Cheney on fiscal policy

I can't help but feel like I'm picking on an easy target, but Dick Cheney's view of fiscal policy in a recent PBS interview just makes me shake my head in sadness. The challenge posed by entitlements spending is real, but it was as real in 2000 as it is today. Demographic trends have been known at least since the Social Security reform of the 1980s.

What a disingenuous thing to call for austerity now, after eight years of utter fiscal profligacy under the supervision of Bush and Cheney. Planning for population aging should have been the strategy all along, Mr. Cheney, you utter political hack.

Now let me apologize for dog-piling. I hope that when I'm in my twilight people are more forgiving of the ridiculous things I may say.

Cassidy looks at income trends

The New Yorker's John Cassidy discusses long-term trends in earnings and income in an interesting blog post. Cassidy is right that trends in the statistics on median earnings and income are alarming, but there are a few more nuanced parts of the story that seem to be missing from this short piece. But perhaps they're in his larger work. 

Average earnings and income have been increasing rather steadily. That there's a difference between trends in the median and in the average speaks to rising earnings and income inequality. Clearly a reason not to be optimistic for those in the left tail if they're stuck there, but a little more nuanced than pessimism-for-all.

 Second, if one looks at total compensation or unit labor costs, one also sees a different picture, and it's because of the rapid rise in benefits, namely subsidies for health insurance premia. Trends in the average are strongly upward, and I imagine the same would hold true for the median, which I don't think the BLS or Census publishes (these are establishment, not survey data). Rapidly rising health care costs are painful, and we pay more than do those in other countries for what we get out of it, but let's not forget that Americans also living longer on average than earlier generations. (And yes, there is an inequality story here too.)

 Finally, let's not forget that the story for women has been starkly different, whether measured by mean or median earnings. Surely the increase in female earnings, while perhaps not always directly good for men in some hyper-selfish version of the world with no partnerships, is an optimistic rather than pessimistic trend.

Go Doug!

Yesterday NPR reported on some Congressional testimony by CBO director Doug Elmendorf. He laid out the cold, hard facts about fiscal sustainability sprinkled with some common sense about when during the business cycle to tighten, when to loosen, and how to plan ahead. Speaking clearly and firmly about economic policy in a diverse setting is a great skill.

Room-for-debate on lowering college tuition

The Times offers twelve viewpoints on reducing college tuition, specifically in response to Gov. Rick Perry's call for a $10,000 college degree. There is quite a diversity of perspectives, and there are a bunch of interesting ideas, many of which seem focused on squeezing more output (student-taught-hours) from faculty. But the prize goes to the president emeritus of GWU, who offers these gems (emphasis mine):

"We can reinvent what we call the college experience. Will it be the same? No it won’t. Will it be better or worse? Yes it will. I hope the governor does not have plans for a $10,000 medical degree."

That last nugget sums it up well! Presumably reductions in marginal cost will reflect reductions in marginal benefits and outcomes, unless we're talking about greater taxpayer subsidies.

Reinhardt on growth statistics

Princeton health economist Uwe Reinhardt discusses growth and inequality in the Times, and cites a nice article in J Econ Lit by Atkinson, Piketty, and Saez that reveals, among other things, what happens to cross-country patterns in average income statistics if you remove the top 1 percent.

Survivorship probabilities

Is that low or high? Some time ago, a family friend attended a 50th high school reunion and remarked to me that a little over 100 or 10% of the graduating class of 1,000 had passed away. In formal demography terms, that's a survivorship probability ratio for that cohort of ℓ(72) /ℓ(22) = 1 - 0.1 = 0.9 or so. What do you think, low or high?

Being well versed in dissembling, I said I thought that sounded about right. I think the family friend thought it was too low, that the Grim Reaper had claimed more than the usual number of victims in this cohort.

There are a number of elements that certainly matter here: the sex ratio, the racial and ethnic composition, and so on, all the covariates that we know affect mortality and tend to vary across geographic regions.

But a broad look can be retrieved from cohort life tables published by Social Security. There, these survivorship ratios for the 1940 and 1950 male and female birth cohorts are 0.73 (1940 men) and 0.83 (1940 women), and 0.76 (1950 men) and 0.84 (1950 women).

So the survivorship ratio was pretty high for that birth cohort. Part of it is surely the protective effect of the high school degree, but one can also infer something about the socioeconomic status and racial/ethnic composition of this cohort.

Those fancy macroeconomists!

For a fun read with insight into the challenges confronting policymakers (and the economics profession), here's the latest from the WSJ's Stephen Moore. My favorite part was the pseudo Cain and Abel story about his lazy and hardworking sons!