Relevant and even prescient commentary on news, politics and the economy.

It’s not how rich we are, it’s how equal we are.

This is a 16 minute * lecture by Richard Wilkinson. It is posted at TED. I am posting it here, as I can not believe this information has not received more attention now that the US is awakening from the decades long delusion of prosperity which did not and as shown in the lecture could not lead to greater justice (which implies equality) via the model of economics we have been using.
The model known by many aliases (Chicago School, Friedman, etc) has resulted in the thought that people are drowning in debt and that we have privatized the profits but socialized the losses. These are inaccurate metaphors. They are the results of the language of the delusion we have been living for 3 decades and thus by definition can not capture the truth of our condition. As the science presented in the lecture shows, if our all encompassing concern should be equality, then people are not drowning, they are dehydrating.
The dehydration is the results of privatizing security in life and socializing the risks in life. We are not “drowning” in risk or losses. We of the 99% are lacking in the substance that reduces risk. One can certainly drown from too much water, but the natural risk in life is not having too much water, it is having too little. Thus is the realization of the delusional statement “drowning in debt” and “socialized the losses”.

The lack of reduction of life’s risks is the inequality, the social injustice…the diversion from the purpose expressed in the preamble to our Constitution. “We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.”
The following concluding statement from a different lecture by Professor Wilkinson summarizes the TED lecture. As you watch the lecture keep in mind the 4 goals I highlighted of the preamble and consider that they were put into a document that created an government 223 years ago this year (based on ratification). I have a greater respect for the intellect and their insight into the human experience of those who wrote and ratified our Constitution.

“For thousands of years the best way of improving the quality of human life has been to raise material living standards. We are the first generation to have got to the end of that process. No longer does economic growth improve health, happiness, or wellbeing. If we are to improve the real quality of life further, we have to direct our attention to the social environment and the quality of social relations. But rather than continuing to tackle each problem separately, by spending more on medical care, more on police, social workers and drug rehabilitation units, we now know that it is possible to improve the psychosocial wellbeing and social functioning of whole societies. The quality of social relations is built on material foundations – on the scale of the material inequalities between us.”

With information such as this research and that of the 2005 World Bank paper on what produces wealth , considering our Constitution’s preamble, we should not be struggling looking for guidance as to what direction, what path, what solution we need for our self (our self as in We the People).
*I tried to embbed the video, but for some reason all that happened was all the code being published and not the video.
(Dan here, h/t to rjs for the embed…

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In Related News, Lee Papa Will Be Selling Obscenity Insurance

Via Lindsay Beyerstein on Twitter, The Onion should now go out of business:

AIG knows a thing or two about bad publicity. Now, a subsidiary of the bailed-out insurer is offering a new type of coverage to defray the cost of bringing in outside experts when a company faces a potential public-relations crisis.

That’s right. AIG is selling “reputation insurance.”

And the best thing about it? All of those links, except Lindsay’s, are at least a week old! Talk about Stealth Marketing!

Maybe they have something to hide?

(For anyone who puzzled for a moment over the title of this post, here’s Lee Papa on Herman Cain. Which turned out to be even truer than he knew.)

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Guest post: Why Means Testing Social Security Benefits Is More Trouble Than It’s Worth

Guest post by Nancy Ortiz

(Rdan here…Nancy is a long time reader of Angry Bear and has worked within the Social Security system professionally)

One of the many fixes now being considered as a remedy for Social Security and Medicare’s projected shortfalls is means testing benefits. The rationale is that rich people shouldn’t get SS because “they don’t need it.” Many people who ought to know better believe this would save a great deal of money and help fix the 2037 benefit gap. Sorry, people. This idea isn’t worth the paper it’s rotten on (as Dorothy Parker once said about someone else’s screen play). The short and long of it is that it costs more to means test benefits than to pay SS benefits without regard to the beneficiary’s income and assets.
How do I know this is true? The Social Security Administration (SSA) administers two programs: the basic SS program and Supplemental Security Income (SSI), a means-tested federal public assistance program for poor aged, blind and disabled people. You have to have worked 40 quarters to receive SS, but no work is required for SSI. It is a “welfare” program, not a social insurance program. SSI began on Jan. 1, 1974. In the intervening years, SSA has had plenty of experience trying to run this complex and challenging program. It has learned that SSI costs at least 7 times more dollar for dollar to administer than its regular SS program. 
There are many reasons. The federal government establishes overall SSI eligibility and payment levels, but each state can pay optional amounts over and above those required by federal law. In effect, there are 50 different SSI programs across the country. Earlier this week, CBS ran an article online with an account of a House Ways and Means Committee hearing about SSA’s improper benefit payments. Here’s the link. http://www.cbsnews.com/stories/2011/06/14/in_depth_us/main20071107.shtml
SSA was third in the list of federal agencies making improper payments to its beneficiaries and recipients. The first two in order were DHHS (Medicare, Medicaid, and TANF with $71.4 billion ) and DOL (Unemployment benefits $17.5 billion). DOD is not mentioned in this article presumably because the amount of DOD’s improper payments cannot be determined. SSA’s total was $8 billion, including $4 billion in improper SSI  payments, out of a total of $650 billion in benefits paid for all programs.
Congress has underfunded SSA since the 1980’s, sometimes more– sometimes less, but consistently for at least 30 years. The agency is  understaffed as a result. This has produced a 10% error rate in SSI payments as compared to a .05% error rate in SS benefits. This is because SSI is very labor intensive. The recipients are poor, often functionally or completely illiterate, and don’t speak English well or at all. Interviews are longer, the topics covered more complex, the documentation requirements much more extensive than in the SS program. Furthermore, you have to reinterview recipients frequently to be sure they’re still eligible. So, not only is it harder to process the claims to begin with but also you have to do the work all over again every year. If you don’t have the staff, you can’t do the work fast enough or accurately enough to produce a low error rate.
SSA’s Inspector General summed up the state of SSA’s efforts to improve payment accuracy in his statement for the record at Ways and Means’ hearing. See http://waysandmeans.house.gov/UploadedFiles/ocarrol222.pdf  SSA plans to spend $796M on quality control in 2011 and at least as much in 2012, budget permitting. This includes local office and end-of-line quality reviews, studies to determine causes of error, costs for computer matches in-house and out-of-house, Continuing Disability Reviews, redeterminations of eligibility, and the like. There are many more ways to reduce payment errors. But they cost more money than the ones listed above.
In SSI or any other means-tested program today, all income and any assets, no matter how small in dollar or market value, have to be reported. Any change in stated income and assets must be reported, recorded and verified. If the parents of a disabled child work, for example, they have to report all changes in their income whenever they occur. People who enter or leave the household cause a change in the payment level. Gifts of money or determinable value can reduce payments. Ownership of real estate other than a principle residence also count against the asset limit of $2000.00 for an individual ($3000.00 for a couple). So, if the recipient is a tenant in common in real estate having a value over the limit, s/he is ineligible. This is common in intestate estates in which numerous relatives may have a share in unmarketable rural property. I could go on, but your eyes are already glazing over.  
The obvious response is to say that means testing SS could be designed in such a way as to get around these problems.  But, the fact is that the limits set on income and assets are absolute dollar limits not subject to waiver or tolerances. So, means testing means one thing and one thing only. You have to check and recheck everything that affects eligibility every year for every eligible person. And, that takes staff which costs money. About 50 million people receive SS and SSI benefits. I cannot even guess what it would cost to handle that many new eligibility determinations. We must look elsewhere to find a fix for the coming SS benefit gap.

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Billions for Bankers, Nothing for the Housing

Good Thing We Have Deficit Hawks in Congress:

The tenants were all living low-rent under a program that’s beginning to expire – but had been promised they could still qualify for a federal Section 8 rent subsidy.

But this week, when many of them began to show up at New York City Housing Authority offices, which accepts the vouchers and administers the subsidy, they were told the program was kaput….

NYCHA Chairman John Rhea Thursday blamed the move – which could push thousands into the city’s already crowded shelters – on Congress, a lower-than-usual attrition rate in the program and unprecedented demand….

More than half the vouchers – 1,833 – had been given to families and individuals who were once homeless.

Rhea, a former investment banker who took over the agency this year, said Congress didn’t set aside enough money to run the program through the end of the year.

Congress took $58 million from the authority in May from funds that were earmarked for Section 8, Rhea said. [link to Rhea appointment added]

Good to see responsible budgeting only means putting 3,000 families out on the streets just in time for the first big snowstorm of the year.

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Welfare vs Social Insurance in the USA

Robert Waldmann

Among experts, there is a widespread view that people in the USA support social insurance an oppose welfare. It is a fact that they support social security old age and disability pensions and hated AFDC. It is suspected that describing social security as a pension plan with mandatory participation is part of the explanation of this. Therefore, some (including the Clinton treasuries first assistant secretary for policy analysis Alicia Munnell) argue that it is important to preserve some link between contributions and benefits in the social security system.

I think that we have performed and experiment which refutes this hypothesis.

It is called Medicare. Medicare part A is a social insurance program like social security old age and disability pensions. Medicare part D sure isn’t – it’s an unfunded entitlement. I don’t know about parts B and C (I think they are basically funded from general revenues).

That’s the point. Compared to many angrybears I am very ignorant about Medicare, but I suspect that I know about as much as the median voter. If the form of financing had such an important impact on public opinion, why doesn’t the public know more about the form of financing ?

My reading of the evidence is that Medicare A through D is very popular, that different approaches to financing have so little effect on public opinion that it can’t be detected.

Frankly, I think this is proof that the social insurance hypothesis is false. At least I don’t see how the evidence could possibly conceivably be any stronger.

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