After Social Security

Original image from By Social Security Administration - Social Security Administration, Public Domain, https://commons.wikimedia.org/w/index.php?curid=43304462
Modified by the author

Social Security isn’t necessarily dead, but there have been Republicans trying in various ways to end since at least 2005, when George W. Bush came out of his re-election saying that he had won political capital and he intended to spend it.

Of course, that effort ended up going nowhere – Bush spent some political capital in his failed push, and then burned through a bunch of what was left with his botched response to Katrina later that year.

Now we’re back at it and the threat is arguably sharper. We’re dealing with a Republican party that is less independent from its president than 20 years ago, a president less inclined to listen to reason, and an off-brand Tony Stark who’s been given the keys to the kingdom and may well have the capability to make the Social Security system so dysfunctional that it falls apart without Republicans in Congress needing to leave their fingerprints on the murder weapon.

Social Security’s demise is hardly a foregone conclusion, but it’s enough of a possibility that I thought it was worth looking at what our options might be after it happens.

The part of this post above the fold is the TL;DR of the whole thing, a series of declarative statements.

Below the post is the “too long” explanation of that first declarative statement.

I hope I’ll lay out explanations of the rest over the next few weeks, but there’s usually a large gap between my intentions and my accomplishments.

Laying out the spine of the argument is easier, so here it is.

There are lots of different ways of organizing a retirement system: government pay-as-you-go (PAYGO) like Social Security; private PAYGO like an old-fashioned company pension; pre-funded company pensions, and private retirement accounts. But the differences among those systems are differences in accounting. Underneath, every single retirement system has to do the same thing. It has to move claims on current output from people who earned those claims by working to produce current output, to people who are no longer working and therefore not playing a role in the production of current output.

A retirement system might want to give a helping hand to people who, for whatever reason, had relatively low lifetime earnings. It also doesn’t want to incentivize people not to take care of themselves during their working lives. Those two goals are potentially in conflict, but Social Security strikes an intelligent balance between them.

People describe the Social Security trust fund as a fiction or a Ponzi scheme, the government borrowing money from itself to pay itself. That’s sort of true, but it’s more false. The 1983 reforms that led to the large (but shrinking) trust fund we have today represented an implicit bargain about who on the income scale would pay when. People of average or lower income would pay up front in the 1980s, 1990s, and 2000s, in order to build up the trust fund, so that Social Security was there for them when they retired. People of higher incomes would pay in the 2010s and after in order to fulfill that promise. Destroying the system now is letting higher-income folks out of their end of the deal, just when it becomes time to pay. And the part about it being a Ponzi scheme—“There’s no money in there for you when you retire! The money you pay now just goes right at the door to pay today’s retirees!”—that part is simply based on a failure to understand what a retirement system does, which is that it moves claims on current output from people who are working, to people who are no longer working.

Replacing Social Security with individual accounts has three problems. First, individual accounts have administrative costs that are an order of magnitude higher than Social Security. Second, the intelligent balance between cushion and incentives described above is impossible with individual accounts. And third, the promise of higher returns by putting money into the private market instead of Social Security is logically impossible to achieve on a system-wide basis, because of the unavoidable nature of every retirement system (moving claims on current output from people working to people who are no longer working).

A large part of why Social Security has financial problems is that more and more of the claims on current output are going to people in forms that don’t get taxed to cover Social Security. That’s a fixable problem.

Social Security faces three fundamental problems. First, an increasing share of the population is of retirement age. Second, the growth of GDP per capita is slowing down. Third, the system as currently funded will run out of money. That third one, as mentioned above, is fixable. The first two don’t have such obvious solutions, but they are just as serious for any alternative to Social Security, because the underlying nature of any retirement system is that it moves claims on current output from people who are working, to people who are no longer working.

Lastly—and to justify the title of “After Social Security”—if Musk et al. succeed in destroying Social Security, it will be disastrous, but it doesn’t have to mean the end of sensible retirement arrangements forever. The bad part is, they will have stolen a lot of money and impoverished millions and probably led to a significant amount of premature death as people face challenges they could have overcome had they had access to the Social Security benefits that were their due. But any retirement system is ultimately a social arrangement, one that (say it with me now) moves claims on current output from people who are working, to people who are no longer working. The true wealth of a country is not measured in collections of financial assets, but in the ability to accomplish useful things. To the extent that we still have that ability after Musk is done experimenting on us, it will be in our hands to decide whether to re-establish a decent retirement system.

That’s the spine of the argument, and it only took me about 750 words.

The rest of this post will be making good on the first claim, the thing that is most important of all to understand before trying to solve Social Security’s problems: Every retirement system moves claims on current output from people who are working, to people who are no longer working.

Apocalypse no. 2

 Part of a semi-regular series. The first part is here.

Albrecht Dürer
The Four Horsemen, from The Apocalypse
via Wikimedia

You've probably encountered people saying we don't need vaccines because "who gets measles now anyway?" and "when was the last time smallpox was an issue?".

You get why that's a problem, right?

We don't see measles moving through our population because almost everyone has been vaccinated against it, and we're in the middle of getting to see what happens when you drop that rate from 95% to 80%.

This is the paradox of vaccine success. They work so well, we forget that they do anything at all.

What if we had this attitude towards the way society as a whole works?

Government is a convenient whipping boy: a target for our frustrations with how our lives are going. And it's easy to find things that government does wrong, could do better, or makes worse.

Unfortunately, it's even easier to overlook the basic things that government does well which enable the day to day lives we've come to expect.

For a quick and morbid example, it's illegal to sell baby cribs with bars too far apart. If you're a manufacturer of baby cribs, you might find this annoying. If you're a parent of an infant, you might appreciate that the government has made it impossible for your baby to get its head stuck between the bars of its crib and strangle itself. But you also might be unaware that such a rule exists. All babies - including yours - are now safe from getting their heads stuck between crib bars and strangling themselves to death, and people don't realize that it was government action that removed that risk.

For a longer example, and one that hits home given where I live, we need an outline understanding of how a rural economy works.

The one economic field in which rural areas have a natural advantage is resource extraction.

Apocalypse no. 1

 Part of an occasional series

Albert Goodwin, Apocalypse
https://en.m.wikipedia.org/wiki/File:Apocalypse-Albert_Goodwin.jpg

You could say I'm doomer adjacent.

I have friends, acquaintances, and colleagues who are full-on doomer, and I understand their arguments.

On one side, there's what we're doing to the natural systems that support us. At the broadest level, global warming of course, but we're pushing at ecosystems and resources in lots of other ways as well. This is a problem of having too much access to fossil fuels for our own good.

On the other side, the idea of peak oil raises the possibility that we don't have enough easy access to fossil fuel to maintain the way of life we've come to take for granted.

Too much and not enough at the same time. I understand the argument, and I can't prove it's wrong.

I used to be full doomer myself, and in 2008-09, I expected that's what we were seeing. I was clearly wrong, so I've learned to be more cautious about forecasts.

Understanding the deep forces beneath a situation is useful, but does little to help you predict the details of how things will unfold.

Ukraine: The least-bad result

As negotiations between Ukraine and Russia maybe move past ultimatums, I've seen discussions of what a settlement might ultimately look like.

One position is that any concession by Ukraine is a complete loss, given that Russia was the aggressor and Putin will have emerged with a victory.

That's an understandable reaction, but I think it's inaccurate.

Let’s say the terms are:

• Ukraine formally recognizes Russian control of Crimea and Donbas;
• Ukraine agrees to neutrality.

Does that suck? Yes. Russia was the aggressor, and this settlement means they got something out of launching an unprovoked war.

But it’s just not true to say it’s a complete loss.

Russia controls Crimea and Donbas now. Recognizing those facts on the ground as a concession to end the fighting isn’t good in that it rewards horrific behavior, but it doesn’t change any reality of who controls what.

Ukraine isn’t in NATO now and wasn’t on track to be for another 5 to 10 years. Saying explicitly, “We’ll be neutral” and thus taking away some freedom of action of the Ukrainian state isn’t good in that it rewards horrific behavior, but for the next 5 or 10 years Ukraine wouldn’t have been in NATO anyway.

What did Putin want?

He wanted Zelenskyy gone.

He wanted a pluralistic, relatively open system in Ukraine replaced by a government subservient to Russia.

He wanted to show what a badass Russia was, and its military.

If Ukraine and Russia end up settling on something like the deal I outlined up top, Putin gets none of that.

On top of that, he’s revealed his military to be weak and ineffective for its size when up against certain kinds of opposition.

So he gets formal recognition of things that were already true de facto, in exchange for thousands of war dead (so far), thousands of pieces of equipment lost (so far), crippling economic sanctions, a spur to Europe to wean themselves from dependence on Russian energy supplies, and the revelation to the world that he is militarily much weaker than everyone assumed.

That’s not a total loss for Putin, but it is still a very bad outcome.

Is it worse for Ukraine?

In many ways yes, of course.

2 million refugees.

Large numbers of civilian dead (one city reported 1,500, but they know that’s an incomplete count, so maybe we’re at 10,000 already; Putin’s probably not done bombing cities, so the total will likely be in the 10’s of thousands).

Apparently fewer military deaths than Russian military deaths, but maybe similar as a share of their army.

Massive damage to infrastructure.

But all of that is already true.

The deal I outlined up top stops those losses from accumulating.

And at the end of it, Ukraine has the support of much of the rest of the world to rebuild, and likely entree to some kind of economic arrangement with the EU, even while they stay out of NATO.

Is this outcome unjust?

Absolutely.

Something that approximated justice would have Russia returning control of Crimea and the Donbas, and paying for full reconstruction of physical damage in Ukraine, plus some kind of war indemnity.

But you only get to impose that kind of deal if you have the military might to force the other party to accept it.

Ukraine certainly doesn’t have that military might.

NATO maybe does, but then you have to ask whether something resembling justice for Ukraine is worth the likelihood of World War III.

Stalin invaded Finland in 1939. The Finns fought back much harder than the Soviets expected, and they used winter to full advantage. But eventually the sheer might of Soviet military power, however clumsily applied, carried the day.

Finland lost a war that had been unjustly waged against them. And they lost some territory. And as part of the ultimate settlement after World War II, they accepted neutrality.

Did that suck? In some ways, yes.

Was it unjust? Sure.

But they preserved the ability to manage their own affairs at home, and became one of those Nordic social democracies that many of us Americans look at longingly.

They escaped the fate of their Baltic neighbors who were fully incorporated into the Soviet Union, saw large numbers of their people exiled to other parts of the USSR, saw an influx of Russians, and saw their economies hobbled by 40 years of Soviet-style economic management.

If Ukraine can fight its way to a Finnish-style settlement, that will be unfair and emotionally unsatisfying.

But the only likely alternatives I see are:

• Complete subjugation to Russia
• A wider war, possibly World War III

If I’m right about that, then a Finnish solution for Ukraine is the least-bad outcome at this point. 

Driving contagion

 "My health care is none of your business!"

To an extent, sure.

Your drinking is also none of my business - under certain circumstances.

If you drink yourself into a stupor in the privacy of your own home, that's your God-given right. If you do it repeatedly and bring on cirrhosis, I might note the cost you've thereby imposed on the medical system, but people make all sorts of choices that somewhat raise their risks of needing medical care. We don't want to go down the road of routinely policing behaviors where people increase their own risk of medical harm.

But if you get behind the wheel of a car, then your drinking is very much my business.

It's not that drunk driving is murder.

If you take a gun that you believe to be loaded, point it at someone, and pull the trigger, that's attempted murder. If the gun actually is loaded and if your aim is good enough for the distance you're at, then it will be murder in fact.

You had the intent to kill the person you aimed the gun at.

Driving drunk isn't like that.

First, most drunk drivers aren't intending to kill anyone. They simply want to get somewhere, and they tell themselves that they're not that impaired.

Second, it's pretty common for someone to drive drunk and not kill anybody. With enough luck, you can make it home from the bar with not even a scratch on your car.

Of course, you do have an elevated risk of having an accident, but maybe you just end up in the ditch with no more than some bruises.

Then again, you might kill yourself and nobody else - driving solo and smashing your car into a tree.

From here

Life's a beach, and then you die

Alternative title for this post: The Sunshine Charnel House

Last week I put up a post illustrating the tremendous lag in Florida's COVID death data.

Most states take a few days to collect their data and get it posted, but after that point their older data stabilize. They're not continually updating numbers that are 10 or 20 days old.

Not Florida. They're special. It's now 25 days since I started watching their death numbers, and they're still going back and adding deaths to data that are two months old.

But they're special in another way as well, and that is simply in the amount of COVID-related death they're producing.

Along the way to illustrating that, I'll give you some pretty good evidence that VACCINES WORK, and also give a sense of how much better we might be doing with a higher vaccination rate.

Back in July I posted a comparison of the Delta surge in a collection of nine not-randomly-chosen states. (I wanted places famously having trouble, like Florida and Missouri, and the state with our highest vaccination rate - Vermont - and then through in some others, including New York, where I live, and Massachusetts, where I grew up and where I still have family.)

Overall, states with higher vaccination rates started their surges later, from a lower level, and weren't rising as fast.

That's still true, but I wanted a more comprehensive measure, that somehow gathered in both how early you started, how high you started, how high you got, and how much time you spent at a very elevated level.

What I settled on was to look at cumulative infections in a state from June 1 through August 30. I measured that by taking total infections recorded as of August 31, and subtracting  total deaths recorded as of June 1.

With that "How was your summer?" question as the main effect, I chose as my causal variable a state's level of vaccination on June 1, at the start of the mess. And I went with "fully vaccinated" rather than "at least one shot" - early in the vaccine roll-out, there was evidence that even the first shot of the mRNA vaccines did a good job of preventing infection, but that with Delta it really took both shots to get a good effect.

So: I'm looking at the relationship between:

1. What was each state's population percentage that was fully vaccinated by June 1st; and
2. What portion of each state's population got infected between then and August 31st.

And that relationship looks like this:

It certainly does appear that states with higher vaccination rates at the beginning of the summer (further to the right on the chart) also had a smaller percentage of their population test positive over the summer (lower down on the chart).

And if you fit a power function to the scatter of points, you get an R-squared of 0.627, suggesting that this single factor - how vaccinated was your state on June 1 - can explain about 63% of the variance in how many people tested positive.

The t-statistic on the vaccination variable is over 9, implying a vanishingly small chance that there is no relationship in the real world, and that the apparent relationship is just random noise falling a certain way.

And the relationship is not merely statistically significant. Its estimated size is also large enough to be meaningful. The country's overall rate of full vaccination by June 1 was 40.7%. The regression predicts that a state with that level of vaccination would see 1.43% of its population test positive over the summer. For a state with 10,000,000 people (roughly Georgia, or North Carolina, among others), that would mean about 143,000 infections over the summer.

If the state had 10 percentage points more vaccination (meaning it was at 50.7%), it's predicted positives over the summer would be 0.83% of its population. Our hypothetical state with 10,000,000 people would see only 83,000 infections - 60,000 fewer than with the average vaccination rate.

As you can see on the figure, the relationship is not linear. The lower your vax rate, the more quickly infections rise. So a state with 10 percentage points less vaccination than average (putting it at 30.7%) would expect an infection rate of 2.89%. In a state with 10,000,000 people, that's 289,000. That's 146,000 more infections than at the average vax rate.

On these charts, you might have noticed one particularly "out there" outlier.

In case you didn't, here's the second chart with the outlier highlighted.

It is 3.1 standardized residuals above its "predicted" value. The next-biggest outlier is only 1.9 standard deviations off. So Florida went into the summer with an almost average vaccination rate, but ended up really punching above its weight, with the second-highest rate of infections and an unbelievably high level given is vax status.

But that's just infections. Where Florida really excels is in COVID deaths.

Here's the chart. The horizontal axis is still percent fully vaccinated by June 1st, but the vertical is now deaths per 100,000 during June-August.

You probably noticed that outlier, but in case you didn't, I've made it easier to see.

Florida is 3.5 standardized residuals above its predicted value, wile the next largest error is 2.3 standardized residuals.

I don't know why Florida excels in death. It could be as simple as having an older population, in which case age-adjusted mortality rates would bring its numbers more in line with the other states.

Hypotheses are welcome.

The Florida slow-roll

You've probably heard in the news about what a hard time many states are having with the Delta surge, with schools having to close, ICU's overfilled, people denied care for other health problems because there's not hospital capacity, etc.

Ground Zero of this preventable catastrophe is ... Florida.

So you go to some data site like Worldometers, and you look at how things are going in Florida and:

From here, downloaded Sep. 12, 2021

Sure, they recently reached their highest daily death rate in the course of the pandemic, but since the peak on August 24th, things have been improving incredibly fast.

Here's another screenshot, focusing in on that end of the graph:

That's fantastic improvement!

Except that it's nothing more than a delay in reporting COVID-19 death data.

I would look in on the Florida page every two to four days, and it also seemed like they had recently peaked, and then things started getting better.


So on August 24th (as it happens) I started transcribing the day-by-day death stats for Florida off of Worldometers, checking back every couple of days to transcribe a new batch.


I somewhat arbitrarily chose July 30th as my starting point, opened up a new spreadsheet, and typed in the data from July 30th to August 24th.


Like on the Worldometers chart, I calculated the 7-day average, and the graph came out like this:





You can see the death rate peaking on August 11th, then falling very impressively, from 178 all the way down to 28, in just 13 days. Remarkable progress.


But let me re-scale that, so that there will be room for the later curves I'm going to have to add:





It's the identical data, just with the vertical axis allowed to rise all the way to 350, and the horizontal axis running out through September 9th.


I went back on August 27th, and the peak was a little later, and a little higher. That downturn after August 11th turned out not to be true:




That had been a Friday. I went back two days later, on Sunday, and the first two weeks of the death curve were unchanged from Friday, but the last seven days had all been bumped up:





Two days later, the whole peak had been raised. The peak now didn't come until August 16th, at 221 deaths per day.




After that, I missed five days. When I came back, the peak hadn't been pushed any later, but it had been raised, and a lot more deaths had been added to previously recorded days after that peak.





When I gathered data on September 8th, the peak had been pushed back to August 21st, and raised somewhat.





Friday, September 10th, saw a big jump and the peak not happening until August 24th.




Today, September 12th, and went and got the numbers again. Like August 27th and 29th I had a Friday-to-Sunday pair. And like that time, most of the curve was left unchanged from Friday to Sunday, with the update only affecting the last seven days of the curve.




I fully expect that if I go back on Tuesday, the entire curve will have been lifted again. The pattern over the last two weeks suggests that, even though the reported data show a decline in deaths, the underlying reality is that they're not done increasing their death rate in Florida.


I should take a moment to address one question that will be obvious to some readers: Is this a big deal? Isn't this just a function of data taking time to compile?


Maybe.


My best argument is that I've been looking at data for many states for a while (particularly for the nine states that featured in my previous post), and none of them have this obvious a rosy scenario. They report their data, and aside from a few small updates, their data don't keep drifting higher.


Just today I started the process of a small check on my impression, by gathering today's death data for New York state, starting likewise on July 30th. In a week or so, I should be able to tell if NY is doing something like what Florida has been doing.


I doubt it will be that dramatic.


In the meantime, we can count up how many deaths Florida had failed do count on August 24th, compared to their report today.





On August 24th (indicated by vertical, black lines), there were a reported 2,907 COVID-19 deaths in Florida.


Today, not quite three weeks later, that total number of reported COVID-19 deaths from July 30th through August 24th has more than doubled, to 6,187.


That particular window (through August 24th) might be just about ready to stop getting worse.


Stay tuned.