Lifted from comments: Program sustainability is?
Lifted from comments comes a beginning thought on the term ‘sustainability’ for programs…Sustainability
Rusty asks:
Is there an accepted definition for “sustainability?”
I tend to think of it in an environmental context, but apparently it is used more broadly.
Your thoughts?
Bruce Webb’s quick reply:
STR, well in Social Security lingo ‘sustainable’ is mostly used in a hyper-specialized way. So to the extent that SS policy has injected the word into discourse it might not be fully representative. I’ll think about it.
Operationally ‘sustainable solvency’ for SS means not just being solvent (as defined) over the projection period (there 75 years) but having the metric of solvency (in this case Trust Fund ratio) trending up at the end of the period and so likely to be longer-term or permanent.
Rhetorically it is an argument against ‘patching up’ a problem or as the Fix the Debt people put it in their messaging “Kicking the Can (Down the Road)”. If the need is permanent so too should be the structure that provides it, come what may there will be some need to provide transit of goods and people from San Francisco to Oakland as long as those cities exist. Showing that both BART and the new Bay Bridge will proper maintenance will suffice for 35 years is not good enough, long range planners need to think about year 36 and year 50.
Now whether given all the uncertainties in the specific case of Social Security we should be worrying about years 76-100 (sustainable solvency) or all years to Heat Death of the Sun (unfunded liability over the Infinite Future Horizon), that is whether this is just reasonable prudence or pointless crisis-mongering to ‘sustain’ a ‘current’ ‘crisis’, is an open question. For example the current funding ‘crisis’ in the Post Office forcing shutdown in Saturday delivery is the result of a requirement to pre fund retiree health care for 75 years, or for the new hires of 2053.
Similarly Congressional restrictions on Social Security Administration have forced field office consolidation and early closing even though those expenses are billed back against a Trust Fund with $2.6 trillion in legally available assets (which presumably have to be paid back SOMEDAY, why starve SS today?)
I am not really aware of ‘sustainable’ being deployed in that many other policy areas, then again I have a certain amount of tunnel vision on this topic. So to the degree that SS has actually been the source of injection of this term into political discourse it’s precise usage may not be illuminating to your overall question.
I think what is missing in the use of “sustainability” regarding government programs (SS, MC, Post Office) is the other concept of “flexibility”.
I could be wrong, but part of our understanding collectively was that we would be flexible an in that would be the success of sustainable.
Inflexibility seem to go with “certainty”. All of this appears to be language morphing from a perspective of societal needs (we are flexible in obtaining our goals as that is life) to one of perspective of business needs which of course is cost control. The longer the cost can be controlled the better one can plan on future profit.
well, i think i like what Daniel Becker is saying.
Social Security is sustainable forever as long as we are reasonably flexible about raising the “tax” at need.
Or we can cook up some phony “infinite horizon” and make it sustainable as long as we keep cutting benefits. Then, one day, we will be able to go to a museum and see something called “Social Security” “preserved” in a jar, sustainably “saved and protected for future generations.”
of course the bitterness of this joke is lost on people who think only in words without regard for the reality those words try to point at… a reality in the case of Social Security that no one seems to understand any more.
but just a hint: under pretty fundamental conditions of “life as we know it,” there will always be a need for people who are too old to work to get enough money to pay for their groceries. there are many ways to accomplish this. “family” support, welfare, “investments,” personal savings, or personal savings protected by government run but not government paid “pay as you go” financing aka Social Security. The “cost” of all of these is pretty much exactly the same. The difference is in the “security.” And the politics.
another obscure hint:
Social Security is entirely sustainable forever. But as Bruce Webb alludes to, the public debate has been poisoned by “non partisan expert” liars twisting the frame that so that the unwary observer is led into a semantic trap which appears to make the costs unsustainable.
the nature of the semantic trap is similar to the famous Achilles and Tortise paradox in which it “can be shown” that Achilles can never catch the Tortise….because the “framing” of the problem is artificially restricted.. without the mark noticing.. to those times before Achilles actually catches the Tortise.
The remarkable thing is that once you fool the mark with this sleight of hand, the mark becomes an impassioned believer in the “need to reform” Social Security and cannot ever pry his cold dead fingers loose of that one concept.
Now, back to Rusty’s question
sustainability in the environmental context means something like
i can fish this lake with dynamite, collect all the dead fish off the top of the water in an hour and eat like a king for a day.
or i can fish it with a line and pole and catch one fish a day forever.
the latter is “sustainable.” it is a concept unknown to politicians or the economists who serve them.
For once, I completely agree with you guys.
75 years is stupid, infinite is more stupid.
Only policy errors can come as a result of this time focus.
But I’m left wondering, what is a more reasonable time frame?
Scientists classify 15000 to 20000 new species each year. From a bean counting definition, that would imply we can sustainably afford to dispense with the endangered species list.
The question requires context. Otherwise, it is obviously a question about SS.
🙂
Bruce Krasting,
I would suggest a more accepted time horizon is easily found based on any other similar planning activity that has shown to be accurately (within a percentage range?) planned for. With flexibility, such a time horizon becomes much shorter and is qualified as to the accepted range of flexibleness. IOW, we acknowledge we will be inaccurate as we look further out.
The mechanics of the proper time horizon is actually, when thought about it accounted for in the North West plan. You see to day what you think you need X number of years out and adjust. Next year, do it again.
But as Coberly’s analogy of putting it in a jar captures, for programs such as SS, the argument is to assume we can create a “fix” that has accounted for all that will come to never to be addressed again. I believe the choice of 75 years implies infinity in that it is close enough to one life time. If you can capture one life time and no need to readdress, then you have solved the problem for eternity?
The concept of sustainability and thus certainty is a human fault. It is Einstein’s hunt for the theory of everything. It’s seems to be a trait of intellect that we can solve life and know for certain. In doing so we would be free to move on to the next life issue.
Now, where have we heard this concept from recently as it relates to solving the deficit?
Unfortunately life can not be lived this way. Though, if you have enough money it may feel and you might experience life as if you have once and for all solved all risk and have thus freed the mind for more pleasurable activity. In that is the disconnect of the mass’ relationship with government and the mass’ relationship with the business model of social structure and function.
Well, this particular inquiry (born of a teaching innovation exercise) has morphed from sustainable communities to sustainable economies in the rustbelt.
So when time allows I will take your comments and work toward so useful definition.
Rusty,
Sustainability of communities, I would think in terms of environment also. But it does then involve economics.
The link Dan put in “Sustainability” however does not take one to where you original comment was made. It took me to the blog post in my blogger account.
How about this? As long as a public program with its own dedicated financing is projected to be able to continue performing as intended for at least 25 years, it should be considered sustainable without need for change or for that matter, attention. This is doubly (or quadruply?) reasonable when the self-funding mechanism can easily, without disrupting the social contract on which it is based, be supplemented temporarily with funds from other sources and when parts of it (disability) probably should be thought of more as general fund or public obligations anyway.
It seems to me this is a thumb-on-scale argument anyway. There is no real argument whether or not Social Security is “sustainable.” Of course it is if there is the will, and with 50 or more million recipients in the future the will will always be found. To suggest otherwise is really the height of absurdity. The only word actually in play is “unsustainable,” and it is used in this context as a $5 word by those who don’t like Social Security — with added clout from its being borrowed from environmentalists who are progressive by definition — to intimidate those who do.
KISSWeb
twenty five years is too long. and supplementing from”other sources” changes the definition of what you are “sustaining.”
SS as designed… worker funded… can be “sustained” as far ahead as we can reasonably see by adjusting the tax based on ten year projections… which turns out to be a ONE year “planning horizon” as the ten year projection changes every year, and the tax to meet it can (should) also be changed yearly if needed.
now if it should appear that “something” out there is going to force a change in the basic design, or even basic goal, that would need to be considered… but it would need to be considered honestly, and not just assumed and reacted to by running around cutting off our heads saying we’re all going to die.
there is NOTHING in either the 75 year SS actuarial window… or even the “infinite horizon” that is unsustainable if people actually did the arithmetic and thought about what it was they were trying to accomplish.
very likely we cannot “sustain” the current tax rate.
but we can “sustain” the program as currently designed for its current purposes (a way for the future elderly to set aside some of their own money to provide for their future needs… protecting that money from inflation and market losses with pay as you go financing, and allowing those workers to insure each other against more personal bad luck)… we can sustain that program with tiny raises in the tax from time to time as needed.
i did not come up with “the northwest plan” as a dumb ten year fix and “tomorrow the deluge.” what i did was show that small timely increases in the tax, based on ten year projections, would be sufficient to “fund” Social Security ACCORDING TO THE CURRENT TRUSTEES 75 YEAR AND INFINITE HORIZON PROJECTIONS.
i am not disputing the projections (they are relatively meaningless without my help).. i am disputing the stupidity that we have to lock ourselves into a fix today based on those projections, and worse, claim that no fix that involves a tax increase, however small, is something we can’t even think about.
Another usage of ‘sustainability’ very familiar to those of us who live or lived in the Northwest (and probably the Upper Northeast where similar industries predominate)are in regards to fisheries and forestry, and in Washington State the interaction thereof.
In Washington ‘sustainable’ salmon runs means runs capable of self-replicating their numbers AND their genetic diversity while still allowing the three main constituencies (tribes exercising treaty rights, commercial fisherman, and sport fishermen) to each take a share in a way that will sustain the economic sectors reliant on those fisheries for the indefinite future.
Similarly sustainable forestry has the same focus on maintaining a steady supply of timber while preserving the forests role in protecting genetic diversity and water quality while also minimizing net losses of commercial forest.
In both cases there are further complications in that the historical flow of timber and fish from Northwest Washington was much higher than currently and obviously wasn’t sustainable because not sustained and also accompanied by permanent or at least serious degradation of the resouces. Leaving it an active question whether current harvest levels are sustainable as is or whether there is the possibility for enhancing them going forward by further limiting them today. Still the concept of ‘sustainability’ is pretty clear even if nothing else about fish and forestry policy is.
And finally as a guy who spent years working on the permitting side of a Planning and Permitting agency I also came in contact with the more loosy-goosy concept of a ‘sustainable urban community’ where the word meant very different things to NIMBY’s and promoters of Urban Density. But THAT topic is covered a lot better by Atrios/Duncan in the Philadelphia context than I could do it in any of the ones I am familiar with.
In 1983 the Greenspan Commission implemented a fix to last about 75 years. 40 years in we can see it may not last another 20. Yes, they were wrong by a bunch, but their long term (75 year) projection provided important utility.
The current status of SS is exactly as a PAYGO program should be – its costs slightly lower than its revenue sich that interest on the reserve fund is enough that the reserve fund is increasing. But the 75 year projection tells us it won’t stay in balance. Knowing that it will be off by a lot again does not mean it has no utility.
The long term projection tells us to adjust from a system in balance with the current tax rate and a high TF to a system in balance with a higher tax rate and lower TF balance because the worker/beneficiary ratio is going to change from about 3.0 to about 2.2. The projection is probably good enough to set up tax rate changes for the next 30 years that would be adequate for the next 30 years (especailly since the TF would still be steadily decreasing), but it makes much more sense to establish a system that can adjust.
If the system were adjustable (as with the NW Plan), the unfunded liability would be zero.
I would like to think a self-adjusting system moves the discussion from how are we going to close the gap (lions and $8T and bears, oh my) to is it worth what we pay.
Given that SS will provide for a 100 percent increase in percentage of retirees for a 50 perecnt in percentage of GDP, it should be obvious that it is worth it.
“If the system were adjustable (as with the NW Plan), the unfunded liability would be zero.”
Yes. And interestingly enough if we just do nothing and allow benefits to be cut in 2033 by 25% by most reckoning unfunded liability goes to zero. It is not a debt, but instead a metric of the gap between current law scheduled and current law payable. Which under most readings of current law vanishes at Trust Fund Depletion/benefit reset.
Another reason not to let ‘unfunded liability’ be our guide. A useful tool in the hands of those who understand it and deploy it without distorting its import. But that pool of people seems mostly limited to economist Henry Aaron of Brookings. Who defends Social Security as a program but also has to me defended unfunded liability as a metric. Because he knows how to use it as a surgical probe for diagnostics rather than a club to kill off the patient.
(Monty Python “Bring Put Your Dead!” “I’m not dead!” “Thunk”)
ahhh . . .
Didn’t we have this discussion before? and decided a 10 year window was the window of opportunity to make changes to SS to coincide with the economy. Why would one look beyond 10 years as the economy and the politics change?
Bill H
well, making it up as i go along, about 30 years ago actuaries could reasonably forsee that the baby boom retirement would not be “sustainable” with the then current tax rates. so they adjusted them… and in fact adjusted them “early” to allow the boomers to pay for part of their own benefits that would not have been paid by normal pay as you go, or paid “unfairly” as an extra burden on those younger than the boomers and too light a burden on the boomers themselves.
all of which is to say there is nothing wrong with looking ahead and making adjustments. what is wrong is looking ahead and refusing to see that adjustments can be made, and can be quite reasonable, and can be make flexible to respond to conditions as they emerge.
what is wrong with the 75 year window and the infinite horizon is that they invite abuse… in fact the latter was created exactly to abuse… by those who want to claim the system is “unsustainable” by ignoring what it will likely take to sustain it, in order to stampede people into making changes that will destroy the system.
and… because i haven’t managed to say it clearly yet… locking yourself into a 75 year or “infinite” fix is insane. or simply a lie.
kicking the can down the road is called “life.”