Government Pensions

This from Dean Baker

In fact, the main reason that some public sector funds face severe shortfalls is that politicians like Richard M. Daley and Chris Christie chose not to make required contributions.

Politicians have an incentive to over promise and under fund pensions.  (Just like the auto company executives.) So each individual should try to make the best arrangements he can and get as much money as he can now. Pensions can be a little like pie in the sky. Pay off your mortgage, add insulation and any home capital that pays back. Work as long as you can keep relations with friends and family strong. Diversify.

Why the Greek People May Vote to Stay in the Euro

So after it has inflicted so much damage on the Greek economy, why might the Greek people vote to stay in the Euro. 

This is from the comments on this Marginal Revolution blog post by Peter Schaeffer.

There are, in fact, any number of pro-Euro factions many of which are anti-austerity. Some folks (a large faction) favor the Euro because they want their pensions, paychecks, and other handouts in Euros, not Drachmas. These folks are very opposed to austerity, but even more opposed to receiving Drachmas from the government. These folks hate the Troika, love Syriza, but will vote yes anyway.Another faction is comprised of Greeks with bank accounts. A no vote means either banks accounts will be confiscated or converted into Drachmas. These folks may or may not like Syriza or austerity, but at this point fear is the only issue on the table.Yet another faction is made up of basically conservative folks like the restaurant owner. These folks see the Euro as a tool for forcing the Greek government to reform. I don’t think they are in correct in this matter. However, it is their opinion, not the correctness of their opinion, that matters.Still another faction (center / left) sees the Euro as a symbol of Northern European efficiency, a large and well funded welfare state, effective and progressive taxes, modernity, the “tolerance” agenda, etc. Of course, they also see the Euro as means of bringing Greece up to the standard of Denmark of the Netherlands. I don’t think they are in correct in this matter. However, it is their opinion, not the correctness of their opinion, that matters.As you can see, lots of groups support the Euro for reasons that are highly divergent and in some cases contradictory. Some of these folks strongly oppose austerity. Others overtly favor austerity. They will all vote yes anyways.Finally, let me offer a quote from a Greek citizen that sums up the situation all too well.“The EU can’t afford to let us fail so we should continue to say no and they will blink and give us a better deal.”This person intends to vote no. However, plenty of folks will vote yes precisely because they think that yes means more goodies from Europe. In one respect, the advocates of yes are probably very correct. A yes vote will probably be followed by a reopening of Greece’s banks. That’s one last chance to “take the money and run”.

One other factor might be that in a country like Greece where people are more likely to ignore laws, the real rate of unemployment might be way below the reported 25%.

It is Hard to Measure What Reduces CO2 More - So do not say "Please scam me" to Politicians

"Researchers find Nissan LEAF creates less CO2 than Toyota Prius hybrid in west US and Texas, but more in N. Midwest"

Regionally specific lifecycle CO2 emissions per mile traveled for plug-in hybrid electric vehicles (PHEVs) and battery electric vehicles (BEVs) in the US can vary widely based on grid emission factors (i.e., the “carbon footprint” of electricity production and use), according to a new study by researchers at Carnegie Mellon University. Under some conditions, the battery electric Nissan LEAF can produce higher emissions than a Toyota Prius hybrid. The paper is published in the ACS journal Environmental Science & Technology."
The team characterized the vehicle emissions across the United States under alternative assumptions for regional electricity emission factors, regional boundaries, and charging schemes. Among the findings were that:"

It is very difficult to tell which method reduces CO2 the most per dollar. So if you go along with  subsidies to green tech beyond basic research and/or cap and trade you telling your congressman "Please scam me."

Good News on Milk Production

From here

One of the keys to higher production and higher profits is to increase the milk yield while raising fewer cows. Between 1950 and 2000, the number of dairy cows in the United States fell by more than half, yet during that same period, the average annual milk yield more than tripled. What made this possible, and how has it affected the welfare of the animals?

Wow that is some serious productivity growth and from what my Agronomist friends their is still a lot of gains to made by bringing the lower producers up to the best producers. That is without new breeds or new technology.

Could the Income Tax be Turned into a a Progressive Consumption for all but but Some of the Top 1%

Could the income tax be turned into a a progressive consumption tax for all but some of the top 1%?  I think it could, by allowing Americans to contribute up to $5 million lifetime before taxes to an IRA. Withdrawals would be allowed at any age and would be taxed as income. You would also want to raise the rates a bit and eliminate the corporate tax, the corporate tax being a tax on saving and investing.

This would greatly simplify my tax return!

Little Gov. Spending Goes to the Important Stuff

Francis Woolley  has a written a paper titled "Why public goods are a pedagogical bad".

The interesting thing to me is how small a part of the budget things most of think as the core function of government are. 

• All of transportation spending (including roads and bridges) 3%.

• Police courts and incarceration 5%. 

• National defense about 6% (the USA is much higher here which BTW is silly. The USA would no less safe spending half that).
• Basic research less than 1% 

What is left are welfare programs but do not get the wrong idea, little of that is welfare for the poor. It is mostly welfare for the rich and middle class including Social Security, Medicare and schooling. Now this would not be a problem except that people usually spend there money much more efficiently than Government spends there money for them.

RICARDO HAUSMANN On "The Education Myth"

RICARDO HAUSMANN On:  The Education Myth

It should probably be titled The schooling myth?

My grandfather came to the USA from Italy in his mid teens with 1 year of schooling. He eventually owned a barber shop and some real-estate and sent his son to Brown University. He would call certain people “male educato” which meant some thing different than in what it means in English and something that seems far more important to me. It does not mean that you did not go to the right schools. he in fact I think he seemed more educated that many college grads.

Bill commented:

Let’s have a controlled experiment for Hausmann’s hypothesis.We will take half of his children, and let them go to college,And, the other half will stop at high school.Would he take the challenge?

But you really need 4 groups. 

All must be students projected to graduate college easily.

Group 1 Goes right to work without a degree after high school and starts earning.

Group 2 Gets a degree right out of high school and goes right work after high school and starts earning.

Group 3 Goes to college and get degree but must hide that fact and live as if they have no degree.

Group 4 Goes to college get degrees and then to work.

Wait a long time and compare life time earnings.

Who would you bet does best from those 4 groups?

I think school helps people get to where they can read, write and do arithmetic and those skills are important to most everyone. A little algebra probably helps to. I think that the rest can be learned outside of school. My grand father evidently learned enough in one grade to continue to learn without more schooling but I would guess that somewhere between 3 to 6 years of schooling would yield enough school learning for most people. For scientists and engineers much more school probably benefits.

One could also argue that more schooling helps society to not miss as many late maturers. That is it might be difficult to see which 12 years should get the more schooling to become the scientists and engineers. So we might reap a benefit yet from our long period of schooling.