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Archive for October, 2010

More Kling on Social Security

Posted by Eliot Weinstein on October 24, 2010

Last month, I highlighted the comments of economist Arnold Kling regarding the Social Security (and Medicare) trust fund. I recently finished reading Kling’s book Unchecked and Unbalanced: How the Discrepancy Between Knowledge and Power Caused the Financial Crisis and Threatens Democracy. Chapter 1 of that book contains the best discussion of the causes of the financial crisis that I have read, and I highly recommend it, even though I do not endorse all of Kling’s diagnosis of or prescription for what is wrong with American democracy. Today, I am more interested in his comments on Social Security, which appear on pages 99-100 of the hardcover edition of Unchecked and Unbalanced.

Social Security does not incur investment risk. That is because Social Security taxes are not invested at all. They are paid to beneficiaries. Until this point, taxes have exceeded benefits, and excess revenues have been spent on other government programs. This excess spending is tracked in an account called the Social Security Trust Fund, which can  be thought of as a collection of IOUs from the rest of the Federal government to Social Security recipients.

Within a few years, Social Security benefits will start to exceed tax revenues, and the government will have to make good on its IOUs. Later this century, depending on how demographic and productivity trends play out, the Trust Fund will be exhausted, and the government will have to raise additional taxes to pay for Social Security benefits.

I would go so far as to say that thinking about Social Security with the image of money (or bonds) in a trust fund somewhere is downright pernicious. There isn’t any money stored away to pay for Social Security–just a promise by the government to repay the money it “borrowed” from Social Security excess revenues and in fact spent on other things. As I wrote in my previous post on this subject, Thomas Sowell once said that no one can borrow and save the same money simultaneously. To the extent that the Social Security Trust fund exists, it is a promise by the government (specifically Congress) to take money out of general revenues and spend it on Social Security benefits when the time comes that–as Kling described–benefits start to exceed revenues. I will conclude by stating what many others have written, namely that if you’re in your twenties or younger, don’t expect the government to keep its Social Security promise to you. One or both of the following will be the experience of my generation: 1) substantially higher taxes during our peak earning years as we (via the government) pay for the retirement and health care of our Baby Boomer parents, and 2) drastically reduced benefits from government programs like Social Security and Medicare when we’re old enough to receive those benefits.

ADDENDUM: Gregg Easterbrook lays out the facts on Social Security here. Also, in the October 2010 issue of The Atlantic, Michael Kinsley argues that the Baby Boomers should redeem themselves by turning down the Social Security largess about the be lavished on them and by helping to pay the way out of our nation’s fiscal hole.

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Leigh Van Valen (1935-2010)

Posted by Eliot Weinstein on October 21, 2010

Leigh Van Valen, professor emeritus of Ecology and Evolution at the University of Chicago, died last Saturday, October 16. An internationally renowned evolutionary biologist, Van Valen was the originator of the “Red Queen hypothesis” and a founder of the field of paleobiology.

From the official University of Chicago press release:

In his most famous paper, “A New Evolutionary Law,” published in 1973, he introduced novel observations and a radical interpretation that together continue to shape the field. The first, which he labeled the law of constant extinction—often called Van Valen’s Law—states that the probability of extinction for species and larger evolutionary groups bears no relation to how long it may have already existed. The fossil record, he argued, shows that lineages become neither more extinction-resistant nor more vulnerable over time.

To explain this surprising pattern, he proposed the Red Queen hypothesis, a model of co-evolutionary interaction, and one of the most enduring metaphors in modern biology. It holds that the struggle for existence never eases up, so that no species or lineage ever pulls ahead for long. Instead there is a constant arms race among species or larger groups, such as a community of competing lineages or parasites and their hosts. In a world with a fixed amount of energy, each must continually develop new adaptations, weapons or defenses to keep up with the other, a prolonged sequence of mutational one-upmanship.

Also:

Considered unconventional even by eccentrics, Van Valen had a wide range of interests, spanning the history of all life forms. “I don’t work linearly,” he explained in a note to his department chair. “I am a generalist and tend to open new approaches more than fill them in. What I work on changes irregularly and unpredictably with the progress of theory and knowledge.”

“Leigh Van Valen was an unbelievably broad thinker, uniquely so,” recalled his colleague David Jablonski, the William Kenan Jr. Professor in Geophysical Sciences. “The breadth of his work was staggering. He was interested in big questions—in everything, actually—but especially in topics like how diversity came about, how it changed over time.”

The picture that emerges of Van Valen is that of a divergent, even radical, thinker. Although capable of specific, technical, and highly theoretical research, he had the soul of a generalist, as evidenced by the wide range of interests he possessed (not to mention his own statements, seen above). As his colleagues and former students attest, he was a unique scientist, and he stood out even at a university that is known for having more than its share of offbeat and eccentric professors.

Van Valen’s work, as transmitted through his greatest popularizer–British science journalist Matt Ridley, was hugely influential on my own worldview and my scientific ethos. I read Ridley’s book The Red Queen: Sex and the Evolution of Human Nature my junior year in high school. I was enthralled by Ridley’s account of the development of modern evolutionary biology, and fascinated by the exciting yet painstaking research of Ridley’s protagonists, including W.D. Hamilton, John Maynard Smith, Donald Symons, and Leigh Van Valen. Even more than was already the case, scientists became my heroes, and professors became the men (like Albert Einstein and Stephen Hawking) and women (like Rosalind Franklin and Jane Goodall) that I esteemed. Although I soon decided that I found history far more interesting than biology (and would later decide that I found economics even more interesting than history, as my favorite parts of history tended to be economic history), I remained committed to the idea that I would dedicate my own life to scholarly inquiry. Thus, I owe the direction of my academic career to my reading of Ridley’s The Red Queen, and that book truly would not have existed but for the contributions of Leigh Van Valen.

Bryan Caplan has written (on more than one occasion) that he misses Julian Simon, even though he never met Simon. Well, I can say the same thing about Leigh Van Valen. Even though I (probably) never met you, I will miss you, Professor Van Valen!

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