I Hate Austerity
What’s your mental image when you hear the word “austerity?” Do you see in your mind’s eye a few Grecian elders standing around in simple white robes, or monks in a monastery having their evening meal of a potato, a small bowl of soup and a crust of bread, while they listen to the 12th Psalm ? or perhaps you imagine a bank manager in a shabby suit with trouser creases nonetheless sharp as a knife, whose old shoes are polished to a mirror-like shine? or his sister the librarian with her hair tied back in a bun so tight you could crack eggs on it?
Of course these are all stereotypes, but when we pick a powerful word like “austerity” to define a culture-wide plan of action, all of those stereotypes are consciously considered by the person designing that plan of action.
Austerity is one of several American images of virtue. Austere people are not wasteful, they save their money, they use the same dining room table and dishes for 50 years, they subscribe to Consumer Reports — and take notes. They steadily save 20% of their income for decades on end, and they buy with cash when they buy it all. They think about what they’re going to say before they say it, and often say little or nothing.
There are several virtues, depending on how you count. Faith, Hope and Charity are the high theological virtues, and Fortitude, Justice, Prudence and Temperance are the others, the so-called Earthly Virtues. (Chastity comes in there somewhere, also, if I remember correctly, but that’s probably not part of this essay.)
In any event, an austere person probably exhibits all four of the earthly virtues, and this doesn’t make him a very desirable consumer. So why are we again being told that the ownership society ought to be replaced by the Benedictine society, or possibly something along Buddhist lines?
Ah, but you see this particular “austerity” is only intended to be temporary, partial austerity, nothing permanent. It’s not austerity for all, just austerity for you.
Since I am a boomer, I know legitimately “austere” people, although they might not think of themselves that way. Most of them are 20 or 30 years my elders, and their austerity sprang from a time when you save your money because if you didn’t have a little put away, there was no likelihood that anyone else would help you when you needed it, and you were almost certain to need it. Spending — especially North American hobby spending — would have been seen by The Austere Generation as a ridiculous waste of time and money. Example: my high school best friend’s parents, who built their own house after World War II, are still in it, with the furnishings and furniture practically unchanged over the past 50 years. Clean as a pin, watertight above and below, a little house that needs and knows nothing of Extreme Makeovers.
It strikes me that business would not intentionally want a country full of austere people. They’ve certainly worked hard against it for decades. And government doesn’t benefit from it either, at least in the long run. In a consumer-driven economy, austerity on the part of the people means lower GDP, lower tax revenues, and animal spirits in hibernation. So, why this pervasive need to talk up the virtue of austerity?
Because, I think, the Austere American also has other qualities.
They talk little, they complain little, if the crop fails they just wait for the following year and try again. Great misfortune is treated as an act of God and an occasion to practice fortitude, another one of those virtues. The word “laconic” was invented for them. All of them prefer silence to noise, and they are slow to anger. (Remember, I’m still working with the stereotypes.) They are not dramatic, and very inclined to see their job as keeping their family and community functioning despite downturns.
In other words, I think what is wanted is not the saving, the careful judgment, or the patience of austerity. What’s wanted is the reluctance to complain in the face of loss — the loss of investments, the dialing back of pensions and salaries and so-called “entitlements”, and the erosion of civic freedoms.
What exactly does “austerity” mean? Here, from the Merriam-Webster dictionary we find:
Etymology: Middle English, from Anglo-French, from Latin austerus, from Greek austēros harsh, severe; akin to Greek hauos dry — more at sere. Date: 14th century
1 a : stern and cold in appearance or manner b : somber, grave
2 : morally strict : ascetic
3 : markedly simple or unadorned
4 : giving little or no scope for pleasure
5 of a wine : having the flavor of acid or tannin predominant over fruit flavors usually indicating a capacity for aging
“Harsh, severe, dry, stern and cold, strict, simple, giving little or no scope for pleasure.” Does that sound like a fun social policy? The only glimmer of hope in here has to do with wine.
Now, this usage is hardly new. To see how the word is used in government pronouncements, have a peek at the very useful Google News Archive search for austerity:
The word has long and consistent use over time, but golly — look at that jump for 2010.
Nip into any timeframe in that link to see what the word means in the news of the day, and it appears to always mean “no soup for you!”, i.e. cuts to public service pay, and cuts to services. The word seems to travel with other words like “riots,” and “general strikes.”
When an old farmer watches a promising crop washed away by a mid-summer flood, the correct response is patient perseverance because Mother Nature can’t be taken to small claims court. She can’t have her assets frozen and a bankruptcy panel divide up the capital among her creditors. She can’t be voted out of office.
However when a citizen watches the promises and investments of decades eroded or washed away by businesses that want the cake but not the dirty diches, or governments who want the tax contributions but not payouts for services already paid for, the old farmer’s appropriate response is not patient perseverance — not the austerity of suffering — but incisive, stern, severe demands for accountability and the keeping of promises made one or two generations before — the austerity of judgment.
“Austerity” is not a synonym for resignation. Remember the final dictionary definition? the wine that is preserved and enriched over time by the bitterness of tannin? the wine that lasts for years, and still has a bite when it leaves the bottle? That is the kind of austerity we need in the face of “austerity.”
Interestingly a large part of the move is a rejection of what used to be called Madison Avenue. An aweful lot of demand is created by those forces that really doesn’t exist. For example who really needs a new Iphone? The issue in many areas that if we go to replacement only levels the companies will no longer make any money. Yet the tech adoption curve tells use that that is the ultimate state with any technology. So we have to be sold the need for the newest gizmo. So in another larger sense it is a revolt against the whole consumer society mode, which as noted in the post is to be expected as the last saving generation is leaving the scene, the pendulum will swing back to that model.
Whew, a mix up in posting led to two versions of this post being up briefly. My apologies to the folks who commented on the first version, and if you could be kind enough to repost them here I would be very happy to see them.
I am nearly 50 and living proof of austerity. Except for a mortgage that is nearly 60% paid off in 16 years, I have no other debt whatsoever, and only buy stuff if I have the money for it.
Over time, I am convinced consumer buying behavior – that is, in line with your means – is how an economy should function. If real incomes grow by 5% a year, you can spend 5% more than last year (if you want, or save it…). If real incomes grow 1% a year, you can only spend 1% more. And if real incomes fall by 5% you need to tighten the belt or take money out of your savings account. It is normal math. However, when real incomes grow 1% and you want to spend 5% more, then you’ve got real problems. Spending more than what you’ve got can be regulated, it’s easy. Pass a law that ensures banks can’t lend to people (credit cards, student loans, mortgages etc etc) until the borrower has demonstrated their total debt payments are in line with their cash flow (real income). Call it “Living Within Your Means Bill”.
this is a bit of a straw man, isn’t it? you take “live within your means” and exaggerate it into some sort of monkish asceticism which you then argue is bad.
sure, borrowing and sepnding has short term benefit for the economy, but long term, the bill has to be paid. at some point, you have to start paying it down on both the individual and the federal government level.
the fact is we have been living beyond our means. the american ideal is rugged self sufficiency, not debt laden wards of the state. why is is that peple seem so amazed that money spent must be repaid? the pendulum of borrow vs save swung too far in one direction, and now it must swing back.
you are absolutely correct that this will pose near term challenges to growth, but the first rule of getting out of a hole is “stop digging”. what other choice is there apart from sustained high inflation to wipe out the debt in real terms to the benefit of the profligate and detriment of the thrifty? inflation is a tax on savings and it is exceedingly unjust to punish those who acted repsonsibly at the expense of those who ran up debts they cannot pay. it is also economic suicide to erode the future purchasing power of those who saved to pay for the past spending of those who didn’t.
so again, what option is there? we must learn to live within our means. that need not mean white robes and barley gruel and water, but it does mean that federal wages and employment need to be slashed and that consumers will need to retrench and spend less than they earn for a while. nothing can stop that now. you may wish it were no so, but as they say if golf “you gotta play the ball where it lies”.
Yes, austerity: http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389×1277981
Woman sitting on stage with Bush: “I work three jobs and I feel like I contribute…”
Bush (interrupting): “You work three jobs?”
Woman: “Three jobs.”
Bush: “Uniquely American, idn’t it. That’s fantastic, yuh, you doin’ that. Get any sleep?”
Excellent post Noni. One of the best of late. Something that is on a lot of our minds.
You make some great insights to the “more than financial” nature of these pushes. There is a real vocal element in the “austerians” camp that just wants us to shut up about our problems. To just take it as it comes and not look to assess blame anywhere. I think of Phil Gramms whiners comment. Actually I agree a lot with the “spirit’ of this idea. Whining about problems does not help at all, looking to assess blame often results in a delay of actually addressing the real issue and a take each day as it comes is an effective credo to live by. One which keeps a person from hopelessly trying to capture some magic in the past and apply it to a completely unique future. I actually live MY LIFE in accordance with much of this, thanks to my parents. However (I’m sure you knew a however was coming) most of the people chiding the rest of us are in no position to do so, at least not morally. That is the reason “I hate austerity” as well because it is a matter of simple financial bullying by those who control the purse strings.
The non financial attributes of austerity are those that follow from living a life of humility. Realizing that EVERYTHING we have is a gift and trying to cherish it. One cannot bring those virtues out in someone by cutting their income 10% simply because you can. There are countless examples of workers/ unions voluntarily making wage concessions in an attempt to keep companies solvent and I’m sure there are examples of CEOs/owners making similar concessions. But where are the congress people volunteering to decrease THEIR pay 10-15% in an effort to do their part? Why do teachers have to hear their mostly thankless profession demeaned on TV daily, shouldering the lions share of the blame for the disrepair of our education system (its those union contracts dont you know)?
“However when a citizen watches the promises and investments of decades
eroded or washed away by businesses that want the icing but not the
cake, or governments who want the contributions but not payouts of
pensions already paid for, the old farmer’s appropriate response is
not patient perseverance — not austerity — but incisive, stern,
severe demands for accountability and the keeping of promises made one
or two generations before.”
Captures the essence of my aversion. Dont ask for austerity when something has been systematically TAKEN from me that I previously had. We can all accept that things that we thought were something valuable turn out not to be so, we’ve all made that mistake, but dont ask me to sit back and not complain when you want to renege on an agreement. Especially when your argument is “we’re running out of money”. THAT, I know, can never happen.
This whole discussion has become an illustration of the argument; Everyone else is overpaid!
Please note: I am not condemning true thrift. This is a post about using stereotypes to manipulate and mute people’s anger.
Too often people are being scolded as wastethrifts when what has actually happened is costs of living and inflation rising, while payscales stayed flat.
We could all live within our means if we kept reducing our expectations. I have a pup-tent, and humans modern and ancient can live on very, very little. In Spain, some people still live in caves. (Very nice caves — I have seen a couple — but still caves.)
But this current, imposed austerity is bait and switch. Americans have paid into pensions (whether federal or private) for decades, either through Social Security deductions, or through lower wages granted in return for a pension. Now, Social Security is under attack as too expensive, and private pensions and retirement funds have been collapsing and melting away for at least a decade. Health insurers are happy to take the premiums, but slower to pay up when needed. To remain thrifty and uncomplaining in the face of systemic cheating is NOT a virtue.
“What’s your mental image when you hear the word “austerity?”
These day, soup kitchens. 🙁
Austerity is what the 99% suffer so that the other one% can better enjoy largesse. It isn’t any more complicated nor mysterious than that.
you have missed the point entirely. the people paid for their pensions. they are being told to do without by the people who stole their pensions.
i am all for “austerity.” i am not at all for theft.
i hadn’t really known i had austerity, but there it is. doesn’t feel “poor” to me. feels simple and clean and liberating.
Like the rhinoceros
Like the lion
unafraid of noises
Like the lotus
unstained by water.
but that isn’t really your point at all, what you are interested in is the “austerity” being offered as a solution to the “deficit” problems all around the world. and there you are right: the austerity is being imposed on the poor by the rich. and the hell of it is that the poor are not being offered austerity in the sense you describe. they are being offered grinding poverty, squalor, and lives that depend on the will of the rich.
Thank you, Miss Noni, for an excellent post. Nancy O.
what on earth are you talking about? your reaply seems to have nothing to do with my comment unless you have misintrpreted me as advocating infaltion when i am in fact arguing against it.
what pensions are you talking about?
if you are arguing that SS money has all been stolen and squandered from what was supposed to be a trust fund, yup, i agree with you. that’s why you should never trust the governement with your money.
there is simply no way that the SS and medicare/aid promises can be kept. it is now fiscally impossible. the aggregate unfunded lainility is on the order of $1 million per family of 4. the money does not exist to pay it. no one has it, and there is nowhere to get it unless you want to hyperinflate by printing money. the kinds of taxes required to get it would destroy the economy and cause so much capital flight that they would wind up making the problem worse.
so what is it you are on about?
Thumbs up for an excellent post.
I got that Noni and thank you for your astute observation of what is really going on. I suspect that if the government truly adopted measures to reduce the deficit–raise taxes across the board, bring all military personnel back to our shores within 6 months, cancel all Pentago orders for weapons etc, the hue and cry from the moneyed class would be deafening. This is all about squeezing a bit more out of ordinary fols and social security is the prime target. The sad reality is that if the politicians are cowed into forcing that sort of austerity on the masses business will fall off just as it would with self imposed austerity.
I do not know where you get your million in unfunded liability per family of 4 at least as respects social security. I asked Bruce about this a while back and I thought it was 3 trillion over 75 years and 5 trillion to infinity. Now if you are talking about the unfunded military budget, tax breaks to corporations etc, then I agree something must be done.
As noted much of this issue concerns our wants and needs, but why do we need a new large flat screen tv if the old TV still works? Why planned obsolence except to get us to buy new (recall cars of the 1950s where the size of the tail fin moved up and down so to keep up with the Jones you had to buy a new car every year). Or why do you need a new cell phone with lots of bells and whistles? Its all the advertising mob creating desires that would not ordinarily be there, see the Hidden Persuaders book of the 1960s. How many adds do people see that convince them if they just buy the latest do-dad they will be happy. Many religious traditions say this, but the world has come to worship at the altar of materialism (of course the whole reason for economic growth is to accumulate more stuff)
This may have been true at one time, and is still partly true. I just had a printer die of planned obsolescence for instance. (For want of a $1.85 part unavailable in Canada except if I pay $30 shipping. Pbththth.)
But for the people living under median wage, over the past 20 – 30 years wages have stayed flat while many essentials have sharply increased in price. Yeah, they go shopping, but where? Dollar stores and Wal-Marts, thrift shops and garage sales. They’ve been shifted from modest reliable incomes to a contingent, precarious workstyle. When I was in college, I never bragged about shopping second-hand, now it’s the norm.
Materialism might be a threat as Americans have been warning and ignoring for decades, but for the past generation at least, it has been mostly consumer dollars that have revved up the US economy like lighter fluid on a BBQ. Now the lighter fluid has run out, and in the absence of wood for the fire (i.e. domestic manufacturing, professional services, and solid, reliable jobs) what’s the economic fire going to feed on?
Just saying “people shouldn’t buy a lot of stuff” is calling for something which is likely whether we wish it or not, given the moths in people’s pocketbooks. I agree that a frothy economy is wasteful. But what will we live on instead?
“there is simply no way that the SS and medicare/aid promises can be kept. it is now fiscally impossible. the aggregate unfunded lainility is on the order of $1 million per family of 4. the money does not exist to pay it.”
Oh really?? Where did it go? Gosh I hope we dont have any hurricane damage this season because we dont have a “hurricane fund” and we’re out of money. I sure hope Iran doesnt get any shit started cuz we dont have an “Iran invasion treasure chest” we’ve been contributing to, we’re flat broke.
sorry, your head is too filled up with lies for me to be of much help to you.
Social Security pays for itself. the deficit commission is a hoax. there is no unfunded liability.
Medicare can pay for itself. it simply means people paying for their own medical insurance.
The pensions, as well as the pay, of the public sector workers were earned.
I don’t think even David Walker has got the per person debt hyped up to a million dollars per capita yet. but since it’s all a lie to begin with the actual number doesn’t matter.
so far the SS Trust Fund has NOT been stolen. It has been borrowed in an ordinary banking transaction. It could be paid back normally by the people who borrowed it. The trouble is the people who borrowed it don’t want to pay it back so they have created this deficit commission to kind of convince idiots like you that Social Security is the real problem. “You should never have let me the money” he screams. “It’s all your fault!”
IF you can find a point of reality where we can begin to explain things to you, I’ll be glad to give it a try, but if i have learned anything in this business it’s that once a person has given their soul to a lie, there is not a damn thing you can do to change their mind.
in your dreams. SS is already heading into cash deficit. it was intended as a trust, not an intergenerational cash transfer. the trust fund was supposed to be sacrosanct, but it became convenient to raid it, and now it’s gone. they could pay it back? with what? where are they going to get that money? i agreee that aht was done was reprehensible. it’s appaling. but it’s also done. crying about it and finger pointing isn;t going to put the rain back in the sky.
and the debt is there, go look it up yourself you credulous buffoon. rather than spew your accusations of “lies” at anyone who disagrees with you, try getting the facts:
at the end of this year, federal debt will be $14.5tn.
if the us governement used gaap accounting instead of the ludicrous modified cash accounting system that they do use (and that any private company execs would be jailed if they tried), our last budget supplus would have been under eisenhower. if we used gaap accounting, we’d have to include unfunded liabilities.
social security and medicare – $60tn at the most conservative estimate, over $100tn by some approximations
freddy and fanny off balance sheet obligations: $5tn
budget projections of $9-10tn in deficits over the next decade
and a couple $tn for the wars
and we quickly get to:
$78.5 tn using the low end of all the numbers and leaving out the 10tn in debt coming in the next decade.
there are 306 million americans. that means 76.5 million family of 4 equivalents.
that makes $1,026,144 in debt and liabilities per family of 4. so terry, there is your answer. it’s not military, it’s mostly medical.
use the high end, and it’s 50% higher. add in the next decade of losses, and you’re looking at nearly $1.7 million per family of 4.
so you tell me, where’s the money going to come from?
there are about 140 million US workers, so each of them has to cover between $560k and $900k. if they work 40 years as an average, that’s about 18k a year per worker just to pay this, or 35% of the average paycheck.
now keep in mind, nothing else has been done by the governement yet. no welfare, medicare, subsideis, military, education, zippo. tack another 15-20% on for that. now we’re at 50%+ taxes. add in state and it gets really interesting. now keep in mind: that has to be the AVERAGE tax rate. right now nearly 1/2 of american workers pay no net federal income tax.
that would cause economic ruin and massive capital flight. at that point, growth stops and we go into decline and the taxe base erodes. you don’t even want to know what happens if the interest rates on US debt rise. every 1% point increase in our current debt service cost causes nearly $150 billion in annual costs. to put that in perspective, that’s 4% of the US federal budget and an 80% increase in debt serice outlays from current levels. given how much debt we have to issue, guess which way our rates are going to go? in 10 years if we hit the budget estimates, we’ll have 25tn in debt. try running the cost numbers with that.
wake up guys, all empires ultimately fail due to fiscal profligacy. we’re no different. once you get issued public debt over about 100% of GDP, you’re cooked. look around the world. debt of 100% gdp means that all the growth you experience gets fed to debt service and the governement budget is fixed in nominal dollars. it’s like a credit card you can never pay off.
so, you are left with 2 options:
admit we cannot meet our promises or try to inflate out from under it destroying the savings of the US in so doing and dooming those on fixed income to penury.
better to start admiting now that the SS and medicare promises […]
i came back here to delete the note in which i called you an idiot. it doesn’t do me any good to be insulting. but the fact is you know nothing except some lies you picked up in the usual places. and what i know is that god himself could not pry you loose from the lies you love. so it’s not worth my time.
New here, but i’m just dumbfounded with your reply. What Morgan wrote was clear, polite, logical, somewhat referenced…. pretty much the ideal partner in an internet conversation – and generally quite hard to find on the internet in general.
I can perfectly sympathize with not believing you can ‘pry [him/er] loose from the lies [s/he] loves’. None of us can ever do that. Morgan couldn’t pry you loose from the lies you love either. So what? It doesn’t stop him/er from clearly arguing a case. What about the reader, like me? Can you convince me that Morgan is telling lies? Serious, I wish you could. That argument seems pretty sound, however depressing. But instead of putting your own case forward, you just come up with “liar liar pants on fire”?
Well David…there is plenty to read on the issue in the social security series available here. Go there first to bring yourself up to speed.
thanks for your note. you are correct in part. i need to be kinder to people like morganovich, but try to understand that i have been at this business a long time, and i know that i can’t reach him. i also know that he is completely wrong about everything.
i don’t have a lot of time today, but if you can be patient with my i will try to answer some of what he says, for your benefit. it will take several posts and maybe several days if you have the intellectual stamina.
he says “ SS is already heading into cash deficit. it was intended as a trust, not an intergenerational cash transfer. the trust fund was supposed to be sacrosanct, but it became convenient to raid it, and now it’s gone”
this tells me he doesn’t have even a basic understanding of what a trust fund is. a trust fund is money you put aside while you have it, in order to draw from it later when you need it. the trust fund was created by money paid in excess of current needs for Social Security pensions, with an eye toward the coming baby boom retirement (a fact well understood at least from the late fifties, contrary to his statement that “no one expected it”). The trust fund itself was created to smooth the month to month ebbs and flows of collections v payouts, but was allowed to grow to one year’s total payout so there would be a reserve big enough to take care of a recession, which is what we have now. that one year’s reserve would be expected to take care of a ten percent shortfall every year for ten years. so when morganovich says SS is already heading into cash deficit, he is being an idiot. the cash deficit was long expected, and long planned for. it is being taken care of. the current cash payout is exactly what the trust fund was created to take care of.
social security is not an “intergenerational cash transfer.” it is a means for workers to save for their own retirement. protected from inflation and other risks by a government program that takes NO money from “the budget,” but merely manages the savings of the workers and insures them against various kinds of losses… mostly inflation, but also market losses, and death and disability of the worker, and also failure to thrive or be prudent. note that the last is managed as an insurance funciton and not as welfare. the workers pay their premium. and no one intends to be poor their whole life so they can collect a marginally higher return of their social security “investment.”
the “pay as you go” financing looks like an “intergenerational transfer” to the ignorant and the people who are determined to be stupid. when you buy a stock you are giving your money to someone who will spend it today, and you hope to be able to sell your stock when you are old to someone who has money then. this is absolutely no different from giviing your money to social security “in return for a credit” that you will cash out when you retire, receiving the money from someone then who is depositing his own money for the same purpose. moreover, “intergenerational transfers” of that type has been the normal way of providing for old age since before Moses said “honor your father and your mother”. The children pay so the old folks can eat. They do this out of gratitude, because the old folks fed them when they were small, and built up the farms and villages that enable each new generation to be richer than the last. And also because they know that if they take care of their own parents, they can expect their kids to take care of them.
But Morganovich and all the SS haters want you to believe that “it’s every man for himself.” all you can do is put your money in the stock market and hope to end a winner.” I apologize […]
that is not, in fact, how a trust fund is supposed to work.
a trust is intended to throw off enough income to cover outlays meaning that you do not need to touch the principal. this is not what is happening with SS, from which we are beginning to drain principal. SS pay as you go works the same way. so what do we do now that we are eating into the cushion on pay as you go? what will we do when it’s gone as even the SS adminstrators admit it will be unless changes are made?
the size of the fund is shrinking while population is growing and life expectancey contiues to rise. so, less money, more expense. what happens when the money is depleted as current demographics ensure it will be? someone is going to wind up with no chair when the music stops. at current rates, the SS trust fund will not even be around when i retire. i pay in, but don’t get to take out. that is the definition of a wealth transfer. the money goes to my parents and grandparents, which is the definition of intergenrational. hence, intergenerationl wealth transfer. the facts on that could not be more plain. we can either change the payout structure (less money, higher age, means test, whatever) now and the system can survive, or, we can wait until it’s drained dry and then be in real trouble.
from the NYT:
“Mr. Goss, the actuary, emphasized that even the $29 billion shortfall projected for this year was small, relative to the roughly $700 billion that would flow in and out of the system. The system, he added, has a balance of about $2.5 trillion that will take decades to deplete.
Indeed, the Congressional Budget Office’s projection shows the ravages of the recession easing in the next few years, with small surpluses reappearing briefly in 2014 and 2015.
After that, demographic forces are expected to overtake the fund, as more and more baby boomers leave the work force, stop paying into the program and start collecting their benefits. At that point, outlays will exceed revenue every year, no matter how well the economy performs.”
the office of the cheif actuary at SS predicts fund depletion in 2037. medicare for hospital stays may be wiped out by 2017 if the same projections are correct. these are the government’s own numbers, not some think tank.
SS is not individual savings, it’s collective. an IRA or 401k is individual. no one can get at it but you. but SS is just a pool of mostly IOU’s from the federal governement attached to a set of promises it looks unlikely to be able to fund. when they money is gone, all those waiting in line are like the guys in line at the ticket booth when the mvie sells out (except that they already paid for their tickets)
you can pretend this isn’t so if you like, but ignoring the cliff at which you are driving won’t stop you from falling off when you get there.
and you get angry with me because you don’t read. where did i argue “every man for himself”? that’s a silly straw man argument you made up because you refuse to accept that anyone could have a view other than your own and still be sane. you appear to have some sort of persecution fantasy where evil men are trying to destroy your utopia. small wonder you seem to be having difficulty with the fatcs. evil? really? what’s more evil, trying to restructire a system so people can still use it to retire in 30 years, or letting those first in line grab all the money now and leave those 30 years from now with nothing? you have some very strange ethical […]
His whole premise rests on the false notion that we can run out of money. We cant. We can run out of trees, we can run out of oil, we can run out of gold but we cant run out of money.
If you believe that people over 65 yrs of age are using up too much of our resources, then make THAT argument. THAT is a discussion worth having, but I’ll bet Pete Peterson would be beaten over the head by his mother and her friends if he tried to make that argument, so he wont. He and his acolytes simply want to scare us by saying we cant afford it, we dont have any more money, which is of course ABSURD if you understand what money is in our modern world.
They actually fear a world where people are receiving medical care or some other sort of services for 20+ yrs of their after working” life. They actually fear that we could have too many users and not enough workers, as if 90% could just decide NOT to care about the production of the things they are demanding. The real truth is its Pete and his interest payment boys who dont “produce” anything (except scary default stories), wish not to work and are trying like hell to make everyone else use less so they can have more……………….SCREW ‘EM!!
you ought to be careful who you challenge to a duel. you are dead wrong, ignorant and stupid. and i will procede to demonstrate that to the world. but it will take more time than i really want to spend, so i will not be polite about it.
i am not impressed your your two ivy league economics degrees, and you would hardly be the first person who practiced financed without understanding what you were doing.
how a trust fund is “supposed” to work.” depends on what the trust fund was set up for. the social security trust fund was set up the way i described: to take in money when income exceeds outgo in order to have a reserve for those times when outgo would otheriwise exceed income. not a damn thing about “living on the interest but don’t touch the principle.” ln any case the current cash drawdown in Social Security is drawing from the interest and not the principle, so you don’t even know the facts, let alone the theory. when the baby boom retirement is in full swing, the principle will be drawn down as long planned for. so go back to your ivy league school and ask for your money back since they obviously didn’t teach you and facts, let alone how to think about them.
when the trust fund is gone… or reduced to the “normal” one year of reserves, social security returns to being fully pay as you go as it was designed. this can happen with no increase in taxes if people are willing to take a cut in monthly benefits as a percent of replacement costs, but in fact they will still be receiving about 20% more in real value than current recipients. probably your ivy league courses didn’t teach you how to do the arithmetic to figure that out. but if those future recipients want to keep the same replacement rate, and retire at the same age as people do today, it will cost them, ultimately, an extra two percent of their payroll. now i know Peterson is expecting people to roll their eyes and gnash their teeth at that horrible prospect. imagine! two percent of a paycheck that will be 2 HUNDRED percent of today’s in real value, and only to pay for the horrible prospect of being able to live without working when you are old. moreover the full two percent won’t hit all at once. it can be reached by raises in the payroll tax of one tenth of a percent whenever the Trustees project ‘short term actuarial insolvency.’ that would amount to an average increase in the payroll tax of twenty cents per week per year while incomes are going up ten dollars per week. is the arithmetic going by too fast for you?
i have already explained what is wrong with your “it won’t be there for me” but i suspect you are too slow witted to understand that it has been explained to you. so here it is again: the trust fund is supposed to be paid down. then social security returns to pay as you go. either with no tax increase or with a tiny tax increase to provide more benefits over a longer retirement. nah, you won’t understand this, it’s too much fun to wave your hands, paint an impressionist landscape, where numbers mean nothing and “facts” loom out in nightmare proportions. because, you sir, are innumerate. ivy league innumerate. economics profession innumerate. you can’t do arithmetic so you get yourself worked up over mumbo jumbo. and then you accuse the people who do understand the arithmetic of not “offering any facts or citations” by which you mean that unless they agree with the people who lied to you , you don’t want to hear about it.
“SS is just a pool” like any other goddamn insurance plan. whereas your IRA isn’t even a promise.
if you could actually think it might be possble to explain to you the difference between insurance and an “investment you control.” […]
Dave, if you come back
morganovich said “they could pay it back? with what? where are they going to get that money? i agreee that aht was done was reprehensible. it’s appaling. but it’s also done. crying about it and finger pointing isn;t going to put the rain back in the sky.”
this shows he does not understand much of anything about money, banking, taxes, social security, the trust fund, the nature of time, or “pay as you go.”
“with what?” well, with taxes. you see the trust fund was borrowed… as it was intended. that’s what you do with saved money. you lend it to someone who will spend it. the people who borrowed the mone were “The United States of America” but mostly the rich people who got the bulk of the tax cuts that were paid for with the borrowed money. Presumably they used their tax cuts to invest and now they can afford to repay the money they borrowed out of their profits.
This is exactly what happens when Uncle Sam sells you a savings bond. or sells the Chinese Government a treasury bond. exactly the same.
but morganovich doesn’t understand borrowing and lending, so he says something clever about putting rain back in the sky and us little puppies are supposed to admire his wisdom.
morganovich says “and the debt is there, go look it up yourself you credulous buffoon. rather than spew your accusations of “lies” at anyone who disagrees with you, try getting the facts:”
you see, the debt is a “fact.” but what the debt means is completely beyond morganovich’s comprehension. does the debt need to be paid back? well maybe yes and maybe no. it depends on a number of things. the government is not going to die, so it can roll over debt forever as long as people are willing to borrow. last time i looked interest rates suggested they are still willing to borrow. there is nothing very remarkable about this. all businesses borrow and carry debt. it’s not a problem, in fact its a big help or they wouldn’t do it. as long as they make more money on the borrowed money than they have to pay for it (interest) they are doing fine. the government is not a profit making business, but it does “create wealth” and if you look at the rise in GDP you are looking roughly at the “profit” government needs to make to “afford” to run a deficit. i have some reservations myself about where we are right now. but morganovich doesn’t understand the first thing about it. he thinks “the fact” there is a deficit means the sky is falling.
and that is the lie that Peterson and his minions are telling. and morganovich believes because he is incapable of thinking about it.
would i be this hard on an ordinary person?
no. but morganovich has two economics degrees from an ivy league school. i could smell it on him when he walked in. smells like brimstone.
morganovich said “so again, what option is there? we must learn to live within our means. that need not mean white robes and barley gruel and water, but it does mean that federal wages and employment need to be slashed and that consumers will need to retrench and spend less than they earn for a while. nothing can stop that now. you may wish it were no so, but as they say if golf “you gotta play the ball where it lies”.
oh goody, another folksy aphorism. the funny thing is that i could agree with him here…up to a point. but this comment came in the context of someone calling for cuts in Social Security. but Social Security has NOTHING to do with the deficit. Social Security has been lending money TO the Congress. Morganovich thinks the way to address the debt is to not repay the money borrowed FROM Social SEcurity. That means not repaying the money to the people who thought they were lending it to “the full faith and credit of The United States of America” and would get it back plus a reasonable interest when they needed it for their retirement.
and note, he never considers raising taxes to pay down the deficit. no, the solution is to cut retirements, and to cut the wages of federal workers… after all we know that public employees don’t really work for their money, dont’ we? and we could lay them all off, because we all know that they don’t do anything that we need done, do they?
morganovich said “but the first rule of getting out of a hole is “stop digging”. what other choice is there apart from sustained high inflation to wipe out the debt in real terms to the benefit of the profligate and detriment of the thrifty? inflation is a tax on savings and it is exceedingly unjust to punish those who acted repsonsibly at the expense of those who ran up debts they cannot pay. it is also economic suicide to erode the future purchasing power of those who saved to pay for the past spending of those who didn’t. “
look another cute aphorism. that doesn’t mean anything.
“what other choice is there..” well, we could raise the taxes of those who got the tax cuts that led to the deficits. but morganovich prefers cutting the pensions of those who paid for their own pensions.
and i defy anyone to make sense of the rest of what he says quoted here.
i think i am running out of room, and time. i’ll be glad to continue this if anyone needs more. later.
pretty much what i expected. Dave doesn’t like harsh words, but doesn’t want to bother his pretty little head finding out the truth.
i would only suggest to anyone else who might have been impressed with morganovich’s list of huge deficits that are going to ruin us that they look a little closer and see if they are smart enough to see how these numbers are rigged.
Back when Reagan cut taxes for the tycoon class, they were supposed to pay for themselves. They did not.
When Bush and Cheney cut taxes two more times for the tycoon class, they didn’t even bother with this pretext. “Reagan proved deficits don’t matter.”
So now the $12 trillion in Republican debt matters, and we’re supposed to pay for it by killing Social Security? When was that ever voted on: Yea or nay, tax cuts for tycoons, and you lose your social security?
How about a referendum now: Keep social security and put income tax brackets back to where they were before the Reagan cuts, or else eliminate social security to Pete Peterson and company can have more billions in their accounts?
but, but, but…
if we do that, where will the deficits go?
and then what will they have to scare us with?
As noted essentially the past good times were an illusion, and not real, Now we get the payback for the fake good times. Since we have and continue to replace carbon units (humans) in the labor force with silicon units (computers) we need a smaller and smaller percentage of the population to provide the needed goods and services. Is bread and video games (changed from circuses) as in the ancient city of Rome an answer???
i’m honestly not sure how to make your argument look any more stupid, emotional, and factually inaccurate than you already have.
much of what you say sounds insane and you yourself sound emotionally unhinged.
when the trust fund is gone… or reduced to the “normal” one year of reserves, social security returns to being fully pay as you go as it was designed. this can happen with no increase in taxes if people are willing to take a cut in monthly benefits as a percent of replacement costs, but in fact they will still be receiving about 20% more in real value than current recipients.”
this doesn’t even make the rudiments of sense.
paygo yields no interest return. inflation continues to bite. wosre, the demographics have shifted. SS was set up with a 65 year old retirement gae when life epectancy was 65. that meant that the avergae person collected ZERO. now, with retirement at 65 and life expectancy over 85, the average person gets 20 years of benefits (and climbing). so how is it you e3xpect them to get more money?
i’m sure someone as used to living off ogvernement largess and special programs as a farmer will be anxious to raise taxes and fleece the rest of us yet again, but go back and read the math i laid out on what it will take to pay these liabilities. it cannot be done, and you are just making unsupported, baseless claims devoid of fact and math. that 2 percent number is based on nothing as far as i can see. you just seem to have made it up because you are used to arguing with vassar english majors. an, of course, you assume that a 2% tax has no effect on the economy ot it’s participants beacuse you are a net recipient of governement funds, not a net payer.
let’s pick a few other lowlights of your rant:
“SS is just a pool” like any other goddamn insurance plan. whereas your IRA isn’t even a promise.
if you could actually think it might be possble to explain to you the difference between insurance and an “investment you control.” it’s funny as hell you say “where did i ever say ‘every man for himself'”? in the very next sentence after you say SS is “not individual savings… it’s just a pool.”
you see, thinking involves the ability to make connections between facts. they don’t teach that in the ivy league i guess. or was that an ivy league jr high school?”
commiting a logical fallacy while ranting about someone else doing so just makes you look ridiculous. so now saying something is not individual savings means “every man for himself”? what a startlingly polarized and politicized dictionary you posess. seriously, can you think at all?
and an IRA is better than a promise, it’s an asset. you have it to do with as you like. others cannot take it from you and it is a known quantity. this is the difference beteen owning a car and having a promise to be allowed to borrow one for the weekend. so what are you talking about? are you telleing me you’d trust a failing pool of governement assets backed by IOU’s and short sighted policy over your own bank account? do you realize how badly SS underperforms saving the same amount of money over your working career (in US bonds) and then using it to buy an annuity?
If I had been able to take these social security taxes and instead put them in a savings plan, and then took the accumulated balance out at age 67 and bought an annuity (at current rates), what would be my monthly payment? Well, assuming a very conservative after-tax rate of return of 5%, I would have $1,077,790 at age 67 to buy an annuity, which at current rates quoted on the Vanguard site, would give me $7,789 a month until I die. […]
The reality of the past good times depends on how far in the past you are looking. The break point seems to be roughly 1981, in a huge number of different measures. From about 1945 to the 1970s, the American middle class accumulated elements of prosperity such as homes and lake properties, pensions, good health, education both formal and informal, and sound reliable jobs and professions protected either by unions or by a workplace influenced by union workplaces surrounding it.
If you don’t think the 70s were better than today, explain how my father, an engineer and electrical designer, could support a wife and five children and his elderly mother, put the five kids through college, and leave his widow with a pension and investment income that has lasted her 20+ years.
I suspect your “fake good times” only go back 10 – 12 years. Could you tell us what time frame you actually had in mind?
your note is too long. and it contains thought error after thought error, which would be impossible to correct in you, and not very interesting to the other readers. if you want to join the discussion on other threads, keep your notes to one point and i will try to answer them carefully. meanwhile you might go back through what you have written for examples of “vitriol’ and see if you can figure out “who started it.”
in fairness to you, i’d have to say that i can see why you would think that i did.
you really do not know what you are talking about.
* crickets *