Greg Mankiw is a hack!
From Brad DeLong's Semi-Daily Journal note is taken of Greg Mankiw's article in The New Republic, advocating for Bush's Social Security phase-out.
Professor Mankiw, late of Bush's Council of Economic Advisers and a professor at Harvard, is also the author of one of the most popular introductory college texts on Economics (a successor among textbooks to the redoubtable Paul Samuelson's classic, among others).
Mankiw is a lying hack of an economist, which is another way of saying that he is a conservative. He subtitles his TNR piece, "Why Democrats Oppose Bush." Rather than trying to advocate for Bush's horrific plan in a straightforward way, which is to say, to disclose to the readers of the TNR why right-wing Republicans favor Bush's effort to phase-out Social Security, he instead chooses to engage in snarky mind-reading.
What pisses me off about this, is that I think he betrays his professional duty as a economics professor, to teach authoritatively and honestly. Economics, as a body of knowledge, has clearly established some pretty good rationales for why insurance (and risk-mitigation, generally) is economically valuable, and why the market provision of insurance often fails systematically, in ways, which government can overcome by, for example, making insurance compulsory. I will not go into the details, but I will claim that such details are NOT controversial as a matter of professional/scientific knowledge. You can find them in any decent textbook.
Social Security is a classic example of government-mandated insurance. Everyone (almost) pays into the system, and everyone is covered. Bush wants to convert this insurance program into a investment savings plan. Bush's main argument appears to be that as an investment savings plan, Social Security pretty much sucks, which is true. But, as an insurance scheme, Bush's investment savings plan also pretty much sucks. Insurance and savings are not the same thing. The closest private sector analogue to Social Security would be whole life insurance, where you pay premiums for x number of years, and if you die before the policy "matures" your heirs get a guaranteed payout, but if you last until the policy "matures", you get some payout. As an investment vehicle, whole-life policies suck, but, unlike savings or stock market investments, it pays quite well in the event of your premature death or dismemberment. Social Security sucks as an investment vehicle for some of the same reasons.
Bush wants to phase-out Social Security because such a phase-out will transfer considerable wealth and income from poor and middle-class folks to rich people. His plan would, generally, be a moderately good deal for people with high incomes and/or considerable personal wealth. His plan would, generally, be a very bad deal for people with less than the average income (in other words, for the majority of people -- if you need me to explain how it is that the majority of people have less than average income, you are too dumb to vote.)
Mankiw could write an article explaining why Bush wants to phase-out Social Security. That is, he could write an article explaining that both he and Bush think rich people should be made considerably richer at the expense of poor and middle-class losers. He cannot write this in a straightforward way, of course, because, if he did, such honesty would attract attention even in a journal of minimal circulation like TNR, and Bush's plan to phase-out Social Security would sink like an anvil.
So, instead of writing about why Republicans, like himself, favor this horrific plan -- something he is in a position to know something about -- he chooses to write about something, which requires mind-reading abilities, which are clearly beyond his psychic powers, i.e. why Democrats oppose it. His mind-reading, unsurprisingly, is not flattering to Democrats.
As an economist, Mankiw, of course, knows perfectly well that Social Security, as an insurance scheme, has a perfectly fine rationale, blessed, in general, by the mainstream economics, which it is his day job to teach and write. After listing two "reasons" Democrats oppose Bush, which "reasons" are simply gratuitous insults, he gets to the insurance thing. This is how he chooses to put it:
"The third reason for the left's opposition to personal accounts is... Democrats are more averse to an economic system in which people play a larger role in taking care of themselves...."
Isn't that sweet? Under Bush's plan, a fairly large number of people would be made destitute in their old age. But, what Democrats are averse to is not the certain prospect of a larger number of destitute old people, but that people might take a larger role in taking care of themselves.
Professor Mankiw, late of Bush's Council of Economic Advisers and a professor at Harvard, is also the author of one of the most popular introductory college texts on Economics (a successor among textbooks to the redoubtable Paul Samuelson's classic, among others).
Mankiw is a lying hack of an economist, which is another way of saying that he is a conservative. He subtitles his TNR piece, "Why Democrats Oppose Bush." Rather than trying to advocate for Bush's horrific plan in a straightforward way, which is to say, to disclose to the readers of the TNR why right-wing Republicans favor Bush's effort to phase-out Social Security, he instead chooses to engage in snarky mind-reading.
What pisses me off about this, is that I think he betrays his professional duty as a economics professor, to teach authoritatively and honestly. Economics, as a body of knowledge, has clearly established some pretty good rationales for why insurance (and risk-mitigation, generally) is economically valuable, and why the market provision of insurance often fails systematically, in ways, which government can overcome by, for example, making insurance compulsory. I will not go into the details, but I will claim that such details are NOT controversial as a matter of professional/scientific knowledge. You can find them in any decent textbook.
Social Security is a classic example of government-mandated insurance. Everyone (almost) pays into the system, and everyone is covered. Bush wants to convert this insurance program into a investment savings plan. Bush's main argument appears to be that as an investment savings plan, Social Security pretty much sucks, which is true. But, as an insurance scheme, Bush's investment savings plan also pretty much sucks. Insurance and savings are not the same thing. The closest private sector analogue to Social Security would be whole life insurance, where you pay premiums for x number of years, and if you die before the policy "matures" your heirs get a guaranteed payout, but if you last until the policy "matures", you get some payout. As an investment vehicle, whole-life policies suck, but, unlike savings or stock market investments, it pays quite well in the event of your premature death or dismemberment. Social Security sucks as an investment vehicle for some of the same reasons.
Bush wants to phase-out Social Security because such a phase-out will transfer considerable wealth and income from poor and middle-class folks to rich people. His plan would, generally, be a moderately good deal for people with high incomes and/or considerable personal wealth. His plan would, generally, be a very bad deal for people with less than the average income (in other words, for the majority of people -- if you need me to explain how it is that the majority of people have less than average income, you are too dumb to vote.)
Mankiw could write an article explaining why Bush wants to phase-out Social Security. That is, he could write an article explaining that both he and Bush think rich people should be made considerably richer at the expense of poor and middle-class losers. He cannot write this in a straightforward way, of course, because, if he did, such honesty would attract attention even in a journal of minimal circulation like TNR, and Bush's plan to phase-out Social Security would sink like an anvil.
So, instead of writing about why Republicans, like himself, favor this horrific plan -- something he is in a position to know something about -- he chooses to write about something, which requires mind-reading abilities, which are clearly beyond his psychic powers, i.e. why Democrats oppose it. His mind-reading, unsurprisingly, is not flattering to Democrats.
As an economist, Mankiw, of course, knows perfectly well that Social Security, as an insurance scheme, has a perfectly fine rationale, blessed, in general, by the mainstream economics, which it is his day job to teach and write. After listing two "reasons" Democrats oppose Bush, which "reasons" are simply gratuitous insults, he gets to the insurance thing. This is how he chooses to put it:
"The third reason for the left's opposition to personal accounts is... Democrats are more averse to an economic system in which people play a larger role in taking care of themselves...."
Isn't that sweet? Under Bush's plan, a fairly large number of people would be made destitute in their old age. But, what Democrats are averse to is not the certain prospect of a larger number of destitute old people, but that people might take a larger role in taking care of themselves.
posted by Bruce Wilder at 6:32 PM
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