Social Security
Thursday, December 16, 2004, 08:25 PM - Economy
Arnold Kling writes about Social Secuirty. He points out that the problems facing the system go far beyond how the current system is funded. A central problem is that, due to our increased lifespan, the number of post-retirement years that Social Security must support has increased greatly.

In reading around, what I find striking is that administration supporters, such as Volokh seem to spend more time discussing the nature of risk rather than the efficacy of the President's reform proposals. It makes me wonder what's going on.

Perhaps it's because the President's "reforms" do not begin to address the real problems. It leads to questioning the motive for his proposals. It's not hard to conclude that Bush's push is really about killing a core program of the New Deal for nothing more than ideological reasons.


Economic theory
Thursday, November 25, 2004, 01:49 PM - Economy
This stuff really can upset me, but I realize that I sound like a silly git because I don't have the time to really research my suppositions.

It seems to me that while wrapping economics with political theory is inevitble, it is tremendously unfortunate to the same degree that wrapping scientific findings with political/religious theory is counter-productive.

I think that an economic theory that does not take into account the cost of disposal and depletion is a theory that has not finished the job.


Circling Back
Sunday, November 21, 2004, 11:09 AM - Economy
Friday's post circles back to the first posts I made (about 3 generations ago, and they're not even online!).

I ask myself, what kind of snobbery are you talking about? Who is to decide what is "good" consumption vs. "bad" consumption? Isn't this the worst elitism possible? Just let the egalitarian market run.

But then I remember that the market is in no way egalitarian. US government policy clearly favors and supports a highway system over a mass-transit system, and the ancillary consumption patterns that support engenders. US government policy clearly favors the continued externalizing of the cost of pollution and resource exhaustion.

Changing these policies are not an act of elitism.


Consumption
Friday, November 19, 2004, 01:27 PM - Economy
This from Stephen Roach of Morgan Stanley:
Global imbalances are a shared responsibility that requires a joint resolution. America is guilty of excess consumption, whereas the rest of the world suffers from under-consumption. Growth in US consumer demand averaged 4% annually (in real terms) over the 1995 to 2003 period, nearly double the 2.2% gains elsewhere in the industrial world.

America’s consumption binge has not been supported by internally-generated income growth. Instead, US consumers have borrowed against the future by squeezing saving to rock-bottom levels.

...as the currencies of Asia and Europe strengthen in response to a weaker dollar, there will be downward pressure on exports in these two regions — the main drivers of their growth in recent years. This will force Asia and Europe to push hard to stimulate domestic demand in order to compensate — resulting in a reduction of saving and a related narrowing of current-account surpluses
What bothers me about this type of analysis is that it is strictly quantitative. Supply and demand economics does not account for a qualitative analysis, such as: what is the quality of the consumption.

The excess consumption in the US is, in my opinion, consumption for the sake of consumption with many of the products sold by Wal-Mart, for instance, being of an increasingly lower quality. It leads to ours becoming a churn economy, not a durable economy. The apparent salvation is to get other economies to follow suit. This seems tremendously short-sighted.



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