Round 17 – Paul

Tom:

Are you familiar with the just released book, “COMING APART: The State Of White America, 1960 – 2010″?

Said book, written by Charles Murray, co-author of 1994′s “The Bell Curve”, generated a fair amount of coverage last week. Murray, who Wikepedia describes as “An American Libertarian political scientist”, has a BA from Harvard and a PHD from MIT.

In COMING APART, Murray examines the decline of White America throughout the last 50 years. A major premise seems to be that the decline in well-paid manufacturing jobs has caused a corresponding decline in families and greater dependency on government entitlements.

Last weekend, THE NEW YORK TIMES MAGAZINE set out to analyze Murray’s findings. Which resulted in a lengthy article that was too long for even me to finish. So I didn’t consider sending it to you. But today Paul Krugman, who I know you hate, hits on the crux of that article.

In short, lower class Whites in Red States are dependent on government entitlements more than ever. Yet strangely they’re in denial about their dependencies and supporting Republicans who would shred the social safety net. In other words, the Tea Party movement was largely fueled by these lower class Whites dependent on government.

Look at some of the stats Krugman comments on in this column.

Paul

 

Round 17 – Tom

Paul –

Krugman’s an even bigger jackass than I suspected. I couldn’t find where he got his data on percent of income being made up of government transfers, but I did look up the list of the most conservative and most liberal states, then compared that list to the richest and poorest states.

Several of the 10 most conservative states are also among the poorest states. Several of the 10 most liberal states are also among the wealthiest states. (Hey, I thought Republicans were the party of the rich?!)  So, let’s apply a little logic and see if we can figure out why people in the most conservative states receive more of their income from government transfer programs. Hmmm, that’s a tough one …

And yet I think I’ve got it: The biggest income transfer program is Social Security. If I’m poor and elderly, a much larger share of my total income will be made up of Social Security checks than if I’m rich and elderly. So states populated by a greater proportion of poor people will automatically be more “dependent” on government transfers in the form of Social Security.

However, those people were, like all of us, forced to participate in the Social Security program during their working lives, like it or not. The government took 10-15% of their incomes, like it or not, and now gives them a check that’s a pittance compared to what they could have accumulated in any moderately successful investment program. (For the average retiree, Social Security works out to roughly the equivalent of a retirement program that only earned a 1.5% return on the money “invested.”)

If they’d been allowed to invest that 10-15% for in their own retirement programs, they’d be able to bequeath their accumulated wealth to their children, thus making it less likely their children and grandchildren will also be poor. With Social Security, there’s nothing to bequeath. You die, the payments stop, even if you paid in more than you received, which is often the case with working-class blacks, who tend to die younger than whites.

For Paul Krugman to call conservative low-income people “moochers” because they now receive checks from a program they were forced to participate in – a program that made them poorer in their retirement years than they needed to be – only confirms my earlier opinion: he’s an arrogant leftist jackass.

Tom

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14 Responses to “Debate With A Leftist Pal, Part 17”
  1. Sean says:

    “Which resulted in a lengthy article that was too long for even me to finish.”

    Even you? It must’ve been weighty indeed for such a deep-thinking thinker such as yourself to find it tendentious.

    LOL.

  2. Paul L in MA says:

    And incidentally, Krugman mentioned “the G.O.P.’s war on contraception.”

    I am so irritated by talk like that.

    Was the big argument months ago about a very inappropriate banning of contraceptive products?

    Or was it a very proper objection to compelling others who don’t use contraceptives to bear a part of the costs for those who do?

    “Insurance” is all about cost shifting among the insured people. (NOT, as commonly and foolishly thought, onto “companies” or “employers,” who only broker that cost shift.) But we think insurance “gives” things that otherwise just can’t be had.

    Apparently things that are not GIVEN to you and now “denied” to you.

    Bingo. It’s equivalent to when Congress cut off funding for some artists and people screamed about censorship. No one was saying those artists couldn’t produce whatever works they wanted. We were simply refusing to give them taxpayer money.

  3. Michael Landier says:

    I’d like to point out that not everyone has received a poor return on “investment” from Social Security. Ida May Fuller, the first beneficiary of recurring monthly Social Security payments, received $22,888.92 over her lifetime on $24.75 total employee payroll taxes paid. She almost got all of her money back from her first monthly check, which was for $22.54. The view from the top of the pyramid must have been nice.

    http://www.ssa.gov/history/idapayroll.html

    Indeed. I read that FDR’s own advisers warned him the system would probably become insolvent in around 50 years or so, but he decided that wasn’t his problem. It was in the 1980s that we first had to “save” Social Security.

  4. Giuseppe Crowe says:

    One thing about the social security mess that everybody ignores is that during the Clinton administration, the claim was made that the budget was balanced….this was accomplished by the accounting trick of putting SS and Medicare contributions into the general fund thus guaranteeing that the whole Ponzi scheme will implode sooner rather than later. Walter Williams has some interesting observations about the nature of SS. Anybody with an iota of observational skill can see the coming disaster of the SS/Medicare failure. Programs like Obamacare only exacerbate the problem. No politician, with the exception of Ron Paul, will speak to the truth of this matter….they are more interested in being re-elected and bellying up to the trough.

    I explained to Paul in an earlier round (or perhaps it’s one I haven’t posted yet) that the budget was “balanced” by raiding social security’s trust fund. We are now facing future liabilities in social security and medicare that we will never, ever pay. It isn’t possible.

    • TonyNZ says:

      So as I understand it, you are saying that the only reason the government had a positive balance sheet a few years ago was because of the security that the super fund provided. Presumably nothing has changed and the securing agency now (and then, i suppose) has forward liabilities vastly exceeding it’s assets. In effect, providing negative security to the government’s books, but still being taken as positive.

      Is that why the USDA pushes carbs? To help reduce those forward liabilities?

      A teeny bit, I suppose. We raided the Social Security trust fund and stuck IOUs in the account.

      • Milton says:

        @TonyNZ: That is correct. Social Security is not an insurance or investment plan; the taxes collected from workers is paid to SS recipients. For a long time, the money collected was more than was paid out (which is not, IMO, an accident). So the government would spend the money and write itself an IOU.

        Some people argue that since the government owes the money to itself, that it shouldn’t be added to any debt calculation. Of course, this is silly– the money is owed to retirees, not the government. And more importantly, the money is no longer there. All that the IOU means is that when the amount paid out surpasses the amount collected (something that is already happening) the additional amount comes from tax revenues.

        It’s a sort of double-whammy. You can no longer use the SS surplus to make the general deficit seem smaller. Now you’re running TWO deficits. And those will have to show up on the ledger.

    • Jason R. in MA says:

      Wait, you mean our unfunded liabilities that outnumber the world’s money supply by over 12 times is an unsustainable model!?!

      We could always just sell off every asset in the United States and that could pay for these things right? Oh wait, that still leaves almost 20 trillion dollars in unfunded liabilities… not including the national debt… which is currently scheduled to increase by at least 1.5 Trillion a year because the Federal Government refuse to cut spending down to pre-bailout levels…

      Why can I understand the problem and not the President or these popular economists like Krugman? Is it really that hard to see that the current path is unsustainable?

      I guess this is why I’m a Libertarian, I can’t stick my head that far up my own posterior…

      When the debt bomb explodes, it’s going to be nuclear.

  5. TonyNZ says:

    Is that 1.5% you mention including a factoring for inflation? These days, if you are returning 1.5%, you’re moving backwards because your wealth is devaluing at a greater rate than it is accumulating.

    That was including inflation, but it’s still pathetic.

  6. johnny says:

    To invoke Krugman to defend your position is laughable.

    This is the same man that stated that we needed an out of space alien invasion to generate enough economic demand to pull us out of the current obamanomics depression.

    Sadly, some fanatics concur with him.

    ET to the rescue? Krugman doesn’t grasp that long-term economic health is about investing in productive capacity, not ramping up artificial demand.

  7. johnny says:

    I’d like to point out that everyone “invests” in Social Security through their payroll deduction – currently 7.65% – and through employers’ payroll deduction – also 7.65% – since this operating cost is built into the price of the product or service and passed to the consumer. The sum of these two is 15.3% (sole employees pay both).

    Since surplus SS funds are raided by the politicians and substituted with treasury securities and SS deficits are funded the same way, the taxpayers will pay interest and principal on these securities, at least 1-2% of salary per year.

    Thus, we are spending 15- 17 PERCENT OF OUR SALARY per year for this measly retirement!

    Placing this percentage of my salary in A SAVINGS ACCOUNT would generate a much higher return!

    Absolutely. Economist and author Walter Williams once ran some numbers and found that most people would retire much more comfortably if they just stuck that money in an interest-bearing account. And whatever they didn’t spend in their retirement, they could pass on to their kids and grandkids.

    • Paul L in MA says:

      Johnny — not sure whether you get this or not, I think you do, but too many fail to understand that the incidence of the whole 15.3 percent tax is really on the employee, whether self-employed or not: as the great Milton Friedman succinctly explains here.

      http://www.youtube.com/watch?v=rKY1xA36ua8

      But I think too many of us are duped, in the same way that we think the employer is eating the cost of health insurance and other benefits, not the employee who is really trading wage for benefits.

      Yup, as far as your employer is concerned, the “employer’s half” is just part of the cost of hiring you.

    • Paul L in MA says:

      Oh, and technically not all of that payroll tax is SS, some is Medicare, still it was till lately 12.4% of your earnings malinvested! (Temporary reductions in effect now.)

  8. Nick says:

    Tom, I suspect that the link below is Krugman’s source for conservative areas being more reliant on government programs than liberal areas. I’ve had this for a while, and I’ve meant to share it with you because I’m interested in your take on it. The map is for 2009, but it goes back to 1969. Watch how dark the map gets and be shocked (or maybe not).

    http://www.nytimes.com/interactive/2012/02/12/us/entitlement-map.html?ref=us

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