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May 12, 2011


Krugman is wrong that the federal government is an insurance company with an army. Unlike the federal government, insurance companies are required to maintain reserves for the claims that will be made on them. And insurance companies that become insolvent are shut down by regulators, whereas the Administration can project massive deficits into the distant future with alarming equanimity.

No, the federal government isn't an insurance company, it's a Ponzi scheme--with an army. It's a Ponzi scheme with the power to compel hapless individuals to invest in the Ponzi scheme.

The "racial resentment" index cited by Abramowitz is based on responses to four questions:

  • Irish, Italian, Jewish and many other minorities overcame prejudice and worked their way up. Blacks should do the same without any special favors.
  • Generations of slavery and discrimination have created conditions that make it difficult for blacks to work their way out of the lower class.
  • Over the past few years, blacks have gotten less than they deserve.
  • It’s really a matter of some people not trying hard
    enough; if blacks would only try harder they could be just as well off as whites.
Give me a break. These four questions aren't a measure of racial resentment, they're a measure of agreement with liberal pieties.

Tesler and Sears explain the provenance of these four questions:

Since 1987, the Pew Research Center and its predecessor Times Mirror, in their series of surveys on American values, have regularly asked a battery of four race-related questions that approximates the
content of Kinder and Sanders’s (1996) racial resentment battery.

These questions gauge the extent of discrimination against African Americans, the group’s societal advancement, whether we should do everything we can to help blacks and other minorities even if it means giving them special preferences, and whether the country has gone too far in pushing for equal rights (see appendix for question wordings). The items do not form quite as reliable a scale as the racial
resentment battery (α = .54 across survey years compared to about .75 for the racial resentment scale). They are also specially unreliable for African Americans (α = .29 across survey years), who as a result are excluded from our Pew analyses.

That the four questions yield unexpected results for African Americans is especially telling. Apparently a large number of African Americans don't buy into these affirmative action pieties. Doesn't that strongly suggest that agreement with those propositions isn't a basis for judging racial resentment?

Apparently not, because pollsters and academics continue to use the four-question index uncritically. That's just sad.

Great posts, Rob. Another bias in the study of racial resentment is limiting it to only one class of racial resentor and racial resentee.

For the purpose of discrimination, the government often considers that we have 5 "races":

Hispanic, white, black, Native American, Asian.

Let's assume that people don't have racial resentment against their own race. That leaves 20 possible combinations of of racial resentor and racial resentee:
-- Hispanic resentment of whites
-- Hispanic resentment of blacks
-- Hispanic resentment of Native Americans
-- Hispanic resentment of Asians
-- White resentment of Hispanics
-- etc.

As a general rule, only one of these twenty possible types of racial resentment is studied and reported. Seldom, if ever, have I heard a report about any of the other 19 types of racial resentment. The result is to give the impression that white resentment of blacks is the only significant type of racial resentment that exists. I don't believe that's actually the case.

Ryan Grim and Jonathan Chait demonstrate how to use a misleading fact to support a myth. They are right that the reduction in childhood mortality is a significant cause of the increased life expectancy at birth. They are utterly wrong that this fact proves the myth that Social Security need not be reformed. Three reasons:

1. Although decreased childhood deaths are a factor in the increase in life expectancy at birth, life expectancy at every age has been increasing. In particular, life expectancy at older ages has increased a lot, so Alan Simpson's point is basically correct.

2. Life expectancy is just an illustration. Simpson's concern about SS costs is actually based on cost estimates from the Social Security Administration. Their actuaries base their estimates on mortality at each given age.

3. SSA probably underestimates life expectancy for today's living people. That's because their mortality tables are based on averages of past mortality. However, life spans haves been increasing continuously for many decades. Chances are mortality will continue to improve in the future. (The source for this point is various books by A. Haeworth Robertson, former Chief Actuary of SSA.)

If Grim and Chait really wanted to inform their readers, they would get future cost estimates from SSA. They would discuss how to raise enough money to cover these costs, in the light of the current deficit as well as other areas where costs will also increase, such as Medicare and Obamacare.

If they were as sophisticated as they pretend to be, they would know that SS's financial needs will probably be considerably higher than SSA figures, since SSA in effect assumes that mortality will stop improving.

Instead Grim and Chait pretend that one mistake on a side issue by one particular spokesman not only invalidates that side's entire argument but proves theirs.

However, I do want to thank Brendan for his altruism in promoting this myth. As long as Americans believe that SS need not be reformed, retirees like me will continue to receive generous benefits paid for by working people like Brendan. When Brendan reaches retirement age, he won't get the kind of benefits I now do because they won't be affordable. He will be one of the Ponzi scheme’s victims referred to in Rob's first post.

Perhaps I'm beating a dead horse, but I get upset by Jonathan Chait's combination of writing skill, intelligence, arrogance and economic ignorance. In the article Brendan linked to, Chait writes,

I'm actually in favor of some kind of technical fix to fill in Social Security's long-term deficit, though I don't see any special urgency to handle it right away.

Chait's opinion is worthless; he has no economic expertise. He just naively assumes that $1 to $2 trillion dollar deficits continuing indefinitely won't matter.

Compare the nonchalant Chait with Megan McCardle, a liberal who does understand economics. She foresees economic disaster:

[Taxing the assets in pension plans] is the sort of thing that desperate governments do when they're having trouble accessing capital markets. It was easy to write off Argentina's seizure of private pension funds in 2008; to paraphrase PJ O'Rourke, if Latin American finance were a soap opera--and it is--Argentina would be the spendthrift crack-addicted younger brother that uptight, ultra-respectable Mexico fights desperately to save.

But Ireland is another thing entirely--a model of fiscal rectitude whose budget surpluses were a shining example to the rest of us, now reduced to pilfering its citizens "tax free" private pension funds. I say this without implied criticism. When budget deficits soar into the double digits, countries end up doing things they never thought they would. I don't know enough about Irish finance to know whether this was the best of the available options--but I know enough to know that they don't have any good options left.

And I don't think it's that farfetched that we could end up in somewhat similar circumstances--not exactly the same, obviously, but close enough for discomfort. If we don't get our deficits under control soon, we're going to get them under control under duress, when the markets are demanding a rising premium to lend to us, and all the choices are hard.

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