbooks is engorged, then we should have no trouble funding Social Security far into the future.

I learned about Baker and Weisbrot’s book when Diamond and Orszag cited it. They devoted literally just one footnote to Baker and Weisbrot, and referred to them in the body of the text (not by name) as liberals who reject all efforts at privatization. They did this so that they could then position themselves as the reasonable centrists. I understand why they might have done this — they were writing during the Bush Administration, after all, when maybe they hoped they could placate their enemies by giving them half a loaf — but it turns out, having read Baker and Weisbrot, that Diamond and Orszag got it all wrong. Reading Baker and Weisbrot, the conclusion seems inescapable that there really is no Social Security problem at all. I really wonder what the four authors, put together in a room, would say to each other. I wonder if Diamond and Orszag would say, “Yeah, we know, but we had to say what we said when we said it.”

I want to buy copies of [book: Social Security: The Phony Crisis] for everyone I know. We’ve had the same ideas hammered into our brains for 30+ years by now: Social Security is going broke; we can’t afford the good life for all our citizens; taxes are too high. It’s important that someone occasionally step up and remind us that these aren’t facts; they were ideas invented by people who have an agenda that they’re trying to sell.

Most every page in [book: Phony Crisis] contains at least one idea that’s so clear, and so well-supported numerically, that I felt dumb for not having thought of it myself. How about this, for instance: people get so concerned that the country will have an intolerable burden on its hands as the Baby Boom generation ages, and the ratio of retirees to workers increases. But no one seems to be concerned about another population that contributes nothing to the GDP, namely children. We invest lots of money in children in the form of schooling, yet no one seems concerned that they’re going to bankrupt the country; we rightly believe that investing in children will make the country wealthier in the future.

So the number we ought to be looking at is the so-called “dependency ratio” — the size of the population that contributes nothing to GDP (retirees plus children, basically), divided by the overall population. FRED, my favorite source of data, comes to the rescue:

A graph that peaks at around 34% in 1969, and falls continuously to 22% by 2012.

You can juggle various indicators of what we’re trying to measure (namely: how much of a problem is the aging of the population?), but that’s kind of the point: these things can be measured, at least in a back-of-the-envelope way; and the more back-of-the-envelope counterexamples each of us has in our heads, the more immunized we’ll be against nonsense.

There’s another broad point that this book tackles: when we argue over seemingly abstruse accounting problems, such as whether to use chained CPI to measure inflation, we’re not just talking about arcane math; we’re talking about people’s real lives. You might think that someone else is engaging in a technical discussion, but there are real ethical choices buried in those numbers. The main ethical question is: are we in this together, as a society, or are we instead just libertarian billiard balls engaging in market transactions with each other? This really isn’t just accounting; it’s about nothing more or less than how a 21st-century democracy cares for its citizens over the industrial life-cycle. If you choose to tune out, and choose not to learn math, that’s your right, but the other side is making different choices.

Baker and Weisbrot are happy warriors in this battle. Their book ought to be in everyone’s coat pocket.

George Packer’s piece about Amazon is terrible — February 14, 2014

George Packer’s piece about Amazon is terrible

I have a deep love for George Packer’s work, going back many books. [book: Blood of the Liberals] is one of my all-time favorite books, though viewed in the context of the other books and articles he’s written, it’s condescending: *his* deep desire to find a liberalism that can appeal to the common man is somehow at odds with everyone else’s. Likewise, when George Packer came to oppose the War in Iraq, *his* ultimate decision to oppose it was thoughtful and well-meaning, whereas everyone else’s was reflexive and irrational.

The piece on Amazon is a long string of [foreign: ad hominem]s, including the requisite slam on engineers: “Everyone there is so engineering-oriented. They dont know how to talk to novelists.” That one example, it seems to be, contains the key to what’s wrong with the whole piece: throughout the piece, you ought to be asking, “Compared to what?” People with an engineering focus can’t talk to novelists, sure. So I assume Random House is filled with artsy types who are willing to forego a profit to take a flyer on some unknown, promising author? I have no experience in the publishing industry, but I am willing to wager huge quantities of money against that premise. Take a nice anonymous survey of authors — including aspiring or failed authors — who’ve worked with large publishers and let’s see what they think of the publishers’ author-friendliness.

Amazon is terrible for local bookstores, sure. But compared to what? How about you Google for [bookstore market share 1998]? Up comes a [newspaper: New York Times] article from that year titled “Independent Bookstores Struggle Against the Tide”. Quoth that article:

> In Tarrytown, the American Booksellers Association, a trade association, reported that while the independents held a market share of 31 percent in 1991, that number had dropped precipitously to under 19 percent five years later.

So let’s not romanticize the world that Amazon inherited. It was dominated by Borders and Barnes & Noble. At one point there was Waldenbooks, too.

It’s hard to find a sentence in Packer’s piece that doesn’t contain a tendentious interpretation of data that we all already experience. To pick just one:

> The digital market is awash with millions of barely edited titles, most of it dreck, while readers are being conditioned to think that books are worth as little as a sandwich. Amazon has successfully fostered the idea that a book is a thing of minimal value, Johnson said. Its a widget.

Did Amazon create this attitude? Who you gonna believe: George Packer, or your own lying eyes? Here’s what my impression tells me: back in the day, I used to buy music CDs, each of which I treasured and obsessed over. I’d buy an album or two, then spend the next few weeks digesting it lovingly. I’d read all the liner notes; I’d listen to it until I’d memorized every lyric and every last bridge. Then MP3s happened. Now I don’t see any liner notes; I don’t see cover art. For a time I used Napster, which allowed me to get unlimited access to free music. Each individual track, then, was valueless — literally costless. Nowadays I use Amazon MP3s, where most tracks cost $0.99. I also use Rdio, which allows me to stream most any song for free. I’ve used Songza and Pandora for similar purposes. In fact the default now seems to be that music is free (ad-supported). I don’t know, but I assume none of these services pays artists particularly well.

So music, in any case, has long since moved from a model where each work was an individual perfect snowflake to a model wherein it’s all basically wallpaper: you can get all the music you want at any time of day or night, and each individual track is a fungible commodity.

As for print media: you could argue that Amazon turned any individual bit of writing into a commodity, but that’s obvious nonsense. The presence of blogs had much more to do with that than did Amazon. The fact that I can get my hands on any newspaper from anywhere in the world had much more to do with that than did Amazon. My Instapaper queue is enormous, meaning that I have mountains of fungible text awaiting me. Amazon did not invent the commoditization of everything electronic; the Internet did.

Listen, I’m not 100% happy about this. I wish this blog post you’re reading were the most brilliant thing you’ll read all week. I wish you carried it rolled up under your arm; that you highlighted interesting passages with a pen; that you photocopied it at work and shared it with all your officemates. But that’s not how the world works anymore. Someone writes an article in a newspaper or magazine, and within hours thousands of blogs have digested that article for you. Now you can choose among thousands of blogs, each of which approaches that newspaper article from thousands of perspectives. I’m sure I could find a libertarian gun nut’s take on George Packer’s piece if I looked long enough in benighted corners of the Internet. But the point is that it’s all a commodity now. George Packer’s apparent dream, wherein each book is treated as a perfect, crystalline work of art, is many years out of date.

I think it’s even out of date for beautiful books published by reputable publishers. Years ago I read Yochai Benkler‘s [book: The Wealth of Networks], which is really a lovely book published by one of the best university presses. A university press! Shouldn’t they be the last bastions of hope for authors who aren’t chasing a profit? University presses are associated with non-profit institutions whose goal is to contribute to the sum of human knowledge. Yet even Benkler’s book, which is sort of a landmark in the field, was horribly edited. When I asked around about this, the word I got back is that authors are now expected to do their own copyediting, and are expected to submit “camera-ready” manuscripts. So much for publisher support.

At the risk of waving my hands too broadly at “society”, I am willing to blame capitalism just as much as I’m willing to blame Amazon or the Internet. Eventually everything becomes a commodity. Eventually everything gets driven down to marginal cost. If Amazon didn’t do it, someone else would.

I don’t mean to absolve Amazon. In fact I mean to praise them, which Packer is somehow unwilling to do. Everyone loves Amazon, right? They’re good for customers. Here’s Packer:

> Those were sweet words for a company that declares itself to be Earths most customer-centric company. Even its bitterest critics reluctantly admit to using Amazon, unable to resist its unparalleled selection, price, and convenience. When Bezos talks about serving the customer, its as if he were articulating his purpose in life. The customer is almost theological, James Marcus said. Any sacrifice is suitable for the customer.

That’s basically the extent of Packer’s praise for Amazon, which is incredibly odd. This is a company whose success is changing one industry after another, and Packer’s piece somehow attributes all of that success to malign influence — such as the infamous engineering attitude. How about this: it’s succeeding because it does right by its customers? Packer is just unwilling to admit that, because it would undermine the entire rest of the article — an article whose premise is that Amazon’s band of barbarians is toppling a once-civilized industry. This premise gets no support from Packer’s article. And somehow Packer never really addresses a question that ought to be fundamental: how could something be good for readers and not good for books, or good for authors, or good for publishers? I’m open to the possibility that there’s a conflict there, but really Packer ought to be asking: does Amazon make people read more, or less? Offhand, I assume that it makes them read more, because books are now cheaper. When people read more, that’s good for authors and publishers. That seems to be the fundamental calculus here, and Packer never once addresses it squarely.

I hate to say it, but Packer’s piece is garbage. I hope you read it in costless form on the Internet. When you do so, I expect that Packer will shed a single proud tear for the commoditization of his heretofore priceless work.

__P.S.__: The costlessness of the Internet means that my own blog post here is just a disposable commodity. Either I learn to deal with that, or I don’t. The dialectic doesn’t care especially much what I think about it.

I think this would be the MOST fun if it were actually a troll-shaped Barbie doll — February 12, 2014
I submit the radical hypothesis that communications media ought to be used insofar as they’re useful — February 11, 2014

I submit the radical hypothesis that communications media ought to be used insofar as they’re useful

Austin Frakt says conference calls should be more like Twitter. I agree! I would go further: I think that people should use each medium exactly so far as it’s useful, and should use each to augment the others. For instance, I believe that people should use email up to the point that everyone is talking past everyone else and the conversation is muddled, but no further. If there’s information to be conveyed that can’t be conveyed via telephone, I believe that it shouldn’t be conveyed via telephone. Likewise, if a rapid back-and-forth would be useful, I believe telephones should be used for that. If the conversation is more asynchronous, particularly if it’s happening across many time zones, I believe email is valuable for that. And I believe conducting part of a conversation over email, part over voice, is the right idea.

My “some methods are appropriate in some contexts, some in others” approach has made a big splash approximately nowhere.

Text explaining to Thai restaurants that this white man wants to eat the real stuff? — February 8, 2014

Text explaining to Thai restaurants that this white man wants to eat the real stuff?

Years ago a dear friend, fluent in Chinese, wrote out this little thing for me to hand out at Chinese restaurants:

> ??????????????,???????????????????????????????,???????????,????????????!????,????,?????????!

As I understand it, and as Google Translate confirms, it tells the reader that the bearer is not your average white man; he can handle the real shit.

Now I would like this in all languages. I would like it in Thai, in particular. Yes, I could feed some English text into Google Translate, but I wonder whether anyone out there in Internet-land knows how to say this sort of thing in Thai.

Chicago taxi drivers v. Uber — February 6, 2014

Chicago taxi drivers v. Uber

This is odd. If the synopsis is right, Chicago taxi drivers essentially object to the existence of services that are tantamount to taxi companies but aren’t required to submit to all the regulation of taxi companies. And then there’s the natural “we invested all this money in medallions, and now the absence of regulation is making them worthless” argument.

If that’s the state of the argument, then I’d retort with:

1. If consistency is what you’re after, then another answer is to weaken regulation on taxi companies rather than to strengthen regulation on Uber.
2. “Taxi medallions are a failed policy, but we have to continue that policy because we invested money in it and we can’t very well just fix the failed policy, now can we?” is basically a libertarian’s fever dream of what regulatory capture and bad government look like. Let’s not feed that.

If I had a car, I could pick up a friend in it and drive him or her anywhere. At the end of the ride, my friend could — if he or she chose — pay me for driving him or her. Friends routinely pay each other gas money, so this isn’t at all unheard of. Yet if I advertise my services as a driver, and people routinely come to pay me to drive them places, I’ve apparently now crossed over the line and have drawn the ire of taxi authorities. It’s weird. If we’re looking for consistency, let’s just drop these laws.

The market doesn’t always arrive at the correct outcome, and I can certainly see cases where an unregulated market in taxis could be a bad thing. Are taxis, for instance, required to pick up anyone regardless of the passenger’s race? A market solution to this would involve some notion of reputation: if particular Uber drivers in particular cities developed a reputation for not picking up black passengers, one hopes that reputation systems alone would lead the drivers to be scorned and would lead Uber to fire them. It’s an institutional question, and one worth solving.

But I, anyway, would need to be convinced that markets can’t do the job here. Until proven otherwise, I assume that taxi cab drivers’ protestations are mere rent-seeking.

You really don’t need to see Wolf of Wall Street — February 4, 2014

You really don’t need to see Wolf of Wall Street

It’s basically a movie about boobs. If you thought that it might have something interesting to say about Wall Street’s role in our broader society, it turns out that it doesn’t. In fact, to the extent that it interacts with the broader culture, it does so anachronistically: the movie mentions collateralized debt obligations in the same sentence as high-tech stocks, and only a few scenes away from 3.5-inch disks. Hard to think of an occasion when those three coexisted. It’s possible that the movie is meant to span decades.

But let’s not fuss over details; the movie clearly doesn’t want you to. Every time DiCaprio starts talking about the details of finance, he stops and tells the camera (breaking-the-fourth-wall style) that we probably don’t care.

So if your mental model of the movie is that it’s all about boobs, you are 99.5% of the way there. There are a couple of scenes that try to be didactic or play to the “common man” — e.g., when DiCaprio asks the FBI agent whether he’s ever been on a boat (meaning a yacht) before, and the agent replies that he’s been sailing boats since he was six; or when the same agent rides a subway at the end and experiences Thoughts or perhaps Feelings in the presence of other “common men”. But those are incidental, and have been thrown in for the hell of it.

Indeed, I think [film: Wolf of Wall Street] is part of an era of movies built for people with short attention spans. I can’t say when this started, and I’m not going to be so wistfully backward-gazing as to suggest that things were better in ye olden tymes. But a movie like [film: Wolf of Wall Street] is essentially built for the same people who loved [film: Anchorman].

Don’t get me wrong: I loved [film: Anchorman], and can quote it chapter and verse. But [film: Anchorman] wasn’t a great film, and certainly wasn’t a contender for the Best Picture Oscar; it was just a collection of funny jokes. [film: Wolf of Wall Street] is just a collection of breasts.

Sounds like “ObamaCare kills jobs” in the same way that “stopping people from smoking increases health-care costs” —

Sounds like “ObamaCare kills jobs” in the same way that “stopping people from smoking increases health-care costs”

I.e., this may be another “tyranny of accounting” problem. See Matt Yglesias for an example.

The usual story with how ending smoking could increase health-care costs is that people live longer, so the medical system has to take care of them when they’re older. (Though without looking at the numbers, I don’t know if this is true. It could be that smokers have to go through long, agonizing cancer treatments that end up costing the same.) By this measure, the best thing for the medical system would be if everyone died in infancy.

Likewise, ObamaCare might make it possible for more people to take part-time jobs now that they don’t need a full-time job to secure insurance; and it might allow people to retire earlier without fear of losing their insurance. I rejoiced almost four years ago that this might happen, and now the CBO thinks that it might.

If we think that people dropping out of the workforce because they can is a bad thing, that is equivalent to saying that it’s bad for people to have more choices. Likewise, if we think that it’s bad for people to live longer and cost society more for their health care, I submit that we’re measuring the wrong things.

Dani Rodrik, “Economics: Science, Craft, or Snake Oil?” — February 2, 2014

Dani Rodrik, “Economics: Science, Craft, or Snake Oil?”

This is a great piece, by the author of the exceptional [book: Globalization Paradox] (which I read years ago and never reviewed; shame on me). One of the basic themes underlying that book — and, I gather, underlying Rodrik’s [book: One Economics, Many Recipes] — is that reality is complicated, and that economics can give you diverse conclusions depending upon your assumptions. Different assumptions are appropriate for different contexts. Free trade doesn’t always, for instance, make the world a better place in the short run; there are winners and losers, and it’s not clear that the gains to the winners outweigh the losses to the losers (particularly if we attach ethical weight to a more-equal distribution of income). Only if you introduce the assumption that the winners can compensate the losers does this conclusion start to make sense.

There’s nothing wrong with assumptions; as the great John Tukey said, “Without assumptions there can be no conclusions.” If you’re going to argue that mathematics or science or economics has a poor track record in decision-making, the natural reply is, “Compared to what?” Compared to your gut, it’s not at all obvious that economics has done poorly.

Where the discipline does sin, according to Rodrik, is in telling a different story to the outside world than it does to its students. Graduate economics seminars, says Rodrik, very carefully tease out all the assumptions that make the conclusions true; what shows up in the newspapers does not (“free trade good; free markets good; industrial planning bad”).

Naturally, though, if you’re going to use economics for real-world decision-making, you need some way of testing which assumptions apply in a particular case. You need data. But doubly-blinded controlled experiments in economics are few and far between, if not outright impossible. So the discipline will always suffer from an abundance of models and a dearth of practical advice on how to use them.

Here I’m reminded of the very excellent “Deconstructing the argument for free trade”, particularly this bit:

> President Truman [allegedly] got so tired of hearing economists tell him “on the one hand…” that he wished for a one-armed economist. But frequently the best advice we can give is a menu of effects that flow from different choices. Trying to come up with a valid measure of the *net* effects is above our pay grade.

It’s a plea that economists show some humility. But since that seems to be in short supply, perhaps we need a belt-and-suspenders approach: the public, and policymakers, need to understand the limits of the discipline that they rely on.

(Rodrik link at the top via Cosma Shalizi’s Pinboard.)

Someone drove the trains to Auschwitz — January 29, 2014

Someone drove the trains to Auschwitz

Simply beautiful and haunting post by Corey Robin. It goes beyond the mere observation that “The only thing necessary for the triumph of evil is that good men do nothing.” It’s much more disturbing than that. The architecture of oppression depends upon many thousands of people doing their jobs *in the service of* that oppression.

To the question in there — would we fight like Pete Seeger if placed in a similar situation — the answer is probably no. I’m not answering for you; I’m answering only for myself. I’ve asked this question of myself a lot. Would I be the sort who sat at lunch counters with my black friends, drawing the jeers of segregationists? Unlikely. Threatened with the loss of my career, would I do as Seeger did and refuse to turn in my friends? I hope so, but it’s hard to map myself back into that era as anything outside the median.

And map it forward to today. What are the great issues of the day that I’m not only passively assenting to (e.g., the NSA wiretapping) but actively supporting? As I get more deeply into the trappings of bourgeois life — the wife, the kids, the home, the college educations to save for — what are the odds that I’ll resist? They seem to get slimmer by the year.

No hopeful moral here.