Today, Alan Greenspan took to his soapbox and told the nation
something that it did not want to hear: Social Security
is unsustainable and its costs have to be cut back. This is
common sense, given that the necessity of the action is driven by
the demographics of the nation and those demographics are obvious
many decades in advance; the age cohort due to take normal
retirement in 2008 was in kindergarten in 1948. Nobody who
was watching the news the last time Social Security was re-vamped
in the face of a crisis (the first Reagan administration) has an
excuse if they did not see this coming.
This long-overdue bit of sanity was promptly denounced by members
of both major parties. Predictably, the Democrats appeared
to be both louder and less compromising
(as befits their socialist
tendencies like the French
Stephen Den Beste
]). John Kerry said
"... the wrong way to cut the deficit is to cut Social Security
benefits. If I'm president, we're simply not going to do it."
His rival John Edwards said Greenspan's comments were
"an outrage." Republican responses were as much in favor
as an outright evasion can be; Dennis Hastert was so brave as
to stand up and say, "He's a fine man."
None of which deals with the issues facing the nation, and the
fundamental issue of equity: why should a large, long-lived
generation, having paid reasonable but not overly large benefits
to the smaller and shorter-lived generation before it, expect
generous payments and unprecedented levels of medical treatment
from the smaller generation which comes after it - for the duration
of a greatly extended retirement?
While rationality may say that the system is so broken that it
should be scrapped immediately, reality is that this isn't going to
happen. But politics is the art of the possible. It may be
possible that pols can get votes arguing for fairness: if you
are going to live longer, you should work longer and pay for longer
to justify your comfortable retirement. It is not fair that
people trying to buy houses and raise families should have their taxes
jacked up so that others can continue to retire well short of age 70 to
have 15 or more years of leisure. Forget the children, who are
in their 40's and 50's; won't somebody think of the grandchildren?
Had the demographic problem been addressed in a sane and sensible fashion
in 1983, it would have been simple: raise the retirement age by one
month per year, with "leap months" as necessary to keep the fraction of
retirees smaller than some statutory maximum. Had this been
implemented in 1985 the retirement age going into 2003 would have been
66.5; hardly a stretch, but a big boost to the bottom line. Social
Security taxes could have been reduced, as the need for the surplus to
carry the Boomers would have been smaller. The lower taxes would
have boosted the economy, and the elimination of the "Social Security
surplus" and its additional borrowing power would have shown the
irresponsibility of the Washington pols' spending.
All of this is wishful thinking. Nobody in Congress in 1983 was
ready to fix the problem properly, and anyone who proposed such would
have been demagogued to death. It is now 21 years later; an entire
generation has gone from birth to drinking age. The crisis is 21
years closer, 21 years have been wasted, and the only pols who aren't
still busy demagoguing to death the voices of sanity are too timid to
find their own.
The last time anything was changed the Social Security trust fund was
within months of running dry. The "fix" was a massive tax increase
combined with equally massive denial of the true nature of the problem.
Instead of catching the disease and treating it early, it continues
to grow. When we finally face the need to act, how much bitter
medicine will we have to swallow?
The statement by Greenspan seems to have made the issue newsworthy. The treasurer of Australia, Peter Costello, is on the same page
(hat tip: Randall Parker
, "The Treasury paper to be released today warns that the longer Australia does nothing about demographic changes, the bigger the reforms that will be necessary in future." The big question: Will this message be accepted Down Under, or will the demagogues deny reality and continue to get a free pass from the voters?
I have received a pointer to The Retirement Calculator from Hell
One of the most well-known phenomena in ecology is the population
cycle of the arctic lynx and the snowshoe hare. About every
ten years the number of hares reaches a peak and then declines
sharply; the population of the lynx, which is one of the hare's
chief predators, falls precipitously shortly thereafter.
The once-obvious driver of the cycle was lynx/hare relationship.
Lynx reproduce much more slowly than hares, so the prey get a running
start from the low point of the cycle. But once the lynx build
up their numbers and the hares run into the limits of their food
supply, the density of predators reduces the number of prey very
quickly. The predators, now past the limits of their own food
supply, quickly follow and the cycle repeats.
This connection is no longer quite so obvious. More recent
research indicates that the connection between plant and herbivore
is much more important than the connection between predator and
prey; hares have been observed to kill brush by overbrowsing, and
compete with animals as large as moose. But regardless of the
exact details, the numbers of both lynx and hares are driven by the
energy supply available to them.
It is worth remembering that the fates of human societies depend on
energy just as much as those of species. In the 1960's the
USA had its first national love affair with massive vehicles and
"muscle cars", and cars grew as quickly as their fuel consumption.
The OPEC embargo and oil-price shocks of 1973 and 1977 ended that era,
did a huge amount of damage to Detroit, and created a great deal of
interest in economical vehicles. This in turn created demand for
cars built in Japan; this demand has changed in character, but it has
not fallen. Detroit's share of the market has fallen greatly
and looks to continue to fall.
American manufacturers have ceded the economy segment of the market.
Small cars now come from Korea and Brazil; if they have American names,
they usually have Japanese drivetrains. The segment still dominated by
Detroit is the large truck. Boosted by the rising economy of the
90's and cheap fuel prices (especially following the Asian economic crisis
of 1997), the new "sport-ute" category boomed. The pickup truck
shed its hick image to become Ford Motor's hottest-selling product, and
the market for Excursions, Suburbans, Durangos and H2 Hummers has grown
to the point where vehicles in this class, almost non-existent ten years
ago, are a large and very visible fraction of what's on the road.
As a part of this phenomenon, the average fuel economy of the US vehicle
fleet has fallen to lows not seen in decades. Meanwhile the asian
economies have recovered and world oil prices have crept up to levels
unseen since the 1991 Iraqi invasion of Kuwait. Prices close to
USD 30/bbl were doubtless one of the drags on the economy throughout
2003. They now stand at over USD 34 per barrel.
Add to this two factors:
- US dependency on oil continues to rise, reaching 38 quadrillion BTU in 2002.
- OPEC has just agreed to cut production by some 1.5 million barrels per day.
This situation has been created by the public policy of the last two decades
plus. Through our unwillingness to make the hard decisions we have
re-created the conditions which led to recession and stagflation a mere
thirty years ago. Our 6% unemployment might soon be but a fond memory,
while our need to spend money on the military to control nuclear-capable
rogue states and terrorist groups may soon outstrip our finances.Right now the US looks an awful lot like the snowshoe hare, wounded by
the very groups we've been feeding and running out of food.
Contrary to Wretchard's implicit claim
(see the bottom) we don't have
to play this role. Like our first moves against Japan in 1940-41, we have to begin to
confront the Islamic imperialist monster starting with its lifesblood,
oil money. The question of this post-9/11 world is, do we have
the vision to see our way to a different future and the will to put
(Coming soon: a vision of a way to de-fund OPEC and the Wahhabist entity.)
Ergosphere, n.: the zone around a rotating
black hole in which the dragging of space-time makes it impossible for an
object to remain stationary relative to the outside universe. This
phenomenon can be used to extract energy from the black hole's rotation.
Hello, and welcome to The Ergosphere. This is my place to bring up my thoughts and analyses related to whatever, but mostly about energy and its politics. I invite your comments and rebuttals.
About the blogger: I am affiliated with no political party. On the other hand I take the political impact of energy very seriously, especially the consequences of delivering billions of dollars a week to religious radicals whose avowed agenda is to make every surviving person be just like them. Giving them money when they're using it to make nuclear weapons to further their agenda is insane.
I take ecology seriously, "deep ecology" and other mysticism not at all. I believe that global warming is an important issue (if carbon dioxide was not really good at keeping things warm, Venus would not be hot enough to have metal frost on its surface). I think that using 5 BTU of fossil fuel to create 6 BTU of "biofuel" from corn is just nuts, an opinion I appear to share with the Cato Institute
Being somewhat of a poet (with emphasis on the "somewhat", as will be displayed in these pages over time), I appreciate elegance when I see it. Being an engineer, I appreciate how things have to work together in order for the whole to function. I solve problems for a living, as it is what I would do anyway. This leads me, not merely to point my finger at perceived problems, but to craft solutions for them. A certain optimism led me to find this forum where they can be posted, and humility leads to the hope that they will be criticised (constructively or otherwise), perhaps even improved. Should that happen they cease being my own and become part of a collaborative work; where they go from there is out of my hands.