Williamson on Social Insecurity

Another book with a chapter (4: Social Insecurity) on the public pension crisis and my highlights:

The fundamental political problem is politics itself: not liberal politics, not conservative politics, not politics corrupted by big money or distorted by special-interest groups, but politics per se – the practice of delivering critical goods and services through the medium of federal, state, and local governments and their obsolete decision-making practices.  p. 7

Political rhetoric aside, politics as an institution fails first and foremost because it cannot manage the complex processes of modern life, because doing so would require politicians to be able to gather and process amounts of information so vast that they are literally incalculable.  Second, politics fails because people do not cease to be self-interested economic actors once elected to political office or hired by a government agency; the profit-maximizing forces that operate in the marketplace operate in politics, too, whether “profit” is measured in conventional economic terms or in power, prestige, or some other commodity.  p. 11-12

The cost of their corporate immortality is not only the waste associate with maintaining them, but the fact that their continued existence prevents the emergence of superior alternatives.  p. 17

To put it simply, being wrong in politics doesn’t hurt enough.  There is a price to pay for being wrong in politics, but the effects are widely dispersed and time-delayed.  And the pain of being wrong in politics is likely to fall on somebody other than the politician. p. 33

As James Bovard notes, “Elections are vastly overrated as a means for restraining government abuses.” p. 34

IN the broadest terms, a politician is better off supporting an imprudent but popular policy over one that is prudent but unpopular, thus, for example, the persistence of unhealthy fiscal deficits in the United States under presidents and Congresses of both parties.  Politicians have strong incentives to spend, strong incentives not to raise taxes, and (for now) the ability to use deficit financing to disconnect the pleasures of appropriation from the pains of expropriation. p. 35

Politics consistently refuses to recognize the exceedingly narrow boundaries within which political organizations may maneuver effectively, and politicians instead consistently seek to extend their influence into realms in which they have no competence or the capability of acquiring competence. p. 36

Politics is the art of obtaining and using the power of government.  To put it another way, politics is the art of applied violence. p. 44

As with the other major entitlement programs, the real question facing us in not “How do we go about paying these benefits?” but “How do we go about not paying these benefits?” p. 93-4

the question of how we go about not paying our bills will be, barring some unforeseen catastrophe or miracle, the single most important fact of economic life for the next generation. p. 94

But it is worth meditating upon the fact that even as a purely theoretical option, simply seizing all of the money in existence in the United States would not allow the government to pay off its debt.  It would have to seize property – which is, after all, pretty much what politics is all about.  That property inevitably would be seized from whomever it is politically more convenient to pillage, and transferred to those whom it is most important to politicians to pay, meaning major bond investors and the financial institutions that have the power to shut politicians out of the financial markets – which is the thing politics fears most: Politics is no fun at all on a pay-as-you-go basis.  The charade that is fundamental to the political game – pretending that politicians have wealth that they can give away to favored constituencies rather than wealth that they can expropriate from one group of people for the enjoyment of others – does not work especially well if politicians cannot borrow money. p. 95

budget analysts predict that within the next decade pension costs alone could exceed all tax revenues in more than half of the states. p. 97

The worst-off cities already have savaged current services to pay for past consumption, with many of them paying more money to retired police, firefighters, and teachers.  p. 98

We could raise the income tax on those earning in excess of $250,000 a year to 100 percent and still find ourselves far short of being able to pay those bills.  It simply is not going to happen: Reality is not optional. p. 101

Washington, then will be faced with a choice of which howling mob it wants to face: recipients of Social Security and Medicare benefits or the world bond market.  One of these groups has the power to cut the federal government off from global credit markets, and one does not: Don’t bet on grandma.  p. 102

State and local governments probably will default on some of their pension obligations, if only because the alternative is closing their schools and police departments.  p. 103

You can give retirees X dollars in health-care benefits, but that is not the same as giving them health care.  p. 110

characterized by the economic dysfunction i9nherent in all politically managed systems. p. 114

Pretty much everyone in the health-care world – other than the patient – has an interest in keeping prices opaque. p. 125

It is important to understand that there is a critical difference between the government provision of goods and services and government funding of goods and services – the former is socialism, with all the ineffectiveness and misallocation of resources that entails, while the latter is the problematic but greatly preferable social welfare model.  Consider the difference between social welfare as it is applied to food and socialism as it is applied to education: We have food stamps for the poor; we do not have government -owned farms, distribution networks, warehouses, and grocery stores.  But we do have government-owned and government-operated schools.  Voucher advocates sometimes joke that what they want are not food stamps but “school stamps,” and note that the food stamp program, for all of its shortcomings, has a good track record of getting its job done for the poor while not introducing massive disruptions and distortions into the agricultural or retail grocery markets.  Vouchers are a key reform not only because they allow students to attend private schools, but because they shift the locus of control in the allocation of education funds from the State acting in loco parentis – or, in the case of children, to the consumers’ parents acting in loco emptori. p. 155-6

Academically indefensible practices such as the four-year journalism degree or the four-year business administration degree probably would disappear, being partly replaced by internships and specialized workplace training. p. 161

(Also, maybe you didn’t want a cell phone at all, but we now have a national cfell phone mandate – it worked for the insurance guys!) p. 200

The right to say no is what political theorists call the right of Exit.  An Exit-based system simply means that nobody can be coerced into any arrangement with anybody else.  We would never accept somebody’s ordering us around on something relatively trivial, like what kind of shampoo to buy, much less on something very important, like whom to marry.  We insist on a right of Exit in all those relationships.  Why do we accept that a small panel of mediocrities, mostly lawyers, in Washington can tell us what we have to do when it comes to so many things? p. 202

One response to this post.

  1. Again, those ‘imaginary’ numbers too big for our NFL crowd size minds


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