The only evidence that Krugman presents to support his case against the proposition that Social Security is headed for insolvency (unless it undergoes big changes) is simply that Medicare and Medicaid are headed for insolvency that's even worse.
Oh good grief – try reading the excellent coverage of this issue presented by Dean Baker . Don really put his foot in his mouth with this analogy:
So Krugman's case that Social Security presents no real problems to worry about is like, say, a lawyer advising client Jones that the grand-larceny charges against Jones are really nothing to worry about because client Smith is facing the more serious charge of murder.
Don should check this out if he’s curious why I’m laughing at his analogy.
Blogger just gobbled my comment. Oh well.
ReplyDeleteShort version. Some guy named Stuart Buck is hitting every comment thread with the same question. He keeps pulling out the same quote from a 1996 Krugman review and claims Krugman is speaking out of both sides of his mouth. The notion that it was reasonable to talk 'Crisis' in 1996 on the basis that seven years of strong growth were not yet in the bank, and equally reasonable to assert 'non-Crisis' after a decade of pretty strong numbers is simply lost of these people.
The earth has been moving under their feet and yet their argumentation has been trapped in amber. At some point reality is going to enter the picture and the results should be shattering.
I'm having a bit of difficulty processing this little debate. That is the debate taking place between Boudreaux and Krugman with pgl as referee. So I link to GMU's site and I discover that Boudreaux is department chair of the Economics Dept. What does this imply about the field of economics? That's a rhetorical queation. How the devil can an academic publish a significantly half truth article without other significant academics coming out of the wood work to criticize the half truth aspect of the article?
ReplyDeleteHas academia changed so much that significant academics can publicly twist the truth on an issue without professional liability? I'm referriing to the disingenuous way in which Boudreaux describes Krugman's article, and does so without any indication that a host of other economists have been making the same argument as does Krugman.
Two commentors on Boudreaux's own blog, Stuart Buck and David, make the argument for Krugman in a clear and simple manner. No numbers, no BS. Just nicely reasoned logic. What do the rest of the George Mason faculty think about this issue? Is GMU little more than a think tank type of institution with a narrow fundinig stream that needs stroking?
Bruce - Stuart Buck is not alone. Greg Mankiw recently pulled out some 10 year old forecast on the solvency of SSTF in a silly attempt to do some Krugman bashing. 10 years ago, Enron looked like a good stock to buy.
ReplyDeleteI think you're both reading Buck incorrectly. His comment on Boudreaux's blog seems very supportive of Krugman and the anti-crisis point of view. He only notes that if Krugman said something different ten years past, then he was then wrong.
ReplyDeleteJack maybe. That didn't seem to be his tune on the other threads. Then again maybe I am projecting my reading of Mankiw onto Buck.
ReplyDeleteIn any event the important point is that it is no longer 1996, the string of strong growth years expanded the overall economy to the point of no return. The economy only has to be so big to support the fixed pool of Boomers, at some point it can just coast home. I don't expect the kind of hard landing that some others do next year. Then again there are reasons I am not Chairman of the Fed. But the way the numbers are running for the narrow purpose of Social Security solvency even a near term recession doesn't throw it much off track, this is some pretty low hanging fruit, even if you discount the Q3 GDP and productivity numbers (which seem high to me, or maybe Q1 are too low, I just don't see the macro effects that one would expect from the huge swing. It is like the economy is being invisibly turned on and off with a switch with nobody noticing.)
Do I misunderstand the arguments in support of "crisis" theory, or do those proponents deliberately avoid recognition of the Trust Fund as a viable source of SS funding. Were these people living on some other planet in 1983 when the same crisis scenario led to the increased paroll tax rates? Are they deliberately disregarding the presence of this huge fund created for the express purpose of coping with the worker-retiree imbalance, which was the description of the crisis at that time?
ReplyDeleteSo I ask the question again. How does a dept chair in economics not get skewered by the rest of the profession for dispensing half truths in a deliberate manner, as Boudreaux appears to be doing?
Jack - you have it exactly right. The Bush privatization crowd bases its crisis numbers on the premise that those Trust Fund reserves have already been stolen.
ReplyDeletepgl,
ReplyDeleteBut that doesn't answer what I think of as a more important question. Why doesn't the rest of the profession chastise those who promote a fallacious argument? Why isn't there a great deasl more focus on the Trust Fund in those forums that have more public recognition? As I noted previously, that trust fund is the result of excess payroll taxes that are the result of the 1982 "crisis" hysteria. Responsible economists and political scientists, as well as any other intellignet person in a position of influence, have got to make this point more clearly. Why aren't the candidates focusing on the need to possibly raise income tax marginal rates inorder to repay the trust fund? Yes, that's rhetorical. I know they're not inclined to address the issue because they don't truly represent the mass of the voting public.
I just put a comment over there. Boudreaux is a committed libertarian, and I suspect opposes the social security system on ideological and philosophical grounds. Such a view should be kept separate from discussions of the solvency or lack thereof or future prospects of the system. It is simply childish to say "Krugman is wrong because I do not like his politics in general." Boudreaux does not present his real gripe with the system. He would be more honest if he did so, rather than playing this dumb game of going along with the gang of pessimist forecasters.
ReplyDeleteBarkley
PS: Maybe tomorrow I'll see if I can get this problem straightened out whereby I am unable to post here. Just back from being out of town...
I'm afraid I don't understand. Are you guys saying that Boudreaux is lying about the state of social security?
ReplyDeletehttp://www.ssa.gov/OACT/TRSUM/trsummary.html
Social security, under current conditions, is insolvent. What did Boudreaux do so wrong?
dan
ReplyDeleteunder current conditions social security has about two trillion dollars in the bank and a source of income that will pay all projected expenses until 2042. that's not what i would call insolvent.
moreover, after that time, it can either cut benefits, or raise taxes...about a dollar a week.
it's about like your saying Toyota was insolvent because there are no orders for any cars after the middle of this century.
or that you are insolvent because you don't have in your pocket, or the bank, the price of your breakfast on June 3, 2041.
try not to worship meaningless words. or imaginary numbers.
For those wondering, yes GMU pretty much is like a libertarian think tank. Yes the fact that its a state school makes it fairly ironic.
ReplyDeleteWhat people need to understand is the the Social Security Report is itself a blend of policy advocacy (the summary) and straight actuarial reporting (the analysis and the tables.
ReplyDeleteThe link Dan is using is to the politically infused Summary. Anyone needing to really understand this topic needs to get back to the meaty parts of the Reports - the Tables.
Dan,
ReplyDelete"Currently insolvent"???
The fund is currently running a nearly $200 billion surplus, which happens to be still rising. "Involvency" is when you cannot pay your bills. There is no part of the federal government or budget that is less "insolvent."
Robert,
ReplyDeleteWhat is it that is libertarian about playing fast and lose with the facts in order to support an ideological argument? I would call that dogmatism rather than libertarianism.
Being selfish and being deceitful about it, always seems to be called libertarian. Selfish deceit doesn't sound like live and let live to me.
jack
ReplyDeletelibertarians are moaral idiots. and their understanding of the real world is none too comprehensive either.
all people, including yours truly, have very limited abilities to hold much of the truth in mind at the same time, even when their immediate desires are not narrowing their focus.
as it turns out a lot of liars take advantage of foolish libertarians.
live and let live means MOM and DAD! stop nagging at me! and let me borrow the car tonight.