Bitter medicine
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 [hat tip: 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?
UPDATE
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).Reports Stuff, "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?
UPDATE
I have received a pointer to The Retirement Calculator from Hell.
¶ 2/25/2004 09:01:00 PM 0 comments
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The lynx and the hare
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.
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 ourselves there?
(Coming soon: a vision of a way to de-fund OPEC and the Wahhabist entity.)
¶ 2/22/2004 08:49:00 PM 0 comments
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Is this thing on?
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.
¶ 2/17/2004 10:36:00 PM 0 comments
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