Another argument for Social Security

From Felix Salmon:

A lot of people have signed up for Wikinvest and handed over access to their brokerage accounts. I spoke briefly to SigFig founder Parker Conrad, who explained that it’s incredibly easy to flick through those accounts and come up with examples like the one he pulled up, of a man with $2.3 million in his Merrill Lynch account.

This guy probably knows that he’s paying his Merrill broker an annual management fee of 1.75%, which alone is more than $40,000 a year. But he doesn’t know that other Merrill clients in his position are paying far less — that Merrill brokers basically charge as much as they can, and the average Merrill client on Wikinvest pays less than half that, just 85 basis points.

And there are other things this guy doesn’t know, as well, because they’re buried in his statements — things like the fact that Merrill charged him $5,763 to make 24 trades last year, over and above that $40,000 management fee. That’s about $240 per trade.

Other fees are even higher. The Merrill broker bought something called the Fidelity Advisor International Capital Appreciation Fund, which charges 1.45% per year on top of a 5.75% fee payable when you buy the thing in the first place. The fund is substantially identical to the Fidelity International Capital Appreciation Fund, which has a 1% management fee and no front-loading at all. Why would any advisor with his client’s best interests at heart put that client into FCPAX rather than FIVFX? He wouldn’t — FCPAX is simply a vehicle invented by Fidelity for advisors which allows them to skim off hefty commissions.

Given these tricks, one can easily imagine how older adults (as they get less sharp over time) falling victim to all sorts of tricks of this sort. In that sense, the Federal Government can act as a disinterested party and act as a responsible agent in terms of managing pension savings. Given the risk of an older adult being rendered impoverished by these kinds of practices, I am unsure of why a program like social security is not universally popular. There may be some funding issues that require tweaks, but the basic idea is genius.

Three education stories -- two interesting and one important

Matt Yglesias and Brad DeLong have an interesting exchange about competition in higher education. I'm not sure either nails it but both make some good points.

Another qualified recommendation for this Salon piece. There's not much here that hasn't occurred to almost everyone who ever taught high school English or freshman comp. For everyone else, though, it's a useful glimpse into the reality of these classes.

And a recommendation without qualifiers for Dana Goldstein's 'The History of "LIFO."' Goldstein shows how a term that was up until recently an obscure piece of accounting jargon has become a powerful rhetorical tool in the reform movement.

It's okay to call Oedipus a...

As I suspect everyone has noticed by now, mainstream media journalists love pox-on-both-their-houses stories, stories where they can point to both parties committing the same offense, thus allowing the journalists to appear both impartial and morally superior.

Journalists love pox stories so much that they often equate very different offenses. Here Jonathan Chait finds an excellent example at the Washington Post:

After a recapitulation of some basic facts, the editorial arrives at the only other portion that can be called an actual argument:

Health and Human Services Secretary Kathleen Sebelius told a House panel that seniors would “die sooner.” The Democratic National Committee proclaimed in an ad: “Their leaders have called for cutting Medicare, and now for killing it.”

This is false, inflammatory and, as we said, useful — for winning elections, that is. When it comes to solving the government’s most pressing problem, it threatens to set things back.

Are these claims false? No, they aren't. Let's take the democratic claims in reverse order. The current Medicare system is a commitment to cover health acre expenses for the elderly. The Republican plan would end that commitment and replace it with a limited and rapidly shrinking subsidy toward that end. It's somewhat tantamount to replacing public education with a system of limited vouchers for well below the average cost of public school tuition. Would you describe that as "killing" public education? I would -- the design of the program would be so altered as to no longer constitute the same thing.

It is true that both sides of the debates have accused the other of attacking Medicare, but only on one side were those accusations accurate.

"This is an egregious example of a public university being willing to sell itself for next to nothing."

Yeah, 'egregious' is what I'd go for (from the St. Petersburg Times via Chait):

A foundation bankrolled by Libertarian businessman Charles G. Koch has pledged $1.5 million for positions in Florida State University's economics department. In return, his representatives get to screen and sign off on any hires for a new program promoting "political economy and free enterprise."

Traditionally, university donors have little official input into choosing the person who fills a chair they've funded. The power of university faculty and officials to choose professors without outside interference is considered a hallmark of academic freedom.

Under the agreement with the Charles G. Koch Charitable Foundation, however, faculty only retain the illusion of control. The contract specifies that an advisory committee appointed by Koch decides which candidates should be considered. The foundation can also withdraw its funding if it's not happy with the faculty's choice or if the hires don't meet "objectives" set by Koch during annual evaluations.

David W. Rasmussen, dean of the College of Social Sciences, defended the deal, initiated by an FSU graduate working for Koch. During the first round of hiring in 2009, Koch rejected nearly 60 percent of the faculty's suggestions but ultimately agreed on two candidates. Although the deal was signed in 2008 with little public controversy, the issue revived last week when two FSU professors — one retired, one active — criticized the contract in the Tallahassee Democrat as an affront to academic freedom.

Rasmussen said hiring the two new assistant professors allows him to offer eight additional courses a year. "I'm sure some faculty will say this is not exactly consistent with their view of academic freedom,'' he said. "But it seems to me it would have been irresponsible not to do it."

The Koch foundation, based in Arlington, Va., did not return a call seeking comment.

Most universities, including the University of Florida, have policies that strictly limit donors' influence over the use of their gifts. Yale University once returned $20 million when the donor demanded veto power over appointments, saying such control was "unheard of."

Jennifer Washburn, who has reviewed dozens of contracts between universities and donors, called the Koch agreement with FSU "truly shocking."

Said Washburn, author of University Inc., a book on industry's ties to academia: "This is an egregious example of a public university being willing to sell itself for next to nothing."

Over the past few years we have seen the undermining (often deliberate) of the independence and credibility of a number of important institutions -- universities, research labs, government agencies, think tanks. It has been done through funding with increasingly less subtle strings attached, through attacks on academic freedom and independence (anyone for tenure reform?), and through a full court press on a media that has been all too willing to play the toady and the fool.

It's easy to see the short-term benefits of this erosion for people who, say, are trying to ignore evidence of climate change or the relationship between tax rates and budgets over the past twenty years, but in the long-term, when we lose our sources for reliable information and analysis, there are no winners.

p.s. I'm opening the floor for nominations. Can anyone suggest a more weaselly phrase than "I'm sure some faculty will say this is not exactly consistent with their view of academic freedom''?

Pop culture resources -- you may never leave the couch

Another advantage of studying old pop culture is that it has never been so accessible. When you think about how difficult it was to find some of these works just ten or twenty years ago, the abundance is truly amazing.


Project Gutenberg

National Jukebox

Internet Archive

Digital Comic Museum

While on the subject of old pop culture

This is a big deal:

The Library of Congress is one of the most splendid resources in the country--which is terrific, if you're in DC. For those who aren't (and even who are!), the Library's putting a massive audio archive online, for free.

The "National Jukebox," available on a streaming-only basis, unfortunately, is a massive trove of audio recordings. Music, speeches, humor readings--spanning decades of American history. The original words of Teddy Roosevelt. "Rhapsody in Blue" with George Gershwin on piano. Serious national gems. And, due to some cuddling with Sony, the label's entire pre-1925 catalog will be accessible, encompassing a significant (and widely forgotten) musical past.

In terms of popular art, the first quarter of the Twentieth Century may be the most important and creative twenty-five years... period. New genres. New media. Gershwin. Keaton. McCay. Wodehouse. To study this period is to realize just how much of what we still read, watch and listen to is built on a framework that's almost a century old.

One of the advantages of studying old pop culture...

...is that it provides a useful reality check against the conventional wisdom around an era. If you spend some time leafing through old comics and pulp magazines, watching old movies and listening to old radio shows, you will inevitably run across ideas and opinions that seem anachronistic.

Take attitudes towards smoking and health. It's easy to think that people in the Fifties thought of cigarettes as healthy. After all, didn't all those doctors in the ads insist that smoking was good for you, that it soothed your T-zone?

But of course, the tobacco industry didn't run those ads because people thought cigarettes were healthy; they ran them because by 1950 it had become clear that cigarettes were anything but. The purpose of those ads was to throw some dust in the air to help people ignore the obvious and, failing that, to at least convince customers (who were, remember, already addicted to nicotine) that the brand being advertised was a bit less unhealthy than its competitors.

This ad from the inside cover of a 1953 comic book (courtesy of Mippyville) tells the other side of the story.

Great quote on the value of brand

APM's Marketplace has a good take on Millward Brown's annual brand survey, including this memorable soundbite:

Andrew Zolli: Someone famously said of Coca-Cola that if you burnt down every one of their factories, they'd be back in business in a quarter. If you knocked everybody on earth over the head and gave them amnesia, they'd be out of business in a quarter. And the reason for that is that their brand really exists in all of our minds.

p.s. While you're there, check out this account of how certain Silicon Valley companies help repressive regimes keep tabs on their citizens.

Why do libertarians not hate geoengineering?

It would seem to be a check list of everything that offends libertarians -- a large, expensive, centralized program that makes no use of market forces, instead working under the assumption that only the government can solve your problems.

By comparison, carbon taxes (under which I'm including cap and trade approaches) would seem to be the ideal libertarian solution to an acknowledged externality -- you let prices reflect the true costs and benefits then let market forces do the rest. Even regulation would seem more acceptable -- banning certain products and practices certainly wouldn't be a libertarian's first choice but there is at least some room left for choice and innovation in the search for substitutes.

With geoengineering, the government dictates an exact and inflexible solution and asks us to have faith that secondary effects will be anticipated and accounted for. I am not what you would generally call a libertarian, but I do have a healthy respect for market forces and worry about the unintended consequences of large government initiatives so, in this case, I support the libertarian position.

What I don't understand* is why so many libertarians (like John Tierney) and advocates of market forces (like Steven Levitt) wax rhapsodic over an idea that violates pretty much all of their stated core beliefs.

Anyone out there have any thoughts on the matter?



* 'Don't understand' might have been a bit of an overstatement. I do have a theory on this (I pretty much always have a theory), but it's the subject for another post.

Clarity Has A Well-Known Liberal Bias

Paul Krugman:

Because it is, you know, a plan to dismantle Medicare. When you transform a program that pays seniors’ medical bills into a program that gives them a voucher that almost certainly isn’t enough to buy adequate insurance, you can call the new scheme Medicare, but it isn’t the same program.

I think it is possible to have a discussion about the future of Medicare, as it is pretty clear that the current program involves some compromises. But I also think that it is really important that it be an honest discussion about what we are planning to do.

Altered Oceans

I'm working on a post about the larger context of global warming. One of my sources is this Pulitzer Prize winning series from the LA Times on the frightening changes taking place in the world's oceans. It's a few years old but it's still an extraordinary and highly relevant piece of journalism. Take a look and we'll talk later.

The Culture that is Britian

A quote from the last David Tennant Doctor Who episode:

The Doctor: You had that gun in the mansion. You could have shot The master there and then.
Wilfred: Too scared, I suppose.
The Doctor: I'd be proud. If you were my dad.
Wilfred: Don't start. You said you were told, he will knock four times and then you die. Well that's it then. The Master. That noise, in his head. The Master is going to kill you.
The Doctor: Yeah.
Wilfred: Kill him first.
The Doctor: That's how The Master started. It's not like I'm an innocent. I've taken lives. I got worse—I got clever. Manipulated people into taking their own. Sometimes I think the Time Lord lives too long. I can't. I just can't.

In the previous episode, the character Wilfred (a former soldier) is told he has never killed anyone. He takes it as a point of pride and not shame.

I think that this really is something that we (as a species) could use more of. A ideal that the use of violence is a last resort rather than the opening gambit. This moral code (admittedly from a TV show) doesn't rule out the use of violence, but it sure makes it seem sad and tragic.

I was similarly impressed with the morality in Harry Harrison's The Stainless Steel Rat (which i think competes with any science fiction series for best ever). Consider:

Cold-blooded killing is just not my thing. I've killed in self-defence, I'll not deny that, but I still maintain an exaggerated respect for life in all forms. Now that we know that the only thing on the other side of the sky is more sky, the idea of an afterlife has finally been slid into the history books alongside the rest of the quaint and forgotten religions. With heaven and hell gone we are faced with the necessity of making a heaven or hell right here. What with societies and metatechnology and allied disciplines we have come a long way and life on the civilised worlds is better than it was during the black days of superstition. But with the improving of here and now comes the stark realisation that here and now is all we have. Each of us has only this one brief experience with the bright light of consciousness in that endless dark night of eternity and must make the most of it. Doing this means we must respect the existence of everyone else and the most criminal act imaginable is the terminating of one of these conscious existences.

Once again, violence is never ruled out but always deeply tragic.

I was thinking about the way organizations find to avoid acknowledging the obvious

...and this well-traveled but still amusing piece of fax-machine satire came to mind.

Enjoy.

Indian Wisdom

The tribal wisdom of the Dakota Indians, passed on from one generation to the next, says that when you discover you are riding a dead horse, the best strategy is to dismount. However, in modern business, because of the heavy investment factors to be taken into consideration, often other strategies have to be tried with dead horses, including the following:

* Buying a stronger whip.

* Changing riders.

* Threatening the horse with termination.

* Appointing a committee to study the horse.

* Arranging to visit other sites to see how they ride dead horses.

* Lowering the standards so that dead horses can be included.

* Appointing an intervention team to reanimate the dead horse.

* Creating a training session to increase the riders load share.

* Reclassifying the dead horse as living-impaired.

* Change the form so that it reads: "This horse is not dead."

* Hire outside contractors to ride the dead horse.

* Harness several dead horses together for increased speed.

* Donate the dead horse to a recognized charity, thereby deducting its full original cost.

* Providing additional funding to increase the horse's performance.

* Do a time management study to see if the lighter riders would improve productivity.

* Purchase an after-market product to make dead horses run faster.

* Declare that a dead horse has lower overhead and therefore performs better.

* Form a quality focus group to find profitable uses for dead horses.

* Rewrite the expected performance requirements for horses.

* Promote the dead horse to a supervisory position.

Noahpinion on Public Goods

One explanation of why the narrative on taxation has become toxic in the United States:

Well, I think conservatives (and not a few liberals!) have really fallen into the rut of thinking that all government spending = redistribution. Part of this may be a simple failure to recognize that America's gravy days are over, and that arresting the rapid shrinkage of our national pie is more important than squabbling over who gets which slice.

I think that this insight is entirely correct. Without public goods, a country inherently weakens (imagine no roads, rule of law or sewage). That being said, I do think that redistribution is also an important function of taxation. High income individuals gain a lot from a fully functional society and it is not unreasonable to share the benefits with other members of the society.

California's Choice

Steve Lopez writing for the LA Times:

In 1990, Linscheid said, the Cal State budget and the state prison budget were roughly the same. Today, the state prison budget is only about 10% less than the Cal State, UC and community college budgets combined. Meanwhile, the number of inmates has shot up from 25,000 to 175,000 over the last 20 years, thanks largely to law-and-order initiatives backed by the prison guards union. The union bankrolls politicians like Gov. Jerry Brown, too, and reaps huge benefits, but they come at the expense of school funding.

UCLA Chancellor Gene Block recently wrote in The Times that of the 42 Republicans in our state Legislature, 29 are products of California's public system of higher education. They got a great bargain, but not a single one of them has supported a Brown proposal — balance the budget half with cuts and half with a temporary extension of existing tax increases — that would maintain a barely acceptable level of quality in the Cal State system and help students avoid crippling tuition hikes.

I can vouch for the bargain part. A couple of years ago I took a grad course at a UC school to get caught up on the latest developments in Bayesian networks. The course was excellent, the paperwork was reasonable, the cost was still remarkably cheap for what you got.

Of course, my isolated experience doesn't mean much but it is consistent with pretty much any system of college rankings you can find. By almost any measure, California has arguably the world's best university system (according to the ARWU rankings, four of the world's top twenty universities are in the UC system).

But California also has a sentencing system that can give you 25 to life for cheating on a driving test and a legislative system that makes it easier to amend the constitution than to pass a budget. We can certainly keep one of these three systems, we might even manage two but at least one will have to go.

If you made this an explicit choice, few Californians would choose to sacrifice our universities, but in the implicit choice we've been given, that's exactly what we've decided to do.

p.s. If you're not depressed enough, check this story from NPR.