TheAgitator.com
Iglesias
Wednesday, October 20th, 2004Matthew Yglesias lobs a grenade Cato-way. He fakes with a faux invitation to a legitimate debate over what the limited government approach to Social Security ought to be:
The answer, then, is means-testing. I don’t know that I think that’s such a great idea, but it’s not a terrible idea (I could live with it), and it seems clear to me that that’s the correct small government answer. But instead, libertarians tend to favor so-called “privatization” measures that would entail a short-term tax increase and the long-term imposition of a program of forced, regulated savings on workers. It doesn’t sound like a very pro-freedom idea.
It would be great if Matt actually wanted to have that discussion. He doesn’t. Instead, he’d rather cast baseless apsersions on Cato’s motivation:
What’s going on here? Someone could probably give you a high-minded answer, but the vulgar Marxist answer is that privatization would be very good for the bottom line at certain financial services companies and those companies have essentially paid off the Cato Institute and other institutions to argue in favor of privatization rather than cutting expenditures by means-testing, a switch from wage-indexing to price-indexing, or some combination of the two.
Matt knows quite a few Catoites, past and present. If he’d have inquired just a little, he’d have found that Cato first advocated private accounts as a dinky, fledgling San Francisco outfit — in 1979. Now I suppose it’s possible that Big Finance came to Ed Crane in the 1970’s and promised huge donations in the 1990s if only he’d found a think tank, move it to Washington, establish said think tank as a player in the public policy debate, adopt the industry’s favored position on Social Security in the event that privatization ever became an issue, then pushed hard should a president amenable to the idea every take office. But I’d say that would take a pretty unreasonable suspension of disbelief.
A couple of years ago, the New America Foundation’s Steve Clemons — who I guess fancies himself as something of think tank whistleblower — levied a similiar charge at Cato, and did about as much actual fact-checking as Yglesias did.
I’d have less problem with the likes of Yglesias and Clemons calling me a whore if it were actually true. I could then at least chuckle to myself about my whoredom as I’m picking my dog’s bowel movements off the grass with $100 bills.
But it just isn’t.
In truth, left-leaning think tanks and advocacy groups get a hell of a lot more money from corporations than market-friendly advocates do. But for some reason, it’s always market-friendly organizations who get their motives questioned. Cato gets it from both sides: from leftists because of our positions on regulation, Social Security, and tax policy; and from conservatives because of our position on immigration.
Problem is, though corporate foundations love to give to leftist groups who’d just as soon the source of their funding didn’t exist, coporate policy people tend to be stingy with the checkbook when organizations like Cato — get this — stick with their principles on issues unfriendly to corporations. Like cutting business off from the public teat, for example, or calling attention to bald attempts at regulatory capture.
For the record, less than 20% of Cato’s typical annual budget comes from corporations and foundations combined. It’s usually quite a bit less than 20%. Cato also eschews major endowments in order to retain its independence.
I realize that this was probably just a throw-away post Matt composed between his more lengthy, thoughtful endorsements of slavery. But that’s sorta’ the point. The ability of a think tank to get its ideas taken seriously is pretty directly related to perceptions of its idependence and its integrity. If you’re going to cast doubt on either of those things, you should at least have some inkling of what the hell you’re talking about. Yglesias doesn’t.
Cato’s annual report lists its major corporate and foundation donors, as well as its budget, broken down by individual, corporate, and foundation donations.
If Matt wants a copy, I’d be happy to send him one.
This post of course represents my own opinion, and not necessarily the opinion of Cato or anyone who works for Cato.
The slavery entry was worse.
“…taxation is forever — always there, nipping and tugging at your life plan — while a little drafting comes, hijacks your plans, and then lets you go.”
He’s right that taxation is forever, always nipping and tugging at your life plan. But does this justify another type of slavery? Of course not.
Matthew should try to tell that whole “a little drafting comes, hijacks your plans, and then lets you go” diatribe to all the poor souls whose names reside on a certain wall in Washington DC.
Hm, that’s funny, Matt. That “little draft” that you spoke of, it never really “let go” of all those people, did it? No, because of that “little draft”, they’re DEAD. I’ve never heard someone speak this nonchalantly before about the wholesale sacrifice of the lives of our citizens at the hands of the state. Never. And he should be ashamed.
You didn’t respond to the substance of his and Cowen’s recommendation.
I’ll respond to it.
Means-testing of the kind we’re talking about (scrapping benefits entirely for people with incomes over something like $200,000) won’t solve the problems. The system would still be a pay-as-you-go entitlement program that would always be extraordinarily sensitive to demographic changes of the kind we’re about to undergo. PAYGO rules may work fine for annual appropriations, but they don’t work for long-term benefit promises–there’s no ompetus on Congress today to fund promises that won’t come due for another 20 years or more.
Secondly, the amount of money “saved” though means-testing would be but a drop in the bucket of what’s needed to cover the unfunded liabilities, unless the limits on income for eligibility were lowered to a politically infeasible level.
Thirdly, say we did means-test: that’s effectively putting everyone who remains eligible for benefits on welfare. It becomes a massive government transfer program–good luck selling that to retirees who have worked their whole lives only to retire and find themselves a burden on society: “Thanks for the 45 years of hard work! Since we taxed you up the wazoo your whole life, you surely can’t afford to retire comfortably now, so us rich folks got together and decided to give you this welfare check!” Surely some people might not mind, but there are a lot of hardworking Americans who DON’T want to the beneficiaries of government largesse in their old age, myself among them. (And given my current career trajectory, I’d almost certainly be elegible for benefits.)
So if the choices as Cowen sets them up are forced saving where everyone saves for themselves (private accounts) or turning Social Security into a government redistribution program (means-testing), I choose everyone saving for themselves. Cowen wants to junk the forced saving and just turn it into welfare for the elderly–but won’t we have to pay the poor elderly less in their retirement if we force them to save and invest now?
What we really need to do is change how beneifts are calculated–currently, scheduled benefit increases are tied to wages, not prices. Since economy-wide wages rise faster than prices, benefit increases tied to wages grow much faster than is necessary. That combined with private accounts (which would lessen the amount necessary to take care of the legitimate “safety net” cases) just makes more sense.
I do find it unsettling how much disinformation remains on this issue. The proud and willful ignorance of the commenters on Yglesias is astounding; they keep repeating that SS is NOT a Ponzi scheme–how else do you describe a system where the current payees pay the benefits of the former payees? Oh, right, it’s a generational contract. That’s some clever f*ing marketing. It’s like they haven’t heard the news that there are more tie-dyed baby-boomers frothing at the mouths for their benefits than there are workers to pay for them.
impetus, obviously, not ompetous.
Most of the Yglesias comments seemed quite comfortable looking at SS as a Welfare program, and thus their willingness to tax the sh*t out of everybody into order to support the poor, feeble elderly. Fortunately, most of Americans still seem to believe that SS is a savings program. Of course it isn’t, but the fact that they believe that will make it harder for the socialists to remarket it as a welfare program.
Nice takedown Brooke.