October 31, 2011

Our Brain-Damaged Elites, Part 3,947: Walter Russell Mead

What causes more brain damage: (1) having your umbilical cord tightly wrapped around your neck for twelve minutes as you're being born, or (2) being one of the people who runs the United States? Based on the way we've been lurching from debacle to catastrophe to cataclysm, I'm going to have to go with #2.

Walter Russell Mead is a truly talented writer who somehow went from writing a funny book about how Henry Kissinger lies all the time to becoming the Henry A. Kissinger Senior Fellow for U.S. Foreign Policy at the Council on Foreign Relations. Today he got extremely excited about the millionth hacktastic Washington Post article about Social Security:


The Washington Post has finally laid it out: Social Security is a Ponzi scheme, not a prudent savings program.

That “trust fund” is a myth, an accounting trick. Note that if the money had been invested in stocks or other assets, the government could now be selling those assets to cover the Social Security costs...

While quacking disingenuously about a valuable ‘trust fund’, the government has already spent the payroll taxes you and your employers paid to provide security in your future. The money is gone, exchanged for Treasury IOUs. It really was a Ponzi scheme, and the bill really is coming due.

Of all the dumb things our elite dumbasses say about Social Security, this may be the dumbest of all.

Let's imagine two different worlds:

1. In MeadWorld, the government invests excess payroll taxes in stocks.

What happens when the Social Security trust fund needs money in MeadWorld? The government sells some of its Verizon stock to somebody, takes the cash and sends it to Social Security recipients.

2. In this world, the government invests excess payroll taxes in government bonds.

What happens when the Social Security trust fund needs to be redeemed in this world? The government raises taxes slightly on Social Security-hating billionaire (and former Chairman of the Council on Foreign Relations) Pete Peterson. Peterson sells some of his Verizon stock to somebody to pay his taxes, and the government takes the cash and sends it to Social Security recipients.

What's the difference between these two scenarios? ONE EXTRA STEP IN THE PROCESS.* Likewise, in both scenarios, the money from the excess payroll taxes gets spent in the same year it comes in—in MeadWorld, it's spent by the person who sold the Verizon stock to the government, while in this world it was spent by the government itself.

All that said, Mead does have a genuinely profound point, although it's exactly the opposite of the one he thinks he's making:

From a certain perspective, it's true that the Social Security trust fund is a myth—not because it's invested in government bonds, but because it's impossible for societies to collectively "save" in the same way that individuals do. When a 30-year-old saves for retirement, it's because they want to be able to eat food and drive a car 40 years from now. However, they don't can a bunch of tomatoes, buy three Ford Fiestas, and hide it all in a cave somewhere so they can go get it again in 2051. Instead, they buy pieces of paper called stocks or bonds, or pay payroll taxes, which gives them a claim on a share of the food and cars produced in 2051.

So any attempt by society overall to "save" like this is a myth. Any attempt by society to "save" in this way is simply, as Mead puts it, "government IOU’s to itself." That's because any money society overall "saves" in 2011 is going to be spent in 2011. And any food eaten in 2051 has to be grown in 2051. The people working at any moment in history have to produce enough to provide for both themselves and the people who aren't working—which includes not just children and retirees but rich people who live off their investments, such as Pete Peterson.

Specifically regarding Social Security, we're currently transferring about 4.2% of U.S. gross domestic product from current workers to retirees. To pay promised benefits, this will have to increase to 6.2% in 2035 and then decline to 6.0% in 2050 and remain there. (See the 2011 Trustees Report for details.) Those are the only numbers that matter, not what the trust fund was "invested" in.

And this is simply not a problem for a rich society like the U.S. The economy continually grows more productive—95.8% (100-4.2) of today's economy is a lot smaller than 93.8% (100-6.2) of the economy of 2035. So people working in 2035 can produce enough for all the promised Social Security benefits and still be much richer than workers today.

Moreover, an increase in the amount of the economy we "spend" on Social Security isn't a crisis. It's exactly what you'd expect a society to do as it gets more productive: use some of that productivity to work less.

But if the Social Security trust fund isn't an "investment" in the way individuals own investments, what it is? It's an agreement.

Social Security is largely a direct transfer from today's workers to today's retirees: workers pay their payroll tax, and that money is mailed out to Social Security beneficiaries.

But payroll taxes, which fall regressively on working people, were raised in 1983 above the amount needed for 1983's retirees—and it was the excess from those higher taxes that, ever since, bought the government bonds in the trust fund. At exactly the same time in the eighties, income taxes, which fall progressively on the richest people in the U.S., were slashed.

So the agreement embodied in the trust fund was that when working people from the Baby Boom began to retire, the cost of their Social Security wouldn't fall solely on younger working people via regressive payroll taxes—instead, it would also fall on the richest people, either via higher taxes or by borrowing more from them. Again, this is neither a crisis nor unjust, especially in a society with massive income inequality.

Thus, if we declare the trust fund null and void, it would constitute the greatest theft in the history of the world. Essentially America's richest people would have stolen $2.6 trillion from the America's working people. That's why Pete Peterson hates Social Security so much: he wants that money. That's why he hired Walter Russell Mead.

But—if societies overall can't "save" in the way individuals save, they absolutely can save in another way: by working to make their future citizens more productive. If America is making sure today's children have enough to eat, we're saving for the future. If we're getting all of today's children a great education, if we're building a high-quality, long-lasting infrastructure, if we're pouring money into scientific research, we're saving for the future. That's why it's so unbelievably stupid to cut back on health, education, infrastructure and science today so as not to create a "burden" on our children in the future. The only burden will be if we DO cut back.

FINALLY: If you meet anyone who believes what Walter Russell Mead does about Social Security, you should feel comfortable literally betting your life that they were also completely certain Iraq had terrifying Weapons of Mass Destruction. Here's Mead:

I supported the US invasion. I supported it originally because I believed Secretary of State Colin Powell’s assertion that Iraq had an active WMD program. (I felt that some of the Bush appointees were capable of stretching the evidence, but Powell over the years had convinced me that he was a sober and serious person on whose judgment it was safe to rely.)

Here's more of Mead's pre-war perspicacity, on the cost of war:

Doom spinners...prophesy ruin. Relax...war with Iraq is a one-time expense -- an expense, incidentally, that even at $200 billion will increase our $6.3 trillion national debt only about 3%...Moreover, the high-end estimates are probably wrong.

In the same article, Mead learnedly explained that, in a post-war worst case scenario, the cost of oil might temporarily rise as high as $42/barrel.

So Mead is, functionally-speaking, brain-damaged. But it's not his fault personally. It's just that power makes people stupid.


*Of course, it's actually not quite that simple—for instance, U.S. business would freak the fuck out if the Social Security trust fund sunk $2.6 trillion into stocks. That would be about 20% of the total stock market capitalization, and would give U.S. citizens collectively a controlling interest in just about every publicly-traded corporation in the country. Corporate America would never have allowed Mead's preferred scenario to unfold.

—Jonathan Schwarz

Posted at 01:09 AM | Comments (26)

October 30, 2011

BREAKING: United States Still Located Just East of Syria


The Obama administration plans to bolster the American military presence in the Persian Gulf after it withdraws the remaining troops from Iraq this year, according to officials and diplomats...

"We will have a robust continuing presence throughout the region, which is proof of our ongoing commitment to Iraq and to the future of that region, which holds such promise and should be freed from outside interference to continue on a pathway to democracy,” Secretary of State Hillary Rodham Clinton said in Tajikistan after the president’s announcement.

Everyone in the mideast will be thrilled that their neighbor the United States will be protecting them from outside interference. The most likely interlopers who might try to influence the region include Iraq and Iran, both of which are located just north of Mexico.

People with long memories might also remember the disgusting attempt by Iran to influence itself.

—Jonathan Schwarz

Posted at 01:20 PM | Comments (8)

October 29, 2011

Where Does the Cruelty Come From?

It's not news that the people who run the U.S. have created a gruesome culture of cruelty among those who have everything (or aspire to) towards those who don't. Digby runs down some vile examples here, including a foreclosure mill law firm that had a homelessness-themed Halloween party.

The interesting thing is this happens everywhere with everyone: people with money and guns and power ALWAYS hate and fear everybody else. My historian grandfather Lewis Hanke spent his whole life researching the European takeover of North and South America, and as he put it:

The hostility of those who have power toward those who can be called inferior because they are different—because they are others, the strangers—has been a historical constant. Indeed, at times it seems to be the dominant theme in human history.

So America's dumbasses with their dumbass contempt for the people they're brutalizing is about as surprising and interesting as the sun coming up every day.

But why isn't it surprising? Where does it come from? Wouldn't you expect that people with a weird compulsion to be cruel would be less effective and replaced by those who didn't have it?

Stan Goff, who used to be a U.S. Ranger and was stationed in El Salvador, once wrote about this based on his own experience:

In the street [in San Salvador], I saw an old woman dragging herself down the sidewalk with a gangrenous leg, a crazy man shriveled in a corner, bone-skinny kids who played music for coins with a pipe and a stick.

On the bus one day in downtown San Salvador, a blind man came begging, and people who could ill afford it gave him a coin. These people were callused, very modestly dressed, with Indian still in their cheeks.

To the slick, manicured, round-eyed, well-to-do, the poor and the beggars were invisible, as invisible as the blackened carboneros, the worm-glutted market babies, the brooding teens with raggedy clothes, prominent ribs and red eyes glaring out of the spotty shade on street corners...They have to be subhuman so they can be killed.

I was reminded of the goats at the Special Forces Medical Lab. When I was training to be a medic, we used goats as "patient models." The goats would be wounded for trauma training, shot for surgical training, and euthanized over time by the hundreds for each 14-week class.

Nearly every student upon arrival would begin expressing his antipathy for the caprine breed. "A goat is a dumb creature, hard-headed, homely," we'd say.

A few acknowledged what the program was actually doing without seeking these comfortable rationalizations. A few even became attached to the animals and grew more depressed with each day.

But most required the anti-caprine ideology to sustain their activity.

So it's actually not that complicated. It's not that normal people start out hating everyone else and then brutalize them; they brutalize everyone else as part of their job and then they HAVE to hate them, or they can't keep doing it. If they can't keep doing it, they drop out of the Special Forces or the foreclosure mill law firm or Goldman Sachs, leaving behind only people who've managed to generate enough cruelty within themselves that they can.

—Jonathan Schwarz

Posted at 04:05 PM | Comments (20)

October 28, 2011

Honest by Accident

The book Confidence Men by Ron Suskind describes an Obama interview with Rolling Stone from September, 2010 that I didn't read at the time. Here's some of it:

RS: There’s also a concern when it comes to financial reform that your economic team is closely identified with Wall Street and the deregulation that caused the collapse. These are the folks who were supposed to have had oversight of Wall Street, and many of them worked for or were close to banks like Goldman Sachs...

OBAMA: I read some of the articles that Tim Dickinson and others have produced in Rolling Stone. I understand the point of view that they're bringing. But look: Tim Geithner never worked for Goldman; Larry Summers didn't work for Goldman. There is no doubt that I brought in a bunch of folks who understand the financial markets, the same way, by the way, that FDR brought in a lot of folks who understood the financial markets after the crash, including Joe Kennedy...

This is from the book The Money and the Power by Sally Denton and Roger Morris:

Through purloined information and speculative connivance, what a later generation outlawed as "insider trading," [Joe Kennedy] took millions from Wall Street before the Crash...For helping to finance Franklin Roosevelt's presidential commission in 1932, he was rewarded with the chairmanship of the new Securities and Exchange Commission, which began to police some of the same stock exchange abuses he had just practiced so profitably, "a crook to catch a crook," as Roosevelt once quipped to his adviser James Farley.

It would be nice if we had presidents, or music magazines, who were able to remember the past. But then we wouldn't get this kind of accidental honesty, so I guess it all works out in the end.

—Jonathan Schwarz

Posted at 07:33 PM | Comments (14)

October 12, 2011

How I Communicate With People Less Right Than Me

On this post about the weird "We Are the 53%" tumblr, Donald Johnson commented:

I think it's a mistake to assume the worst about these people. What they're doing is probably what a lot of us do--make ourselves heroes in our own stories. We lefties are the smart ones who see through the propaganda that surrounds us (or anyway I assume that's a temptation to self-glorification that others besides myself feel--I have to remind myself of how clueless I can be sometimes when I read something especially ridiculous in the MSM which is clearly intended to fool someone somewhere in the readership).

Anyway, these folk see themselves not as the victims of society, but as modern day American pioneers, like their fabled forefathers who moved West and conquered a wilderness through hard work, grit and determination. Stoic John Wayne types. No whiners allowed. (And no Indians, and no Chinese except to build railroads and preferably no blacks or Mexicans, but that's beside the point.) They don't see their heroes as the people who struggled for a five day workweek or equal rights for blacks or Native Americans or anything like that. Now those protestors against Wall Street are telling them that maybe they're not heroes--to some extent they're victims. They hate that.

I have no idea what to do about it.

I do have an idea what to do about it, sort of. I strongly believe that every ideology is right in the sense that it is responding reasonably to some aspect of reality. In the case of the 53% people, they accurately perceive that individual effort, personal responsibility, etc. absolutely do affect your life circumstances. They clearly have lived that, and trying to persuade them that they're wrong will be like trying to persuade them that they have nine arms. That's not going to work.

What might work is acknowledging and respecting their lived reality, while gently trying to widen their view to include other aspects of reality that they've missed. For instance, Saddam Hussein grew up poor, was extremely talented and worked really hard, and reached the very top. That doesn't mean that the Iraqi system was a fantastic idea that we should all celebrate.

Likewise, wanting other people to have better lives is completely consistent with everyone's personal self-interest. It just has to be a slightly more enlightened self-interest than the standard American version. I would really like the people who do the maintenance on the plane I'm flying on next week to be well-rested and not worrying about whether their spouse is about to get laid off. I'd like there to be lots of money spent now researching treatments for the diseases of the old, because I plan to be old someday. And so on.

Obviously this is a lot easier said than done. The 53% tumblr people are probably so rigid in their thinking that they're not reachable. And even reaching less rigid people is much easier when it's part of some kind of shared experience (which is why unions and churches can be such a powerful force for democratization). But if there's a way to do it, it involves respecting the fact that people think things for a reason, even if they're missing a lot of the rest of the picture.

BONUS: It turns out that the 53% thing was created by Joshua Trevino, a bl*gger who once wrote under the name "Tacitus"—ie, the Roman historian. This gratifies me very deeply, and I would like to thank him for making the world a funnier place.

—Jonathan Schwarz

Posted at 03:19 PM | Comments (72)

October 10, 2011

This Is Really Funny. In a Movie.

I've been looking at this tumbler We Are the 53%, which of course is a response to We Are the 99%. If anything, the first tumblr is even more heartbreaking than the second. Here's a good example of the "We Are the 53%" people:


I look at that and it tells me that I've failed, you've failed, we've all failed, and because of that we're all going to die. These people not only won't fight the killer billionaires stomping on their windpipe, they'll brag about getting stomped on and ask for more.

I knew I'd seen this before, but I couldn't remember where. Then I realized it was here:


Yes, it's very funny. In a movie.

—Jonathan Schwarz

Posted at 12:32 PM | Comments (47)

October 07, 2011


This is a great, great oped by performer Mike Daisey about Steve Jobs:

Mr. Jobs’s magic has its costs. We can admire the design perfection and business acumen while acknowledging the truth: with Apple’s immense resources at his command he could have revolutionized the industry to make devices more humanely and more openly, and chose not to. If we view him unsparingly, without nostalgia, we would see a great man whose genius in design, showmanship and stewardship of the tech world will not be seen again in our lifetime. We would also see a man who in the end failed to “think different,” in the deepest way, about the human needs of both his users and his workers.

I've never owned any other computers in my life but Apples, and I have an iphone. And they always make me feel like this whenever I look at them: it's wonderful that people are able to invent and build something so beautiful, and it's horrible that people somehow aren't able to bring the same intelligence and effectiveness to invent and build better societies.

Along the same lines, Frank Oppenheimer (brother of Robert and creator of the Exploratorium in San Francisco) once said: "Just as present technology had to await the explanations of physics, so one might expect that social invention will follow growing sociological understanding. We are desperately in the need of such invention, for man is still very much at the mercy of man."

That's true, but it leaves out the unfortunate reality that anyone who tries to invent a better way of organizing politics and society will be punished severely. If people who tried to invent better cell phones were regularly shot in the head, we wouldn't have good cell phones.

P.S. If you're in New York, please go see Mike Daisey in The Agony and the Ecstasy of Steve Jobs at the Public Theater.

—Jonathan Schwarz

Posted at 03:44 PM | Comments (27)

October 03, 2011

NY Times Reporter Explains Crazy Foreigners Believe Crazy Conspiracy Theories Published in the New York Times

Mark Mazzetti, a national security reporter for the New York Times, was just on Fresh Air to explain the mysterious ways of the orient:

GROSS: So anti-American sentiment seems if anything to be growing a bit in Pakistan. Why is that?

MAZZETTI: The number one conspiracy theory in Pakistan is that ultimately the Americans' goal is to take the nukes, that we have designs to ultimately take the nuclear weapons out of the hands of Pakistan's government because of concerns about, that they might fall into the hands of militants. So—so many of the conspiracies on the street in Pakistan sort of go back to that...

And so that is what's fueled so much of this anti-American sentiment in Pakistan...So as long as the U.S. is maintaining a presence in Pakistan, an intelligence presence and also with the drone strikes, I think you'll continue to see these conspiracy theories...

And here's a 2007 op-ed by two of the most prominent national security think tankers in the U.S., Frederick Kagan and Michael O'Hanlon, published in the New York Times:

...the United States simply could not stand by as a nuclear-armed Pakistan descended into the abyss...we would have to act before a complete government collapse, and we would need the cooperation of moderate Pakistani forces.

Somehow, American forces would have to team with Pakistanis to secure critical sites and possibly to move the material to a safer place...For the United States, the safest bet would be shipping the material to someplace like New Mexico.

Why are the filthy wogs so given to mass delusion? Is there something wrong with them genetically, or is it their culture? I suppose it could be both, of course.

(To be fair, Kagan and O'Hanlon do say it would be probably be impossible to get even "moderate" Pakistanis to let us literally steal their nuclear weapons, so we would "have to settle for establishing a remote redoubt within Pakistan, with the nuclear technology guarded by elite Pakistani forces backed up (and watched over) by crack international troops.")

—Jonathan Schwarz

Posted at 02:02 PM | Comments (14)