Sunday, November 16, 2014

Privatize or Increase Age of Eligibility?

What should we do about social security? There are many answers to this question that, in my opinion, tend to center on whether social security should be privatized or to increase the age of beginning eligibility. Some benefits to privatization would be the stock value getting an increase in value with billions of dollars being injected into corporate investment, which can be an economic stimulus. However, poor portfolio management can leave many retirees much worse off and the transition costs would be tremendous, which would drastically increase the deficit. Still, good portfolio management can be arise for many in historically safe long-term portfolios diversified from unsystematic or diversifiable risk, but there would still be systemic or nondiversifiable risk caused by the market. This means personal responsibility and ownership would be created for citizens' retirement, which means they would have a personal stake in the nation's economy and it could cause for benefit cuts that are believed to be inevitable without raising the age of eligibility. Also, it would allow for many in poverty to have a chance for a wealthy retirement, but the market risk could leave very large numbers of retirees in a bad financial situation if they happen to retire when there is an economic downturn they weren't protected from. Furthermore, there are less complicated corrections available to social security and the privatizing the system would take money away from an already underfunded system when current IRA's and 401K's offer practically the same benefits as private social security accounts. Thus, what should be done can depend on one's political, economic, or ideological beliefs that are definitely not universal. The question of what should be done is still not answered in my mind because I would want to see further research into the issue with concrete parameters discussed.

How to Change Social Security



Reading the article "The Social Security Myth" by Nick Newel the idea of the inadequacy and wastefulness of social security is explored. Nick states that “The SI (Old-Age and Survivors Insurance) program is in no sense a federally-administered “insurance program” under which each worker pays premiums over the years and acquires at retirement an indefeasible right to receive for life a fixed monthly benefit, irrespective of the conditions which Congress has chosen to impose from time to time” which is so counter to what you would have been led to believe Social Security is there for.

A significant reason that Social Security has remained in place and continued to increase in premiums is that a large majority of the political power - the elderly - are the ones voting for policy change. In the instance where they directly benefit from the increase in premiums on the younger generations they have no incentive to change the direction of their votes.

At this point in time looking towards the future and future generations is it feasible to think that we can continue to raise the costs of social security to benefit us once we retire? To me it seems like a economic policy destined for failure in that eventually the premiums will become too large to bear. What changes could be made to reroute the direction Social Security is going in? Is there any hope that changes in policy could make Social Security a worthwhile endeavor?



Social Insecurity

The system was supposed to be a service in which the qualifying parties paid into. Then if became used for welfare. This has lead to the funding of the welfare of mentally disabled people, and those that are of retirement age that may not have paid into the social security system. The problem with the system is that there was too much money in there for a debt ridden government such as the USA. The misapplication of funds was legally bound in the fine print. The government isn't always honest, therefore people will suffer. I do believe it is unfair to the potential recipient who has paid their dues and got shafted on the deal. I do believe that welfare helps people, but social security was not meant to be the way it is. I think if you were born after the 1970's your chances of receiving the retirement fund are very slim. Taking THE GOVERNMENT TO COURT SHOULD HAPPEN MORE OFTEN. There is a serious opportunity cost being thrusted upon the tax-payers. This is because people could have saved their money privately or in a trust fund. guaranteeing them benefits. however its like a raffle where everyone is buying tickets, but not everyone will win. The negative externality is that elders who have no family around are living in poverty, limited mobility, and no one is assisting them. The independence and safekeeping in which they invested can and in some cases, has dissipated. The system sounded great, but the reality has left people without a way to live after their dues to society and to the social security fund have been paid.

The Social Security Myth

Its obvious that Social Security is broken and a drain on our productivity and efficiency as a society. What to do about it? I argue that immediately eliminating it completely would be a fine method of handling the situation if carried to term, but the fallout would be so extreme that political intervention would stop a recovery from occurring.

The next best option, then, is to phase it out at the fastest rate possible while not being extreme enough to incite political intervention. To this end, I look at a special case study provided by Chile, in which that exact thing has happened.


from http://www.freedomworks.org/content/chilean-model-social-security

Entering into the work force, workers were given a private pension fund that requires them to contribute 10 to 20 percent of their income. The amount put into the fund depends on the age the employee wants to retire. At retirement, the private fund is transferred into an annuity with an insurance company. The individual is given the choice to decide what insurance company to work with and what plan best fits the circumstances. If the individual is not satisfied with the company or plan, they have the freedom to change companies. This also allows competition between insurance companies, which would lead to better service and greater returns over time.

For those who were already paying into the public system, they were given a choice to stay public or to enter the private system. The major cost created by the transition is the money Chile loses from the people switching to the private system. The cost was financed by the selling of state-owned enterprises that would provide for those who stayed on the public pension system. Due to the success of the privatization, around 93 percent Chilean workers switched to the new program. The public pension program will be completely eliminated the day the last person in the system passes away.

The effects of the program model include generating surpluses without raising taxes, inflation, or interest rates; Old-age pensions are 40-50 percent higher than the public pension system; Disability and survivor pensions are 70-100 percent higher than the public pension system; There has been a significant decrease in the payroll taxes have contributing to an unemployment rate below 5%; Savings rates have sky rocketed and have deepened investment; Growth rates have more than doubled in the past 10 years.

Sunday, November 9, 2014

Environmental Victory

I believe the law is an environmental victory for the state of California, and it's an especially significant victory for a state making up 12 percent of the nation's population. The fact that the law was passed in such a large state will have a very significant environmental impact for the planet. Plastic is very chemically stable, and the fact that nearly all bags are not made of biodegradable material by being plastic means the law should have a significant impact on the oceans being polluted with plastic that does not decompose. Marine life, in my opinion, will be the prime beneficiary of the environmentally-friendly law. Too much plastic ends up being thrown into the oceans and it is very costly to clean up the mess, so the measure might end up saving future generations an immense amount of money if the world will ever decide to clean up the oceans. Furthermore, the opinion of plastic bag manufacturers is very biased because they profit directly from such laws not being passed, so it's a significant environmental victory that such a law was passed over the lobbyists of the plastic industry, which is very large multi-billion dollar industry that holds immense political influence. If anyone thinks plastic bags are good they should simply see what the Great Pacific garbage patch is to see what the true environmental impact of plastic particles is on the fragile environment of our planet.

Slippery Slope

There's a reason grocery stores use plastic bags; they're inexpensive. Paper bags are expensive enough that they are not used in a majority of stores. What does this mean? It means that if a grocery store can no longer use the inexpensive option, they must resort to a more expensive one. That means that prices will rise and wages will lower in order to meet their bottom line.

The benefit of this law is supposed to be less pollution; less plastic pollution specifically. I expect that it will meet this goal, but the cost to the consumers will be substantial enough that the plebeians in California will demand price controls on the goods from grocery stores. Ultimately, I think this is a bad move for California.

But I'm biased.

Friday, November 7, 2014

Will the Cutbacks Even be Visible??

I thought that story was lacking depth into the situation. Very poor theory. Where is the proof? I honestly don't know a  single person who doesn't re-use grocery store plastic bags. I think they are taking the ethical, social responsibility approach to cleverly disguise their decision to make cutbacks. The issue is petty and the argument is very poor...just like California's current economic state. If they are truly concerned about ocean life, the waste management source should re-vamp it's system. The consumer has always been entitled to free grocery bags. It should be the consumer's decision to accept or decline. There are always "green" bags for purchase. There are also biodegradable bags that are very popular.Why wouldn't that be the next option? Because it is a money issue! this is the same as sandwich shops not offering toothpicks, or restaurants regulating the amount of condiments a customer may receive.

Monday, November 3, 2014

Mare Nostrum....NOTHING LAST FOREVER.

That was a sad article!


      My opinion is that nothing last forever. Government programs are typically built on the basis of temporary availability.(unless you live in the United States)The assistance provided By Italy was like a 'leg up' on the situation and on the grounds of helping those who truly intended to help themselves. Immigration is already a hazardous process when you are dealing with smugglers and other unorthodox forms of entry into a country.Maybe if the majority of immigrants chose to unite and seek legitimized transportation and immigration, things could be safer.

     I may be speaking too soon but I can believe the United States government hasn't robbed its own country to be at the political forefront of this issue. Maybe someone (Not the United States) will sincerely acknowledge this problem and the surrounding governments can work with police and immigrants to set up a system. The smugglers are getting away with the terrorist behavior because there aren't any laws in place to hold them accountable! While this scenario exemplifies the phrase "Where there is no crime, there are no criminals."

I gathered an illustration of Italy being shunned for not doing the American style 'Temporary government program' which essentially can last for a lifetime and procure debt. I don't see Italy not caring which is why they assisted in the first place, however no one can do everything forever! I think they need an immigration reform policy.

Sunday, November 2, 2014

Govt Spending





There are quite a few problems leading to the ignorance of the general public in regards to present day realities of government and policy. I am in no way attempting to excuse anyone from blame, yet the process to which this point has been reached is understandable. 

    The present political structure is the leading cause of  problem.
Regardless of cause, or the idealism behind it- regardless of whether or not it was the 'right' course to take- the sheer amount of power the central govt has amassed over time is the leading cause of the problem today.
    Income tax- When the income tax was put into effect, it was for good reason, but now we are paying the unseen consequences. When the income tax was instated, the sheer amount of money that shifted from the people and concentrated into the Fed govt. caused a shift in the balance of powers of the state and Fed govt. The central govt grew exponentially. It is only natural for an organization to protect its own expansion, and natural that those who could potentially benefit from that power to gravitate to the politicians wielding it. Today, from the individual viewpoint, central govt and its decisions seem beyond our control- it is far away and inexorable as the tides. Sure we can vote for our congressmen and senators, but when the fed govt holds the purse strings, the states tend to go with the flow. The people no longer vote for what the govt should be doing, but what the govt can do for them. Fewer politicians run on what they, the state, and the govt should be doing, but on what they can give the people. For decades, politicians have trotted out experts testifying that our current course will be successful in the long run, and ensuing politics are about how to spend the money, not whether or not it should be spent at all.
  The result is the public becoming less and less interested in the over all condition of the fed govt. The experts have everything well in hand, and their interest is in what they can get from the govt now. (I love the irony)
    Another factor is the prominence of such news in our news sources. Todays news in the US is very sensational, to maximize profit, and the overall state of affairs from an economic view is not popular, even if it may be the most important piece of national news. Again, far more popular is how the money is spent- because the effects are immediate. So our fair, balanced, and unbiased news focuses mainly on news pieces that make them money and fail to report on the most important news in the nation.
    In recap- the fed govt is huge and spends billions of dollars as quickly as I drink coffee- so why should I care exactly how they spend it? It isn't my decision. It is enough that I know the general areas it spends money in and that I vote for what affects me and my family today and tomorrow.


    This problem can be analyzed all day long, but I think the solution is simple. If the people had more incentive to be informed and to vote conscientiously, they would. I think this could be achieved by returning the balance of central/state power more to the side of the states. The people would immediately be more concerned with the use of that power as they would have a more immediate effect on that power. This would require a restructuring of our current tax structure. A simple solution, but not so simply carried out. I would predict that our current system will have to collapse under its own weight before the people have enough incentive to fix the problems in govt today. (And to educate themselves as to the functioning of govt)

Much Self-Interest?

The article appears to point to how many politicians do not value human life as much as many might expect them too. Spending $11 million a month is a great expect considering that it potentially saved over ninety one thousand lives last year. That is only about $1,450 per person, so it's a very small expect considering that a human life is in danger. Also, the article highlights the contradictions that are often made to justify cutting such an important humanitarian program by mentioning how Italy's interior minister Angelino Alfano said "We are proud of the lives we saved, but Mare Nostrum won't live another year, because however commendable, it was meant as a short-term operation. Responsibility for the Mediterranean frontier rests with Europe. These migrants don't want to come to Italy, they want to come to Europe." From the last time I checked a map, Italy was both in Europe and the Mediterranean. Maybe Italy's interior minister has Italy somewhere else in his own personal atlas such as in Florida or maybe even in Malaysia, but it is common knowledge that Italy is in both in Europe and the Mediterranean.  I understand that many of the migrants' final destinations are not in Italy, but many of the deaths occur near Italy, so it just appears that money and a controversy are more valuable to some politicians than human lives. At least Judith Sunderland from the Human Rights Watch suggests that before Mare Nostrum is  discontinued that Europe should proceed with concrete action to honor all those that died trying to reach its borders if Italy does not want to do everything alone. Furthermore, I do not understand how those that give the order to collectively reject migrants instead of doing that based on individual cases are still in office and not persecuted when it violates both maritime asylum law. Apparently, there is selectivity in the application of laws, which I am strongly against. On the contrary, the claim that many migrants are placed into less safe vessels and boats because of the likelihood of them being saved seems to suggest that rescue efforts can actually be endangering the migrants' lives in some situations, which can only increase the need for Mare Nostrum. The article does seem to make a great suggestion that less xenophobia in Europe and simplified visa procedures can help save many lives, but it's hard to see that happen anytime soon.

Monday, October 27, 2014

No one is 'Actually' Running Out Of Water

I do believe that water in its drinkable form does have periods of scarcity. However, for the grand picture of this topic, I think not. Cheap 'anything' is at risk. More is always purchased at a lower price, and when it comes to life's essentials, this concept will be more factual than ever. The consumer is not at fault for indulging in a good deal. The supplier did not use a rational approach in distribution.

Farmer's should have priority on water because its consumption redistributes goods back into the economy. They are using that water to grow food, they should get it at a less expensive rate than everyone else.


General consumers should not be wasting water. Although we aren't running out of water per se, the resources used to handle and treat the water to make it available for public use may be scarce, or expensive.

Sunday, October 26, 2014

What About Agriculture?

The article does address that water is not conserved effectively, but there were serious blunders in the reading material. At one point the article stated "And they are legion: California has granted rights to five times its average annual flow of surface water. These restrictions have perverse consequences.", which makes no sense to me. Either the article missed a key point of what exactly the restrictions are or granting too much water rights that exceed annual flow of surface water by five times is apparently a restrictions. This appears to point to the bias of the author. I understand that I am somewhat critical, but it appears as if the premise of the post was for an attack on farmers. The author kept on bringing up California as if the state making up 12% of the nation's population is the determinant of the policies that need to be taken with regard to water for the entire nation. I have been in Southern California for a few weeks this summer and can attest that there is a huge drought, but there was still much water being used to spray many lawns that would simply dry up in the dry heat. There is an incredible amount of attacking farmers that require water to produce food, so if irrigation would discontinue in dry regions then how would much of the food we eat today be grown? This is a rhetorical question, so do not bother answering.  The arguments presented were very one-sided, so they are likely to demonstrate either the convictions of the author or possibly interest groups he may represent. It's very difficult for me to just believe everything written on the internet because the solutions to the problem were not very clear. Raising the price of water may sound like a great idea, but what about the rising costs of agricultural products and shortages of them associated with such a change? How popular would the change be if there are millions of Americans that can afford to purchase food? I believe raising the cost of water can be a very unpopular move, even though many economists may acclaim such a move. Thus, blaming the pricing system of water simply appears to point towards incompetence or bias in favor of certain interests groups being backed by them. The article should discuss the costs of relocating agriculture and present the positions of the other side such as the position of farmers before making hasty solutions to the problem that is much more complicated than the article attempts to make it appear.