The Halfway Point

Helping the economy through retirement policy changes

To fix the US economy we need to lower the Social Security retirement age, not raise it - no, really

What's wrong with raising the retirement age?

I was looking at the mess the economy and jobs and doing some projections of effects of raising the SS retirement age, and I came to the conclusion that the whole idea isn't going to work. If the retirement age is raised the number of new jobs created by retirement will drop. If the average middle class skilled worker works from age 20 to age 66, that's 46 years, and with an even distribution that means that 1/46th of that workforce will retire each year, or about 2.2% each year. If we raise the retirement age to 68, 1/48th of that workforce retires each year, or 2.1%, and they will be on their employer's insurance plan for another two years, and they tend to be the higher paid workers, so the net effect is fewer new job openings, and a greater fraction of the employees people who have poorer health and more vacation. Is that a recipe for a happy employer?

What could we possibly gain from a lower retirement age?

Now just for a moment stop disagreeing with me until you hear the other side of the idea, the benefits.

If we allowed people to go on SS at a younger age, say 55 for discussion, skilled workers would work only 35 years, almost 3% of the jobs would be available for new hires every year, average worker health would be better, and people would retire with the health to actually do something, which probably would involve spending money. So lower cost for employers in terms of vacation and health costs, earlier retirement for workers, and a better job market?

How can we pay for that?

This gets interesting. The benefits paid by SS have to be roughly revenue neutral, so they have to take into account the life expectancy so the earlier someone retires the less they get in pension. That makes the actual retirement age revenue neutral. And to allow people to add money to their SS count as if they were making a higher salary, So if a worker was making $40000 a year, that worker could pay the SS tax on an extra $5000 and have that year counted as if the worker made $45000. Since the payment to the SS system is the same, that is revenue neutral as well, and it encourages worker saving in a safe investment.

Protecting the fund

For decades lawmakers have simply raided the supposedly safe "lock box" and taken out money, promising to pay when needed. However, now that payment is coming closer, these same lawmakers want to cut benefits to whatever they can comfortable afford. I have another idea.

The SS funds should be used to buy bonds, special bonds with special protections, and should be available under those conditions by bid. The amount at risk with any one organization would be limited, both as a percentage of the total fund to limit value at risk with one source, and as a percentage of investments under management to reduce the chance that the total value of the investment could be recovered. Then buy bonds from corporations, both financial and industrial. It is probable that preferred stock might suitable, that's a question for lawyers and economists. And if the total amount available from suitable higher bidding external sources is not enough, do not accept lower quality securities, go back to buying from the treasury. So the money will be safe, the people who dream of privatizing SS will get a little of their dream, and the fund will get the best safe return available.

Fluke device implies secure networks cloak kiddie porn

I see in a NetworkWorld article that cops are now using a Fluke device to identify locations dowloading kiddie porn by determining if the Access Point is using encryption and is secured (needs a password to access). Wow, who knew that security is only used by perverts.

Hare's the advice Fluke gives the cops:

more confidently enter the suspect's location, if they determine a
wireless network is secured, knowing that illegal Internet content is
being downloaded from within that residence

Clearly, anyone who understands security realizes that anyone who isn't doing these things is leaving their AP open to being used for unauthorized downloading, possibly of illegal materials. A perfect Catch-22 here, if you don't secure your network it may be used for illegal activities and compromises your security, if you do it's prima facie evidence of posession of kiddie porn.

This would be funny if all cops were given proper training and understood good practice for networking. But inevitably some police force will get a small grant and buy one of these gadgets, not have a clue that the claims are at minimum incomplete and misleading, and go off on a mission to track down a pervert, with a tragic ending.

I look forward to reading about the lawsuits which will come when some cop actually takes this advice.

People are getting harder to reach

With everyone having cell phones these days, it's getting harder to get in touch. During working hours do I call you on your cell if it's personal and the work phone on your desk if not? When I want to talk to a couple, do I call the cell of the man or the woman? When there was a land line at home, I would call that, whoever was home would answer, and I could do "couples stuff" like party invites to whoever I got.

When I call a cell I never know where you are (and some people want it that way). Am I disturbing you in the car, at work, out shopping, doing business? A cell will get to you anywhere, but for a non-urgent call, is that really necessary? I still keep a land line at the house, that's the way to reach me when I'm there, I don't want to carry the damn cell phone around the house with me, I want to take it off, put it on the charger, and forget it. Not to be, too many people send me texts these days, so I sometimes do wind up carrying the phone around. I thought Google voice was going to be the answer, one number which rings everything I have and I get your message wherever. Only if you send me a text, I have the "email SMS" option on, and so I get your message as a text, and also as email on my cell and my desktop. If I'm home and have the cell nearby, the house phone and the cell ring, which do I answer? And if you leave me Google voice mail, I get it on the cell as a missed call, and transcribed to text and emailed to me elsewhere (including on the phone).

I think having a cell phone is a valuable thing, so someone can be reached at any time, but the downside is they are expected to have that phone with them all the time. Have a phone associated with a place is nice in some ways, I want to talk to you at work about some things, and at home about certain other things, and for many things I just want to talk to you somewhere.

I notice people are slowly getting into the practice of sending a text saying something like "call me from work when convenient," or perhaps "from home" for other things. Perhaps that's a way to return the link between the phone and the place, so I understand the intent when you send me a message like that.

Now where do you want to be when I make that call?

UpstateNY - why a property tax cap can't work long term

I was against the new NY State tax cap in property taxes, because in the long run it can't work, nor can any approach which limits income but not cost.

The state has capped the increase in property taxes for smaller municipalities to 2%, as a tax cutting measure. While this sounds good to the innumerate, limiting county and city income creates a problem rather than solves one. The reason local taxes are so high (mine are supposedly the highest in the nation) is that expenses are going up.

Let's look at causes before talking solving cost through efficiencies:

Unfunded Mandates - the state can, and has, and will mandate that counties and large cities do certain things on behalf of the state. The state doesn't pay for these services, so there is no penalty to the state legislators, and state taxes don't go up. Medicaid is one, but New York is very concerned about the poor, as long as someone else has to raise taxes to pay for it.
Cost of living increases - things cost more, and the current method of limiting inflation, recession and high employment, is unpopular. Therefore any approach which limits revenue increases to 2% is bound to be less, perhaps far less then enough at times. And employees cost more, because they need to be paid more so they can afford to live. Holding down pay only helps if the pay is generous, after that low wages result in low quality people, every position being an entry position, employees leaving as soon as they get some experience on their resumes, etc. Turnover drives training costs, and providing service with inexperienced people and those no one else would here, is a ticket to bad service. Politicians hate poor service, it leads to unhappy voters and turnovers in office, too.
Infrastructure costs - roads and bridges are aging and crumbling in many localities, for the most part these are old cities and towns. My street is being repaved as I type, after being designated the worst street in the city, due to using the lowest bidder the last time. The first thing the city did was give us a truckload of cold patch and a Rough Road sign, but ridicule of that "solution" forced the repaving.

If the roads are old, what's underneath is old, too. The water lines and sewers are both aging and to some extent obsolete, and it's hard to keep the streets paved when you have to dig them up regularly.
Environmental issues - there is increasing cost to limiting damage to the environment, but there is also increasing cost associated with damage from the environment. Special interests have limited the regulation of coal plant emissions, so cheap sulphur rich coal can be burned, and few filters limit sulphur in the exhaust. So on the east coast the lakes are dying, and buildings and roof materials are being dissolved with acid. Anything in a part of the country where water freezes and thaws has additional damage as any slight roughness of surface turns to scaling, and large cracks turn to total failures.
Pension costs - the Governor wants to limit salaries for administrators, which takes away the option of hiring a few really good people at the right level to make things work better. See below for another approach.

If you expected to find a clever solution here, at least in terms of a cheap or quick solution, look to politicians, they will always promise a clever solution until the day after election.

Just for grins, here are my thoughts on these things:

Mandates - have the government which passes the mandate fund the mandate. Leave the choice of paying the local government to do the work, hiring a service to do the job, or doing it at the mandating level.
Cost of living - the state wants the local governments to merge. That doesn't scale well, government should serve local interests. However, encouraging merged purchasing to improve discounts, reduce personnel count, and hopefully allow the best people to negotiate prices, and full or partial merging of highway departments, up to some level where administrative costs match economies of scale, do seem useful.
Infrastructure - the way to limit cost seems to be buy good goods. Contracts should go to the lowest qualified bidder, and if a road is to be repaved, consideration given to replacing what's under it. Obviously on a case by case basis.

Stop building new roads. No, really. And raise the gas tax for highway maintenance by a dime a year for a decade. This will cover inflation (the tax hasn't changed in years), faster rebuilding, and encourage voluntary purchase of economical vehicles. Mandating "better gas mileage" reduces choices, forcing buyers to consider the choices increases choices and makes the buyer happier with the choice.

Pre-fund roads and bridges, don't just fund the construction, require payment up front for maintenance. Put the future costs in a lock box allocated to just that project. This would discourage building roads and bridges which aren't really needed, and make the real cost clear. It would also encourage using better materials, such as corrosion resistant steel in girders instead of or in addition to painting, better road beds under the pavement, perhaps concrete rather than asphalt in the north.
Environment - time to pay for pollution, this is one of those "you can pay me now or you can pay me later" issues.
Pension costs - cap the salary which can be counted toward pension. Social Security taxes and benefits are capped, government pension contributions can and should be, as well. Allow Medicaid and Medicare to negotiate prices for drugs and services just like private insurance. No, it's not a perfect solution, it just makes the cost of imperfection lower.

Saving money, saving jobs, saving Borders

I see in the New York Times that the purchase of Borders by the Book of the Month Club has been rejected. The committee supervising the bankruptcy feels that they would get more for the unsecured creditors if the assets were sold, rather than as an operating business. And I suppose that is the job of the committee, and they are just following orders, and if thousands of people lose their jobs, and thousands of others are stuck with ebook readers and gift certificates, that's not the concern of the committee, and no one ever got in trouble for following orders, right?

Actually we hung people for following orders After World War II, but that won't happen here, the means are legal, if heartless. The physical assets of Borders are worth more than the people, who are carried on the red side of the ledger as liabilities.

However, the government(s), whichever one or ones which will pay unemployment, welfare, medicaid, ADC, they care. The government which doesn't get income taxes, or Medicare taxes, or Social Security taxes, they care. And if you think the people laid off won't be "on the dole" as the British say, consider that many, perhaps most, of the clerks in most chain bookstores are not the top of the income brackets, in many cases they are only a little over the minimum wage, some people on fixed incomes working to make ends meet, students trying to work their way through college, people like that. Borders competitors won't set up hiring halls to grab all the experienced people, the competition carries people as liabilities, too.

What is the cost to government of throwing them out of work? What are the social costs? Perhaps the government, some local, or state, or federal government, would pay the difference between the offer from Book of the Month, which keeps the stores open, and the value of tearing the whole organization down and selling it for scrap. Out of pure old pragmatic "it's cheaper that way" motives. Perhaps because there's an election coming and "saving jobs and money looks good."

Democrats should like it, it saves jobs, keeps people working, and if the Republicans fail to pass it, the GOP takes the blame for committing us to unemployment and welfare costs while leaving working people out of a job. Republicans should like it, it actually is a money saving approach, and they might let a Democrat sponsor the bill and then pass it while bemoaning the cost, complaining that it's an "entitlement program" and simultaneously calling it their idea and taking credit for saving both jobs and money.

The nice thing is that if either party submits it, then the other party risks being labeled as responsible for job loss and added taxpayer expense if they oppose the idea. Therefore, if someone will give it a start, it will probably pass, both parties will try to take credit, and one sensible bit of bipartisan legislation could actually get passed.

CapdistNY - Thoughts on Gay Marriage

Just a few thoughts on the legalization of gay marriage in New York.

First, it s the proper thing to do, although I am amazed that it passed in the Senate with so many assorted fringe groups opposed. But in the long run, more people would have remembered a vote against that will remember a vote for. Unless, of course the sky does fall because gay people get married. The people who benefit will still be gay, the merchants will still be selling weddings, wedding rings, honeymoons, receptions, etc. The bigots will be busy trying to make some other thing they don't do illegal.

I note with amazement that the Catholic Church manages to believe the pedophile priests should be protected, but gay people, consenting, are unacceptable. Bishops who deny communion to those "living in sin" or "voting for perversion" moved priests to new parishes, bribed witnesses (they called it civil settlement, I don't), just amaze me. When it's my turn to be God for a day, pedophiles and those who protect them get a "go directly to Hell, do not pass GO" card in the great Monopoly game in the sky.

I have said before that the state should only do civil unions, and leave marriage to be a religious or social ceremony. I stand by that, but I realize that all the laws which convey rights and duties on married people would have to be rewritten, etc. And just as a Constitutional amendment banning gay marriage would never pass, neither could one explicitly allowing it. We couldn't even pass the Equal Rights amendment to give women rights.

I look forward to your letters.