70 Year Old Dog Food

Optimal Economic Growth

In the past few days I have read several commentaries on USA Inc, a non-partisan report that looks at the U.S. federal government (and its financials) as if it were a business.  It is a very thorough report consisting of 266 pages which “examines the country’s income statement and balance sheet, aiming to interpret the underlying data and facts”.  The report also analyzes “the drivers of federal revenue and the history of expense growth, and discusses basic scenarios for how revenue and expense growth might change to help America move toward positive cash flow”.

If you feel you’re not quite up to reading 266 pages of hypothetical statistical analysis, you may want to read “Can America Function More Like a Fiscally Responsible Company? It’s up to Us, the Shareholders” by Sarah Lacy.  She points out in her analysis of USA Inc. that Medicare and Medicaid are the biggest culprits for why our financial situation is so untenable. Thanks largely to these unfunded entitlement programs our cash flow is negative $1.3 trillion, or about $11,000 per household.  Ms. Lacy also points out that 80% of Americans indicate balancing the budget should be a top priority, but only 12% support cutting spending on Medicare and Social Security– two of the biggest reasons our financial situation is so untenable.  In other words, America’s “shareholders” agree on the “company’s” ailments but are not willing to accept the “corporate cure”.

Matthew Yglesias on his blog “Think Progress” suggests there’s really a deeper issue here. “A state is fundamentally an ethical enterprise aimed at promoting human welfare. A business isn’t like that. If you’re trying to look at America from a balance-sheet perspective the problem is very clear. It’s not ‘entitlements’ and it’s not ‘Social Security’ and it’s not ‘Medicare’ and it’s not ‘health care costs’, it’s ‘the existence of old people’. Old people, generally speaking, don’t produce anything of economic value. They sit around, retired, consuming goods and services and produce nothing but the occasional turn at babysitting. The optimal economic growth policy isn’t to slash Social Security or Medicare benefits, it’s to euthanize 70 year-olds and harvest their organs for auction. With that in place, you could cut taxes and massively ramp-up investments in physical infrastructure, early childhood education, and be on easy street. The problem with this isn’t that it wouldn’t work.  It’s that it would be morally wrong.”

I hate to say it (I’m a senior citizen), but I think Mr. Yglesias is on to something here.  Because of our ever increasing national debt, our country's economy will sooner rather than later collapse and we need to take drastic action immediately.  Why not take the idea of euthanizing 70 year-olds and harvesting their organs for auction a step further.  We could grind up the remaining body parts, mix them all together and make dog food.  We could then sell it and use the profits to pay down the national debt.

The biggest problem however, is finding someone who will implement this idea and others like it, and actually run this country like a business and not let morality get in the way of a profitable business strategy.  And we don’t need any more spineless politicians.  We need a hard nosed, uncompromising, ruthless, corporate megalomaniac CEO who can get beyond minor moral issues and implement an effective and profitable dog food business.

Anyone watched "The Apprentice" lately?

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Tehran Where ?

Do You Know The Difference Between Arab And Persian?

Very Interesting.  Something you won't find in mainstream media.  Watch the video and then read the comment below the video that was posted by a "Persian" reader after viewing this video on the "Arab" cultural blog, "The Arabist" .



A couple years ago there was a pdf slideshow that had many of the same pictures as shown in the video above. As your comment (not everybody is a mullah?) sarcastically points out, a capitalistic/materialist life thrives for the elites of Iran as is true within many nation-states. More importantly, however, is the benefit of such images in combating misconceptions about Iran and the Middle East in general.

As an Iranian born and living in the U.S. (am I American? that's another story...) I value these images in order to provide a well rounded view of Iran. As you and many others may be aware of, Iran is in the mainstream news for certain topics and these certain topics only! (nuclear, Israel, terrorism, etc...)  Not to mention that most Americans don't know the difference between an Arab and Persian. Something that I work hard to dispel in the courses I teach (at a large public Midwestern University). While the video clip above is "strange" and the choice of music may seem random, it counterbalances the other images of Iran that are prevalent in Western media outlets.

I am a critic of the Iranian regime and would appreciate a more democratic and "secular" (is any govt. really secular?) regime in Iran. However, people in Iran, like my extended family, live average lives compared to the rest of the world and are not necessarily rich like the portrayal of some of the lifestyles in the video. However, Iranians that are middle class can travel and enjoy leisure time like much of the world.

The overall point is that when Americans say "I didn't know there were cities in Africa" because they only think of Africa has containing wildlife and tribal lifestyles, there is something wrong with how their perceptions are created. The same is true with how Egypt, Tunisia, Libya, etc... are portrayed in recent news coverage. As if Arabs could ever be civilized? Why do Americans and other westerners think this? This speaks to a large problem in our global order. One last example that may relate to the above video well is the representations of China - Americans still hold on to this lingering idea of an austere "communist" state. When in reality nothing could be further from the truth. Yes, there is a large peasant class in China, however there is a large and rapidly growing materialist/capitalist class. The term communism is void of all meaning when it comes to China. Therefore, not all Iranians are terrorists that hate the U.S.

Apologies for rambling, but since you didn't post much in terms of comment about the video I thought I might begin some dialogue.

Why Government Doesn't Work

I just got back from a trip to Washington D.C.  I visited with many U.S. Senators and Representatives and had the opportunity to take pictures of all of them.  When I got home I downloaded the photos to my computer and the weirdest thing...they all look exactly alike !!!

We Will Be Judged

A Big Guy For The Big Things?

Not A Clue

Can anyone look at the picture below and tell me which one is the Democrat and which one is the Republican?  Well, never mind.  It doesn't matter.  Neither one has a clue as to the seriousness of our national debt and budget problems.  The truth of the matter is that these two gentlemen just might be members of Congress and they think they can solve our fiscal problems by sticking their heads in the sand.

Goooood Pizza

Too Much Regulation, Too Much Legislation, And Too Much Taxation.


The more you watch the better it gets.

Remembering Ronald Reagan

Today Would Have Been Ronald Reagan's 100th Birthday.  I'm Old Enough To Remember This...

We Can't Kick The Can No More

Fix Social Security Now And You'll Like It. 

Fix It Later And You Won't.

by Charles Blahous  Mr. Blahous is one of the two public trustees for Social Security and Medicare, a research fellow at the Hoover Institution, and a former deputy director of the National Economic Council. He is also the author of "Social Security: The Unfinished Work"

Those of us concerned with the fate of Social Security watched President Obama's State of the Union address closely. We expected to learn whether the president would signal support for the proposals put forward by the bipartisan Commission on Fiscal Responsibility and Reform. But instead of commenting directly on the group's proposals—to change the benefit formula, the tax base, and the retirement age—Mr. Obama mentioned Social Security only long enough to issue vague warnings against "putting at risk current retirees" and "slashing benefits for future generations."

The president's admonitions were perplexing given the Social Security reform plans on the table. Neither Republican nor Democratic plans, nor the plan put forward by the commission, would cut benefits for today's seniors or for the poorest workers. Whether the status quo remains or the system is reformed, Social Security benefit levels will grow substantially from this point forward. That makes the president's warnings confusing at best.

To understand why, we need to start with the basics of the Social Security benefit formula. Since 1977, Social Security has employed a formula that links a retiree's initial benefit payment to growth in the national average wage index. Since wages tend to grow faster than prices, this formula pays younger cohorts greater benefits (in inflation-adjusted terms) than those paid to earlier retirees.

The rationale behind this is to provide the same replacement rate (i.e., benefits as a percentage of pre-retirement earnings) for "similarly situated" workers of different generations. In other words, if a typical worker's benefit today is 50% of his previous wage earnings, then that worker's grandson, assuming he occupies the same relative position in the national wage distribution, will also get a benefit equal to 50% of his own earnings.

What this means practically is that today's medium-wage retiree receives a benefit just below $18,000 at the normal retirement age. But benefits scheduled for a medium-wage retiree of 2050 would equal nearly $29,000 in today's dollars.

What's wrong with this formula? First, it's very expensive. As the baby boomers retire, we will soon have far more beneficiaries to support—90 million within 25 years. And if we continue to pay them according to the current formula, the inevitable result will be a huge increase in tax burdens.

Before the baby boomers began to hit the rolls in 2008, funding Social Security required less than one out of every eight dollars that workers earned. Under the current formula, workers of the 2030s will need to surrender one out of every six dollars they earn simply to fund this one federal program. A 2003 Congressional Budget Office report found that 55% of projected program cost growth was due to population aging. The other 45% was attributable to growth in real benefit levels.

The adoption of wage-indexing in the late '70s represented a significant departure from Social Security's previous rationale. The logic of wage- indexing essentially holds that even though tomorrow's $50,000 (inflation-adjusted) worker is no poorer than today's $50,000 worker, tomorrow's worker is poorer relative to those around him and should thus be entitled to a higher return than today's worker receives.

Some defenders of the current system argue that Social Security's benefits should grow with wages because, after all, worker contributions are assessed as a percentage of wages. But since Social Security is an income-transfer program in which current benefits are paid from current workers' taxes, no such proportional relationship can be preserved as society ages and there are relatively fewer workers to support each beneficiary. 

To slow the growth of tax burdens, therefore, the benefit formula must grow more slowly. Current wage- indexing doesn't create benefit equity across generations. Rather, it ensures that each successive generation must pay higher taxes to get the same replacement rate.

Most responsible reform proposals recognize that the benefit formula needs to change. Under the proposal put forward by the commission's co-chairs, Alan Simpson and Erskine Bowles, for example, the medium-wage worker of 2050 would get a benefit somewhat over $24,000 (in today's dollars) at normal retirement age. This amount is not as much as the current system is promising, but still offers far more purchasing power than today's retirees possess.

In no true sense, therefore, would any current Social Security reform proposal "slash" benefits. Leaders on both sides of the aisle should acknowledge that we are actually negotiating over a rate of benefit growth. The irony in all of this is that if we dither long enough, ultimately we will indeed face the threat of benefits being "slashed" by a full 22%, according to last year's Social Security Trustees' report. It's not a reformed Social Security system that threatens to cut benefits, but the status quo—and our elected leaders would do well to acknowledge this reality.