Sunday, June 30, 2013

Imperfect Information

As I stated in earlier posts ("A Little Bit of Irony", "Noble Goals") I have been reading, in an off and on fashion (which is why it is taking so long), Jefferson Davis' history of the Confederacy. Obviously, it is a somewhat one sided affair, being biased not only in favor of the Confederacy, but also in favor of Davis in opposition to his critics, both during and after the war. However, if one makes allowances for the inevitable bias, it does provide a rather interesting insight into the war -- rather like the writings of General Early -- from a perspective we rarely see in conventional histories, which inevitably have, more or less, a Union bias. Of course, Davis also glosses over some of the more uncomfortable facts, such as his efforts to make the war entirely about sectional strife with barely a reference to slavery as anything other than a pretext for northern aggression1, and when he later mentions slavery, it seems he does view it with quite rose colored glasses.  But when it comes to factual reports of what took place, of the debates within the military and government, Davis is certainly a valuable, and interesting, source.

What is especially interesting in reading of the Civil War itself is how much of the war was the result of imperfect, or outright incorrect, information or assumptions. For example, after the First Battle of Bull Run (or Manassas), the Union was essentially in full retreat, and had almost no defenses to cover Washington. As a result, they were also in a panic about the Confederate troops advancing and assaulting the capital. However, the Confederates suffered from two mistaken beliefs. First, that the Union armies were still capable of offering resistance, that, though retreating, numerous units were still in position to either cover that retreat or perhaps even resume an attack on some limited scale. Second, once it became clear that the Union had withdrawn well into northern Virginia, many Confederate generals were of the impression that the Union had established impressive defensive works along one or both shores of the Potomac, making any assault on Washington impracticable without far more troops than then available. As a result, the Confederate army failed to follow up on their victory and missed an opportunity to strike a quite demoralizing blow against the Union very early in the war. (Not to mention that the Confederate high command -- and government -- suffered from considerable dissent and second guessing once the error became known.)

A similar error worked in the opposite direction in the Peninsula Campaign. Thanks to rapid movements of Confederate forces, exceptional discipline and somewhat risk averse Union leadership, the Union troops assigned to fight along the York and James Rivers were under the mistaken impression that the Confederate Army before them  was made up of fifty to one hundred thousand men, rather than the twelve to twenty thousand initially confronting them, and that the defensive works -- impressive as they actually were -- were much more extensive and formidable than they proved to be. As a result, the Union took a slow and cautious approach to reducing these defenses, give the Confederates time to both build up defense works and bring in tens of thousands of reinforcements. In the end, it was of less benefit to the Confederates than the first error mentioned was to the Union, as concerns about Union troops turning the Confederate flanks, or engaging in landing operation -- neither of which was being considered by the Union at the time -- led to Confederate troops withdrawing rather precipitously, losing rather considerable stores. (Which in itself is another example of how mistaken perceptions drove many decisions.)

I mention all of this because we often forget how uncertain knowledge can be, especially in military and political matters. For example, the question whether Iran was (and is) carrying on research toward building nuclear weapons. While at one time it was thought to be true beyond a shadow of doubt, later it was equally vehemently denied, only to have the same people then assert once more there was such a program a few years later2. Yet, in each case, those with a political axe to grind treated the assertion of the moment as absolutely certain, despite the clear evidence that our intelligence was, to be polite, a bit shaky.

A similar issue existed with regard to Saddam and both his WMDs and ties to terrorism. Many assert that Bush faked evidence and knew there to be no weapons, but the facts simply don't bear that out. Bush may have made his case with somewhat less than certain evidence, but those who voted for him, Democrats as well as Republicans, had equal access to those sources, and Langley was hardly a Republican stronghold (recall Valerie Plame?), and Foggy Bottom -- which allowed Joe Wilson to freelance -- was even less of one, so if there was evidence to the contrary, strong evidence, it is certain those same Democrats would have heard of it, and made it public. That they did not shows one thing, that we just did not know. Saddam acted as if he had WMDs, there was some evidence he might have them, or was pursuing them, and while some evidence of terrorist ties were later debunked, there were other bits of evidence, such as training facilities at Salman Pak, the presence of Abu Nidal, offers of bounties to suicide bombers and the like, that made the issue uncertain.

But, critics will say, why did we act? If we did not know, why didn't we wait? Do we not believe a man is innocent until proven guilty? If we weren't sure, would it not have been better to wait and see?

And therein lies the problem. Foreign affairs is not the same thing as internal policing3, and trying to equate the two leads to nothing but trouble. Internally we are guided by the rights citizens, by an established legal system and the like. Externally, we have no such safeguards, and despite all the efforts to fabricate some court of nations, the truth is, nations have no means of policing one another but the explicit use of force. Furthermore, nations are not obligated to treat one another in the same manner as a government must treat its citizens. A government is not obligated to treat other nations in any specific manner, its sole concern is the protection of its own citizens. And thus, when it appears a threat may exist, it must decide if that threat is probable, and if the risk is great enough for it to act. It cannot worry if the proof would stand up in court, or if the reaction is fair in some abstract sense. It must act, even if the information is imperfect, as to do otherwise is to fail to fulfill one of its fundamental obligations.

We can debate forever whether or not the evidence was there to support invading Iraq, whether or not we should have thought Saddam was a threat, even whether or not there were WMDs4. However, none of that will change the fact that, at the time, there was reason for the government to think there was a threat, and, because of that possibility, it had to decide whether or not to act. And just like those Civil War era generals I mentioned above, they had to act with imperfect information. To fault them for reaching incorrect conclusions is a valid position -- whether I agree or not -- but to fault them for acting before having perfect knowledge is not. Yet, sadly, in many modern debates it seems many now demand just that, that we must not act until we have absolute certainty. And that is nothing but a recipe for immobility.

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1. Clearly, in some cases he may have been right, there were sure those who were not above using the abolitionist cause for settling regional scores, or gaining certain advantages. On the other hand, it is also without a doubt that there were numerous sincere abolitionists who championed the cause sincerely, and had not the slightest interest in various regional conflicts.

2. For those who have forgotten the various back and forth intelligence assessments, I suggest my posts "I Don't Get It", "Heads I Win, Tails You Lose", "Another Thought On Iran", "I Told You So", "To Make It Very Simple", "Idiots or Geniuses?", "Our Friend Iran", "Can Everyone See It Now?", " Iranian Weapons", " Wait a Minute!", " Amnesia", " Iran's Assessment of Obama", "Comparing Bush and Obama -- Foreign Policy", "Initial Thoughts on Iran", " Some Thoughts on Iran", " A Thought on Iran", " Overly Optimistic and "Iran Gets What It Wants".

3. See  "Rational National Defense", "Rights Versus Laws", "Last Word on Defense", "Foreign Policy", "My (Informal) Nobel Peace Prize Nomination", "Inconsistencies in Historical Perspectives", "The Point of Foreign Policy", "Stupid Quote of the Day (January 5, 2012)", "Knights and Bandits""War As Last Resort", "War Crimes", "Civilian Casualties", "Follow Up on an Old Comment" and  "A Little Bit of Irony".

4. For my earlier arguments on this topic, I recommend "Food For Thought", which itself includes a postscript which discusses the problem of uncertain and imperfect information.

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POSTSCRIPT

If we are honest with ourselves, all of life is nothing but acting on imperfect information. I can think of no aspect of life -- outside of formal logic and mathematics -- where absolute certainty can be had. And in most aspects of life we accept that truth. However, it seems that certain political causes are prone to ignoring this simple truth. The death penalty, for example, is often opposed on the basis of our lack of certainty ( "Compassionate Execution", "The Death Penalty", "A Rational Approach to Punishment", "The Ends Justify the Means?", "Fair or Functional?", "Crime, Insanity, Incompetence, and IQ", "Sunday Morning Talking Heads", "Revisiting the Death Penalty" and "Reconsidering My Earlier Justifications of the Death Penalty"). Yet, would we not think it justified if a man saw another aim a gun at him, for him to shoot in defense? Yet, until he is shot, he is not certain the man would shoot him. So, why demand the death penalty prove with more certainty than we require for claims of self defense? Both can be lethal, yet we do not treat them the same. Similarly, we often find people arguing against wars, especially wars launched to preempt attacks, based on nothing but a lack of a "smoking gun". Yet, there too, the issue is the same. Until we are attacked, there will be no certainty. Even a man who plans aggression can always call it off. Thus, until we are the victim of aggression there is no absolute certainty. So, does this mean we must never act to defend ourselves until the first blow lands upon us? That seems a poor sort of plan, as so often the one who strikes first enjoys a tremendous advantage. Should we give that up, even when the intent is very clear, just because we are not absolutely certain? We do not behave that way in any other aspect of life, why demand it when so much more is at stake?


Friday, June 28, 2013

Misleading Terminology

When replying to a comment on my last post ("Not Quite True") I was reminded of a quote from Confucius:
 If names be not correct, language is not in accordance with the truth of things. If language be not in accordance with the truth of things, affairs cannot be carried on to success. When affairs cannot be carried on to success, proprieties and music do not flourish. When proprieties and music do not flourish, punishments will not be properly awarded. When punishments are not properly awarded, the people do not know how to move hand or foot. 
Though I am not certain that this is correct in all respects -- in some respects the mechanistic nature of the argument reminds me of the whole "for want of a nail" chain with which I have other issues1 -- but the basic premise still seems sound. When we use terms in incorrect ways it can lead to real problems, perhaps not of the scale suggested in the Analects, but still, when words are used in inappropriate ways it can make debate difficult, can mislead the careless into thinking things are other than they truly are and can, in general, create chaotic and risky situations.

Perhaps the best example is the use of the term "power" to describe both political and economic control2. While term term suggests some equivalence, which many use to equate business and government, the fact remains that political power is the ability to use force against others, to imprison, to fine, to confiscate and kill, while economic power is the ability to engage in consensual exchange, and nothing more. The use of the word "power" conceals this simple truth and suggests that a CEO has power of life and death equivalent to a president or dictator, which is far from true. On the other hand, it is a useful deception, at least for some, as it can turn popular opinion against business, can justify taking action to regulate or even destroy certain corporations, and generally justify an aggressive approach to business regulation.

However, that is one of the more obvious, and dramatic, examples. Many others are more subtle, and the risk is less obvious, though no less real. For example, the mistake that inspired this post, that is the use of the term "insurance" to describe Social Security, as well as medical assistance and unemployment payments, is a similar deception. That it is a mistaken designation is certain, though the arguments are too lengthy for a short essay3. Equally clear is the reason many favor this designation, erroneous as it is. When these payments are welfare, benefits, or any other term which suggests a payment by the government from the general revenue, it is easy to argue for their modification or elimination. Once they become insurance, the recipients see them as a right, as simply receiving what they paid in, and they will fight tooth and nail to keep these programs. In addition, the term also serves to deflect certain critics. Some who argue against welfare do so from a moral opposition, rather than an argument from practicality or theory of government. These people see welfare as something unearned. Thus, by claiming Social Security and Medicare are simply payments from insurance, or that payments to the unemployed are insurance, the objections to unearned income are deflected from these programs.

A similar purpose is served by the description of government subsidies as "investment". Now, it is likely that some of these payments are truly intended to encourage economic growth, though others are more or less disguised payoffs to important constituencies (eg farmers prior to Iowa primaries) or political allies (such as subsidizing highly unionized industries), but they are still nothing like actual investment. Investment is, in normal parlance, giving money to a venture in the hopes of obtaining greater returns. The government has no such intent, they may be trying to create a particular industry, create jobs or do any of a dozen other things, but they are never concerned with returns. In fact, they do not expect to ever see the money again. This may seem a small point, but it is actually much more important than many imagine. You see, an investment, in the strictest sense, is made with a thought as to the likelihood the business will prosper, that is that it will better meet the desires of the public than other firms. Government "investment" is made without such concerns, and thus almost inevitably ends up reducing such satisfaction, that is, even if it creates superficial prosperity, in the long run it produces less growth than a similar amount of private investment would4. In short, it works well as a political payoff, as some sort of patronage or to reward political support, but it does not work as an economic stimulus, despite the short term appearances. And thus, calling it an investment is terribly misleading, as it is not intended, nor will it, bring about true economic growth, and thus has only a superficial resemblance to investment.

Then there exist even more subtle misuses, or perhaps proper uses, but misleading ones. For example, the use of a multitude of terms for taxation. While not technically incorrect, taxes can be called at various times "fees", "excise", "duties", "licenses" and so on, the fact remains that by segregating taxes into a large number of categories the state manages to distract us from the reality of the truly massive amount of tax we pay. If, instead of seeing it as a tax, we imagine we are paying to buy a business license, or a fee to use the roads, or a license to hunt, or an import duty, we forget that all of them still serve the same purpose, the transfer of money from citizens to fund government operations. Thus, by shifting certain taxes into categories we do not normally consider taxes, the state manages to hide at least some of the cost it imposes upon us5.

Some may argue that this is a rather trivial concern, that the government is hardly unique in preferring to use euphemisms for uncomfortable topics, or in wanting to put the best face on its actions. In addition, as we are aware of this tendency, there is no real harm in this petty deception. And, I suppose in a very strict sense, this is arguably true. Every freshman student who takes philosophy learns at the start that terminology is largely irrelevant so long as the terms are properly and thoroughly defined at the outset6. Thus, even if the state chooses to use conventional terms in unusual ways, it should present no problem so long as we recognize that, for example, when the government says "investment" it uses it in a sense very different from when a business owner or small investor uses the term.

On the other hand, I could make several arguments to the contrary. For example, imagine an argument where we decided that we would revers the conventional meanings of right and left. It would be quite possible to do so, and with concentration it could probably be made to work. However, in using to such very familiar terms in contrary ways also increases greatly the probability of someone making a mistake and reverting to the conventional usage unintentionally. Or, to make it even more obvious, let us say we will discuss the budget, however, whenever a number is mentioned, it does not refer to that number, but rather the number represents its square root plus four. Thus, if I say "nine" I mean "seven". Or "four" means "six". How long do you think you could carry on such a discussion? Even with a calculator and a statement of the rule in front of you?

And that overlooks the other fact that the state often does not admit its use of the terms are unconventional, and it certainly doe snot provide clear definitions. Thus, unlike our imaginary debates, the state does not bother to define "investment", or even admit government investment in any way differs from private investment. Even if ti does admit such a distinction, the state often chooses to use such terms in rather nebulous ways, so that it is often difficult to tell if the term is being used in the conventional manner or in the sense favored by the government7. As a result, there is much needless confusion.

But, as I argued above, I believe that often that confusion is the reason many favor these terms. Perhaps they were initially adopted with sincere motives, by those who failed to note the distinction between the new use and the traditional one, but now I think many favor them for much less innocent reasons.

It would be easy to continue on, listing hundreds of terms the government uses either in misleading or incorrect ways, or else employs properly, but in such a manner as to hide uncomfortable truths, but I think my point has been made. In the case of debate about government, we often must choose to avoid the conventional descriptions and terminology, such as calling Social Security "insurance" or speaking of government "investment", if we are to approach anything like a true understanding of the issues. So long as we tie our understanding to these misleading terms, we will not truly grasp what is going on. And thus, though it may at first lead some to  find our arguments difficult to follow, or may make them think we are needlessly pedantic or quirky due to our choice of terms, in the long run it will prove to everyone's benefit if we insist on using terms properly, and avoiding terms which obscure or confuse the issue.

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1. I was going to write in the past about the "want of a nail" view which often leads individuals to ascribe tremendous results to trivial causes. While these arguments may be true in some abstract sense, they often overlook many opportunities for this chain of causation to be broken, and thus fail to recognize much more immediate causes. So, while they often lead to dramatic, shocking, even absurd claims that make for eye catching headlines and may intrigue blog audiences, they are very often much more misleading than the conventional historical view they seek to challenge.

2 See "Economic and Political Power Revisited" and "Power - Political and Economic".

3. The basic arguments rest upon the fact that premiums are in no way tied to risk, eliminating any concept of risk pooling. We could also argue that these programs are not self-funding, which also is an attribute of traditional insurance. Finally, the fact that they are both universal and mandatory puts them more in the category of taxes and transfer payments than anything akin to insurance. I suggest reading "Not Quite True", "Social Security is Not Insurance", "Selling Yourself Cheap", "A True Conservative Platform", "How Not To Argue About Social Security", "Redefining Insurance... To Actually BE Insurance", "The Insurance Sham", "My Health Care Plan"""Medical Reform, An Overview", "High Cost of Medical Care",  "Bad Economics Part 10", "The GOP Health Care Plan", "Semantic Games""Bad Economics Part 14", "Democrats Envy the French", "Hurrah for Jindall!" and "Minimal Reforms" for more details.

4. see "Competition", "The Case for Small Government""The Role of Dissatisfaction", "Cutting "Costs"", "Misunderstanding Profits", "Two Examples of "Inefficiency" in Capitalism", "Third Best Economy", "Clarifying a Reality of Capitalism", Planning For Imperfection", "Fairness and the Free Market", "The Triumph of Good", "Greed Versus Evil", "Selling Yourself Cheap", "People Prove My Point", "The Secret of Success, or, Why Government Fails""The Irrationality of Government Redistribution" "The Inherent Disappointment of Authoritarianism",  "The Benefits of Inequalities of Wealth""An Examination of the Economics and Sociology of Government Spending", "The Other 99%","How the Government Corrupts Relationships" and "The Fifth Wheel". Though I did not discuss it here, the same arguments apply, in a slightly different way, to funding of arts and sciences as well. See "Patronage", "A Question for Artists of the Left", "A Perfect Example (And an Unintentional Example of Blindness on a Simple Issue)",  "Moral For Me, But Not For Thee", "My Censorship Is Your Discretion", "Culture and Government" and "Missionary Zeal and Human Discord".

5. For a related argument, see "The Foolishness of Corporate Taxes", "Passing Thoughts on Taxes" and "Two Thoughts on Taxation".

6. The other rule, often forgotten by those same freshmen philosophy students, is that if you do use a common term, and do not provide a definition, then you must use it in the most common and accepted sense. Using it in an idiosyncratic way is an invitation to confusion.

7. Despite the teaching of philosophy course, I would argue that redefining common terms in an argument is a poor idea, both because the participants often have a hard time remembering the new definition and because there may be a need to use the term at some point in its conventional sense, leading to needless confusion. Though I do not favor the use and creation of jargon, my objection is mostly to needless creation, such as ignoring the existence of the word "designed" in favor of the abominable computer industry neologism "architected" (see "Officially Annoyed", "Two Small Grammar Nazi Gripes", "One More Grammar Quibble","Fictitious Words" and "New Blacklist"). In this case, if you have a very precise technical definition, I would favor creating a new term rather than taking a more common term and redefining it to fit the definition. In that case, jargon is justified by leading to less confusion than a novel definition of an extant and familiar term.


Not Quite True

I recently saw a post on Facebook (and it has appeared elsewhere) that argues Social Security should not be termed a "Federal Benefit" because it was earned. As this post contains a number of errors (and misses some important facts about Social Security as a whole), I thought I would reproduce it here and then comment on it:
Just a reminder, better pass this around, it's the clearest presentation
I have seen in quite some time.

Subject: Social Security check
Date: Friday, April 20, 2013, 5:00 AM

Here we go.

JUST REALIZED THAT WITH REQUIRED AUTO DEPOSIT, I NEVER GET TO SEE THE CHECK ....

ALERT EVERYONE YOU KNOW. THIS AFFECTS ALL OF US.*

*Subject:*
SOCIAL SECURITY becomes FEDERAL BENEFIT CHECK

Have you noticed, the Social Security check is now referred to as a

"Federal Benefit Payment"?

I'll be part of the one percent to forward this. I am forwarding it because it Touches a nerve in me, and I hope it will in you.

Please keep passing it on until everyone in our country has read it.

The government is now referring to our Social Security checks as a Federal Benefit Payment.

This isn't a benefit it. It is earned income! Not only did we all contribute to Social Security but our employers did too.
It totaled 15% of our income before taxes .

If you averaged $30K per year over your working life, that's close to $180,000 Invested in Social Security .

If you calculate the future value of your monthly investment in social security( $375/month, including both your and your employers contributions) at a meager 1% Interest rate compounded monthly, after 40 years of working you'd have more than $1.3+ million dollars saved!

This is your personal investment.
Upon retirement, if you took out only 3% per year , you'd receive $39,318 per year, or $3,277 per month .
That's almost three times more than today's average Social Security benefit of $1,230 per month, according to the Social Security Administration

(Google it - it's a fact).

And your retirement fund would last more than 33 years (until you're 98 if you retire at age 65)! I can only imagine how much better most average-income people could live in retirement if our government had just invested our money in low-risk interest-earning accounts .

Instead, the folks in Washington pulled off a bigger Ponzi scheme than Bernie Madoff ever did.

They took our money and used it elsewhere. They forgot (Knew) that it was OUR money they were taking. They didn't have a referendum to ask us if we wanted to lend the money to them .

And they didn't pay interest on the debt they assumed . And recently, they've told us that the money won't support us for very much longer .

But is it our fault they misused our investments? And now, to add insult to injury, they're calling it a benefit ,
as if we never worked to earn every penny of it.

Just because they borrowed the money,
doesn't mean that our investments were a charity !

Let's take a stand.

We have earned our right to Social Security and Medicare. Demand that our legislators bring some sense into our government .

Find a way to keep Social Security in OUR POCKETS!
*You can bet I WILL !!!* Security and Medicare going, for the sake of that 92% of our population who need it. *Then call it what it is: Our Earned Retirement Income. *

99% of people won't forward this.

Will you?
Now, I suppose I should start off by pointing out that I am opposed to Social Security for a number of reasons. (See "Social Security is Not Insurance", "Selling Yourself Cheap", "A True Conservative Platform" and "How Not To Argue About Social Security".)  First, and foremost, because it forces a given amount of saving on individuals regardless of their own desires or financial situation. That is why I have opposed not just Social Security, but also plans to "privatize", as that amounts to still forcing savings, though it is a bit better in that it allows individuals to choose their investments, but it is still a needless imposition. Just think, when you first were starting out, how much benefit you would have gained from a 15% raise, compared to the relatively small return on Social Security. Of course, you would forego some benefits, but that should have been your choice, not a government regulation. However, all of that is not important for this post, so I will simply direct readers to the posts cited earlier for a more thorough discussion.

Instead, let us look at the essay above and ask if it is truly accurate, and, more important given the topic, if it gives the whole picture.

Well, let us start with some logical problems. First, the essay here somehow manages to overlook the considerable amount of inflation that has taken place in the last several decades. Just to make one simple point, I recall when The Price Is Right had to add a fifth digit to the showcase bids. prior to that, they could include trips to Europe and Hawaii, boats and luxury cars and still bid in four digits. For that matter, I recall when $25,000 a year was comfortable salary, when cigarettes were under a dollar, when a dollar or two fed you very well in a fast food place and so on. Just to put a number on it, between 1973 and 1983, relative to gold -- so as to avoid the distortions in CPI deflators due to high energy prices -- prices rose almost 600%. As a result, the idea that someone contributed the same amount in the 70's as they do now is absurd.

A second problem with Social Security, and this argument, is that most people earn very little early in their lives, when the money earns the most interest, and the most when they are about to retire, and thus when it earns the most. However, their final benefit is based largely on the last few years of earnings, thus inflating the payout, while the amount paid in is much less.

I recall reading a few years ago that, considering the return based on what Social Security is nominally invested in -- treasury bills -- the average recipient ends up using up their contributions in something like four years, while they tend to collect for over ten years. And that does not even consider the Medicare portion of things.

However, I do not really need to argue that the numbers are wrong because fo one overwhelming fact. Social Security is going bankrupt, and payments today are being paid out of fund taken in today. Yes, the government uses Social Security funds to pay for current spending, but it also reimburses with interest. So, if Social Security really was funded as the post above suggests, it would be running surplus and a growing one. However, the only time Social Security shows a surplus is when the economy is good. That is, when the current economy increases income. Thus, it should be clear, Social Security is in no way the insurance it claims, or this post suggests. I do not want to say those collecting are immoral, they truly do think they are just taking out what they put in, but in truth, whether they like to hear it or not, they are receiving welfare, as they are getting more than they put in, at least if they live to an average life span.

Some will argue that the deficit is not because of the reasons I suggest, but rather due to the other recipients, the disabled and others who start receiving benefits at a much younger age. And that is part of it, I agree. However, once again, that is a small part. By and large, the far larger group of recipients are those who receive money after retirement, and they are also the reason it is bankrupt.

Let us look at the numbers above. According to the census, the mean income for all households in 1980 was a little over $21,000, while in 2011 it was almost $70,000. Just looking at that, is it likely the contributions were flat the way the post above suggests? Assuming that all income is taxed for Social Security  -- which is not realistic as many categories often escape detection, such as tips, and those which are not taxed are often those earned earliest in life -- assuming you started in 1980 earning the mean income, you would have paid $3150, while in 2011 you would have paid $10500. On the other hand, it is unlikely you started out earning anything close to the mean. So if you were paying $105000 in 2011, odds are good in 1980 you paid in $2000 or less. As you can see, these are far from the numbers suggested in the post above. The fact is, the early earnings are both lower in absolute terms, as early in life you have fewer skills, and in terms of dollars, as inflation -- and inflation has been continual and relatively high ever since 1971 -- continues to erode the value of the dollar, increasing dollar salaries and costs, as well as Social Security payout, while earlier pay-in is much lower in dollar terms.

So let us be honest, whether or not you support Social Security -- and I do not -- it is no more "insurance" than Medicare and Medicaid  or unemployment "insurance" are. (See "Redefining Insurance... To Actually BE Insurance", "The Insurance Sham", "My Health Care Plan"""Medical Reform, An Overview", "High Cost of Medical Care",  "Bad Economics Part 10", "The GOP Health Care Plan", "Semantic Games""Bad Economics Part 14", "Democrats Envy the French", "Hurrah for Jindall!" and "Minimal Reforms") Perhaps the original concept was intended to be self-financing, but even as it was begun, the base of recipient extended, and the Federal Reserve expanded the money supply, resulting in damaging inflation, so I doubt it ever was self-financing. Instead, it is yet another for of welfare disguised as insurance so that the recipients and others think of it as something just, that is their due, and does not represent a wealth transfer, though in truth that is precisely what it is.

Of course, even were it self financing, I would oppose the idea of forcing individuals to save for retirement against their will, so my opposition does not rest on whether it is welfare or insurance. However, in discussing Social Security I think we must be honest and, though it will offend many who think they are just collecting what they paid in, we must recognize that Social Security is welfare.

POSTSCRIPT

In my post, I state between 1973 and 1983 there was a 600% rise in prices, relative to gold. Thinking about this number, I have to admit it may somewhat overstate inflation, as gold tends to appreciate during inflationary periods. On the other hand, thanks to oil prices raising the CPI early in the 1970's, the inflation is understated at 170% +/- using CPI deflators. Salaries show a rise somewhere between 200 and 300%, which is probably fairly close to the actual experience of consumers.

Of course, all of these are just estimates. In fact, there is no single "rate of inflation", as part of the harm of inflation is that it strikes without uniformity, harming some more than others, and even bringing benefit to some. Thus, it is kind of pointless to speak of a single rate of inflation. On the other hand, we do need some approximation of inflation's effect when making certain arguments, so, as in this case, so long as the measure used is provided, I have no objection to using one of these approximations. Of course, we might argue over which is better or worse, but so long as the measure is defined, at least we know what we are comparing. See "Inflation and Uncertainty", "Bad Economics Part 7", "Bad Economics Part 8", "What Is Money? ", "What Is A Dollar?", "The Gold Question, Not "Why?" But "When?"", "Bad Economics Part 19","Fiscal Discipline", "Putting the Bull in Bull Market" and "The Rubber Yardstick".)

POSTSCRIPT II

While looking for articles to use as citations in this post, I found an article that is especially amusing given my recent critic's accusations of me being a Keynesian. Just check out "WSJ Misses the Mark AGAIN" (as well as "Derivatives and Other Investments") and tell me how fond I am of Keynes and his theories and those of his disciples.


Monday, June 24, 2013

With Friends Like These

Allow me to ask my readers, few as they might be, a simple question. What is the biggest threat to freedom today? Or, perhaps, to word it slightly differently, what is the single thing that imposes the biggest impediment to any efforts at reducing the size of government?

I suppose, if I am completely honest, the most accurate answer is indifference. That is, the simple fact that the public is not convinced there is anything wrong with large government. Or, to elaborate a bit, the combination of well hidden costs and general affluence have managed to keep us from considering the cost of government unduly burdensome compared to what we believe to be the benefits. That many of those benefits are illusory is irrelevant, so long as the public at large considers government sufficiently beneficial to justify what they perceive to be the cost, they are unlikely to look for any significant changes.

However, that is a large problem, and one that will take a long time, and lots of slow, patient work to resolve. So, let us look instead at the second biggest impediment. And that would be, strangely enough, those who claim to be freedom's friends, the libertarians, conservatives and others who raise their voices the loudest in proclaiming they defend freedom.

Obviously, such a claim requires a bit of explanation.

As I said above, the public by and large believes government is mostly worthwhile, it does what it is supposed to, and they are content. Some may differ over exactly how big government should be, they may ask for it to grow faster or slower, they may disagree with specific steps, but for the most part, the public is not unhappy with big government. It is familiar, it has been this way for generations, and things seem to them, for the most part, to be going well. In addition, they have learned, from school, from the media, from academic experts and others that big government is right and proper, that the era of supposed laissez faire were disasters1, and so they see no alternatives but our version of big government and the even more intrusive governments of much of the rest of the world. And so, from their perspective, what they endorse in the US actually is smaller government, and, compared to many, it is.

I say all of this because it helps explain why I think so many defenders of freedom end up doing just the opposite. You see, to change such a mindset, to bring about real change, takes time, a lot of time, and patience. You need to slowly and patiently show why the beliefs held for so long are wrong, why things could be better than they are, why the supposed benefits of government are not true. But doing so takes a lot of time, a lot of slow, tedious effort, none of which is glamorous, and none of which bears immediate fruit. However, that is how historic changes take place2. We often miss it, because we see the sudden change, the revolution, and don't realize there were decades of history behind it. For example, many somehow imagine the Communist victory in the Russian revolution was a sudden, self-contained event, and not the fruit of generations of Russian revolutionary activity, not to mention Communist theorizing going back to well before the uprisings of 1848. And so we imagine history is made up on long calm stretches, punctuated by sudden explosions of change, rather than what it truly is, a constant struggle between competing ideas, with changes serving only to mark the point when one has finally achieved sufficient dominance.

But I am getting a bit far from my point.

To be brief, most people see the current situation, the government as it is, as satisfactory, and thus are not inclined to change. In addition, while they may be open to modest criticism, claims that the state is a secret tyranny, or that we are less free than the citizens of China or Cuba are likely to be met by nothing but laughter. And that is where the modern defenders of freedom hurt their cause, as well as the cause of more temperate champions of minimal government. Thanks to the excessive fear of government, and over the top claims, modern libertarians cause the cause of minimal government to be associated in the minds of the public with conspiracy theories, claims of government assassination and so on.

For those who recall the 1980's, there is a slightly different example which may help clarify. Actually two.

First, there was the close connection between the libertarians of the 1980s and the drug legalization movement. For whatever reason, many libertarians, if not a majority, at least a segment loud enough to seem a majority, decided that drug legalization would make a good cause to illustrate libertarian principles. And thus, in the minds of the public, libertarianism became associated with drug legalization. Now, I am a proponent of drug legalization, probably to a degree beyond many, as I promote not only legalizing all drugs, but doing away with prescriptions as well -- an area oddly overlooked by many proponents of legalization -- however, I also recognize that many -- even a number of those who use illegal drugs -- do not favor legalization, for any number of reasons. And, harmful as drug laws may be, the issue is sufficiently emotional that many are not open to argument. Thus, as a cause to introduce individuals to libertarianism, it is a loser. In the end, rather than aiding either drug legalization or libertarianism, it ended up making the public at large view all libertarians as secret stoners, interested in freedom only so they could get high. It was about as bad a PR move as one could imagine.

A second example is even more on point, as it is a good parallel for many issues today. Among not only those claiming to champion liberty, but also among conservatives who dislike the president, there is a tendency to grab each revelation and turn it into as serious a threat to liberty as possible. Each leak shows not just government excess, but according to these individuals, it shows a plot to strip us of all our liberties. In fact, they often argue, we are already so far gone that we have to act now, or else!

All of which should sound familiar, as it was at one time the rallying cry of the other end of the spectrum, among the radicals of the 1960s and 1970s who claimed "Amerikkka" was plotting to exterminate minorities and radicals, was removing all our freedoms and so on. Unlike today, however, they actually had a slightly better audience for their claims. Granted, the majority of Americans were still relatively happy with things, but there were issues such as Vietnam and race relations, followed by oil embargoes and inflation, that created a great deal more dissent than our present issues do. However, despite a slightly more receptive audience, the end was predictable. As the radicals became more and more accepted into the mainstream of the left, the public became ever more wary about the political left, giving the Republicans their first real gains in decades. Why? Because the claims of the radicals, and later of the left as a whole, seemed extreme and absurd, and thus those presenting the message were seen as being extreme and absurd as well.

And that is why I say the supposed supporters of freedom are themselves an impediment to freedom. Instead of explaining why they think things have gone wrong, why we need change and so on,t hey shout out that the end is nigh and thus poison the well not just for themselves, but also for the rest of us who would take a more measured approach. And in the end they do a great disservice to freedom.

Some would argue that the end is nigh, and thus there is no time for persuasion, but I disagree. First, because I do not believe we are as far gone as they claim. True we have lost many freedoms, and government continues to grow, but I do not agree we are the slaves they imagine. We are not doing well, but the end is not here. However, that is a secondary issue. More important is the simple fact that, whether the end is here or not, people do not believe so, and so no amount of shouting or extreme claims will reach most people. We have but two choices, a gradual approach, or shouting and alienating the majority. And so, whether the end is here or not, we have no choice but gradual education3.

Which, once again, is the problem with those who feel the need to shout. It may make them feel good to be the lone voice in the wilderness, might give them a thrill to be the unsung genius who saw it all before everyone, but in terms of real change, that will come from a host of unknown and unrecognized workers who make a lot of little changes. And it will come about despite, not because of, those shouting about the end of the world.

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1. See "Child Labor and the Industrial Revolution", "Mistaken Perceptions of the Industrial Age" and "Rethinking the Scopes Trial".

2. See "Catastrophic Thinking, The Political, Economic and Social Impact of Seeing History in the Superlative" and "All Life in a Day, or, How Our Mistaken View of History Distorts Our Understanding of Events".

3. I suppose there is the possibility of violence being used to force people to "be free" despite their inclinations, but that is such a self-contradictory proposition I hesitate to even consider it. And, in any case, if we cannot gather enough support to even form a decent third party, what is the chance of those who support minimal government gathering a viable army? The degree of public indifference suggests revolution is a remote possibility at best.

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POSTSCRIPT

Before someone puts forth a straw man argument, arguing that I suggest ignoring scandals or losses of freedom, I am saying nothing of the kind. We should continue to point out these things, but deal with them realistically. Point out that they infringe upon our freedom, not that they will destroy the last shred of liberty. We should continue to hold the government responsible for its actions, but do so in a reasonable, measured way, rather than decry each and every incident as the breaking of the seventh seal. Unfortunately, in today's political climate, it seems reasonable and measured is becoming an ever more unreasonable expectation.

Sunday, June 23, 2013

Speechless

I have heard it so many times, it had reached a point where it no longer made an impression upon me, but for some reason, tonight, while reading through all the paranoids  and wikileakers and fellow travelers and crazed libertarians  and others defending Snowden's leaks and flight1, I came across a comment, or set of comments, I have seen hundreds of times, and this time, for whatever reason, it just made me angry. And so, though I have read it a hundred, nay, a thousand, ten thousand, maybe even more, times, when I read someone trashing "privatization", criticizing corporations for being "inhuman" because they "maximize their profits" leading them to "monopolize", and arguing as a consequence they should be "denied a voice in government", it made me groan, and shake my head, and sit down at my laptop to write this post.

I suppose the first point I should make is that corporations have no say in politics, any more than do churches, or nonprofits, or even political parties. You may doubt this, but I can prove it in a very simple way. When was the last time any of those entities voted? Or bought an advertisement? Or did anything? They can't, because they are legal fictions. A corporation, just like a church or a political party, is made up of people, people who individually act. Yes, they may act at the request of others who are also part of the corporation, but in the end, the action is still taken by an individual. The individual who can choose how to act, whether to act, or whether not to act.

And that is the largest problem of this belief that "big business" should have no say in politics. How do we accomplish that? By denying a political voice to those employed by certain businesses? Those who own the businesses? How do we "silence big business"? Do we say that I cannot lobby politicians because I own a company? Does that not remove rights from some people that others retain? I cannot buy political ads because I own a business?2 Does this not simply discriminate against certain people? How is that a formula for a free society? And, for that matter, when you want to silence "corporations" does that include the corner store that incorporated for tax purposes? My friend the computer software developer who is a one man corporation? If not, then who decided which can speak and which are to be silenced?

But, even before we discuss how silencing corporations is nothing but silencing certain individuals, let us look instead at the basic premise, that being that corporations are somehow inhumane, evil or otherwise disreputable, probably because of their profit seeking. Actually, let us look at this on an even more basic level, and ask, is profit seeking evil?

Let me ask, do those who want to silence corporations, when leaving a paid parking lot, say "$3? It was certainly worth more! Here, take $6!"? When they are offered a raise at work, do they turn it down? Or even ask for a reduction in pay? When they want a car or home, do they go out and comparison shop to find the most expensive one? And in so doing do they also seek the worst built and least desirable location, so as to get the least for their money?

Probably not.

But is that not profit seeking? Are they not looking to get the most in exchange for their money or labor? And isn't that exactly what the supposed evil or a corporation is?3

In fact, since this all started with a denunciation of privatization, allow me to point out the one group that does not seek profit, at least not in monetary terms. The government. Since the state does not need to concern itself with expenditures, having the ability to confiscate money through taxes, or indirectly through printing money leading to inflation, it has no concern for costs. And since the state does not get to retain profits, it has no concern with income. In fact, the state is driven by two motives. At the higher levels, it is concerned with profit, but of a different sort, that is the gain of votes, or of political support. But at lower levels, it is even more simple, it wants to do nothing but avoid negative attention.4 Since promotion in a bureaucracy is by time served, and scandals avoided, there is no incentive to do anything but avoid scandals. And thus, the state, especially in the bureaucratic rather than politicized layers, is truly a non-profit organization.

And what is the consequence? Horrible inefficiency.

Which is why privatization is so often put forth as a solution. Of course, once a private company takes on a political task, of necessity it begins to adopt a political character5. Since the contract depends on political favoritism, they too begin to avoid scandal, and bureaucratize, and thus privatization begins to fail to live up to the initial benefits. But still, does it not say something that simply giving a task to a private company -- at least initially -- yields such serious benefits? Does that not tell us something about not being concerned with profits?

And yet, because profit, and the profit motive, is universal, and yields such benefit, it seems to inspire terrible envy in some, and as a result they come up with absurd plans, such as denying political representation to those involved in corporations.

Sometimes I think some of my fellow men think in ways completely alien to me.

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1. I have considered writing something about Snowden, or about leakers in general, as well as about the strange antigovernment fringe, exemplified by Wikileaks, that finds leaking -- in and of itself, regardless of context or content -- as something admirable, but I can't believe I have to point out to reasonable adults that fear of the state, fear of the state simply because it is a state, is a bad thing. Then again, neo-anarchist types do seem to be increasing on the internet, as are most immature, simplistic political beliefs, so perhaps I will eventually have to do so. For now, however, let me point out that our champion of freedom, foe of spying, and defender of human rights has sought refuge in China and Cuba, an odd set of nations to visit if one thinks the US is too repressive. But enough said about that.

2. Sadly, the current campaign finance laws do this already, by discriminating about who can run ads, leaving some options only open to "news sources" or certain political groups, and thus effectively silencing some on arbitrary criteria. Then again, I have always believed that one should be able to contribute as much as one wants, to whomever one wants, with no reporting. Legally, if I can spend my money, I should be able to buy ads, contribute to a campaign or do anything I want with the money. I argued this more thoroughly in my posts "Regulated Speech", "Confusing Money and Votes", "A Crime?", "Volitional Beings" and "The Threat of Perfection".

3 See "Competition""A Question for Artists of the Left", "A Perfect Example (And an Unintentional Example of Blindness on a Simple Issue)",  "Moral For Me, But Not For Thee", "My Censorship Is Your Discretion", "Culture and Government",  "The Inherent Disappointment of Authoritarianism", "Missionary Zeal and Human Discord""Government Quackery" and "The Case for Small Government".

4. See "Bureaucratic Management and Self-Policing", "Bureaucracy and Arbitrary Power", "Fear Driven Enterprises", "Killing the Railroads", "Adaptability and Government", "Inflexibility and Bureaucracy", "Bureaucratic Management", "The Bureaucratic Mind", "Bureaucracy Revisited", "The Wrong Solution to Bureaucracy", "Inflexibility and Bureaucracy", "Adaptability and Government", "Best Practices and Resistance to Change, Bureaucracy and the Free Market", "How the Government Corrupts Relationships", "An On Demand World", "Reforming Education", "You Don't Drown in a Glass of Water - Vouchers Revisited", "Why Vouchers are not the Answer" and "Never Ascribe To Evil, A Discussion of Education"

5. See "The Inevitability of Bureaucratic Management in Government Enterprises".