NYT: American Critiques Scandinavia Social Welfare State
Robert Cohen
PERSPECTIVE
We're Rich, You're Not. End of Story.
By BRUCE BAWER
Published: April 17, 2005
OSLO - THE received wisdom about economic life in the Nordic
countries is easily summed up: people here are incomparably affluent,
with all their needs met by an efficient welfare state. They believe it
themselves. Yet the reality - as this Oslo-dwelling American can
attest, and as some recent studies confirm - is not quite what it
appears.
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Even as the Scandinavian establishment peddles this dubious line, it
serves up a picture of the United States as a nation divided,
inequitably, among robber barons and wage slaves, not to mention armies
of the homeless and unemployed. It does this to keep people believing
that their social welfare system, financed by lofty income taxes,
provides far more in the way of economic protections and amenities than
the American system. Protections, yes -but some Norwegians might
question the part about amenities.
In Oslo, library collections are woefully outdated, and public swimming
pools are in desperate need of maintenance. News reports describe
serious shortages of police officers and school supplies. When my
mother-in-law went to an emergency room recently, the hospital was out
of cough medicine. Drug addicts crowd downtown Oslo streets, as The Los
Angeles Times recently reported, but applicants for methadone programs
are put on a months-long waiting list.
In Norway, the standard line is that there must be some mistake, that
such things simply should not happen in "the world's richest country."
Why do Norwegians have such a wealthy self-image? Partly because,
compared with their grandparents (who lived before the discovery of
North Sea oil), they are rich. Few, however, question whether it really
is the world's richest country.
After I moved here six years ago, I quickly noticed that Norwegians
live more frugally than Americans do. They hang on to old appliances
and furniture that we would throw out. And they drive around in wrecks.
In 2003, when my partner and I took his teenage brother to New York -
his first trip outside of Europe - he stared boggle-eyed at the cars in
the Newark Airport parking lot, as mesmerized as Robin Williams in a
New York grocery store in "Moscow on the Hudson."
One image in particular sticks in my mind. In a Norwegian language
class, my teacher illustrated the meaning of the word matpakke -
"packed lunch" - by reaching into her backpack and pulling out a hero
sandwich wrapped in wax paper. It was her lunch. She held it up for all
to see.
Yes, teachers are underpaid everywhere. But in Norway the matpakke is
ubiquitous, from classroom to boardroom. In New York, an office worker
might pop out at lunchtime to a deli; in Paris, she might enjoy quiche
and a glass of wine at a brasserie. In Norway, she will sit at her desk
with a sandwich from home.
It is not simply a matter of tradition, or a preference for a basic,
nonmaterialistic life. Dining out is just too pricey in a country where
teachers, for example, make about $50,000 a year before taxes. Even the
humblest of meals - a large pizza delivered from Oslo's most popular
pizza joint - will run from $34 to $48, including delivery fee and a 25
percent value added tax.
Not that groceries are cheap, either. Every weekend, armies of
Norwegians drive to Sweden to stock up at supermarkets that are a
bargain only by Norwegian standards. And this isn't a great solution,
either, since gasoline (in this oil-exporting nation) costs more than
$6 a gallon.
All this was illuminated last year in a study by a Swedish research
organization, Timbro, which compared the gross domestic products of the
15 European Union members (before the 2004 expansion) with those of the
50 American states and the District of Columbia. (Norway, not being a
member of the union, was not included.)
After adjusting the figures for the different purchasing powers of the
dollar and euro, the only European country whose economic output per
person was greater than the United States average was the tiny tax
haven of Luxembourg, which ranked third, just behind Delaware and
slightly ahead of Connecticut.
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Robert Cohen
Published: April 17, 2005
(Page 2 of 2)
The next European country on the list was Ireland, down at 41st place
out of 66; Sweden was 14th from the bottom (after Alabama), followed by
Oklahoma, and then Britain, France, Finland, Germany and Italy. The
bottom three spots on the list went to Spain, Portugal and Greece.
Alternatively, the study found, if the E.U. was treated as a single
American state, it would rank fifth from the bottom, topping only
Arkansas, Montana, West Virginia and Mississippi. In short, while
Scandinavians are constantly told how much better they have it than
Americans, Timbro's statistics suggest otherwise. So did a paper by a
Swedish economics writer, Johan Norberg.
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Contrasting "the American dream" with "the European daydream," Mr.
Norberg described the difference: "Economic growth in the last 25 years
has been 3 percent per annum in the U.S., compared to 2.2 percent in
the E.U. That means that the American economy has almost doubled,
whereas the E.U. economy has grown by slightly more than half. The
purchasing power in the U.S. is $36,100 per capita, and in the E.U.
$26,000 - and the gap is constantly widening."
The one detail in Timbro's study that didn't feel right to me was the
placement of Scandinavian countries near the top of the list and Spain
near the bottom. My own sense of things is that Spaniards live far
better than Scandinavians. In Norwegian pubs, for example, anyone rich
or insane enough to order, say, a gin and tonic is charged about $15
for a few teaspoons of gin at the bottom of a glass of tonic; in Spain,
the drinks are dirt-cheap and the bartender will pour the gin up to the
rim unless you say "stop."
In late March, another study, this one from KPMG, the international
accounting and consulting firm, cast light on this paradox. It
indicated that when disposable income was adjusted for cost of living,
Scandinavians were the poorest people in Western Europe. Danes had the
lowest adjusted income, Norwegians the second lowest, Swedes the third.
Spain and Portugal, with two of Europe's least regulated economies, led
the list.
Most recently, the Danish Ministry of Finance released a study
comparing the income available for private consumption in 30 countries.
Norway did somewhat better here than in the KPMG study, lagging behind
most of Western Europe but at least beating out Ireland and Portugal.
The thrust, however, was to confirm Timbro's and Mr. Norberg's picture
of American and European wealth. While the private-consumption figure
for the United States was $32,900 per person, the countries of Western
Europe (again excepting Luxembourg, at $29,450) ranged between $13,850
and $23,500, with Norway at $18,350.
Meanwhile, the references to Norway as "the world's richest country"
keep on coming. An April 2 article in Dagsavisen, a major Oslo daily,
asked: How is it that "in the world's richest country we're tearing
down social services that were built up when Norway was much poorer?"
Obviously, this is one misconception that won't be put to rest by a
measly think-tank study or two.
Bruce Bawer,a freelance writer based in Oslo, reports frequently on
social and cultural issues.
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Martin Holterman
> We're Rich, You're Not. End of Story.
>
> Published: April 17, 2005
>
>
> (Page 2 of 2)
>
>
>
> The next European country on the list was Ireland, down at 41st place
> out of 66; Sweden was 14th from the bottom (after Alabama), followed by
> Oklahoma, and then Britain, France, Finland, Germany and Italy. The
> bottom three spots on the list went to Spain, Portugal and Greece.
>
> Alternatively, the study found, if the E.U. was treated as a single
> American state, it would rank fifth from the bottom, topping only
> Arkansas, Montana, West Virginia and Mississippi. In short, while
> Scandinavians are constantly told how much better they have it than
> Americans, Timbro's statistics suggest otherwise. So did a paper by a
> Swedish economics writer, Johan Norberg.
>
> Norberg described the difference: "Economic growth in the last 25 years
> has been 3 percent per annum in the U.S., compared to 2.2 percent in
> the E.U. That means that the American economy has almost doubled,
> whereas the E.U. economy has grown by slightly more than half. The
> purchasing power in the U.S. is $36,100 per capita, and in the E.U.
> $26,000 - and the gap is constantly widening."
>
AE
Purchasing power is high, but having a look at the purchasing power of
individuals one gets aware that the one of the two quantiles with the
lower incomes (half of US population) is falling fairly fast, third
quantile's purachasing power is stagnating and only the one of the
fourth quantile is growing - growing fast enough to compensate the rest.
Only the mavericks are growing really fast.
That's surely a development that takes plase in a similar way all around
the western world, due to the current Kondratieff minimum, but on the
one hand it's by far more extreme in the US than in Europe, on the other
hand, it simply puts the numbers given in the articles into perspective.
Economy is growing in the US, but it is based on a rapidly growing
amount of debt - be it the external trade deficit, the budget deficit or
the rapidly growing debts of individuals. The result is an economy
developing towards a collapse - a development causing the value of US
dollar to fall continuously, despite the pool support of China and Japan.
Slow growing or even stagnating European economies are much more
promising - and I intend to live her not only right now, but let's say
for five decades to come.
Independent of the numbers there is the personal impression of the
writer of the text.
He is right: Economic status of a healthy person in US middle class is
higher than in any European nation. Would this person pay insurance to
reach the same protection in the case of social descent or long-term
illness, things would change quite a bit. Having a look at the groups
with lower income, things are changing completely: An example is the
fact a member of US underclass has education and life expectancy similar
to a person in a developing country.
So, yes: I would have higher purchasing power when living in the US than
here in Europe, but (independent of the fact that due to the whole
development of that country I would not migrate to the US for all money
of the world) I'm preferring the security of a European nation.
Michael E Craney
says...
> Robert Cohen wrote:
> > We're Rich, You're Not. End of Story.
> >
> > Published: April 17, 2005
> >
> >
> > (Page 2 of 2)
> >
> >
> >
> > The next European country on the list was Ireland, down at 41st place
> > out of 66; Sweden was 14th from the bottom (after Alabama), followed by
> > Oklahoma, and then Britain, France, Finland, Germany and Italy. The
> > bottom three spots on the list went to Spain, Portugal and Greece.
> >
> > Alternatively, the study found, if the E.U. was treated as a single
> > American state, it would rank fifth from the bottom, topping only
> > Arkansas, Montana, West Virginia and Mississippi. In short, while
> > Scandinavians are constantly told how much better they have it than
> > Americans, Timbro's statistics suggest otherwise. So did a paper by a
> > Swedish economics writer, Johan Norberg.
> >
> > Contrasting "the American dream" with "the European daydream," Mr.
> > Norberg described the difference: "Economic growth in the last 25 years
> > has been 3 percent per annum in the U.S., compared to 2.2 percent in
> > the E.U. That means that the American economy has almost doubled,
> > whereas the E.U. economy has grown by slightly more than half. The
> > purchasing power in the U.S. is $36,100 per capita, and in the E.U.
> > $26,000 - and the gap is constantly widening."
> >
> And what if we just don't care about that ,8 %?
How can you not? Let's see the impact of .8% over 25 years on much
smaller numbers:
Supposing a given couple has a retirement plan in which they stay
comfortably solvent over 25 years. They retire with $750K in the bank,
collect $2800 in SS between them. 25 years after retirement, assumimg an
inflation rate of 4.85% and an average retirement return on investment
8.5%, they still have 250K left 25 years after retirement.
Assume the average inflation rate is 4.85% + .8% = 5.65%. In this case,
instead of having over a quarter of a million 25 years after retirement,
their cash balance goes negative 19 years after retirement. They have to
decrease their standard of living in order to remain solvent. If they
don't, they'd be over half a MILLION in the hole after 25 years.
In short, .8% compounded over 25 years is a big number. You may not
care, and that's your business, but I do.
Martin Holterman
I have a degree in economics, and I'm quite comfortable working with
compound interest. I'm not sure if your example quite adds up, though.
Perhaps you should have picked a different example.
You could have just shown what 3 % and 2,2 % over 25 years mean: 2,0938
and 1,7229 respectively. That is a difference of 21,5 %.
The point of my post was simply to argue that too many people are
getting too exited about a few basis points of economic growth or
inflation, forgetting that it might be worth it to sacrifice those 0,8 %
growth per annum to get a "fairer" distribution of income, or more
generally a more just society.
Martin Holterman
Michael E Craney
says...
Obviously my example is dependent on other assumptions, but that's
beyond the point (and could potentially bore the hell out of other
readers.)
>
> The point of my post was simply to argue that too many people are
> getting too exited about a few basis points of economic growth or
> inflation, forgetting that it might be worth it to sacrifice those 0,8 %
> growth per annum to get a "fairer" distribution of income, or more
> generally a more just society.
It's perfectly reasonable to raise this as a policy question. When you
focus on the .8% apart from the underlying policy question, it has the
effect of minimizing the issue, since to the non-
economist/investor/mathematician, it *sounds* like a trivial amount of
money. After all, who would be concerned if a person grossing 100K
suddenly took a pay cut to 99.2K due to a tax increase? Sounds trival.
Thus, I think it's proper (and necessary) to bring in examples which
illustrate the magnitude of the compound over time. Good information
leads to good policy, and the reverse is also true.
Another one would be an example which adds .8% to the expense ratio of a
mutual fund returning 12% a year over 25 years. In that case, the total
return decreases by 15%.
Mike
Bret Cahill
< sacrifice those 0,8 % growth per annum to
< get a "fairer" distribution of income, or more
< generally a more just society.
Thee's no trade off. As the high tax Clinton economic boom
demonstrated, a more just society has higher economic growth rates.
Bret Cahill
Bret Cahill
Living off of geo resources is almost as bad for an economy as slavery,
and for the same reason: it dishonors labor.
The saddest looking place in Texas isn't in the Valley, but Proctor
Ave., Port Arthur, ten miles south of Spindletop where the word
"gusher" originated. Unemployment in the bayou is always in double
digits. Coal does the same for West Virginia.
Contrast Norway with Netherlands which has nothing, hardly even any
land.
Norway's problem obviously isn't the social welfare state but oil.
That's why it is so easy to predict zero future for the Iraqi people or
any other mideast oil despotisms. They aren't working.
Instead, as many liberdopes enthusiastically and unwittingly agree,
libertaria has broken out in Iraq:
1. No taxes
2. No [civilian] government
3. Everyone has unlimited access to arms
4. Freely distributed geo plunder
85% of Americans would prefer the 70%+ tax rate of the Dutch over Iraq.
In fact, a majority would prefer it over America.
Henry George, DeTocqueville, Jefferson and other thinkers have already
covered this issue, George in great detail.
This is really basic stuff. Either this is a troll or someone at the
_Times_ needs to get a liberry card.
Here's a couple of questions for more thoughtful people with library
cards:
1. If you adopt George's philosophy, that no one really "owns" geo
resources because they aren't the product of human labor, doesn't that
suggest one world government without any borders? Isn't the only way
to prevent the injustice of unequally distributed geo resources is one
national government for the entire planet?
2. How can Georgism be made to work peacefully under Montesquieu's
famous statement concerning the esprit generals of different nations?
I'm not justifying Cheney "securing" Iraqi oil -- it is as bad or even
worse for American mores than living off oil -- but I don't see any way
around either George or Montesquieu either.
The only conclusion is some countries on the planet are going to have
to give up their esprit general.
One way or another.
Bret Cahill
Bret (admiring the jack pumps on a sugar plantation next to the
river):
"They have everything here."
Off Shore Geologist (bitterly):
"Yea, it should be the richest state in the country and instead it is
the poorest. I can't wait to get out of here."
Martin Holterman
I see your point. Personally, I never said that that ,8 % is trivial,
but I see how a lay person could get that impression.
Martin Holterman
Martin Holterman
I'm not so sure. As a rule, social security tends to reduce incentives.
Nothing motivates people better than the threat of starvation.
Martin Holterman
Martin Holterman
> OK, I'll play the straight man:
>
> Living off of geo resources is almost as bad for an economy as slavery,
> and for the same reason: it dishonors labor.
>
> The saddest looking place in Texas isn't in the Valley, but Proctor
> Ave., Port Arthur, ten miles south of Spindletop where the word
> "gusher" originated. Unemployment in the bayou is always in double
> digits. Coal does the same for West Virginia.
>
> Contrast Norway with Netherlands which has nothing, hardly even any
> land.
>
> Norway's problem obviously isn't the social welfare state but oil.
>
> That's why it is so easy to predict zero future for the Iraqi people or
> any other mideast oil despotisms. They aren't working.
>
> Instead, as many liberdopes enthusiastically and unwittingly agree,
> libertaria has broken out in Iraq:
>
> 1. No taxes
> 2. No [civilian] government
> 3. Everyone has unlimited access to arms
> 4. Freely distributed geo plunder
>
> 85% of Americans would prefer the 70%+ tax rate of the Dutch over Iraq.
> In fact, a majority would prefer it over America.
>
Our top rate is 52 %. But I see your point.
Martin Holterman
Bret Cahill
< > demonstrated, a more just society has higher economic growth rates.
< I'm not so sure.
DeTocqueville based his 3 decade long prediction of the American Civil
War on it.
1. Injustice of slavery => dishonored labor
2. dishonored labor => poverty in South
3. poverty in S. => increasing population in North
4. increasing population in N. => more power in congress
5. more power in congress => S. invoking states' rights.
6. S. invoking states' rights => civil war
In other places he called democracy a more just, more productive
society.
< As a rule, social security tends to reduce
< incentives.
Did anyone suggest incentives always conflict with a more just society
or with social security?
Indeed a more just society would have at least some incentives,
wouldn't it?
< Nothing motivates people better than the
< threat of starvation.
Economic insecurity certainly motivates Midas employees to replace good
shocks when they don't require it.
The question is, how does this or any other coercion and deception
induced by fear increase the wealth of a nation?
You have all the terror you could want in the mideast but no one has
suggested that their productivity is very high.
All they can do is open a valve. What are they going to do when the
oil is gone in a few decades?
Nope, Iraqi libertaria isn't for me. Send me to Netherlands. I hate
cold weather but anything is better than the hell on earth promoted by
liberdopes, aka "despotism."
Bret Cahill
"The common man in the United States has understood the influence of
the general prosperity on his own happiness, an idea so simple but
nevertheless so little understood by the people. Moreover, he is
accustomed to regard that prosperity as his own work. So he sees the
public fortune as his own, and he works for the good of the state, not
only from duty or pride, but, I dare almost say, from greed."
-- DeTocqueville 1833
We have always known that heedless self-interest was bad morals; we now
know that it is bad economics.
-- Franklin D. Roosevelt
"Monarchy is based on honor, democracy virtue and despotism fear."
-- Montesquieu
Markku Huttu-Hiltunen
We're Rich, You're Not. End of Story.
Published: April 17, 2005
...
(Page 2 of 2)
The next European country on the list was Ireland, down at 41st place
out of 66; Sweden was 14th from the bottom (after Alabama), followed by
Oklahoma, and then Britain, France, Finland, Germany and Italy. The
bottom three spots on the list went to Spain, Portugal and Greece.
Alternatively, the study found, if the E.U. was treated as a single
American state, it would rank fifth from the bottom, topping only
Arkansas, Montana, West Virginia and Mississippi. In short, while
Scandinavians are constantly told how much better they have it than
Americans, Timbro's statistics suggest otherwise. So did a paper by a
Swedish economics writer, Johan Norberg.
...
I haven't actually read the paper made by Norberg, but I'v heard about it,
and the whole "study" appears silly and biased. Economies are so
multidimensional, that making that kind of conclusions is highly suspicious.
I don't actually have to read the paper to say a couple of things:
Currencies have values, which do not neccessarly reflect economical
fundaments, in many case not even close. Purchasin power (pp) is not any
absolute and fair way of measure, either.
USA has had a greatly overvalued currency for a very long time, even now,
though it has dropped against euro. Therefore, making GDP compairsons, even
with pp corrections, is biased. I understand how a society like USA likes to
brag about their GDP, and their growth, though those are in large extend
based on massive depts and imports. Furthermore, quality of life has
components wich are not measured by GDP, like safety and small earnings
differences among population.
USA's culture and society might be what people want there, and the same goes
alike with Nordic people.
Many international studies have been made about economies, for example
competitiveness studies by the World Economic Forum. I find those kind of
studies much more revealing, than sticking on plain dollar GDP's. Also, the
myth of public sector making economy inefficient, can be challenged.
BTW, I think USA is heading towards a severe recession in near future. IMO
EU should do their upmost to expand consumer purchase, in order to create
growth, and help the US economy. In other words, import more from the USA
(and other parts of the world, like China), thus creating more jobs in the
EU.
MHH
Michael E Craney
Right, once you said you were an economist I knew we had
miscommunicated, and I had posted stuff that you knew intuitively. The
message to the layman is that over two and a half decades compounded,
there is really no such thing as an inconsequential percentage.
Mike
Michael E Craney
> ...
> We're Rich, You're Not. End of Story.
>
>
> USA has had a greatly overvalued currency for a very long time, even now,
> though it has dropped against euro. Therefore, making GDP compairsons, even
> with pp corrections, is biased. I understand how a society like USA likes to
> brag about their GDP, and their growth, though those are in large extend
> based on massive depts and imports. Furthermore, quality of life has
> components wich are not measured by GDP, like safety and small earnings
> differences among population.
Well, right. For example, in Houston, where I live, people eat out ON
AVERAGE four times a week. For me, and for many of us here, that is a
FUNDAMENTAL part of our lifestyle that we enjoy and the loss of the
ability to do so we would considera "decrease in our standard of
living."
Now, I have relatives all over Europe, and in most places, the cost of a
eating out (in terms of % of an average weekly paycheck) is much higher
than it is here. So, personally, Europe might have all sorts of
lifestyle bennies, but if I have to eat home more often, I'm not
interested.
This is the complication of "quality of life" measurements.
>
> USA's culture and society might be what people want there, and the same goes
> alike with Nordic people.
>
> Many international studies have been made about economies, for example
> competitiveness studies by the World Economic Forum. I find those kind of
> studies much more revealing, than sticking on plain dollar GDP's. Also, the
> myth of public sector making economy inefficient, can be challenged.
>
> http://www.weforum.org
>
>
> BTW, I think USA is heading towards a severe recession in near future. IMO
> EU should do their upmost to expand consumer purchase, in order to create
> growth, and help the US economy. In other words, import more from the USA
> (and other parts of the world, like China), thus creating more jobs in the
> EU.
The USA's recession, if severe, will be due to the demographic imbalance
between social programs, "baby boomers", and fertility rate. Europe is
in much worse condition than we are, with a more expensive social
infrastructure, even more baby boomers, and much lower fertility --
thus, I expect any US recession to be less severe than the analogous
recession in the EU.
Although the net effect of the boomers hitting (both here and in the EU)
will be lowered unemployment rates, I don't think the EU (or Japan, for
that matter) will be in a position to infuse funds to the US. That
"hope" will be from China and India.
Mike
Publius
news:d3tmm6$ijp$1...@reader08.wxs.nl:
> The point of my post was simply to argue that too many people are
> getting too exited about a few basis points of economic growth or
> inflation, forgetting that it might be worth it to sacrifice those 0,8
> % growth per annum to get a "fairer" distribution of income, or more
> generally a more just society.
Of course, you're equating justice and fairness with equality. It is an
equation commonly encountered these days, but it is fallacious. Justice
consists in securing to each person that which he or she deserves. If what
they deserve is not equal, then an equal distribution is not just --- it is
unjust, for it will require taking from the more deserving to give to the
less deserving. It is also unfair.
tg
So, there will be a shortage of labor, which means that wages will
rise. Unless someone foolishly cuts taxes, that will mean that there
will still be plenty of money to take care of the boomers. What's the
problem?
-tg
Michael E Craney
tgde...@earthlink.net says...
The problem is that there aren't near enough incoming workers to take
the place of the boomers, meaning the jobs go offshore. The more you
have to pay a domestic worker to do a job, the more incentive there is
to offshore the labor.
Mike
shrikeback
"Bret Cahill" <BretC...@aol.com> wrote in message
news:1113749939.9...@f14g2000cwb.googlegroups.com...
> That's why it is so easy to predict zero future for the Iraqi people or
> any other mideast oil despotisms. They aren't working.
So you should be supporting the first arab democracy in the
middle east, instead of badmouthing it in favor of the totalitarian
state that preceded it.
shrikeback
What you mean is that Clinton's policies required eight years to
end the Reaganomics boom (18 years during which all but
nine months showed economic growth) to an end.
Bret Cahill
< people eat out ON AVERAGE four times a
< week.
Yea, hog cracklins. That's why so many heart specialists are located
in Houston.
Bret Cahill
Michael E Craney
BretC...@aol.com says...
You're a funny guy. If your serious, you're as ignorant as hell, but a
funny guy.
Mike
Bret Cahill
< > < people eat out ON AVERAGE four times a
< > < week.
< > Yea, hog cracklins. That's why so many heart specialists are
located
< > in Houston.
< You're a funny guy.
There's nothing funny about Houston having the second highest
cholestrol rate after central North Carolina.
< If your serious, you're as ignorant as hell,
< but a funny guy.
I spent 2 1/2 years in SE Texas. If it will make you feel any better I
gained 10 pounds at the buffets.
Bret Cahill
Michael E Craney
BretC...@aol.com says...
AH! Then you know......
Mike
Lady Chatterly
B.
>< week.
He is a good thing, and I Will be able to do with the discussion at
hand.
>Yea, hog cracklins. That's why so many heart specialists are located
>in Houston.
Now hold on there. What's so funny? Just maybe someone has discovered
why there are so many stupid people posting to Usenet.
--
Lady Chatterly
"Whoops! You are lying about that because doc's bot morphs its e-mail
addy several times a day. With you being a PRoP nazi as well as a
known troublemaker, I suspect you are well aware of who is running
this bot and you are trying to distract attention." -- The Cunning
Linguist :Ş
Markku Huttu-Hiltunen
"Michael E Craney" <mcr...@hotpop.com> kirjoitti viestissä
news:MPG.1ccc7c2b...@news.houston.sbcglobal.net...
>
> Well, right. For example, in Houston, where I live, people eat out ON
> AVERAGE four times a week. For me, and for many of us here, that is a
> FUNDAMENTAL part of our lifestyle that we enjoy and the loss of the
> ability to do so we would considera "decrease in our standard of
> living."
Do you see homeless people living on the streets of Houston?
> Now, I have relatives all over Europe, and in most places, the cost of a
> eating out (in terms of % of an average weekly paycheck) is much higher
> than it is here. So, personally, Europe might have all sorts of
> lifestyle bennies, but if I have to eat home more often, I'm not
> interested.
>
> This is the complication of "quality of life" measurements.
I agree.
I'm afraid USA economy has runned out of steam, and there's no way
preventing a crash. The main resaons are (1) massive trade dificit, (2)
massive budget deficit, and (3) private (consumers) dept. The whole economy
will turn into a negative spiral. I don't see how that could be avoided.
I don't see that aging problem that serious, though it's very easy to see
(unlike diving to a recession like above).
> Although the net effect of the boomers hitting (both here and in the EU)
> will be lowered unemployment rates, I don't think the EU (or Japan, for
> that matter) will be in a position to infuse funds to the US. That
> "hope" will be from China and India.
>
> Mike
Infuse funds?
MHH
tg
Well, first of all, the jobs are going offshore now---hard to imagine
what will keep them here anyway.
But it is just a matter of taxing the profits from that offshore cheap
labor instead of taxing well-paid workers. Or, you can invite the
offshore labor to come here, if you have a magic formula for the
perfect age distribution in the population.
-tg
Michael E Craney
>
> "Michael E Craney" <mcr...@hotpop.com> kirjoitti viestissä
> news:MPG.1ccc7c2b...@news.houston.sbcglobal.net...
> >
> > Well, right. For example, in Houston, where I live, people eat out ON
> > AVERAGE four times a week. For me, and for many of us here, that is a
> > FUNDAMENTAL part of our lifestyle that we enjoy and the loss of the
> > ability to do so we would considera "decrease in our standard of
> > living."
>
> Do you see homeless people living on the streets of Houston?
Yes. Point being?
The issues are all related, ultimately. Money is money. If you have a
standard of living you wish to maintain, you either earn enough money to
pay for it, or you borrow the money, or you get someone else to pay for
it. The trade deficit falls into the last of the three categories. The
budget deficit falls into the second last, and the private debt also
falls into the third.
The current accounts deficit (trade + budget) is financeable, apparently
indefinitely, by way of the fiduciary reputation of US Treasury paper.
At the last T-bill auction (last week) there was 60% more money offered
for investment than we needed. Now, does the risk exist that our
budgetary needs exceed the available investable capital in the rest of
the world? Sure. We have to get back close to balance, and sooner rather
than later, but disaster in this regard is not imminent.
What is imminent is that in 2008 the US pension and entitlement programs
will go cash-flow negative, and will deplete their reserves by 2041. At
that time, they will by law be forced to cut payouts, but if political
pressure prevents that, you'll have an insurmountable liquidity crisis.
> > Although the net effect of the boomers hitting (both here and in the EU)
> > will be lowered unemployment rates, I don't think the EU (or Japan, for
> > that matter) will be in a position to infuse funds to the US. That
> > "hope" will be from China and India.
> >
> > Mike
>
> Infuse funds?
Exactly. As funds move overseas (trade deficit + outsourced work) money
ends up in the hands of foreign government and people who need to do
something with it other than watch it sit in a bank. The most secure
investments will still be in the paper of the traditional colonial
powers (US, UK) and in the companies broadly included in the S*P Global
100.
However, there are some economists who are more optimistic about this
scenario playing out than others.
Mike
Michael E Craney
tgde...@earthlink.net says...
>
>
>
> Well, first of all, the jobs are going offshore now---hard to imagine
> what will keep them here anyway.
>
> But it is just a matter of taxing the profits from that offshore cheap
> labor instead of taxing well-paid workers. Or, you can invite the
> offshore labor to come here, if you have a magic formula for the
> perfect age distribution in the population.
As to the former suggestion, I agree that a broad based tax (VAT, for
example) will probably be necessary to exploit this new source of
profit. As to the second, there's no question that immigration is *part*
of the solution, but it would have to be high-skill immigration in order
to make a difference without upsetting the socio/cultural balance.
>
Mike
Bret Cahill
down but the only real solution is to reintroduce freedom of speech on
economic information.
Right now Art. III courts only apply the First Amendment to silly
nekked nazi flagburner parade issues even though they all know full
well the truth is self evident: free speech on economic matters
precedes each and every free trade.
Everyone should be able to freely and openly discuss the "private
sector" just as Thomas Paine did back in 1776.
Bret Cahill
"Time makes more converts than reason."
-- Paine
Robert Cohen
>Malcolm Forbes
Steve Forbes (the seemingly more rightist than his father, yet much
more "riskest" & political-participating in GOP politics son)
Robert Cohen
experience in Norway article:
1. Maybe the social welfare state really doesn't work in the
utilitarian nor pragmatic nor humanistic nor overall public interest.
2. Perhaps the article's author distorts, exaggerates, lies
3. I'd like to live there in order to see for myself
4. They think their social welfare state achievement is moral/good,
and now (after perusing the article), I doubt if it's so good, and
perhaps my America's infinite contradictions aren't as relatively bad
as I had thought
5. Mr. Don Humphrey, critic of American style capitalism, please
comment (?)
6. There are less than 50-100 million people living in Scandinavia
7. Their model may not function with the ethnic and other social
diversity in the main of Europe/Britain/the U.S.
8. Canada only has about 25-50 million people (?)
9. I'm not an "ideologue" (ideologically driven by a rigid mickey
mousean philosophy), and I don't care if the politiks are called
nicely/derisively "socialistic" or "capitalistic"
10. What "works" "best" here in my US of A is of most importance to me,
and the so-called Scandinavian "social welfare states" don't now seem
to me to be so damne great as I had once imagined 'em
11. You guys arguing about an (seemingly esoteric) economic statistic
as such is to me so irrelevant that we're seemingly on different
planets/in differing realities
12. One who is politically-economically
evaluativel-intellectually-"fairly" motivated, must make overall value
judgments about the contrasting political-economic systems, and I
suppose that I must dwell there for awhile as per the author supposedly
did with companion
13. I wish it were all so damne rational & simple; while I must
candidly acknowledge the realization that the US of A is in such debt &
deficit that ...Malcolm Forbes is in some kind of dream world the last
time I heard his pontifications to a youth group (in late teen, early
twenties) on C-SPAN about our USA's @#$%^&*()_+ D-E-B-T, which
continues to scare the @#$%^&*()_+ out-of-me, who once thought I
understood political-economic reality
Michael E Craney
robt...@msn.com says...
> My overall comments/questions about the NYT first-person subjective
> experience in Norway article:
>
> 1. Maybe the social welfare state really doesn't work in the
> utilitarian nor pragmatic nor humanistic nor overall public interest.
Possibly so. I have relatives in Sweden who would take this position.
>
> 2. Perhaps the article's author distorts, exaggerates, lies.
Well, it IS the Times, and thus subject to question.
>
> 3. I'd like to live there in order to see for myself
Bottom line, this is the only way to know. One person's paradise might
be uncomfortable for another.
>
> 4. They think their social welfare state achievement is moral/good,
> and now (after perusing the article), I doubt if it's so good, and
> perhaps my America's infinite contradictions aren't as relatively bad
> as I had thought.
I concur.
>
> 5. Mr. Don Humphrey, critic of American style capitalism, please
> comment (?)
>
> 6. There are less than 50-100 million people living in Scandinavia
>
> 7. Their model may not function with the ethnic and other social
> diversity in the main of Europe/Britain/the U.S.
Probably so. The US, for example, is accustomed to a degree of self-
determination which is above and beyond those of other Western
countries.
>
> 8. Canada only has about 25-50 million people (?)
30, roughly.
>
Mike
Robert Cohen
what happens in an advanced, democratic-socialistic/capitalistic
state's recession, allegedly on-going in the Berlin area.
I suggest that while capitalism is contradictory, divisive &
alienating, that perhaps the dulling social welfare state culture (as
being written about in the NY TIMES) may have wretched consequences.
Again, one attempts to make an overall judgment, and one perceives
reality through one's ultimate subjectivity.
Meanwhile: We should be concerned that the
skinhead/gothic/nazi/unemployed/whatever sub-culture of Europe does
not get further political traction.
This BBC report is bad news, and would it be intellectually fair to
suggest that the seemingly prevailing "anti-capitalism" attitude is a
major cause?
Bret Cahill
was the harshest on earth. Then he added it was also the least
dangerous.
I'm not sure what he meant or if it applies here.
Bret Cahill
Markku Huttu-Hiltunen
confuses about who has said what.)
"Michael E Craney" <mcr...@hotpop.com> kirjoitti viestissä
news:MPG.1ccd5090e...@news.houston.sbcglobal.net...
In article <d400ht$4b9$1...@nyytiset.pp.htv.fi>, mhut...@pp.htv.fi says...
...
I think a minor disaster in the US economy is imminent.
I'd like to read your describtion about how a smooth correction (you suggest
above) could occur. Also, I'd like you to take into account negative effects
of "going into a correction", ie. for example if the US cheap labour imports
from China and Mexico reduce significantly, surely that would put GDP down
and unemployment up, which again would again have other major impacts...
> > Although the net effect of the boomers hitting (both here and in the EU)
> > will be lowered unemployment rates, I don't think the EU (or Japan, for
> > that matter) will be in a position to infuse funds to the US. That
> > "hope" will be from China and India.
> >
> > Mike
>
> Infuse funds?
Exactly. As funds move overseas (trade deficit + outsourced work) money
ends up in the hands of foreign government and people who need to do
something with it other than watch it sit in a bank. The most secure
investments will still be in the paper of the traditional colonial
powers (US, UK) and in the companies broadly included in the S*P Global
100.
I don't see that point of view as relevant - the major part of export
factories, say in China and Mexico, are financed by US companies, and the
essential reason behind those factories is cheap labour. Are you really
suggesting that somehow that cheap labour could be transferred to the USA?
Your statement about secure investments right now looks just bragging
without fundamentls from where I'm looking at it.
MHH
tg
I can't quite follow Mike's reasoning but the option does exist to
increase immigration. Much of the success of the US has always been a
matter of trading land for (cheaper) labor. Not a long-term solution
if other (particularly energy) resources continue to be scarce, but
something like it is in the immediate future.
-tg
Bret Cahill
< option does exist to increase immigration.
Not politically possible now that everyone knows what the corp. media
would ordinarily try to keep a secret:
Average mean income per working American is well over $45.00/ hour --
enough to get plenty of "Anglos" or other native born Americans out in
the hot sun to pour some concrete or lay some brick.
Now things were different before the info age. Back in the old days
immigration was a useful tactic to keep wages down.
Even after 9/11 the borders were left wide open for 3 1/2 years. For
awhile there Cheney Rove, et. al. thought they could have it both ways.
A glorious patriotic war on terror AND open borders to reduce American
wage slaves to third world poverty.
But when Cheney Rove hyped the war on terror they unwittingly set
things up for the people to have all the rhetorical ammo they needed to
call the bluff on open borders policy.
Just yesterday I read where the Minutemen are going to expand to five
states.
I wouldn't want to be associated with them. I don't think it is the
best way to solve the low wage/immigration problem. For one thing they
have bigots cheering them on. For another it doesn't call the bluff on
the fundamental problem: ANY job "shortage" is ALWAYS a scam.
But this doesn't change the fact that they help expose both immigration
policy and Cheney's sham war on terror.
< Much of the success of the US has always
< been a matter of trading land for (cheaper)
< labor.
Yup, not politically possible to use immigration to keep Americans'
wages low anymore.
Republicons need to contact Hoover, Heritage, Cato, Am. Enterprise,
etc., for some more ideas.
I mean, what are Repugs paying them for anyway? To sit on their fat
cans?!?
Bret Cahill
"If corp. interestes pay economists to dodge issues, next thing you
know, you have a lot of economists who are dodging issues."
-- Bret "Hoover Fellow" Cahill
tgde...@earthlink.net
Bret Cahill wrote:
> < I can't quite follow Mike's reasoning but the
>
> < option does exist to increase immigration.
>
> Not politically possible now that everyone knows what the corp. media
> would ordinarily try to keep a secret:
>
> Average mean income per working American is well over $45.00/ hour --
> enough to get plenty of "Anglos" or other native born Americans out
in
> the hot sun to pour some concrete or lay some brick.
>
Are you sure that isn't the average mean average income? ;-)
Yes, that's why this business about Social Security being in trouble is
such nonsense. The scare tactic is--- "there will only be two workers
to support each recipient"---but who cares, as long as the workers are
getting paid enough.
But I think you may be incorrect about the immigration thing, although
I'm not sure what form it will take---"guest" wage slaves, perhaps. The
minute-boys will still vote for the party that keeps them safe from
those gay marriage proposals they're all getting.
-tg
Michael E Craney
> (There's some error in settings of showing dialogue properly? I hope nobody
> confuses about who has said what.)
It's no problem, I know my own prose.... :-)
Define imminent, if you would. I think that the US has to focus on
dealing with the megatrend of population shift between 2008-2050. There
are short term challenges related to the current account balance, but
the real challenge is the megatrend, not the 2005-2008 situation.
>
>
> I'd like to read your describtion about how a smooth correction (you suggest
> above) could occur. Also, I'd like you to take into account negative effects
> of "going into a correction", ie. for example if the US cheap labour imports
> from China and Mexico reduce significantly, surely that would put GDP down
> and unemployment up, which again would again have other major impacts...
There are a couple of factors which have to work together:
1) Productivity must continue to increase at its historical rates. There
is no reason to belive that it will do otherwise.
2) The US must engage in a program of *targeted* increased immigration.
By this I mean the active encouragement of foreign professionals to
relocated to the US. This will be essential to maintain the existing
business infrastructure when the boomers start retiring in 2008. The
focus here is to encourage the immigration of high productivity
individuals as opposed to low productivity labor from south of the
border who also are net consumers of services.
(It's important to point out that there won't be nearly enough
professional graduates to fill the positions vacated by the boomers
starting in 2008. Unemployment is not a concern. What *is* a concern is
that wages inflate to a point where they are unsupported by corporate
earnings.)
3) Oursourcing must maintain and provide the potential for increased
corporate profits. The S&P 100 must continue to be attractive to
investors in relation to the Global 100.
>
>
> > > Although the net effect of the boomers hitting (both here and in the EU)
> > > will be lowered unemployment rates, I don't think the EU (or Japan, for
> > > that matter) will be in a position to infuse funds to the US. That
> > > "hope" will be from China and India.
> > >
> > > Mike
> >
> > Infuse funds?
>
> Exactly. As funds move overseas (trade deficit + outsourced work) money
> ends up in the hands of foreign government and people who need to do
> something with it other than watch it sit in a bank. The most secure
> investments will still be in the paper of the traditional colonial
> powers (US, UK) and in the companies broadly included in the S*P Global
> 100.
>
> I don't see that point of view as relevant - the major part of export
> factories, say in China and Mexico, are financed by US companies, and the
> essential reason behind those factories is cheap labour. Are you really
> suggesting that somehow that cheap labour could be transferred to the USA?
No. I'm suggesting that wealth will accumulate in the developing
companies and that China (for example) will eventually want to diversify
its portfolio. Individuals will also have money to invest, as wealth
moves into private hands.
>
> Your statement about secure investments right now looks just bragging
> without fundamentls from where I'm looking at it.
I'd then refer you to Jeffery Siegel's new book, The Future for
Investors, for a deeper treatment of these dynamics. A good deal of the
book focuses on the economic challenges of the generational megatrend.
Mike
Robert Cohen
over-my-head
This morning a psychologist (?) actually says on the TODAY SHOW that
3rd graders ought not have one hour of nightly homework; but should
have less homework.
Well, his advice goes against nearly everything that most educators and
worriers about the USA's relative education failure (low ranking) have
been preaching for years.
And what has such got to do with the price of green tea in Ceylon (?)
Well, Piaget was the pre-eminent & pioneering education psychologist,
and he says that a child's readiness & physical/mental brain
development shouldn't/can't be pushed, or something similar to this
Yet, the Montessori method and other celebrated & also ole fashioned
means for instilling early childhood intellectual achievement do seem
to manifestly contradict Doctor Piaget
And so what about Lipton's Orange Peco tea bags at Safeway?
Well, I suppose the U.S. of A. has been getting-by in the notorious
importing of labor and of brains to do the heavy-lifting and the
crucial researching/discovering along with non-alien residents of
course
Yet, the @#$%^&*()_+ D-E-B-T and balance of payments etal are
increasing as Walter Mondale & Mike Dukakis & Rryan Dorgan etal have
duly warned us (Perit has shut-up)
My bottom-line here and elsewhere:
I can't perceive a consensus nor an absolute.
If anybody reading this can assure me of anything except more of the
same ennui & irresolution, then s(he) probably tells tall tales
If only the RCC would just appoint an intellectual Pope who holds
stringent inflexible absolutes...
tg
book, why don't you share the underlying principles that would lead to
a problem. I've heard this conventional wisdom over and over, but when
questioned, there is never a justification given.
-tg
tg
retrogro...@comcast.net wrote:
> On 20 Apr 2005 03:42:56 -0700, "tg" <tgde...@earthlink.net> wrote:
>
> >I can't quite follow Mike's reasoning but the option does exist to
> >increase immigration. Much of the success of the US has always been
a
> >matter of trading land for (cheaper) labor. Not a long-term
solution
> >if other (particularly energy) resources continue to be scarce, but
> >something like it is in the immediate future.
>
>
Except that SS doesn't need saving. This business about 'not enough
workers' is a myth. If there are fewer workers, then they will get paid
more, and their SS taxes will be plenty to support the system. I keep
asking people to justify this mythology about SS and never get an
answer.
Immigration can be used as a short-term political tool to create the
illusion that things are getting better. That has been the history of
the US ever since we killed off the original property owners.
-tg
Michael E Craney
tgde...@earthlink.net says...
Sure. If you Google on "Gockhale Smetters" you can find the actual
report, but here's the issue:
There are different accouting methods used to calculate the imbalance of
a country's entitlement obligations. The SS Trustees use one (the name
escapes me) with a 75 year horizon. There is also a "generational"
accounting approach, used by Gockhale and Smetters, and another called
"infinite horizon" used by Greenspan to analyze the problem.
The latter two generate about the same numbers, but the gist is this:
the economic health of the US depends on the entire entitlement
imbalance, not just the 75-year imbalance, which dramatically
understates the problem, leading to bad public policy. The public thinks
the problem is "solved" by making tweaks to the system and pushing out
the "magic date" when the systems go broke out a few more years. This
gives the public the mistaken notion that a series of small tweaks will
continually push out the bankruptcy date ad infinitum, when in fact
there is a tipping point where the only "tweaks" available to maintain
the solvency of the system are major and painful, and all that's been
accomplished is to push the bulk of the debt into the next generation.
Gockhale and Smetters calculate the fiscal imbalance of SS to by 8.7
trillion dollars, Greenspan at over 10 trillion. The total fiscal
imbalance of the systems (SS and Medicare) is 51.7 trillion dollars as
calculated by Gockhale and Smetters.
There are multiple "tweaks" one can use to address that size of a
shortfall, but it must be addressed, else a liquidity crisis is on the
horizon, and as we know, markets in the present react to future events
as they reveal themselves. Koltikoff's models based on Gockhale show
that the following "tweaks" can bring the system back into balance.
Taken by themselves, each is painful and/or politically impossible:
1) Increase the retirement age to 74-76 years of age.
2) Accept 400 million new immigrants by 2050
3) Move ALL discretionary spending to entitlements (in fact, this comes
up 6% short)
4) Cut entitlement benefits drastically (I don't recall the exact
number).
....and other such measures.
The bottom line is that the 75-year accounting horizon drastically masks
the imbalance of the system. Each year, a new year enters the horizon,
one in which the payouts of the system are far larger than the funds
taken in, and the current year, replacing a year where the funds taken
in are far greater than the payouts.
Mike
Michael E Craney
tgde...@earthlink.net says...
>
> retrogro...@comcast.net wrote:
> > On 20 Apr 2005 03:42:56 -0700, "tg" <tgde...@earthlink.net> wrote:
> >
> > >I can't quite follow Mike's reasoning but the option does exist to
> > >increase immigration. Much of the success of the US has always been
> a
> > >matter of trading land for (cheaper) labor. Not a long-term
> solution
> > >if other (particularly energy) resources continue to be scarce, but
> > >something like it is in the immediate future.
> >
> >
> > some see immigration as a key component to saving SS.
>
>
> Except that SS doesn't need saving. This business about 'not enough
> workers' is a myth. If there are fewer workers, then they will get paid
> more, and their SS taxes will be plenty to support the system. I keep
> asking people to justify this mythology about SS and never get an
> answer.
It would be instructive to run the math, starting with the 70 million
boomers who are scheduled to leave their jobs over the next 23 years, to
be replaced by about half as many people entering the workforce.
This does indeed increase upward pressure on wages, which leads to a
very *big* assumption on your part: that the wage level that the market
ultimately settles at is sufficient to provide enough taxes to cover the
SS imbalalnce. I'd want to see the numbers justifying that position,
because it's counterintuitive (to me, at least).
I believe you'll find that the wage level won't even come close to
covering the imbalance. In 2015, the workforce will begin to shrink, and
will continue to shrink throughout the boomer retirement horizon.
Again, this does put upward pressure on wages, but it also increases the
financial case for outsourcing. This will clearly offset (significantly)
the upward pressure on wages.
>
Mike
tg
Well, I appreciate your effort, but you aren't answering my question.
As I stated earlier, the problem is solved simply by having wages
increase, which is the natural result of a diminishing workforce. If 10
workers support 1 retiree now, and in the future it will be 2 to 1,
then the wages of each workers should be 5 times that of each current
worker. Or, if 'jobs go overseas' as you said earlier, the profits
derived through the overseas labor can be taxed.
So the issue isn't whose numbers, it is the underlying premise that the
system will not be funded because the ratio of 'workers' to 'retirees'
will change. That is the thing which is conventional wisdom but has yet
to be demonstrated.
-tg
> Mike
Michael E Craney
tgde...@earthlink.net says...
2.5, actually.
> then the wages of each workers should be 5 times that of each current
> worker. Or, if 'jobs go overseas' as you said earlier, the profits
> derived through the overseas labor can be taxed.
You're assuming a change in policy. I wasn't.
>
> So the issue isn't whose numbers, it is the underlying premise that the
> system will not be funded because the ratio of 'workers' to 'retirees'
> will change. That is the thing which is conventional wisdom but has yet
> to be demonstrated.
It's been modeled ad infinitum. If you model indicates a crisis
situation, it's unwise to wait until the model is confirmed by actual
experience.
Mike
Michael E Craney
retro...@comcast.net says...
> On 20 Apr 2005 10:22:20 -0700, "tg" <tgde...@earthlink.net> wrote:
>
> >As I stated earlier, the problem is solved simply by having wages
> >increase, which is the natural result of a diminishing workforce. If 10
> >workers support 1 retiree now, and in the future it will be 2 to 1,
> >then the wages of each workers should be 5 times that of each current
> >worker.
>
>
> system. But there's no basis for that beyond your desire or hope that
> it does so.
>
> if wages are % fold, what will prices be? Inflation?
Yes. TG is assuming there's a calculable (and linear) ratio between
workforce supply and wage. I would contend that it is calculable within
a range, but there's no reason to assume linearity -- in fact, it's
likely that the % wage increase becomes proportionately less as the
labor crisis increase, since high wages not only encourages outsourcing,
but makes mechanization, which today may not be cost-effective, very
cost effective going forward.
But, the bottom line is that wage increases are constrained by corporate
earnings. If there's no way to produce and sell product X profitably
while paying the wages you would have to in order to produce and sell,
then the company will get out of the business of producing product X,
and consumers wanting X will have to get it from another manufacturer,
likely overseas (in which case there are NEITHER wages nor profits in
the US to tax, unless we go to a VAT.)
Mike
Publius
news:MPG.1cd036532...@news.houston.sbcglobal.net:
> But, the bottom line is that wage increases are constrained by corporate
> earnings. If there's no way to produce and sell product X profitably
> while paying the wages you would have to in order to produce and sell,
> then the company will get out of the business of producing product X,
> and consumers wanting X will have to get it from another manufacturer,
> likely overseas (in which case there are NEITHER wages nor profits in
> the US to tax, unless we go to a VAT.)
Heh. I've tried to explain that to tg in other threads. He is convinced,
however, that wages can be set by fiat, without economic consequences.
Just a heads up.
tgde...@earthlink.net
OK, I seem to be responding to the different sub-threads without
checking for the other reply-sorry.
Look, I'm willing to listen to any argument that states underlying
assumptions, has concrete empirical elements, and provides some kind of
rational basis for the conclusions. But I don't see that here at all.
If I understand you correctly, it is irrelevant whether there are any
retirees or not, since these negative effects are the result of a
decreasing workforce, *not the ratio of workers to retirees *. There
will be "NEITHER wages nor profits in the US to tax"--- even if we kill
off all the boomers (myself included) when they turn 65. Is this
correct?
-tg
Martin Holterman
> retrogro...@comcast.net wrote:
>
>>On 20 Apr 2005 09:41:10 -0700, "tg" <tgde...@earthlink.net> wrote:
>>
>>
>>>retrogro...@comcast.net wrote:
>>>
>>>>On 20 Apr 2005 03:42:56 -0700, "tg" <tgde...@earthlink.net>
>
> wrote:
>
>>>>>I can't quite follow Mike's reasoning but the option does exist
>
> to
>
>>>>>increase immigration. Much of the success of the US has always
>
> been
>
>>>a
>>>
>>>>>matter of trading land for (cheaper) labor. Not a long-term
>>>
>>>solution
>>>
>>>>>if other (particularly energy) resources continue to be scarce,
>
> but
>
>>>>>something like it is in the immediate future.
>>>>
>>>>
>>>>some see immigration as a key component to saving SS.
>>>
>>>
>>>Except that SS doesn't need saving. This business about 'not enough
>>>workers' is a myth. If there are fewer workers, then they will get
>
> paid
>
>>>more, and their SS taxes will be plenty to support the system. I
>
> keep
>
>>>asking people to justify this mythology about SS and never get an
>>>answer.
>>
>>
>>SS has a problem. It is not a crisis true. It's problem lies 30 years
>>out and can be solved with small measures now.
>>
>>But your notion that people will make more and this will solve things
>>is silly. For one thing you'd have to remove the earnings cap beyond
>>which SS is not collected.
>
>
> Of course you would have to raise the earnings cap to reflect the
> increase in wages. You don't think that indexing the output without
> indexing the input is 'silly'??
>
> As I said, I never get an answer to why this doesn't work---let's hear
> an explanation.
>
> -tg
>
I'll give you a hint: The theory predicts that real wages increase with
productivity. If you want to raise real wages, you're going to have to
rely on a greater capital stock per worker and/or new inventions that
increase productivity.
Martin Holterman
Michael E Craney
tgde...@earthlink.net says...
No, we're not communicating well. Let's put it this way: I agree with
the financial analysis of Gokhale and Smetters. Here is a link to their
paper, which has no shortage of underlying assumptions and empirical
evidence. If you want to understand the "SS/Medicare is in crisis
condition" POV, reading the paper is necessary.
www.aei.org/docLib/20030723_SmettersFinalCC.pdf
Having said that, I *hope* (and find his arguments persuasive) that
Siegle is right, that outsourced labor becomes a source of funds
allowing the US to meet its fiduciary obligations going forward. I'm
travelling right now, and don't have the book with me, otherwise I'd
provide more specific and quantitative information.
Mike
Bret Cahill
< even come close to covering the imbalance.
Ave. mean income is well over three time median.
The problem isn't people living longer; the problem is disparity of
wealth.
Now what part of "guillotine" do you NOT understand?
Bret Cahill
Bret Cahill
< adequately to save the system.
A pretty good assumption after we guillotine all those who have a
problem with leveling income to something above $45/hr.
Bret Cahill
shrikeback
"tg" <tgde...@earthlink.net> wrote in message
news:1114015270.1...@l41g2000cwc.googlegroups.com...
>
> retrogro...@comcast.net wrote:
>> On 20 Apr 2005 03:42:56 -0700, "tg" <tgde...@earthlink.net> wrote:
>>
>> >I can't quite follow Mike's reasoning but the option does exist to
>> >increase immigration. Much of the success of the US has always been
> a
>> >matter of trading land for (cheaper) labor. Not a long-term
> solution
>> >if other (particularly energy) resources continue to be scarce, but
>> >something like it is in the immediate future.
>>
>>
>> some see immigration as a key component to saving SS.
>
>
> Except that SS doesn't need saving. This business about 'not enough
> workers' is a myth. If there are fewer workers, then they will get paid
> more, and their SS taxes will be plenty to support the system. I keep
> asking people to justify this mythology about SS and never get an
> answer.
So inflation will increase, and a retiree's cost of living will also be
higher.
Actually, the sort of labor retirees (Alzheimer's care, etc) will require
will be in particularly short supply, since demand for it will rise as well,
and its cost will rise higher than the general inflation rate.
tg
> increase productivity.
>
> Martin Holterman
Again--- of course!
Please note that I am objecting to the characterization of the SS
problem as being caused by the numerical ratio of workers to retirees.
If I have a factory with ten workers, and I replace 8 of them with
robots (a metaphor for productivity-increasing tech) which cost me the
same as the workers (lease, capital, maintenance, whatever,) then it
becomes a question of taxing that expenditure as if it were payroll. I
don't care if I pay SS tax for a worker or a robot, as long as the
numbers all come out the same. The 'employee contribution' likewise can
be derived from a tax on the robot supply end, although I find the
business of dividing up the total idiotic in the first place. If a
robot costs me less, then you can tax that excess profit; if I must
have those two humans and I must pay them a lot, then you can tax that
excess wage, and so on.
Now, if you wish to say that (however it balances out between wage and
tech) there will still be insufficient economic activity to pay for SS
at some point in the future, that's fine. If you believe that the US
will not be wealthy enough in 30 years to take care of old people, then
we should all just build some bunkers in the basement and wait for the
end-times. And all the private accounts in the world aren't going to
help, are they?
I repeat---I haven't heard a justification that *the number of workers*
is the problem. I think there *is* a problem, but it has to do with the
competition for resources, particularly oil.
-tg
Bret Cahill
book, but would have deplored the future of mankind in silence."
-- DeTocqueville