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Fall of the State
My co-worker Zubin, pictured below in late October 2004, is getting married! He was pretty quiet about this. I didn't even know he was seeing anyone. My vast network of informants brought me the news only a short time before Zubin did himself. He'll be married in December.
He hates it when I use this picture. :)
In all seriousness, Zubin, I'm glad you've found someone to spend your life with and I hope this bond brings you all the joy you deserve.
I regret I won't be able to attend the ceremony in India. I'll be happy to attend any local nuptial event upon your return, and I suspect a lot of our teammates would feel the same way.
Plus if we're all there in a group, that will be a strong silent reminder that you should hurry up and come back to work.
Heresy and Incorporation
The other controversy raised in my post on Kelo concerns the applicability of the Bill of Rights to the States. I argued that it is incorrect to reject State applicability simply due to rejection of "incorporation" via the 14th Amendment. I believe that a plain reading of the Bill of Rights supports their applicability to the States even without the 14th Amendment.
Shocking! Outrageous! Heretic! Buuurn him! He's a witch, get a duck and some scales…
My first defense is that I'm a victim of the public school system, and I've only heard of "civics class" in myths and legends. I was never taught a damn thing about how the government works, and I blame the teachers. (I just blew all my sympathy, didn't I?)
My second defense will be to to explain my unorthodox — nay, heretical — reading of Bill of Rights by drawing from the Amendments themselves.
You'll get no argument from me on this one. "Congress shall make no law&hellip" Nothing about the States there. Fine, this one was only relevant to the Federal government.
See, I'm not totally unreasonable.
What's interesting about this is the lack of any clause defining the scope. There are crimes at both the state and federal levels, so this amendment could conceivably apply to either, or to both.
The natural reading of a sentence that doesn't delimit a scope is to apply it as broadly as possible. Unless there is a surrounding context that sets the scope, it should be read to apply to all cases.
I'll happily agree that context limits the scope of this amendment to the scope of the document to which it is attached — the Constitution of the United States. This amendment doesn't apply to foreign countries, only to the USA. But the Constitution affects the States extensively, so I refuse to grant any presumption that text applies only to the Federal government unless explicitly written otherwise.
Surely, the position that Federal scope should be assumed could be argued for. And that's exactly what I require: a convincing argument that the default scope of text is Federal only. I emphasize that such an argument is likely to be made by appealing to documentation other than the Constitution itself — which is valid, but carries a higher burden of proof.
This amendment does contain a clause defining its scope: "In all criminal prosecutions…" All of them. Every. Single. One.
Criminal prosecutions are possible at both the state and federal levels. The text of this amendment explicitly endorses a broad reading by saying "all" — it doesn't say "all federal" or "all state", it says "all". It's not okay to silently insert the word "federal" where you imagine it to be or would like it to be. It's not there!
I submit that this is prima facie evidence that the Bill of Rights did originally affect the States and not just the Federal government. The onus of proof is on those who would claim otherwise. Why should I read this amendment as if the word "federal" was inserted?
And just to be a pompous jackass about it, I have to ask, "What part of 'all' don't you understand?"
So, I wait for the extra-Constitutional scope-limiting argument. I'm actually fairly confident that it will both arrive and be convincing. And when it does, I'll be in a mood to scold the Founding Fathers for not making their intentions clearer in the body of the Constitution itself.
I leave you with a few closing thoughts. If the Bill of Rights was intended to limit only the Federal government and not the States, then the First Amendment's clause "Congress shall make no law…" was unnecessary and is mere surplusage. This is a dangerous reading, and must be rejected:
My Goals for Federalism
My post on Kelo generated controversy in two areas. One was whether the Bill of Rights is enforceable against the States even without "incorporation" via the 14th Amendment. I'll address that topic soon. For now I'm going to talk more about the other controversy — individual rights in a federal system.
I'm going to leave aside the Bill of Rights and speak purely theoretically about how I would like individual rights to function in a system of layered governments.
Firstly, I cannot assume utopia. Even though I'd like to have a government that understands individual rights as I do — maximizing individual freedom of action in the context of forbidding the initiation of physical force — I'm part of a tiny speck-like minority and am under no illusion that my political philosophy is attractive to most people. The system I really want is out of the question. So I'll do the next best thing: describe a system whose robustness in the face of controversy makes it reasonably likely to preserve and to enhance individual rights.
The genius of federalism (more generally, layered governments) is that it permits local variations within a larger framework. The local variations admit a sort of "political competition" whereby people can vote with their feet to live under the system of their choice, while the framework provides the broad rules, coordination, and an arbiter to settle controversies between the local systems.
I'm not fond of the term "political competition" because politics and economics are very different and it's dangerous to confuse them. But the "economic" angle is important to understand. In a market, customers have choices. They don't have to buy any particular product. They choose the one that best meets their needs. Producers must please their customers or they will lose them — the customer is king. In politics, on the other hand, the King is king and if you aren't happy with his edicts, too bad. You don't get a choice. I think it's important for people to be able to escape onerous governments, while at the same time realizing that different people will have different conclusions about what is onerous. If one size doesn't fit all, the solution is to have a variety of sizes.
Another significant benefit of federalism is that the local variations can be compared and evaluated. Thinking about prohibiting alcohol? How about a small-scale experiment instead of hitting the whole country all at once? It's easier to see when you've hit upon a bad (or good) idea when you can compare your results to those of a control group.
A higher layer has power over the layers beneath it, so it is essential to tightly control this higher layer. Checks and balances. Enumerated powers. Vigilance from the lower layers. Rebellion when the higher layer exceeds its authority. Higher layers must be created with great deliberation, and the threshold for changes should be similarly high.
Resist the temptation to protect individual rights at higher layers, to bind the hands of the lower layers. For every lover of freedom who wants to protect property, there is a person who wants to declare a right to health care funded by the expropriation of property. So-called "negative" rights, which I favor, are not guaranteed to be the only kind of rights. (Recall, utopia cannot be assumed.)
All rights should begin at the lowest level of the hierarchy. Only those rights that win overwhelming approval in the "political competition" should be brought up to the next level. To be very clear, they should be brought up, but only after they have proven their success.
It is not a coincidence that the Bill of Rights is similar to lists of rights in the constitutions of the various states. The Bill of Rights was forged from the successes of the rights protected by those states. The attractiveness of "incorporation" via the 14th Amendment (even as I argue it was unnecessary — but that's another post) is precisely that it gives a greater scope to rights already widely beloved.
This model of rights "bubbling up" to higher levels of government based upon their success on a smaller scale is the reason I would limit the power of higher levels of government to "create" rights. Up to its own discretion, it might create rights I like … or it might create rights I don't like. I do not want any small group of people, such as the Supreme Court Justices, to have the authority to create rights by the mechanism of legal gymnastics.
I think abortion is an excellent example — it's absurd to read a right to abortion into a right to privacy, which itself isn't even fully clear in the Bill of Rights. It's two levels removed from the text, and it's made a significant proportion of the population very upset. Indeed, when either outcome (establishing it as a right, or banning it) would make a significant proportion of the population very upset, that's a powerful clue that it might be too soon to apply a universal rule! I would prefer the controversy to be settled over time at a lower political layer. Let different states establish different rules regarding abortions. Able to vote with their feet, fewer people will be very upset than in the case of a universal rule. And after some period of time, comparisons will be possible — data may change minds. If and when something approaching a public consensus can be reached, only then should the higher layer of government get jurisdiction over the matter.
"I am in favor of state decisions for rights that are unclear in the Constitution, and federal decisions for rights that are."
Controversy is important. Controversy is good. Higher layers of government should not preempt controversy by handing down a ruling based on something only weakly in its constitution. Higher layers of government should be in the business of reacting to consensus, not attempting to create it. A powerful higher-layer government might act in ways that enhance freedom (protecting property) — or it might act in ways that limit freedom (establishing a right to health care). Sometimes the bad guys run the show, and it's important we don't give them enough rope to hang us with. I am safer at the hands of a public supermajority than at the hands of any small group of elites. (Because I don't, and will never, get to pick those elites.)
Federalism, Eminent Domain, and Kelo v. City of New London
Eminent domain is the government power to forcibly take or purchase private property from an unwilling owner. My belief is that no government should have this power. For government to take property, when one of the express purposes of government is to protect property, is a complete inversion of government's role. The arguments in favor of eminent domain are flawed. (In particular, dominant assurance contracts (PDF) solve the "holdout problem".)
However, my purpose here is to discuss the Kelo v. City of New London case, not eminent domain in general. The interested may want to read the Court's opinions (PDF).
Stephan Kinsella wrote a libertarian defense of the Kelo decision, arguing that the correct legal outcome was reached — upholding the State court's decision allowing the seizure — although SCOTUS's reasoning was flawed, and despite his personal opposition to eminent domain.
I'll use Kinsella's article as my basis for comment. His argument is essentially that the Kelo decision is correct on federalist grounds — the federal government doesn't have the authority to intervene:
Central to his argument is that "the Fifth Amendment — like the other rights listed in the first eight amendments, applied only to the federal government."
I have sympathy for the argument that the Fourteenth Amendment has been interpreted too broadly. But I don't think it's relevant in this case.
The Supreme Court Justices unanimously believe that the Fifth Amendment did not apply to the States until it was "incorporated" by the Fourteenth. This is apparently a settled matter, although it is one that I don't understand. It is clear to me why the First Amendment didn't originally apply to the States, but it is not clear why the others didn't. It is unhelpful that all the explanations of this issue I have read give examples from the First Amendment instead of the others. The First Amendment is easy; the others are hard!
I am in no way a legal scholar. I have never studied law. I'm just an unfrozen caveman lawyer a functionally literate pirate, and I have read the United States Constitution and believe that it is and was intended to be accessible to the layman. My plain-language reading of the Constitution tells me that the Fifth Amendment does apply to the States, not just to the federal government. Compare the text of the First and Fifth Amendments:
The First Amendment is explicitly a limit on the power of Congress, rather than a limit on the States. The Fifth Amendment has no such language and reads as a broad list of rights of persons. So, does the Fifth Amendment apply to the States? Yes!
The real question isn't whether the States are bound by the Fifth Amendment. In fact, Connecticut's Constitution contained a similar takings clause. The people involved certainly had the right to be be secure in their property but for the eminent domain exception. The real questions in this case are:
The Constitution is designed to pit the three branches of government against each other to inhibit the accumulation of power. The executive branch may refuse to enforce a law it considers unconstitutional and the judicial branch may refuse to punish violations of a law it considers unconstitutional. The legislative branch may withhold funding from executive actions it considers unconstitutional, and has the power to set the jurisdiction of the courts and to confirm judges.
The States too are designed to be a check on federal power. The election of senators by state legislatures (until, unfortunately, the Seventeenth Amendment made them elected by the public) was intended to reinforce the fact that the States, not the Federal government, had most of the power. See also the Tenth Amendment. The States have, and have used, the power to declare acts of the federal government unconstitutional. For example, the Kentucky Resolutions declaring the federal Alien and Sedition Acts void.
No federal law has force unless all three branches of the federal government, and the States, agree that it is constitutional. Any one of them can refuse.
What about the constitutionality of state laws, as in the Kelo case? The same principle applies. Inasmuch as state laws affect the federal executive and legislative branches (the latter seeming unlikely), the federal authorities may decline to cooperate on Constitutional grounds (and basing their decision on the federal, not state, Constitution). The judicial branch's involvement is less clear, but by my reading it appears to be up to the discretion of Congress whether or not the federal courts have jurisdiction (aside from those items specifically described in Article III). I assume that proper procedures were followed as the case traveled to the Supreme Court, and ipso facto that that Congress really does assent to this review.
Given my belief that the Fifth Amendment did apply in this case, it is right for the Supreme Court to agree to hear the case. By Congress's assent, it does have the power to rule on the compatibility of this state law (from the SCOTUS opinions, "… the city has invoked a state statute that specifically authorizes the use of eminent domain to promote economic development") with the Federal Constitution. (Congress, or the States, should restrain the Supreme Court from ruling on purely State Constitutional issues.)
I'd like to comment on a side issue at this point. Reading the comments to this post, people discuss abortion and slavery as examples for federalist reasoning.
My position is that rights not clearly listed in the Constitution should not be granted nationwide scope through judicial means. The Ninth and Tenth Amendments make it clear that people have rights not listed in the Constitution, and that the States reserve all powers not explicitly given to the federal government by the Constitution. In simple language, those two Amendments say "people have more rights than these, but they're up to the States."
The resolution of the slavery controversy, by the passage of the Thirteenth Amendment, is the correct way to federally protect a right.
The "resolution" of the abortion controversy, by the decision on Roe v. Wade, is not the correct way to federally protect a right. It takes circuitous logic to read a right to abortion into the right to privacy. The federal government is in the business of upholding the Constitution as written, not teasing things out of it that aren't really there.
Roe v. Wade should be overturned because it violates the Tenth Amendment. Until and unless an amendment is passed, the issue of abortion should be up to the States — as was the issue of slavery until the Thirteenth Amendment.
I am in favor of state decisions for rights that are unclear in the Constitution, and federal decisions for rights that are.
States should resist federal rulings that exceed the federal authority, either by meddling in purely state matters, or by granting or denying rights the Constitution does not clearly put under federal scope.
Matters of jurisdiction settled, let's turn to the final question: did this case violate the takings clause?
Absolutely. Read Justice Thomas's dissent.
I appear to have sparked some sort of controversy with this post, which was not entirely unexpected. :) I'll revisit the matter of the scope of the Bill of Rights tonight, and my thanks to The General for clarifying the 9th and 10th Amendments — I was writing hastily. That too, I'll look at in more detail soon.
Lost Liberty Hotel Moving Forward
If you've followed the Kelo v. City of New London case, you've probably heard of the Lost Liberty Hotel — a plan to use the Kelo decision to take the home of one of the Supreme Court Justices and convert it into a hotel.
It might actually happen:
Given the wide unpopularity of the Kelo decision, I think a ballot initiative is highly likely to succeed.
If this hotel is built, I pledge to vacation there. This would be a wonderfully fun way to ridicule eminent domain.
My old college dormitory, Storms Hall, was destroyed July 19th, along with its twin Knapp Hall. The Iowa State University News Service has a story and video (Real Media) from the east (Knapp Hall) and the Iowa State Daily (the student newspaper) has a story and video (Windows Media) from the west (Storms Hall).
The Des Moines Register has a video report (QuickTime) with several vantage points.
I lived on the 9th floor of Storms Hall for my 3½ years at the University.
Knapp and Storms are were part of a collection of four dormitories collectively known as the Towers. The other two, Wallace and Wilson, were renovated a few years ago and are still in use. Knapp and Storms were physically deteriorating. When I was there, the buildings had a significant water infiltration problem, rusting the rebar and causing leaks in students' rooms, and also had chunks of concrete falling from the buildings. Also, the elevators were usually broken. Come to think of it, these dorms sucked pretty hard.
For their condition of maintenance as well as their shape, I referred to the Towers as the Communist Housing Briefcases. I had been looking forward to their demolition for the past several years (Yesss! All the evidence is finally gone!) and hoped to attend, but my summer vacation was about two weeks too early this year.
One of my field reporters sends this image of the collapse. Click for a high-resolution (200KB) version. Thanks, Dennis!
I've been meaning to write about this story I noticed over vacation:
Guess what Weaver is talking about. Go ahead, I'll wait. … … Sounds like an urgent matter of the most severe importance, doesn't it? If you don't care where the money comes from, it must be the top priority. Have you figured it out yet? He's talking about starting salaries for teachers.
Guess what, Weaver? I do care where the money comes from.
Weaver's judgement — based upon what, we are not told — is that starting salaries for teachers should be immediately increased by 30%. That's some raise! I don't see the sort of massive teacher shortage that would justify such an increase. Of course, that's a market consideration, and Weaver runs a union, so I may be looking at irrelevant factors here.
Teachers make a lot of money already. On top of their $30,000 starting salary, they get about 10 weeks of vacation. Even with a low-paying summer job, they could make a few thousand extra. Considering the median household income is about $43,500, a teacher with a summer job plus a spouse working full-time for federal minimum wage ($5.15/hr) is a median household! If the spouse makes even $10/hr, the household falls near the 60th percentile. Remember, we're talking about starting salaries. Poor teachers? Cry me a river.
My most recent raise didn't keep pace with inflation, either. So what? Why should wages always keep up with inflation? There's no economic justification for that. Prices, including wages, both rise and fall in real terms.
Notice also that an average teacher (not a starting teacher) by themselves has a high enough income to be in the upper half of all U.S. households.
Here's another interesting quote from a different story:
Yeah. Somehow. :)
This story is about the Seattle monorail. Conlin himself is a skeptic about the viability of the monorail. If it's a "vision" thing, I have a better solution: automobiles. Public transportation does not go "wherever you want", it goes to a few designated locations. Public transportation does not go "whenever you want", it goes on a regular schedule. Automobiles take you within walking distance of wherever you want to go, whenever you want to go. That's why automobiles have also been known as "freedom machines".
I wonder if Seattle has done any significant highway construction in the last decade or so?
Four times in ten years? My sympathies for the people who voted "no" four times and kept getting overridden. If the monorail were privately funded, this wouldn't be a problem — if you didn't want to pay for it, you wouldn't have to. Another cost of government.
I'm thankful that as an Oregon resident I'm beyond the reach of that particular batch of urban planners. Alas, I have to pay for the MAX light rail system here. Oh, how I wish I could escape…
For inspirational news, see this (hat tip Catallarchy). A restaurant in Indiana is bracing for a lawsuit for defying an ordinance that would "require restaurants that allow smoking to have separate rooms with separate heating and cooling systems."
This is a tax on permitting smoking. To comply with the ordinance while still allowing smoking would be very expensive. The cheaper option would be to forbid smoking, which is certainly the goal of those who advocated the ordinance.
No doubt it was pitched in the name of improving public health by providing cleaner air for nonsmokers. An attractive glove wrapped around government's iron fist.
The similarity with Jim Crow laws is striking. Requiring separate bathrooms for whites and blacks, for example, was a tax on serving the black population. Then too, the laws were frequently opposed by business owners but promoted in the name of the public good.
Good for you, Katie, and all your co-workers. If the employees show up in court together, and if you can get a jury trial, I feel confident they would nullify the ordinance.
While you're on the march, be sure to un-elect the do-gooders responsible for that ordinance.
Out of Context
From a Q&A with Bob Lutz, Vice Chairman at General Motors:
Yes, they are good with ketchup.
… oh, well that's different, then.
If it's a bad pun you're looking for, try this one. It's a really good bad pun, even by my standards.
And what about my standards? We engineers are a sad lot. In a discussion at work last week, we were scoping the role of a new debug tool we're going to create, and realized we could use a bad acronym for its name: "BUTT".
It gets better. This tool would have some involvement in the process of gathering array dumps from our processors. Obviously this means we'll be going to the lab and using our BUTT to take a dump on a processor.
Yes, the world's most advanced microprocessors are debugged with the help of engineers who still think bathroom humor is funny. (If this surprises you, you clearly haven't spent enough time around engineers.)
The Value of Face-to-Face Service
When I got the news my car wouldn't be built right before I left for vacation, I decided it was worth looking for a vehicle in Iowa. I didn't think I'd find one close to my options (and I didn't), but at least I got to see a blue one in person and to see the spoiler option in person. I like the color. The spoiler is a joke.
The ideal situation would have been to find something buyable while I was on vacation so I could take advantage of the employee discount offer while it lasted. (GM extended it, so my hurry didn't matter.) Getting the vehicle back to Oregon would have been a hassle, but still worthwhile.
I mention all that as background. When I was sure I wouldn't be able to find a 2005 and would need to order a 2006, I knew I wouldn't be getting a car until September at the earliest. What to do with the wad of cash in the bank? "Put it in a CD, of course," I told myself. And I did. Thousands of miles from my branch, I did it online. And then I noticed something unfortunate.
My CD was for a very short term (63 days), so it wasn't getting a great interest rate. I was actually getting a better interest rate in the money market account I funded the CD from! I sent a message to customer support explaining what happened and asking them to cancel the transaction. I never got a reply, and they didn't do it… wonderful support.
Today I visited my branch. I've been banking there for over six years. They recognize me when I come to the branch, which is about once a month because I don't use ATMs. (I don't have a cell phone either — yes, I'm old-fashioned.) I told them what happened, and they fixed it. They waived the penalty for closing the CD (itself approximately equal to the difference in interest between the CD and money market) and instead of putting my money back in the money market account, they did something better. Bank of America is offering a 9-month "risk-free CD" that has no early withdrawal penalty and has a substantially higher interest rate the money market account.
This is great. It's a a better interest rate than I expected (2.81%), and I can still spend that money on my new car in September!
This happened because I went there in person. I couldn't have done this with their online banking services. Their online banking customer service didn't even acknowledge my message, but their "personal banker" exceeded my expectations. She knew I worked for Intel, and we had a friendly conversation about it. She even asked if I knew Glenn Hinton (I do) — it turns out she knows him from a church she used to go to.
My long relationship with this bank and personal visits to the branch are worth real money. I estimate the changes will net me an extra $50 by the time I buy my car. The bank had no obligation to treat me so well, but they did, and I thank them for it. Not just online of course — I thanked my "personal banker" in person.
Then I immediately drove over to a competing bank who gave me $75 for opening an account with them a couple months ago. My $75 incentive had arrived. The teller there was pleased that I had actually been using my account, unlike a lot of people who only opened it to get the $75.
You bet I've been using the account. Sure, I could have taken advantage of the incentive. But I want this bank to like me, too. It might be worth an extra $50 to me someday!
The Reality of Social Security Opt-Out
I've written a lot about my desire to opt-out of the Social Security system. I haven't written about the people who legally can, or already have. That's right — my favorite "reform" option already exists! The catch is that I'm not eligible.
But some people are. These people can fill out IRS form 4029 (PDF), the "Application for Exemption From Social Security and Medicare Taxes and Waiver of Benefits". Who is eligible? Members of a "recognized religious group" provided that:
You must be (1) a member of a religious group that (2) is ideologically opposed to insurance and (3) takes care of its dependent members and (4) isn't new.
Thus, I'm blocked from setting up a sham religion for the sole purpose of opting out of Social Security. It wouldn't work anyway; I'm in no way opposed to insurance and I have no desire at all to be part of a semi-socialist "dependent members" group.
It's curious that the opt-out provision is for religions that are opposed to insurance. Instead of, for example, an opposition to stealing. My opposition to Social Security has nothing whatever to do with insurance. And Social Security isn't insurance anyway, as the government's own brief in Fleming v. Nestor explains:
I think Social Security should be voluntary. You shouldn't even have to give a reason for opting out — although I can give an earful to anyone willing to listen.
IRS form 4361 is similar in nature but only applies to ministerial earnings, rather than being a complete and total opt-out like 4029. I know someone (in meatspace) who was formerly a minister and used 4361. He later opted back in to Social Security by filing IRS form 2031, but this option is no longer available — it was a limited-time offer and had to be done by 2002.
Federal government employees were not covered by Social Security until 1984. People hired since then have been under Social Security, but those already employed before 1984 were allowed to remain outside the system if they chose to. This change in 1984 applied to members of Congress, too.
The status of state government employees varies. Fifteen states (that list only has fourteen, I think the missing one is Colorado), or portions of those states, have alternate public pension plans for their state employees. Beginning in 1991, the only way a state/local government employee can be exempt from Social Security is if they're covered by a different public pension plan.
The most famous local government opting out of Social Security is that of Galveston county in Texas. President Bush went to Galveston in April to talk about Social Security reform, and talked with people in that alternate plan. The loophole that allowed municipal governments — not individuals, I stress — was closed in 1983. No more state/local governments will be able to set up their own systems. This Heritage Foundation research piece contains some concrete examples of groups who have opted out. (Scroll way down to "Some US workers Already Participate in Successful Private Pension Plans".)
For people in the private sector, the religious exception is all I've found. I don't qualify for it. And I don't want to become a state employee just to avoid Social Security. (Plus, I'd have to leave Oregon to do it.)
A Stroll Around the Blogosphere
Sometime over the past few months, my blog reading has declined. A side-effect is that recently I haven't had many links to other blogs, and haven't discussed articles I've read on other blogs. Let's take a stroll around the blogosphere and see what we find.
Micha is writing a speech about cannibalism, and in one of those gems that makes me almost wish I had comments on my blog, he got the following comment from "Chris":
In older taboo news, Steve Chapman argues cousins should be allowed to marry. I found it highly persuasive.
Speaking of marriage, Bryan is writing about marrying for money:
Aye, but what about the transaction costs?
George Reisman tells the truth about unions. Apropos nothing in particular, I think his theory of aggregate profit and his Aristotelian basis for national income accounting are extremely valuable.
If you're in the mood to snicker, Don catches Krugman complaining about a problem that Krugman would make worse.
North Korea is getting desperate. This is an opportunity. Thank you, Bush, for not giving in to two-party talks. Here's hoping the six-party talks can make progress now that North Korea knows there's no alternative to them.
And tonight's good-night story is from Fafnir, twisting a parable.
Rep. Wu at Social Security Town Hall Meeting
On July 7th I attended a town hall meeting organized by the Congressman from my district, Rep. David Wu (D-OR), on the topic of Social Security reform. This is the third event I've attended on this subject; the earlier ones were to see Treasury Secretary Snow and former Congressman Tim Penny (D-MN).
The meeting was at the Hillsboro Senior Center at 4:00pm. These logistics predictably packed the room with seniors. I had to leave work early in order to attend, and I was the only young person in the audience. I expected the crowd to be hostile to Social Security reform and supportive of Rep. Wu — I expect most of them, like me, learned about the meeting through his advertising — but I was surprised by the magnitude of both.
The meeting lasted 1 hour (and was refreshingly punctual at begin and end) and was primarily a Q&A session. Rep. Wu did not make a speech, but he did invite two speakers who were both brief. The first was an AARP volunteer whose name I didn't get written down. I believe his last name was Moore, but this may be incorrect. The second speaker, Jim Davis, was caught in traffic and arrived during the Q&A.
The first speaker (Moore?) opposed privatization on the grounds that it would "cut promised benefits", create a "mountain of debt", and "pass on the bill to future generations." He distributed AARP materials at the end and signed people up who wanted to be more involved. (Yes, I signed up. Know thy enemy and all that.)
In his short statement, he listed three essential criteria for Social Security reform: (1) Guaranteed benefits, (2) Fair to everyone, (3) Dignity and independence. (He and I have drastically different notions of fairness, dignity, and independence — I believe Social Security undercuts all three.)
The discussion questions and responses below are all paraphrased. I took three full pages of notes in the pursuit of accuracy, but can't write quickly enough to record quotes.
1) The questioner thanked Rep. Wu for not falling for the "phony crisis", then stated that we used to use the Social Security surplus to pay down the federal debt but now we're spending it on the Iraq rathole. Also asked how to get Senator Gordon (R-OR) to vote against Iraq spending.
Wu said that he personally (and therefore Gordon implicitly) genuinely listens to constituents. Make your wishes known — attend meetings, write letters, etc. He'll pay attention to community input.
Cap'n's take: The Social Security surplus merely allows the rest of the government to spend more than it otherwise could by reducing the amount of borrowing. It doesn't pay down the federal debt because the general fund is in deficit. Iraq isn't a rathole, it's the focal point in the war against terrorism. I would sooner cut Social Security payments than Iraq war funding.
2) The questioner asked her granddaughter (9 years old) what she would say if she was able to attend. The message from the granddaughter was that Bush was sending bills that she would have to pay back, and that Bush was giving money to the rich and taking it from the poor.
Wu said he appreciated the sentiment and stated that there are differences in opinions among different age groups. Of people in their 20s, 70+% believe Social Security won't be there when they retire — but the age-related differences in opinions have always existed, it's not recent.
Cap'n's take: I won't criticize a 9-year-old. But I will criticize her family for teaching her such crap. I thought Wu's segue was appropriate and that it would have been in poor taste to respond directly to the girl's thoughts. The information about the consistency of the age-related opinion differences was useful and I referenced it later when I eventually asked a question.
3) A question about the trust fund. Could the surplus be set aside so it couldn't be spent?
Wu responded that accountability is important and that privatization plans don't address solvency, and in fact they make it worse. They also expose individuals to market risk.
Cap'n's take: No, the surplus cannot be set aside as long as it remains in government hands. Money is fungible. The surplus has to be put somewhere. If it's treasury bills, the money becomes available for the general fund. Personal accounts, of course, put that money in the hands of individuals and are actually a form of "lockbox" that works. The fact that personal accounts are a "lockbox" is the reason that they would increase government borrowing, which reform opponents are quick to note as a reason to oppose personal accounts. Of course, this is trying to have it both ways — any effective lockbox must, by its nature, increase government borrowing because to be a lockbox means it has to make the Social Security surplus unavailable to the general fund!
4) This question was about the Social Security notch, a topic I don't know about and didn't care to take notes on.
5) Why aren't Democrats more forward about lifting the income cap and taxing unearned income?
Wu responded that that's not his plan, and that the "crisis" might not even come. If economic growth is better than the Trustees' conservative forecast, there would be no crisis.
Cap'n's take: I was extremely offended by the question. I do not want to pay more taxes, I pay enough taxes already. Raising the cap on income subject to Social Security tax would impact me personally; subjecting unearned income to Social Security tax would impact me personally. I am not a teat for others to suck on. Keep your hands out of my wallet! I would be especially upset if I had to pay extra taxes but my own Social Security benefits were not correspondingly increased. It's not fair to take more of my money and give me nothing in return. That's undignified, and the loss of those funds makes me less independent.
I'm happy Wu had a cold response to that question. He knows that his district, the so-called Silicon Forest, includes significant numbers of high-income individuals who would be affected by such tax increases.
6) This question was about the worth of the trust fund bonds. As asked it included a swipe about the Chinese government that I don't think is worthy of repetition.
Wu said that the trust fund bonds are worth something to the same extent that a dollar bill is. They're backed by the full faith and credit of the United States Government.
Cap'n's take: I wanted to snicker and I wanted to roll my eyes at the same time. Wu's response admitted that a dollar bill isn't itself worth anything, a point that advocates of the gold standard are fond of mentioning. In this sense the bonds are equivalent to dollars, worthless. But in another sense he's wrong. While a dollar bill can be exchanged for goods, these trust fund bonds are non-marketable. Because the government owes them to itself, they have exactly zero economic value. As I've explained before, the assets and liabilities cancel exactly and the trust fund bonds have no economic reality.
7) A statement (not a question) that people like me don't know how to invest in the stock market.
Wu said that Social Security should be the bedrock of retirement income, and using the famous stool analogy, the other two legs are pensions (whether defined benefit or defined contribution) and personal savings.
Cap'n's take: I took this as a very veiled suggestion that people ought to learn how to invest. And that, certainly, I agree with. Further, I'm irritated at the notion that because uneducated investors exist, I shouldn't be able to invest my Social Security contributions. No, no, no. People who aren't comfortable with investing can stay where they are, and people who are comfortable with investing should be able to do so. President Bush's angle on this matter is correct: give people the choice. One size does not fit all. Voluntarism is the way to go. (Of course I'd go much farther and make the entire Social Security program voluntary.)
At this point, Jim Davis had arrived and was ready to give his short speech. He called privatization a "very very dangerous proposal" and that we're not in a crisis. He said that the $90,000 payroll tax cap should be higher — and received wild applause. He said Bush is pushing privatization to benefit his buddies on Wall Street — and received wild applause. It wasn't until this point that I realized just how partisan the audience actually was. For a moment I physically felt unsafe; that the atmosphere in the room was an assault on my values. These people would enthusiastically steal from me and wouldn't feel at all guilty about it. The "buddies on Wall Street" portion was sickening, a clear example of emotional imputed-motive thinking. Of course Bush isn't pushing personal accounts because he honestly believes it's better for young people, he's doing it to benefit his "buddies on Wall Street"! Nevermind the fact that personal accounts are actually popular among the young. It's really all about Bush's anonymous buddies. What baseless rubbish. It's mind-boggling that people are taken in by that sort of thing.
Jim Davis is helping to organize a grassroots organization, "Oregonians United for the Preservation of Social Security". I will be keeping an eye on it.
8) A two-part statement (not a question). The government should quit taking money out of Social Security [basically #3 again], and we need leadership who knows what it's like not to be able to pay the electric bill.
Cap'n's take: Personal accounts would prevent the government from spending (that) money, and I don't think many destitute people have strong leadership skills. I'm repulsed by the idea that leaders need to "feel your pain" in order to help you. No, usually they emphatically should not, because I want decisions to be based on reason rather than on emotion.
9) What happened to the lockbox Al Gore was talking about?
Wu said that the lockbox idea has come up many times and has actually been passed, but then not respected. Wu advocates running the Social Security system closer to break-even all the time to minimize the magnitude of any surplus or deficit.
Cap'n's take: I wish he had been more specific about previous lockbox implementations and what happened to them. I believe the fungibility of money implies that there are no lockboxes except when the funds are used to purchase non-government assets. (And I strongly oppose the government owning private-sector investments. Personal accounts would be okay because they would be owned by individuals, but I have other gripes about them.)
10) Raising the income cap is a good way to fix Social Security's solvency. Why aren't Democrats pushing this more?
Davis responded to this, saying that he'd like to increase the cap gradually. Solvency will be paid for by those who can afford to make up the difference. He compared the Social Security shortfall with the Bush tax cuts as a way to say that the amount of money required is not that large.
Cap'n's take: This is the stereotypical soak-the-rich attitude. I feel insulted every time someone compares the shortfall with the tax cuts: Social Security has and has always had intentionally separate accounting from the rest of the government. The Bush tax cuts did not affect Social Security solvency and it is irresponsible to imply otherwise. The two are orthogonal. Under current law, even if (say) income taxes were doubled the Social Security shortfall would be unaffected. When the trust fund is exhausted, benefits must be cut. Even if the rest of the budget has a huge surplus! To pay for Social Security benefits out of the general fund instead of the trust fund would require a legislative change.
This is another example of trying to have it both ways. If you view Social Security funds as commingled with general funds, you must recognize the value of the trust fund as precisely $0, but you could argue that raising income taxes could fix solvency. On the other hand, if you view Social Security funds separately from the general funds, you could talk about the trust fund having value, but you must recognize that the shortfall must be fixed by adjusting Social Security taxes and benefits alone (in particular, you must hold harmless Bush's tax cuts.)
11) Greenspan wants to cut Social Security. He said the COLAs are too high. They're not.
Davis responded to this, simply saying that he agrees — the COLAs are not too high.
Cap'n's take: There's no such thing as a tax increase or benefit increase that's large enough to satisfy this man. My intuition is that he's a socialist, but I didn't hear enough to be able to know for sure.
12) There was a treaty signed in June allowing illegal Mexican immigrants to get Social Security benefits. What is congress planning to do about this? Why isn't it covered more in the media?
Wu said that he believed Congress voted down the treaty, so it's void.
13) Is a more optimistic rate of growth (2%, rather than the Trustees' 1.5%) possible?
Wu said that the country is underinvesting in research and development and that we need to increase the savings rate. The answer amounted to a qualified yes.
14) A question about the politics of Wu's district. Is Social Security a significant issue for your reelection?
Wu said he plans to do what he believes is right for the country, and he'll let the chips fall when it's time for reelection.
15) This was my question. As he called on me he said that I had been very patient. This is a close paraphrase of what I asked:
Wu said that he would be opposed to that. He's heard of some groups opting out but didn't know offhand how well they had done. [They've done well.] He said that Social Security has been successful in reducing the poverty rate among the elderly, and positioned the program as something that society has decided to do for everyone. You don't have an option on not paying your taxes.
Cap'n's take: I was surprised by the softness of his response. When I asked the Treasury Secretary about it, for example, he was curt and dismissive. Wu actually seemed to consider the idea, and I thought this was a very good sign. My crusade has been to raise the visibility of individual opt-out and to get politicians thinking about it. In this case I think I've succeeded, although I don't expect Wu to change his mind about opposing it. I think it helped that my question connected to something he had earlier brought up, and that asking about individual opt-out is orthogonal to the matter of personal accounts (so I couldn't be pigeonholed as a supporter or an opponent of Wu's).
As for his point that taxes are involuntary, that's exactly what I'm trying to change. I want Social Security to be a voluntary program, not a forced program. The facts that it has separate accounting and tracks benefits at the level of individuals actually help to make an individual opt-out implementable!
16) This question was about No Child Left Behind. I'm reporting on Social Security, so I'll skip this. (The town hall meeting was explicitly open to other topics, but most questions were about Social Security.)
17) A statement (not a question) that Social Security is the best insurance young couples can have. I believe this was a reference to survivor's benefits. Rhetorically asked if there was some way to get Bush to understand that fact.
Cap'n's take: It seems presumptuous to presume that Bush is unaware of, or doesn't value, survivor's benefits. In any case, I don't understand the supposed advantage over a life insurance policy.
18) This question was about pensions, so I'll skip it.
Wu gave short closing remarks, and addressed me in them. I was flattered. He said that he believes we (meaning government) can make the proper decisions regarding Social Security, although "I know that faith is not shared in certain circles" [smiling and pointing to me]. That's very accurate. I don't trust the government. I think it's a lot less risky to take care of my own retirement than to entrust the government with that task.
As people were leaving, I went over to the first speaker (the AARP volunteer) to ask him why the AARP was so involved in the Social Security issue, given that none of the proposals affect the system for those already retired. He said that AARP's concern is for children and grandchildren of retirees and that they want to make sure the Social Security system is still there for them. This is a fair answer, but I'm still uncomfortable with the AARP's prominent position in the debate. If it's really about children and grandchildren, shouldn't the opinions of those children and grandchildren be given priority over the opinions of current retirees?
I talked with three members of the audience on the way out. The first was hostile to me but then apologized after making a comment he regretted. It was an "if you don't like it, leave the country" type of comment. I wasn't offended by it, but he retracted it anyway. Mighty polite of him.
The second was a lady who said she agrees with me about the issue of political risk and has thought about what that in connection with her grandchildren. I didn't get the impression she liked individual opt-out, though.
The third was in the parking lot. I talked for a few minutes with a lady who turned out to be an Intel retiree and who was strongly opposed to tax increases and was upset with the soak-the-rich attitude among the audience. She was quiet at this town hall meeting, but said she had spoken a lot at a meeting several months ago.
Talking with these nice and polite people cured my earlier sour attitude about the audience. Yes, there were a lot of people there who saw me as a mere piggy bank. But there were also people there who were keeping a low profile and were sympathetic to the young.
Cap'n Inducted Into Poofy Hair Objectivist Society
I'm back from vacation. Among my many fun activities that would make you very very jealous if I told you about them, I was inducted into the ultra-secretive Poofy Hair Objectivist Society. Following in the august styling of such luminaries as Leonard Peikoff and David Kelley, I sported poofy hair one morning.
The initiation process consisted of kidnapping, disorientation, a blindfolded interrogation under a bright light ("it's rational!"), and the recitation of the Oath of the Order of the Poofy Sect (OOPS): "I swear, by my life and my love of it, that I will never see my hairstylist, nor ask another man to see his."
Curiously, Ayn Rand herself had decidely un-poofy hair. Poofy-haired objectivists do not discuss this.
I have learned of a heretical breakaway ideological group that does discuss this, and claims that the OOPS is actually a misquotation and that the whole poofy hair thing is all a big misunderstanding. I find the conflict frightening and am trying to avoid taking a position on the matter so I don't alienate any of my friends.
Happily, the incident appears to have caused no permanent psychological damage to my photographer. But it's pretty hard to tell.