Newsweek Offers Crap on Crap

Newsweek - Heaven Is RealNewsweek is out! And what is the news on the cover? You can read it in the image on the left: “Heaven Is Real.” What you can’t see in this image is the subtitle, “When a neurosurgeon found himself in a coma, he experienced things he never thought possible—a journey to the afterlife.” It is written by a neurosurgeon, Dr. Eben Alexander—the man with the after death experience.

This is a cover story about a thoroughly studied phenomenon—near death experiences. But this is new! It’s by a man who didn’t believe in near death experiences before he had one. Wow. This is like a man who doesn’t believe claims that people on LSD don’t in fact talk to God. He says, “They just have hallucinations and think they talk to God.” But then he takes LSD and goes around telling everyone he really did talk to God.

I can’t decide what I find most annoying about this. Take your pick! It all comes down to the same thing: they are wasting space that could have been used for actual news. I suppose I should give them a little credit for the fact that whatever they covered would have been crap. But crap about something is better than crap about crap.

Social Security Paradox

C. A. RotwangDo you know the Social Security Paradox? It comes up all the time regarding reform of the program, but almost no one notes the paradox. Here it is: in order to stop future benefit cuts we must cut future benefits now.

The worst case scenario is that at some point in the next 50 years, Social Security will run out of savings and only be able to pay 75% of promised benefits. This is 75% of the benefits at that time, so they are inflation adjusted. This is a problem, but not a catastrophe. And it is absolutely not the case that there will be no program for young people. That is, there will be Social Security for people retiring in 50 years, unless somehow all the Very Serious People get their way and “reform” it out of existence.

C. A. Rotwang[1] has written an incredible article about liberal efforts to “tweet” Social Security, Mr. President: Tweak This! Right off the top, he notes that the program will be short by at most 1.6% of GDP in any year. The actual amount of money doesn’t matter. What does matter is that we are currently taking in too little money in federal taxes. In the last part of 1990, total federal taxes were 21% of GDP. Today, they are down below 16%. So just by bringing taxes up slightly, we solve any shortfall.

But such ideas are off the table. Republicans just want to destroy the program. Liberals want to “tweak” it. As I’ve noted in the past, just for the sake of fairness, we should get rid of the payroll tax cap, which is currently set at $110,100. This makes the tax highly regressive. Most people pay 12.4% (half directly and half via their employers).[2] For example, if Mitt Romney was paid a salary, he would only have paid payroll taxes on the first $110,100 of his estimated gross income of $20.9 million last year: $13,652.40. That would mean that unlike regular people paying 12.4%, Romney would have paid 0.065%. Of course, since all of his income was “capital gains” he paid nothing at all.

Ideas like this are simply off the table. The rich have far too much power in Washington and they will never allow their taxes to be raised in this way. (At least they won’t do it without a major fight from the rest of us.) So the liberals—The good guys!—propose three ways to “tweak” the system:

  1. Reduce inflation adjustments;
  2. Raise the retirement age;
  3. Means test.

Note that each of these tweaks do what I talked about regarding the Social Security Paradox: reduce future benefits to prevent reduced future benefits. Rotwang discusses each one of these in details and shows that they are all substantial. For example, according to a study by David Rosnick and Dean Baker at CEPR, increasing the retirement age from 67 to 70 would result in an 18% reduction in lifetime benefits for couples in the bottom 20% of the income distribution.

The main point of the article, beyond pointing out that Social Security is not in crisis, is to show that the “tweaks” of Democrats have big benefit cuts concealed in them. Rotwang ends:

Much has been made of Republicans’ flagrant disregard of truth. And Lord knows they deserve it. But what of their counterparts? I suggest that if Democrats are honest, they would a) acknowledge their own exaggerations of the program’s difficulties, and b) spell out the impact of their purported “tweaks.” After all, if Romney ought to spell out how his magical tax proposal reduces rates and recoups all lost revenue, shouldn’t Democrats do the same with respect to their Social Security reform nostrums?

In the matter of Social Security, Barack Obama and the Democrats have some ‘splainin to do. The return of Occupy! cannot be too soon.

Government keep your damn stinking hands off my Social Security, indeed!

Update (10 October 2012 2:09 pm)

I had a little email correspondence with Dean Baker:

To: Dean Baker
Are you Rotwang in the Huffington Post article? I’m clearly not in on the joke, but this does read a little like your writing.

Plus I can totally see you as an evil robot inventor!

To: Frank
It’s not me. I’m sworn to secrecy on the legendary Rotwang’s identity

To: Dean Baker
What if I told you I have pictures of you with a naked robot?

To: Frank
I’d demand royalties

I may just have to post those pictures. He can get in line for those royalties.

[1] Rotwang is a brilliant robot inventor in Metropolis. So I don’t know what is really going on at Huffington Post.

[2] I am only including the Social Security part of the payroll tax. Additional money is taken out for Medicare.

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Unions Protect Us, We Must Protect Them

RadioShackWhen people think of unions, they think of salaries and benefits. And indeed, unions do improve wages for union and non-union employees alike. But have you ever wondered why a lot of companies are willing to match union pay in order to stay non-unionized? If the company is going to pay the same, why not just allow the union? It is because unions are most important in their ability to stop employers from abusing workers.

Age Discrimination—at 35!

I remember back in 1999—when I was 35 years old—I was applying for a job with a high tech company. They made a very big deal about my age. They were concerned that I wouldn’t “fit in” with their group. But they really wanted me because I was such a high tech badass. Eventually, they hired me and I went to work in a group of 13 people. Out of this group, almost all of the work was done by one other guy and me. The other guy was, of course, “old” like me.

Both parts of this story are typical. First, high tech companies do not want to hire older workers. Most of the time they are not so up front about it. And most of the time it isn’t because they are worried about group cohesion; they are worried about salary. Second, there is often a huge gulf between the knowledge and skills of the old and young workers.

I find this all particularly interesting in light of the conservative obsession with raising the retirement age for Social Security and Medicare. It is certainly true that most white collar workers could easily work until they are 70. The problem is that there is a big difference between biological and cultural norms. A computer programmer could work past 65 and might even want to; but most corporations don’t want to employ such a programmer. Of course, most companies don’t wait that long. Usually, white collar workers get the ax in their 50s.

RadioShack and the Globalization Lie

Al Lewis at the Wall Street Journal wrote a column about a typical case, Getting Sacked at RadioShack. It tells the story of David Nelson, a guy who started at RadioShack in 1979. He worked his way up through the company, becoming district manager and supervising 51 stores. In 2008, when Nelson turned 55, a new regional manager came in. After the first month, he gave Nelson a negative performance review—the first Nelson had ever received. After the second month, he gave Nelson another bad review and fired him. Nelson managed to get the Equal Employment Opportunity Commission to represent him in court. Last month, the court found against RadioShack and made them pay Nelson $187,000 in back pay. Of course, that means Nelson had to wait 4 years for this justice. I’m sure he has lost far more than he’s gained. But it is a much happier story than that of most people who are illegally fired.

Lewis ends his article with something of an apology for RadioShack—talking about how poorly the company is doing. I don’t see how this belongs in the article. What’s more, all of my tech friends and I were horrified years ago when RadioShack switched to being mostly a phone reseller. It was clear at the time that the company was trying to cash in on a short term opportunity at the expense its long term health. But this is what you get when companies are managed on a quarterly time scale.

I think the point of noting RadioShack’s bad situation is a way of saying, “Globalization is hurting everyone; workers just have to get used to it.” Note that Canada has basically the same level of unionization as it did 50 years ago; unionization in the United States has plummeted; no one has ever explained why the US would suffer more from globalization than Canada. What’s more, corporate profits are way up. The management of places like RadioShack don’t fire people like Nelson because they have to in order to survive. In fact, Nelson’s position wasn’t going away. They were just getting rid of him because they could replace him with someone younger and cheaper.

Unions Protect Us

All these stories highlight the one systemic problem facing the middle class here in the United States: unions are dying. There are only two ways to protect workers’ rights. The first is for the government to intervene aggressively in the work place. That is not going to happen. The other is to strengthen the ability of workers to organize. Over the last 60 years, we have made it much harder for unions to organize (both through legislation changes and lack of enforcement). If there is any way forward it is through stronger unions. Note that conservatives are almost all against unions when they should be for them.

Unfortunately, unions are running scarred. Union members are just trying to hang on to the little they still have. Non-unionized workers tend to resent unions—often thinking that no one should be unionized rather than that everyone should be. And this resentment is something the right has been very good at promoting. Now the main coverage of unions in the media is about how public sector union pensions are killing us. (Funny that when Wall Street was handing out big bonuses to the people who caused the crash of 2008, we were lectured on contracts and how we had to fulfill our obligations. But when it is ordination workers’ pensions, contracts don’t matter that much.)

David Nelson is an object lesson for all of us. In most circumstances, a company would not screw up. In most circumstances, they would have fired Nelson in a way that would not have allowed him to sue. And regardless, the whole of the Republican Party is against even having the right to seek legal redress, as we saw with Lilly Ledbetter. This is not a war we can each fight alone. The situation is dire. We must organize so that we will have the right to organize.