The Interocitor

Fisking the NY Times Newsitorial on Social Security

The New York Times' opening shot against Social Security privatization is out. Masquerading as a news article, the front-page editorial paints Chile's fairly successful privatization in the worst possible light.

Nearly 25 years ago, Chile embarked on a sweeping experiment that has since been emulated, in one way or another, in a score of other countries. Rather than finance pensions through a system to which workers, employers and the government all contributed, millions of people began to pay 10 percent of their salaries to private investment accounts that they controlled.

If only Bush's plan was as bold. But lets see how bad this can be made to look:

But now that the first generation of workers to depend on the new system is beginning to retire, Chileans are finding that it is falling far short of what was originally advertised under the authoritarian government of Gen. Augusto Pinochet.

And here, many Times readers will stop. The boogeyman was behind it, so it must be a horror for all concerned. An odd form of ad hominem attack.

For all the program's success in economic terms,

Huh? Weren't we just saying the opposite? In what terms should an economic program be measured?

the government continues to direct billions of dollars to a safety net for those whose contributions were not large enough to ensure even a minimum pension approaching $140 a month.

As does Social Security through SSI. We even pay it to people who've never worked, including recently naturalized elderly immigrants who have never paid any taxes.

Many others - because they earned much of their income in the underground economy, are self-employed, or work only seasonally - remain outside the system altogether.

SSI again. No pension system of any kind pays out to people who never participated.

Combined, those groups constitute roughly half the Chilean labor force. Only half of workers are captured by the system.

And the old system captured how many? We're not told.

Even many middle-class workers who contributed regularly are finding that their private accounts - burdened with hidden fees that may have soaked up as much as a third of their original investment

Over 25 years, one third of the original contributions -- not account balance -- are eaten up in fees. Assuming a constant deposit and interest at 10% [see below], this would amount to an annual fee of 0.4% over 25 years, with the total account value being about 4 times contributions, rather than slightly more. Hardly gouging, even for those Pinochet bastards.

- are failing to deliver as much in benefits as they would have received if they had stayed in the old system.

Really? Can we find the worst possbile case? Yes, of course we can:

Dagoberto Sáez, for example, is a 66-year-old laboratory technician here who plans, because of a recent heart attack, to retire in March.

Note that he entered the new system at the age of 41. There was a buyout for people who contributed under the old system, but we don't know what he did with it.

He earns just under $950 a month; his pension fund has told him that his nearly 24 years of contributions will finance a 20-year annuity paying only $315 a month.

Hmmm ... Multiplying by 5 for a typical US worker, the numbers are pretty much the same in the current system. The maximum US payout is something like $1700 a month for a couple, which is pretty much at the US poverty line.

"Colleagues and friends with the same pay grade who stayed in the old system, people who work right alongside me," he said, "are retiring with pensions of almost $700 a month - good until they die.

Good god, no wonder they reformed it! For a US worker making $5000 a month at retirement (typically a high-paying year), this would amount to a payment of $3700 a month, which would bankrupt our system next week, not in 2042.

I have a salary that allows me to live with dignity, and all of a sudden I am going to be plunged into poverty, all because I made the mistake of believing the promises they made to us back in 1981."

Clearly he spent the buyout, or never contributed under the old system before he was 41. Assuming US life expectancy and a fixed $315 payout at age 66, a lump sum annuity would cost $48,000, which isn't a whole lot of savings over 25 years. Assuming Chile's historic 25-year program interest of 10%, less fees, this would be an average contribution of $40/month, given a zero initial value. The $315 payout seems pretty generous for this investment. Certainly he wasn't putting in the $95/month the article implies.

Note that this particular scare story also ignores features of Bush's plan, where a worker who moves to the new system at age 41 retains significant interest in the old system of payouts. This is comparing oranges to rotten apples. Now let's move past the "jump":

The problems have emerged despite what all here agree is the main strength of the privatized system: an average 10 percent annual return on investments. Those results have been achieved by the pension funds largely through the purchase of stocks and corporate and government bonds - investments that helped fuel an economic expansion giving Chile the highest growth rate in Latin America over the last 20 years.

Hmmm. Again, it's not a failure, it's a wild success. But why is this lede so deeply buried in horror stories? But back to the horror:

Among the complaints most often heard here is that contributors are forced to pay exorbitant commissions to the pension funds. Exactly how much goes to such fees is a subject of debate, but a recent World Bank study calculated that a quarter to a third of all contributions paid by a person retiring in 2000 would have gone to pay such charges.

Assuming that the World Bank is right, over 25 years, this is a fee of about half a percent. And certainly not the many percent the article implies. It's not at all a hard calculation actually, although you have to make assumptions about the deposit ramp. What's missing is the assocated fact that the account would grow to about 4 times contributions instead of 4 1/3rd.

Proponents of the privatized system argue that those costs will diminish in coming years, as those still receiving benefits from the old system gradually die off.

D'oh! And more importantly, younger workers will have paid in over more years. Running the calculations over a 45-year time frame gives an ending balance of about 15 times contributions.

But critics disagree, pointing to the large numbers of younger Chileans in the work force who either do not participate or whose contributions will fall short of the amount required for a minimum pension.

Again with the people who never pay in. Social Security doesn't pay them anything either. The welfare SSI program pays them a bit, but not a lot more than Sr. Sáez is going to get in Chile.

So, buried in this article is the real story -- privatization worked in Chile for those who paid in, and didn't work for those that didn't. Much like people who work get a paycheck, and those who don't, don't. Why is this so hard for the NY Times to grasp? And why is it so hard for them to report honestly?

The Ever-Despicable Boondocks

Aaron McGruder is in fine form this week with these "Boondocks" strips that suggest that Iraqi voters are suicidal morons for defying terrorist threats. It's not hard to tell which side Mr. McGruder is on...

[and yes, I'm stealing his bandwidth]

Media Notes

I've been watching a bit more TV lately, due to that spawn of Satan, the TiVo. I've noticed some suble changes lately in TV's attitude towards the world. Maybe it's acceptance that Bush did in fact win, or a calculated tilt towards the beliefs of Middle America, but I see increasing evidence that someone has got the idea that we're in a war that we need to win.

Examples are anecdotal, perhaps, but one stands out for me: "24".

In the first three seasons, the bad guys were, variously, Serbian thugs, American traitors, venal oilmen trying to start a "war for oil" against innocent Arab states, Mexican drug lords and a disaffected secret agent out to expose America's sins.

This season? Are you sitting down? It seems that Islamic radicals want to carry out large-scale attacks against civilian US targets! Not only that, but the US is justified in using nearly any tactic to defeat them, because, well, we're the good guys, and thet're not! Even the Secretary of Defense is cool and packs a mean AK! To top it off, last night's show was dedicated to a pilot who died in Iraq, and to all those that serve.

Of course, there's still about 18 hours to go, so it could still be evil capitalist job exporters behind it all, hoping to drive up the price of gold....

Charles Stross on World Government

I ran across this in a Locus interview:

...As I see it, our biggest problem is that we've effectively got a planetary government that's running on autopilot, governed by international treaty law and the fundamental systems of the way the global free-trade regime has been set up. Not only is there nobody at the controls, there's nobody to complain to when things go wrong -- it's unaccountable. Traditional empires had safety valves for public protest -- the current system doesn't have one.

Lots of people argue that we need (or need to avoid) a world government, whether based on the UN or some new democratic body. What they don't realize is that we already have one and it's growing, the WTO and Kyoto being the most obvious examples of its reach.

Surely there is something better than faceless gnomes in smoke-free rooms...

What is NASA good for?

Besides the folks at JPL, I can see no point to NASA anymore. Fire everyone and use the money as X-prizes. Newest outrage: NASA has cut funding for the space telescope, reserving everything to get the shuttle flying back to the dysfunctional space station. A trip to fix Hubble, though, is out of the question. AARRRGGH.

I wonder if one can enter the shuttle in the Dead Pool?

Barbara Boxer For President?

I think what really bothers me about Barbara Boxer (besides her sullying the name of California) is the nagging suspicion that she intends to represent the feminist/pacifist/big-govenment left in the 2008 primaries. She seems to be positioning herself as the "outspoken voice of looney left authentic Democrats," both in the Rice hearings and her tantrum during the electoral vote announcement.

If she's running we can expect more of this, especially in confirmation battles to come. Is a trip to New Hampshire in the works?

Barbara Boxer

Is this really the best the state of California can do? What a frelling embarrassment! I mean 30 million people, and we send her? How about a lottery next time?

Happy Birthday, Dr King

One thing is often lost when talking about Martin Luther King, Jr. It wasn't so much that he freed blacks from oppression, but rather that he freed whites from the role of oppressor. Where other black leaders roused blacks against their subjection, King saw that the real answer was shaming whites into letting go. That it would be all right. His speech of August 28, 1963 (hat tip: Dean) was aimed not at black ears, but at those of whites:

Five score years ago, a great American, in whose symbolic shadow we stand, signed the Emancipation Proclamation. This momentous decree came as a great beacon light of hope to millions of Negro slaves who had been seared in the flames of withering injustice. It came as a joyous daybreak to end the long night of captivity.

But one hundred years later, we must face the tragic fact that the Negro is still not free. One hundred years later, the life of the Negro is still sadly crippled by the manacles of segregation and the chains of discrimination. One hundred years later, the Negro lives on a lonely island of poverty in the midst of a vast ocean of material prosperity. One hundred years later, the Negro is still languishing in the corners of American society and finds himself an exile in his own land. So we have come here today to dramatize an appalling condition.

In a sense we have come to our nation's capital to cash a check. When the architects of our republic wrote the magnificent words of the Constitution and the declaration of Independence, they were signing a promissory note to which every American was to fall heir. This note was a promise that all men would be guaranteed the inalienable rights of life, liberty, and the pursuit of happiness.

It is obvious today that America has defaulted on this promissory note insofar as her citizens of color are concerned. Instead of honoring this sacred obligation, America has given the Negro people a bad check which has come back marked "insufficient funds." But we refuse to believe that the bank of justice is bankrupt. We refuse to believe that there are insufficient funds in the great vaults of opportunity of this nation. So we have come to cash this check — a check that will give us upon demand the riches of freedom and the security of justice. We have also come to this hallowed spot to remind America of the fierce urgency of now. This is no time to engage in the luxury of cooling off or to take the tranquilizing drug of gradualism. Now is the time to rise from the dark and desolate valley of segregation to the sunlit path of racial justice. Now is the time to open the doors of opportunity to all of God's children. Now is the time to lift our nation from the quicksands of racial injustice to the solid rock of brotherhood.

It would be fatal for the nation to overlook the urgency of the moment and to underestimate the determination of the Negro. This sweltering summer of the Negro's legitimate discontent will not pass until there is an invigorating autumn of freedom and equality. Nineteen sixty-three is not an end, but a beginning. Those who hope that the Negro needed to blow off steam and will now be content will have a rude awakening if the nation returns to business as usual. There will be neither rest nor tranquility in America until the Negro is granted his citizenship rights. The whirlwinds of revolt will continue to shake the foundations of our nation until the bright day of justice emerges.

But there is something that I must say to my people who stand on the warm threshold which leads into the palace of justice. In the process of gaining our rightful place we must not be guilty of wrongful deeds. Let us not seek to satisfy our thirst for freedom by drinking from the cup of bitterness and hatred.

We must forever conduct our struggle on the high plane of dignity and discipline. We must not allow our creative protest to degenerate into physical violence. Again and again we must rise to the majestic heights of meeting physical force with soul force. The marvelous new militancy which has engulfed the Negro community must not lead us to distrust of all white people, for many of our white brothers, as evidenced by their presence here today, have come to realize that their destiny is tied up with our destiny and their freedom is inextricably bound to our freedom. We cannot walk alone.

And as we walk, we must make the pledge that we shall march ahead. We cannot turn back. There are those who are asking the devotees of civil rights, "When will you be satisfied?" We can never be satisfied as long as our bodies, heavy with the fatigue of travel, cannot gain lodging in the motels of the highways and the hotels of the cities. We cannot be satisfied as long as the Negro's basic mobility is from a smaller ghetto to a larger one. We can never be satisfied as long as a Negro in Mississippi cannot vote and a Negro in New York believes he has nothing for which to vote. No, no, we are not satisfied, and we will not be satisfied until justice rolls down like waters and righteousness like a mighty stream.

I am not unmindful that some of you have come here out of great trials and tribulations. Some of you have come fresh from narrow cells. Some of you have come from areas where your quest for freedom left you battered by the storms of persecution and staggered by the winds of police brutality. You have been the veterans of creative suffering. Continue to work with the faith that unearned suffering is redemptive.

Go back to Mississippi, go back to Alabama, go back to Georgia, go back to Louisiana, go back to the slums and ghettos of our northern cities, knowing that somehow this situation can and will be changed. Let us not wallow in the valley of despair.

I say to you today, my friends, that in spite of the difficulties and frustrations of the moment, I still have a dream. It is a dream deeply rooted in the American dream.

I have a dream that one day this nation will rise up and live out the true meaning of its creed: "We hold these truths to be self-evident: that all men are created equal."

I have a dream that one day on the red hills of Georgia the sons of former slaves and the sons of former slaveowners will be able to sit down together at a table of brotherhood.

I have a dream that one day even the state of Mississippi, a desert state, sweltering with the heat of injustice and oppression, will be transformed into an oasis of freedom and justice.

I have a dream that my four children will one day live in a nation where they will not be judged by the color of their skin but by the content of their character.

I have a dream today.

I have a dream that one day the state of Alabama, whose governor's lips are presently dripping with the words of interposition and nullification, will be transformed into a situation where little black boys and black girls will be able to join hands with little white boys and white girls and walk together as sisters and brothers.

I have a dream today.

I have a dream that one day every valley shall be exalted, every hill and mountain shall be made low, the rough places will be made plain, and the crooked places will be made straight, and the glory of the Lord shall be revealed, and all flesh shall see it together.

This is our hope. This is the faith with which I return to the South. With this faith we will be able to hew out of the mountain of despair a stone of hope. With this faith we will be able to transform the jangling discords of our nation into a beautiful symphony of brotherhood. With this faith we will be able to work together, to pray together, to struggle together, to go to jail together, to stand up for freedom together, knowing that we will be free one day.

This will be the day when all of God's children will be able to sing with a new meaning, "My country, 'tis of thee, sweet land of liberty, of thee I sing. Land where my fathers died, land of the pilgrim's pride, from every mountainside, let freedom ring."

And if America is to be a great nation this must become true. So let freedom ring from the prodigious hilltops of New Hampshire. Let freedom ring from the mighty mountains of New York. Let freedom ring from the heightening Alleghenies of Pennsylvania!

Let freedom ring from the snowcapped Rockies of Colorado!

Let freedom ring from the curvaceous peaks of California!

But not only that; let freedom ring from Stone Mountain of Georgia!

Let freedom ring from Lookout Mountain of Tennessee!

Let freedom ring from every hill and every molehill of Mississippi. From every mountainside, let freedom ring.

When we let freedom ring, when we let it ring from every village and every hamlet, from every state and every city, we will be able to speed up that day when all of God's children, black men and white men, Jews and Gentiles, Protestants and Catholics, will be able to join hands and sing in the words of the old Negro spiritual, "Free at last! free at last! thank God Almighty, we are free at last!"

No, the dream isn't reality, quite. If you think it is, drop by 98th & Main here in Los Angeles. But no one in 1963 would have thought that the Republicans would be seriously considering an African-American candidate for President, and not for the first time.

I was 9 when Dr. King spoke thiose words, attending a 100% white school. I know what it was, and I know what it is. King's dream may not be here yet, but I'm pretty sure that I'll live to see the day. Quickly enough? No. But it's really going to be all right.

Prince Harry

Bad enough that Prince Harry was wearing a Nazi armband (what DO they teach those Windsor kids? Shopping and partying?), but I'm rather surprised that there wasn't more uproar about the cigarette....

Book Reports

What to do in a rainstorm? Don't know about anyone else, but my usual plan is put some logs in the fireplace and grab an unread book from the stack. I have some reports:

• Michael Crichton, State of Fear. (***1/2 [out of 5])
  Ostensibly a novel about a conspiracy to create natural disasters (including a tsunami) to advance spurious evironmental theories, most of the book is devoted to trashing the Global Warming and newer Extreme Weather scientific fads. Crichton apparently believes that global warming is mostly political science of a sort that makes rational analysis of the problem, if it exists, impossible. He provides quite a bit of data for his side, but doesn't even bother with decent strawmen for his opposition. The background story is mediocre -- but I add a star for his willingness to annoy the right people.


• C J Cherryh, Destroyer (**** 1/2)
  This is the 7th book in Ms Cherryh's Foreigner series, which posits an enclave of shipwrecked humans on a far planet and their political efforts to co-exist with the native civilization. Hard to say much about it without talking about the first 6 books, but this is one of the best series going in SF. Politics is more dangerous when the powers-that-be don't think like you do. Note: my copy is a galley proof (thank you, ebay), which might tell you how much I look forward to each installment.


• John Scalzi, Old Man's War (****)
  An earlier version of this book was first published on John Scalzi's blog to wide praise, then picked up by a publisher for dead-tree release. Professor Bainbridge likes it a lot, as does the Instapundit. It's fun and Heinleinesqe, but I'm not sure there's much more there. One idea that seems new: that old folks might be better recruits in a technological war than 18-year-olds. Great story, well told. They used to call these "Young Adult" novels. Recommended.


• Alastair Reynolds, Revelation Space (*****)
  Award-level novel about Man screwing around with dangerous toys, and you just know there's a sequel about "what happens when they get caught." You know they won't learn [In fact, there are two sequals, and I have them]. Concept after concept, and wheel within wheel. This is SF of the first caliber.
  
  Scientist moves Heaven and Earth (almost literally) in order to find The Answer -- politicking, blackmailing or otherwise forcing whoever he can to accomplish his aim. Others are sent to stop him before he does, as his sucess is everyone else's Real Bad Day. Just when you think you know what's going on, another layer comes off the onion. Highly recommended.

"Extreme Weather"

I was watching Aaron Brown's CNN show a bit ago, and they had a story on the Santa Barbara landslide and the recent Southern Cal rainstorm. Their graphic for the "event" was "EXTREME WEATHER."

What a pile of rot. It does rain in Southern Calfornia and the recent storm, while powerful, is pretty much par for the course every few years (balancing the drought years). I've seen much worse. I think there's a line in Raymond Chandler about "only buying real estate in Los Angeles when it rains". Like on a strip of sand between the coast and a 400 foot tall pile of dirt, say. Mudslides along the coast should be about as surprising as a tornado in a trailer park in Kansas. Sheesh.

Michael Crichton's new novel about an environmentalist conspiracy (State of Fear) claims that the successor theory to the failing Global Warming meme will be about "Extreme Weather." You know, like tsunamis, or mudslides after a strong seasonal rain.

But Crichton is a paranoid right-wing kook, right?

NY Times Online Going Subscription?

Apparently the NY Times is considering charging an access fee. Several thoughts:

• Perhaps they should try a tip jar.
• While this has worked for the Wall Street Journal, that's a business resource with unique information -- there are many other sources for the Times' information. The London Times abandoned subscriptions after a short time.
• I suspect that advertisers have little interest in pay sites, due to the massively decreased eye-traffic.
• Walling up the internet with pay barriers is probably not a good thing.
• This will make CNN very happy indeed

Friday Catblogging

Online (the 8 year-old grey cat) has been slow to accept the new kitten (10-month-old Leeloo, right). Seems that things are changing.

Democrats and Ethics

After several months of media noise regarding the Republican's attempt to roll back their party ethics rules to protect Majority Leader Tom DeLay from trumped-up partisan charges in Texas, the Republicans have relented. Expecially after the Texas Democrats prosecutor dropped the investigation.
It is worth noting, however, that the Democrats have only just now passed the rule for themselves that they criticized the Republicans for dropping. Not that the MSM will.

Why do I read the LA Times?

I was wondering today why I bother reading the LA Times. After all, I can get the Daily News here in West LA, and the internet has more, clearer, faster and better news than anything in print. I've decided that it's either because I like being outraged in the morning, or like the dead-tree format, or because I like the Time's comic section. If they had Day by Day instead of Doonesbury or the awful Mallard Fillmore, I'd probably be a subscriber for life. My wife seems to agree -- she doesn't even bother with the front section -- all she reads of the Times is Calendar.

Not a Press Release President

President Bush is getting bashed again for thinking that quiet action is better than loud talk. Unlike his predicessor, Bush seems to think that it's better to spend an hour making sure that the US Navy is sending significant assets to help tsunami victims than it is to call up the Today show and blather about how he feels South Asia's pain. Doesn't he know that it if it doesn't happen on television, it doesn't happen?!?

Of course, the people getting the medicine and food from the Navy helicopters probably don't feel the same way. Their TVs aren't working too well anyway.

Staples vs "Biased Media"

The LA Times Business section reports that the Staples office supply chain has pulled its advertising from all Sinclair TV news reports, due to Sinclair's "conservative bias." This has been done in response to a small letter writing campaign orchestrated by David Brock's Media Matters group.

How much effort does it take to get a company like Staples to fold its tent? Not much, it seems:

Staples spokesman Davis said the e-mails used "similar language" about the programming and stated that they were sent by a Staples customer.

Davis did not specify the number of e-mails Staples had received. But, he said, it was enough that it warranted consideration.

"Certainly, we take the concerns of our customers seriously," Davis said.

Well, Mr Davis, take this post as a humble, non-orchestrated demand that you also refrain from ad buys on CBS News programming. Not only has CBS's left-wing bias been evident for the entire television era, but they also feel fine about forging documents to help (in collusion with?) a Democrat Presidential candidate -- and then lying about it.

My local Staples is next door to my local Office Depot. Everything else being the same, guess who's going to get my business.

UPDATE: The Washington Post has a better report.

Shame on Hertzberg

Apparently, a pro-fascist blogger's comments have convinced Bob Hertzberg, the only non-leftist LA mayoral candidate, to cease his advertising on "conservative" Roger L Simon's site. Or so the LA Times reports. Never mind that Simon, while a Iraq-war proponent, is socially liberal and favored Kerry in the last election. But I guess that the Times' standard for conservatism is different than mine....

Hertzberg has been taken to task by one local blogger — http://www.martinirepublic.com — who complained last month that Hertzberg was advertising on a website run by conservative commentator Roger L. Simon, who among other things labeled opponents of the war in Iraq "pro-fascist."

Hertzberg responded to the critique on his own site, noting: "With all due respect, the decision regarding blog advertisements was made not on the basis of the blogger's ideology. Rather, like all media buys, the decision was made on the basis of the blogger's readership."

Hertzberg's online critic noted that he appreciated the candidate's reply.

The campaign is no longer advertising at Simon's website.

In any event, I was considering giving Hertzberg some campaign money, but cowardice in the face of criticism from the looney left gives me pause. I'd buy the spin that he cut other ad buys, too, except Hertzber's online notice of martinirepublic's criticism gives that the lie.

And why is anyone on the campaign reading that Islamofascist apologist anyway? And admitting to it in public?!?

UPDATE: Boi reports that this is simply the usual tonedeaf reporting by the LA Times -- Hertzberg has stopped most blogads for the time being. This doesn't quite answer why Hertzberg feels the need to respond to trollblogs like martinirepublic.

UPDATE 2: In a comment, a spokesperson for the Hertzberg campaign confirms what Boi posted. The mere fact that the Hertzberg campaign has a clear understanding of the usefulness of blogs gives me hope.

UPDATE 3: Oh, crap. This post is probably the wrongest post I've put up. I'd like to quietly delete it and pretend my cats wrote it or something. But I won't. Better is to bury it in a ton of new posts. Except for my name at the end, just about everything in it is wrong.