Re: A dependable safety net (was Re: Social Security)
On Sun, 15 May 2005 14:40:55 -0400, JDG wrote Secondly, Social Security has no investments, so that's a bit of a non sequitur. I wrote bout investments in *people*. Surely you wouldn't disagree that Social Security is an investment in people? Thirdly, Social Security it is inaccurate to describe Social Security as merely an investment in today's needy people. Oh, look, you don't disagree. After all, Bill Gates is going to get a Social Security check. Moreover, Social Security provides some *increased* benefits based on having worked longer, or worked for higher wages, which I would expect to be inversely correlated to need. I didn't say it was a need-based program. But it is a primary safety net for our neediest people. For example... I just received a message saying that one of my friends, the youth pastor at a large church, died yesterday. He leaves a wife and four kids. The last time I saw him, five months ago, he was leading the funeral for another friend who died leaving seven kids and a pregnant wife. These widows and their children are examples of people for who Social Security is the primary safety net -- and it isn't even much. Lastly, your position as described above would lead to the logical conclusion that one should not save so long as there are needy people - that that money would be better spend on charity than on savings. Reductio ad absurdum! Have I said one word against saving? The two places I've spent most of my life are Pittsburgh and Silicon Valley, which were centers of manufacturing. I saw the mills close in the former and semiconductor fabs largely disappear from the latter, with those businesses and their jobs go oversears. The best understanding of why that happened is that our failure to save, as a nation, has made capital far less expensive in places with high personal savings rates, such as Japan. Our reponse has been to encourage other nations to stimulate consumption, to increase their cost of capital, rather than encouraging savings in our country, to decrease our own cost of capital. I think that stinks. Consumerism is out of control. So, while I am in favor of encouraging savings, which would strength our financial foundations, I don't favor taking money out of the Social Security safety net to do so. The question is: Should the government construct policies such that as few people as possible need the safety net. What does that have to do with how dependable the safety net is? If there were only ten people who needed it, but it wasn't there for some of them, then we're not being good stewards of the neediest. Nick ___ http://www.mccmedia.com/mailman/listinfo/brin-l
Re: A dependable safety net (was Re: Social Security)
5/16/05, Nick Arnett [EMAIL PROTECTED] wrote: On Sun, 15 May 2005 14:40:55 -0400, JDG wrote snip Reductio ad absurdum! Have I said one word against saving? The two places I've spent most of my life are Pittsburgh and Silicon Valley, which were centers of manufacturing. I saw the mills close in the former and semiconductor fabs largely disappear from the latter, with those businesses and their jobs go oversears. The best understanding of why that happened is that our failure to save, as a nation, has made capital far less expensive in places with high personal savings rates, such as Japan. Unnh, wrong lesson. Capital is not that expensive in the United States. Perhaps you are conflating into capital both capital investment costs, including the regulatory environment, and labor costs. Neither of those relate to the personal savings rate except in indirect ways. Our reponse has been to encourage other nations to stimulate consumption, to increase their cost of capital, rather than encouraging savings in our country, to decrease our own cost of capital. I think that stinks. Consumerism is out of control. So, while I am in favor of encouraging savings, which would strength our financial foundations, I don't favor taking money out of the Social Security safety net to do so. The question is: Should the government construct policies such that as few people as possible need the safety net. What does that have to do with how dependable the safety net is? If there were only ten people who needed it, but it wasn't there for some of them, then we're not being good stewards of the neediest. Constructing safety nets is hard I wouldn't trust the job to those who think they aren't needed. Nick -- Gary Denton Easter Lemming Blogs http://elemming.blogspot.com http://elemming2.blogspot.com ___ http://www.mccmedia.com/mailman/listinfo/brin-l
Re: A dependable safety net (was Re: Social Security)
On Mon, 16 May 2005 13:09:51 -0500, Gary Denton wrote Unnh, wrong lesson. Capital is not that expensive in the United States. Perhaps you are conflating into capital both capital investment costs, including the regulatory environment, and labor costs. Neither of those relate to the personal savings rate except in indirect ways. I believe you are mistaken. The savings rate directly affects the cost of capital. It is almost as simple as classic supply-and-demand -- the more cash that is saved, the more money is available for investment. In the semiconductor business, for example, Japan beat us repeatedly by achieving economies of scale much faster than our companies by building larger fabs, at lower cost of capital, then manufacturing more product faster. In that business, scale has has a multiplicative effect because high semiconductor yields (the percentage of good chips on a wafer) rise rapidly with volume because the manufacturer acquires the key resource -- experience with that chip and process. For a long time, the U.S. semiconductor industry called for Washington to just keep out of any sort of trade regulation, but around 1985, the industry decided to call for political action, citing the difference in the cost of capital and its effect on their ability to compete. Our government's response, which met with some success, was to persuade Japan to increase consumer spending, thereby decreasing the savings rate. A major reason for the high personal savings rate in Japan was its lack of a Social Security system. So one *could* conclude that we should abolish Social Security in order to strengthen our capital-intensive businesses. I think it is easy to make moralistic argument about saving v. spending, but in reality, both are needed. Where I think we get in trouble is focusing too much on one or the other. FYI, this is a subject I wrote about in some depth around 1984-1985 as I reported on the chip business. One of the most memorable moments of my career as a business journalist was on the phone with Bob Noyce of Intel, hearing him take a deep breath, a long pause and say that he had changed his mind about government intervention. Constructing safety nets is hard I wouldn't trust the job to those who think they aren't needed. ;-) Nick ___ http://www.mccmedia.com/mailman/listinfo/brin-l
Re: A dependable safety net (was Re: Social Security)
On 5/16/05, Nick Arnett [EMAIL PROTECTED] wrote: On Mon, 16 May 2005 13:09:51 -0500, Gary Denton wrote Unnh, wrong lesson. Capital is not that expensive in the United States. Perhaps you are conflating into capital both capital investment costs, including the regulatory environment, and labor costs. Neither of those relate to the personal savings rate except in indirect ways. I believe you are mistaken. The savings rate directly affects the cost of capital. It is almost as simple as classic supply-and-demand -- the more cash that is saved, the more money is available for investment. I was not objecting to that. Although that is a long term effect. Foreign capital and Fed actions have a large influence. In the semiconductor business, for example, Japan beat us repeatedly by achieving economies of scale much faster than our companies by building larger fabs, at lower cost of capital, then manufacturing more product faster. In that business, scale has has a multiplicative effect because high semiconductor yields (the percentage of good chips on a wafer) rise rapidly with volume because the manufacturer acquires the key resource -- experience with that chip and process. For a long time, the U.S. semiconductor industry called for Washington to just keep out of any sort of trade regulation, but around 1985, the industry decided to call for political action, citing the difference in the cost of capital and its effect on their ability to compete. Our government's response, which met with some success, was to persuade Japan to increase consumer spending, thereby decreasing the savings rate. Ahh, you were comparing Japan and the US in the mid-eighties. At that time the cost of capital in the US was high and in Japan was very low. Today the US is in the same position as Japan in the mid-80's. The Fed.Reserve here drove down the cost of capital in response to a major stock market decline. In the 80's the same thing occurred in Japan as well as government incentives for the major exporters to expand production in Japan. A losing battle - manufacturing follows low capital investment costs, low regulation and low wages - neither of which describes Japan or the United States today. A major reason for the high personal savings rate in Japan was its lack of a Social Security system. So one *could* conclude that we should abolish Social Security in order to strengthen our capital-intensive businesses. Except that the cost of capital, the interest rates, had been very low in the US for the Bush presidency despite the low savings rate. Personally, I think this was Greenspan partially saving Bush's butt, partially doing what the Fed is supposed to do, and helped by several foreign countries that don't want to stop their own export booms so they were purchasing huge amounts of dollar denominated bonds. Both of these actions are slowing and the economy weak as it is should significantly slip. I think it is easy to make moralistic argument about saving v. spending, but in reality, both are needed. Where I think we get in trouble is focusing too much on one or the other. FYI, this is a subject I wrote about in some depth around 1984-1985 as I reported on the chip business. One of the most memorable moments of my career as a business journalist was on the phone with Bob Noyce of Intel, hearing him take a deep breath, a long pause and say that he had changed his mind about government intervention. You are much more knowledgeable than I of manufacturing in the 80's.. In the 80's I was only worrying about a few mutual funds I was invested in and doing retail sales forecasts. Constructing safety nets is hard I wouldn't trust the job to those who think they aren't needed. ;-) Nick -- Gary Denton Easter Lemming Blogs http://elemming.blogspot.com http://elemming2.blogspot.com ___ http://www.mccmedia.com/mailman/listinfo/brin-l
Re: A dependable safety net (was Re: Social Security)
At 07:58 AM 5/2/2005 -0700, Nick Arnett wrote: In a plan that creates a shortfall by moving money into private accounts, progressive indexing means that the the most needy of the needy will be hurt less than everyone else. If we were actually solving the problems of hunger, health care and education, then perhaps it would make sense to move our investment in Social Security, which is an investment in today's needy people, to private markets that might benefit future needy people if the investments perform well. But we're not; poverty, hunger and illiteracy are rising. First, that shortfall is only relevant if it causes the US to default on Social Security promises - which I think that you and I would both agree is extremely unlikely. Secondly, Social Security has no investments, so that's a bit of a non sequitur. Thirdly, Social Security it is inaccurate to describe Social Security as merely an investment in today's needy people. After all, Bill Gates is going to get a Social Security check. Moreover, Social Security provides some *increased* benefits based on having worked longer, or worked for higher wages, which I would expect to be inversely correlated to need. Lastly, your position as described above would lead to the logical conclusion that one should not save so long as there are needy people - that that money would be better spend on charity than on savings. I don't see anything wrong with using our common wealth and our government to provide assurance that there will be a dependable safety net. The question is not: Should there be a government safety net' The question is: Should the government construct policies such that as few people as possible need the safety net. Isn't that the very purpose of government -- to band together for the common good? What greater measure of the common good is there than the willingness to sacrifice for the neediest? That is one proposed measure - I believe by Galbraith. Another would be the Pareto Criterion - any policy which makes no one in the society worse off. Another would be the Pragmatic Criterion - the policy that does the most good for the most people. JDG ___ http://www.mccmedia.com/mailman/listinfo/brin-l
A dependable safety net (was Re: Social Security)
On Mon, 02 May 2005 07:38:59 -0400, JDG wrote What's your source for this? The plan the President presented last week cut preserved benefits for the neediest, and reduced benefits for the highest income earners. In a plan that creates a shortfall by moving money into private accounts, progressive indexing means that the the most needy of the needy will be hurt less than everyone else. If we were actually solving the problems of hunger, health care and education, then perhaps it would make sense to move our investment in Social Security, which is an investment in today's needy people, to private markets that might benefit future needy people if the investments perform well. But we're not; poverty, hunger and illiteracy are rising. As for privitization, I support it because I believe that if many Americans who earn enough to save enough themselves for their retirement do so, then they won't *need* Social Security when they retire. This reduces dependency ... I don't see anything wrong with using our common wealth and our government to provide assurance that there will be a dependable safety net. Isn't that the very purpose of government -- to band together for the common good? What greater measure of the common good is there than the willingness to sacrifice for the neediest? Do we want to offer our brothers and sisters an undependendable safety net, in the name of ending dependence? The war and Wes are on my mind today (just read a detailed account of Fallujah) so I'll add this. Our soldiers fight for America as a land of opportunity, the freedom to make private investments in businesses that produce wealth. But they also fight for America, the land of freedom from fear of poverty, hunger and treatable illnesses, the land of the dependable safety net. I am entirely willing to pay sufficient taxes that we, in our role of citizen, *ensure* that other Americans who are elderly, handicapped, orphaned, etc. -- the weakest and most powerless people in our society -- have a safety net. Reduction of our commitment to this safety net, at a time when poverty is on the rise, is an abrogation of responsibility and compassion for those who are least able to help themselves. Do you want to share this responsibility and help ensure that our safety net is dependable? Nick ___ http://www.mccmedia.com/mailman/listinfo/brin-l
