The Glade 4.0

Very interesting graph and comment from Ezra Klein:

I wonder what the projections were in 1970?

The only way to curb growth is to reduce services, isn't it? Especially if there is a whole generation of folks that outnumber the subsequent generations.

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In time, this too shall pass.

Interesting chart, but like the "Sin" chart from that other thread, completely pointless when you look at some of the major driving factors in health costs and how the countries used as examples treat those costs.

I think that's what Klein is getting at, though. Cutting benefits and raising taxes aren't enough to make the system sustainable in the long run, so we need to reform the underlying system in order to address the cost-drivers themselves.

I'd like to see where he got his projection information and the component costs of his reduction figures. From what I know about the deficit and already promised expenditures there is no way that this can be true.

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"...but there exists also in the human heart a depraved taste for equality, which impels the weak to attempt to lower the powerful to their own level and reduces men to prefer equality in slavery to inequality with freedom." - De Tocqueville

So what happens to medical research if we adopt the positions of those various countries' nationalized plans? Is the Fed going to relax regulations to reduce costs of R&D so those groups don't go bankrupt?

That aside, I'd love to hear the defense for why then we are proceeding with forcing this increase in costs via the current plan to later try and fix it again, instead of scrapping this effort and going after the real problem. From that article, its almost as if the author thinks this expensive 'reform" is needed to force us to actually address the real issue.

I believe the author is indicating that it will be impossible, politically and practically to "scrap everything" and fix it in one take. Reform will need to be an iterative process.

As usual, Ezra Klein is full of ****.

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*chuckle* Thank you for that enlightening critique, Khross.

CEPR already skewed their data set by using old GDP projection information. I don't know how they site their own critique of IOUSA as information (I didn't know self-citing was an acceptable tactic for presenting information).

I could dig deeper into the WHO's information and how the CBO calculated data (and from which of the three federal budget books it used) but I think they've already blown the goat on quality of inputs.

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"...but there exists also in the human heart a depraved taste for equality, which impels the weak to attempt to lower the powerful to their own level and reduces men to prefer equality in slavery to inequality with freedom." - De Tocqueville

RangerDave:

I imagine you regard Rush Limbaugh slightly more positively than I regard Ezra Klein. Beyond being economically wrong on nearly every point, Klein is a pro-government, pro-Keynes commentator that has the general understanding of a grapefruit. That said, the graph and the data it's drawn from are beyond bogus.

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They didn't cite their critique as a source for the graph, Elm. They linked to it "for further information" on the subject. The sources for the graph were the CBO' Long Term Budget Outlook from June 2009 (not exactly outdated, particularly for a discussion of projections going forward to 2080!) and the Wold Bank data.

Those particular CBO projections assume government spending will decline year to year, starting with the 2010 budget. Since there will be 0 real growth this year, was negative actual growth last year, and spending continues to rise, empirical evidence disproves any projections made.

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Heh. Come now, don't hold back; tell me what you really think of him.

Seriously though, Khross, I get the impression you just really hate it when people with a Keynesian and/or semi-liberal worldview get recognition and respect. Off the top of my head, I recall you expressing similarly intense disdain for Krugman, Cowen, McArdle, Yglesias, DeLong, and of course Keynes himself, not to mention all the politicians and judges you've maligned over the years. These are all people who are widely considered intelligent and well-informed, even by people who disagree with them. It seems like you think Keynesian and liberal perspectives are so inherently and obviously ridiculous that anyone who holds to them is necessarily either an idiot or a scoundrel. With respect, I'd say that's more an indictment of your own worldview, and it certainly makes it hard to take your critiques as seriously as I otherwise would.

I'm pretty sure the mistake you're making is to assume SS and Medicare will pay out 100%. SS is already, 25 years in advance, stating that they're not going to pay up. It's on the front page of their web site, saying they will only pay 77 cents on the dollar. So that's not going to run a deficit. The main problem is Medicare. BBut if you look it up, the UK for example spends a third as much on health care per capita. That' definitely comparing apples to oranges but if we were to somehow cut Medicare spending by 66% it wold definitely be solvent with the current tax rate.

Its not hard to disdain Krugman when he contradicts himself what he wrote less than a year ago and does so regularly.

Still how does puling a GDP estimate which shows continued growth thats pulled from before the start of the recession? (unless the graph somehow reverses the direction of our GDP for 2009 but doesn't show that it then represents a negative as a positive?)

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"...but there exists also in the human heart a depraved taste for equality, which impels the weak to attempt to lower the powerful to their own level and reduces men to prefer equality in slavery to inequality with freedom." - De Tocqueville

You're ok with a governmental system calculating its existence in robbing an average of 23% per person?

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"...but there exists also in the human heart a depraved taste for equality, which impels the weak to attempt to lower the powerful to their own level and reduces men to prefer equality in slavery to inequality with freedom." - De Tocqueville

Am I "ok" with it? Not exactly, but calling this "robbery" is a huge stretch. When SS was implemented the average age of a pensioner was eight years. Today, it is over twenty years. The system was never designed to pay benefits for that long, so it's no surprise that it can't pay out in full. I never would have supported using SS surpluses to fund the general budget but there's nothing that can be done about that now.

Sure there exists things we can do about it now and statin the existence of a wealthdestruction engine as being ok because it was more benign 60 years ago is hardly something I would call an argument in defense of.

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"...but there exists also in the human heart a depraved taste for equality, which impels the weak to attempt to lower the powerful to their own level and reduces men to prefer equality in slavery to inequality with freedom." - De Tocqueville

No there isn't. Simply killing SS entirely now, or alternatively forcing current workers to pay SS tax but not giving them any benefits so we can pay 100% to current or near-future pensioners, would result in far more "robbery" than paying 77% 25 years from now. Or perhaps you're suggesting we get rid of the tax now but still pay the full obligation to everyone whom has ever paid in? Where do you suppose we would get the money for that, you want to just print money for all of them and run a 40% of GDP deficit?

A wealth destruction engine? Seriously? It's forced savings for retirement. Anyone who's not an idiot does that. If SS hadn't been repeatedly raided, the only thing you'd "lose" from SS is the difference in the investment interest between the government investment and a similar private one. So, one or two percent on average?

RangerDave:

I can't bothered to re-hash the explanations of why the various people you mention are wrong any longer. I got enough of disproving them deliberately every time someone used them as a source. I'm sorry you weren't here for the weekly eviscerations of those sources. That said, there's an interesting confirmation bias present in the people you chose to mention; said confirmation bias is substantiated by the sources you generally choose to post. So, let me ask you something ...

How many "conservative" responses to Yglesias do you read for every blog post of his you read? How many non-Keynesian economic analyses do you read for every Keynesian one Krugman issues?

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Depends on the investment vehicle but the freedom to best secure one's future happiness has been taken away. For some it may be 1-2% for others it may be closer to 30% compounded annually.

Wealth destruction.

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"...but there exists also in the human heart a depraved taste for equality, which impels the weak to attempt to lower the powerful to their own level and reduces men to prefer equality in slavery to inequality with freedom." - De Tocqueville

Yeah, an investment that returns 30% per year is going to have a massive risk of loss. You can't just claim they're losing 30% compounded annually, you have to use the expected value, because while SS might prevent one guy from making 30% a year, it'll also prevent someone else from investing the money in such a high-risk speculative venture and losing everything, effectively generating wealth for that person.

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In time, this too shall pass.

Yeah, I try to keep the echo chamber effect in mind, and I recognize that Yglesias and Krugman in particular are politically partisan. But I'd argue that the people I identified - Krugman, Cowen, McArdle, Yglesias, DeLong - do represent a reasonable spectrum of mainstream opinion. On the health care reform bill, for instance, Krugman, Yglesias and DeLong support it, while Cowen and McArdle oppose it. On TARP and the ARRA, they all supported bailouts and stimulus as necessary to avert an immediate crisis, but while Krugman, Yglesias and DeLong wanted as much fiscal stimulus and additional regulation as they could get, Cowen and McArdle argued for more modest fiscal stimulus and targeted regulatory reform with greater emphasis on things like payroll tax reductions and monetary policy. Sure, all of those views are within the realm of mainstream political and economic thought, but they still represent pretty different policy preferences.

All of that said, in a typical week I read most of the following: The Atlantic blogs, Matthew Yglesias, the Washington Monthly blog, Tyler Cowen, the Corner at National Review (less than I used to, since I loathe Mcarthy, Thiessen, and Gallagher), Volokh Conspiracy, Glenn Greenwald, Outside the Beltway, and the Foreign Policy blogs. And of course, given the nature of online writing, I usually end up following various links provided in the foregoing.

If you have other recommendations that are less mainstream without being fringe, I'd appreciate the pointer.