Oddly, we’ve never talked about retirement issues before, except one old meeting on Social Security. Yet, there’s a growing chorus of warnings about our fragmented retirement system, and some serious people are starting to wonder whether future generations of Americans will be able to retire in the financial comfort we all have come to expect.
As I’ve mentioned, American’s retirement system is a three-legged stool employee pensions, personal savings and investments, and Social Security. Neither one was ever intended to be the sole source of Americans’ retirement income, and none are adequate for that.. To say that retirement depends on these three legs means that Americans’ secure retirement depends on:
- Adequate wages
- Adequate savings and earnings on those savings, and
- The willingness of future governments to keep their promises on Social Security and, for about 1 in 7 of us, public sector pensions.
Right away, you can see the potential problems with each of these, and you can add another: That employers have shifted the risks of retirement onto the backs of workers by replacing defined benefit retirement plans with defined contribution plans, like 401(k)s and other vehicles that depend on the stock market to pay off.
But, despite a lot of doom and gloom, exactly how big the looming retirement crisis will be is hard to say because it requires making a lot of assumptions about the future. Will wages stay flat? Will stocks grow as fast as in the past? Will state and local government DB plans all be eliminated? Will we decide to slash Social Security benefits?
This is a complicated topic, but we’re up to it. To help (hopefully) I’ll open by explaining a few of the basic facts about each of the three legs of our retirement system (private pensions, savings, and Social Security). Then, if I can figure it out, I’ll explain a little bit about why experts are projecting a dim retirement future for so many Americans.
Discussion Questions –
- Private pensions: Who gets them and who does not? How much do they earn? How well funded are they?
- Savings/Investment: Same.
- Social Security: How generous are its benefits? How big is its funding shortfall? How easy would that be to make up?
- How do experts predict the future of Americans’ retirement, given all the unknowns about future wages, savings, earnings, etc.?
- How bad is the looming retirement crisis? Which types of Americans will be hit the hardest?
- What can and should be done about all this?
Is a pension crisis coming?
- Yes. The failure of 401(k)s and the coming retirement crisis. Specifically, why 401(k)s are such a bad retirement deal for many, many Americans.
- No, or at least only kind of. The retirement crisis won’t be that bad! A must-read. Or, read this here.
- Oh, yes a crisis is coming! A rebuttal.
Social Security -
- 60% of Americans think that Social Security will never pay them one dime. This is crazy wrong.
- Nine misconceptions about social security. A must-read.
- More on the whole “SS trust fund is an accounting fiction” thing.
- Social Security does face a shortfall. Some ways to fix that. [UPDATE: Full list of ideas for patching SS is here.]
- Or, maybe we should raise Social Security benefits to compensate for the loss of secure private sector pensions.
- Of course, keeping our economy strong with good wages and a strong stock market is a must. Government action alone can’t solve the retirement problem.
- We talked about state and local government employee pensions a few months ago.
NEXT WEEK: Should the Government Still Be Promoting Home Ownership?
We need topics for Q1 of next year. Carl, Dean, and I will select them within a week. We usually like to have 40-50 ideas to choose from.
What do you want to talk about? Politics & public affairs. International relations. Religion. Philosophy. Culture. Science. History. Let me know in comments.
This week, young people (next week, old people!). The Millennial generation, like the gaggle of young women sitting next to me in this Starbucks, was born 1982-2003. So, they are all under 30. And, there are a lot of them: About 90 million people, larger than the Baby Boom generation. Yes, young people vote in smaller numbers than other groups. But, their political views are going to change American politics and the country, just as every generation has done. Their political and partisan tendencies are being locked in now, in their youth, also like the rest of us.
How will this generation change our politics? Can we even make any generalizations about such a large and diverse group? If so, what do Millennials believe that is relevant to politics? What do they want politics to do for them, specifically? How will Generation Y vote and how will the need to attract their loyalty change both political parties?
Discussion Questions –
- Who is the Millennial Generation? Do they have any common formative experiences? What are their social and political views?
- Can we describe Generation Y as uniformly progressive? What about their libertarian tendencies? What made them like this?
- What do Millennials want out of politics and how do they (or, do they) expect politicians to solve their problems?
- How have they voted and affected politics so far? Which party will appeal to them in the future? How will the need to attract them change the parties and what they stand for?
- Voting aside, how will Millennials’ political participation change our country?
- Will Millennials change their politics as they grow older?
- The Great Recession has devastated young adults. Their economic catastrophe. Their “delayed adulthood.” The staggering debt trap they are in. (Read one, please,)
- What are the social and political views of Millennials? (Recommended)
- What are their political views like?
- Are Millennials the “progressive generation?” (Recommended, but don’t believe everything you read.) See here for a longer and better source analysis that says the same thing.
- Right now, Millennials hate the GOP.
- But, this could change, especially if Obama is perceived a failure and/or if Republicans change some of their policies! (Read one)
NEXT WEEK: Can Americans Afford the Retirement Security They Expect?
A debate broke out in the blogosphere this week that’s perfectly timed for Monday’s topic (except they’re debating the opposite of our question, but that won’t stop us). The economist Larry Summers followed by Paul Krugman and then the whole public policy community, it seems, debated reignited the debate over just how screwed the U.S. economy is for the next decade or two, or longer. This discussion dovetails with a debate that’s been going on at least since the big crash in 2008: Is the age of strong U.S. economic dynamism and growth that leads to broadly-shared prosperity just over? Are we doomed to a long period of slow growth, high unemployment, rising inequality, and deteriorating conditions for the rest of our lives? Conservatives have been among the pessimists, too. I track this debate and it’s pretty grim.
But, I was thinking it wouldn’t be the first time the experts preached doom and gloom and been wrong. In, for example, the 1930s and 1970s all the hip people thought America’s economic miracle had come to the end of the road. They cited slow growth and permanent high unemployment, flat or falling wages, a sputtering pace of technical innovation, a broken financial system, and foreign competition. Today we could add a broken political system and a level of global competition earlier generations could scarcely have imagined. Oh, and climate change looms over all of this.
Still, our economy – and our society! – are highly adaptive, and we have risen from the ashes before. Can we do so again, or are the critics right this time?
On Monday I’ll open us up by explaining a little about what the experts are saying on all of this. It’s not complicated, really, and it’s as much about politics and business and science than obscure economics. Then I think we can have broad-based discussion of the causes of our present predicament and our future.
Discussion Questions –
- What drives innovation and growth and how is growth translated into widespread prosperity that includes regular Americans?
- What are the main schools of thought that argue that we’re entering a “great stagnation” or a period of falling prosperity for most Americans? What do they say the causes are?
- Are these factors “natural” to the 21st century economy, or are they within our control to change (i.e., have we done it to ourselves)?
- Are they too pessimistic? What are they leaving out? What about America’s cultural and social dynamism that few other countries have - isn’t this our greatest advantage of all?
- What could we do to change a grim future, or at least to help restart the American dream?
- Are we in a permanent slump? Recommended.
- Has innovation basically stopped?
- Will intelligent robots put the middle class out of work? Seriously, this is worth reading!.
- Was our prosperity in the 1950s-80s just a historical accident that cannot be replicated? Recommended.
- [UPDATE: There are many, many theories of why we might be entering an era of permanent slump, and I'll go over them. One that never gets any attention is this one. Skim it.]
No, we’re not
- Innovation will be back, just like it always has been. Recommended.
- A 15-minute TED talk (video lecture) on how abundant the human future is.
- 31 charts on good news “that will restore your faith in humanity.”
NEXT WEEK: How will the Millennial generation change U.S. politics??
We’re still attracting 12-15 people for a typical meeting. On a Monday night. To talk politics and philosophy and culture. In a Coco’s. I think it reflects the high quality of our discussions and the great topics. Anyway, as I mentioned, here are a few cool articles from the Atlantic Monthly concerning gender roles:
The Gay Guide to Wedded Bliss: What straight couples can learn from gay couples. I found this fascinating.
Gender roles have changed a lot for Millenials, but the changes really began much earlier than that.
Jim Z. had this fantastic idea for a topic: Does the Munich appeasement metaphor still carry any relevance in 21st century America? It certainly has been the most frequently-used historical metaphor in our politics for decades. It’s amazing how often it’s been 1938 since 1938. During the entire Cold War. In the Balkans and the Persian Gulf. In North Korea and Iran. And now, apparently in Libya and Syria.
It’s easy to laugh at this overkill. But, historical analogies, while often problematic, can be useful. Years ago, in graduate school, I took a class on their uses and misuses. The upshot was that people often use them without defining what the analogy is supposed to mean, when the historical parallels are few or vague, and to stifle debate rather than inform it. Still, without using history to guide us we’re flying blind.
What does it mean, then, to invoke Munich and appeasement? Is it the idea that making concessions to an adversary always emboldens them and leads to more aggression? Is it to warn us against naiveté, to insist we face the malevolence and will to aggression of, say, Iran or North Korea? Or, is it a belief that negotiating with an enemy – making concessions in return for some – is tantamount to surrender?
I’m looking forward to hearing Jim’s opening take on this topic. Let’s at least try to understand Munich before we decide to bury it, and try to understand why this metaphor still resonates with so many people.
Discussion Questions –
- What does the “Munich analogy” mean? Can it have more than one meaning?
- When since 1938 has it been applicable? Which enemies have we appeased? How much historical parallelism is necessary to invoke Munich?
- What can constitute appeasement of an enemy today, when the United States is so powerful and our enemies so small? Are we appeasing Iran, or North Korea, or anyone else? Appeasement requires that there be realistic alternatives to war, BTW.
- Is it time to retire the Munich metaphor? What would we gain and lose?
- What about other historical analogies, like the Vietnam analogy? Are they useful or harmful?
Munich has been - and still is - invoked frequently –
- From 1938-80. A lot in the 1980s. During the Persian Gulf War. [Jim wanted us to know the history of Munich’s invocation. These are a very long and liberal version of the history.]
- Against Obama: To conservatives, the entire Obama foreign policy has been one, big appeasement exercise, of all of our adversaries. This is no exaggeration: Iran and Russia - Recommended. Syria. Libya. His/our appeasement is everywhere.
- By Obama: SecState John Kerry used Munich to justify the
Is it time to end the Munich analogy?–
- Yep. It’s high time. Recommended.
- Longer, more thorough critique of the analogy using the ways it has been misused in the last 50 years..
- But, the Munich/appeasement metaphor still has its uses!
Optional Long Reads –
- 20pp 1998 study by the Air War College of uses/misuses of the Munich analogy.
- U.S. Army study of whether the actual Munich agreement constituted appeasement of Hitler.
NEXT WEEK: The future of American gender roles!
Recently, the city of Detroit filed for bankruptcy, the largest municipal bankruptcy in our history. Such bankruptcies are rare, and Detroit is a special case. The city has lost about one-half of its population in the last 40 years, is overwhelmed with poverty, and may no longer be able to support the basic services of a large city. However, four local governments filed for bankruptcy in California since 2008, and a lot of people are worried that more local and even state governments could fail in the near future, even if the main cause – the worst recession with the sharpest fall in state revenues ever recorded – continues to abate
Why are state/local government likely to continue to operate on the edge? Do taxpayers just not want to pay for the services they get, the tune I sing every week? Or, is something else going on here? Is there any truth to the conservative mantra that greedy government unions are the cause of all these problems? Or, are liberals right to say we only have problem paying for government if we want to have a problem? This topic may sound technical like last week’s Fed discussion. But it’s really just another installment in our group’s long running saga, What do we want government to do and who should pay for it?
On Monday, I’ll start us off with a little background 0n why state and local governments are in this position. (Detroit’s problems are pretty obvious, especially if you read the articles below, so I won’t lecture on those.) Then, I’ll briefly outline ways people say we might shore up local finances in the future.
Discussion Questions –
- What do state and local governments DO with our tax money? What are their sources of revenue?
- How big is the state/local fiscal crises? What caused it? Is it just this unique recession, or are the problems “structural?” or even political?
- What does the future hold? How will governments, especially CA, pay for basic public services if the economy stays slow for years?
- What if the public just does not want to pay for the next generation of public services or for public sector workers to be well-paid?
- If businesses strongly prefer low taxes to high services, how can we nurture them and the broad public at the same time?
- Do you really want a future of a much lower level of state/local government services? Wouldn’t that hit the poor and vulnerable the hardest? Are you okay with that?
- Also, do you really think that would be good for economic development and for our society as a whole?
- What do state governments do? [UPDATE: Pie chart of CA state + local spending. See this if you don't know the basics of what they spend our money on.]
- Detroit basics.
- Local government fiscal crises mount. (from 2011, so a little better now) Recommended.
- Four CA cities went bankrupt recently, and the rest are scrambling.
NEXT WEEK: Is the Munich appeasement analogy still relevant?
I hope everyone enjoyed listening to Professor Will Cummings on the Fed. Here are two things:
1. Here’s the full schedule for next week’s “political economy week” at Grossmont College. They have panels on many great topics, including many topics we have talked about: Immigration, Obamacare, libertarianism, and the causes of the crash of 2008.
2. “The Retirement Gamble,”the PBS Frontline report that Will mentioned on the looming pension crisis in America. No one knows about the coming pension crisis, but we will because we will be discussing it on December 9! I’ll post the video again then.
It’s guest speaker time! Will Cummings, a professor of political economy at Grossmont College, has agreed to come talk to us about the future of the Federal Reserve. The Fed, as many of you know, is the most important government (well, quasi-government) institution outside besides the Presidency. Basically, the Fed is charged by law to do all it can to ensure maximum employment, stable prices and moderate long-term interest rates. Under Chairman Ben Bernanke, it probably saved us all from economic depression in 2007-08, but it did so by taking extraordinary actions that may in the long term limit its ability to achieve those goals. Many people think the Fed should also be responsible for preventing financial bubbles, but that us hard to do.
Now, President Obama has nominated Janet Yellen, a serving Fed board member, to replace Bernanke. Since the Fed is supposed to be politically independent, naming a new chair is one of the few opportunities to influence the institution. Bruce, among others, wanted us to use this opportunity, too, to debate the Federal Reserve’s priorities and future.
Will is going to walk us through the basics, focusing on the big policy questions. Fear not! How the Fed does what it does is very technical, but questions about what it’s priorities should be and who it should be listening to are not. Regular people can debate this without getting into finance-speak.
Discussion Questions –
- Basics: What is the Federal Reserve and what is its mission/mandate; i.e, what is it supposed to be doing? Also, how does it do it?
- Bigger picture: How political is the Fed? Whose interests does it serve? Ours? Big Finance’s? Both (by ensuring economic growth and stability)?
- The New Fed: What extraordinary measures has the Fed taken to help the economy since 2008? Did they help or hurt? What risks (of future inflation, say) do they pose? Should they stop doing it?
- Tomorrow’s Fed: What are the big issues facing Yellen? What, if anything, should the Fed do differently in the future?
Links – [Saturday night - I've prioritized these readings and added a few.]
What is the Fed and how has its role changed dramatically recently?
- What does the Fed do, and what has it been doing lately; i.e., since the 2008 meltdown? More here.
- The revolutionary new ways the Fed started operating in the wake of the 2008 financial meltdown. Recommended.
What Should Fed do now?
- Five big challenges it faces.
- The Fed’s role as bank regulator is what really matters now.
- The basic liberal view of what the Fed should do now to help the economy.
- NEW: Krugman expresses it best. Recommended, or the previous one on liberal view.
- There is no inflation to fight! None, says a former Reagan/Bush official.
- NEW: A more conservative view of what the Fed should do. Read if you understand this stuff a bit.
BTW, on politicizing the Fed –
- The Fed is “political” even when it’s independent.
NEXT WEEK: Detroit, et. al.? How to handle looming local and state bankruptcies. I swear this will be interesting.