Involuntary risk
Morality in a recessionary world
It used to be that the American retirement system relied on a so-called three-legged stool of assets: Social Security, a pension, and private savings. Changes in our economy over the last 50 or so years have cut away at two of the legs.
Our personal savings rate dropped to the low single digits for much of the 00s and most Americans don’t have access to a good pension (much less a career-track job). That’s why so many of those forty and older are suddenly scared to death about their retirement. With the precipitous decline in markets, few have truly adequate savings to bridge the gap between their 401k (if they have one) and Social Security.
Corporations have struggled, too. Those that invested their pension funds bullishly now have billions in liabilities they can hardly afford to cover. That’s why so many are reinvesting more conservatively. State and local governments, however, are doing just the opposite:
But states and other bodies of government are seeking higher returns for their pension funds, to make up for ground lost in the last couple of years and to pay all the benefits promised to present and future retirees. Higher returns come with more risk.
“In effect, they’re going to Las Vegas,” said Frederick E. Rowe, a Dallas investor and the former chairman of the Texas Pension Review Board, which oversees public plans in that state. “Double up to catch up.”
State and local governments employ about 14.8 million people. These employees tend to belong to strong unions that often negotiate for health and retirement benefits comparatively better to those found in the private sector (when they are offered at all).
But a good pension contribution plan isn’t much help when the bottom falls out. Because employees can’t control the investment portfolio, state and local workers are forced to take on an inordinate amount of risk–one that we now recognize can be crippling.
What’s the solution? Giving employees some measure of control over the pension mix seems like a coordination disaster, and there is no guarantee that a majority vote would prevail in favor of a more conservative mix.
That said, giving workers a choice about what risks they incur lessens the apparent moral harm when stock market swoons wipe them out. But many have argued that the current recession shows exactly why we need to give individuals less, not more, choice over how they save for retirement. It’s too easy to underestimate far-off risks, even when so much is at stake.
A more sensible approach would be to enact more stringent regulations about retirement investment–both for public and private funds.
It seems like we’re relearning the lessons that led to the creation of Social Security during the New Deal. It’s not good to be poor when you’re old, and it’s worth forcing people to insulate themselves from that risk. Liberty reaches its its limits when the capacity for informed choice is similarly limited.
-Sam
If video games lead to violence, should government regulate them?
The Washington Post’s health blog, The Check Up, writes about a study published this month in Psychological Bulletin demonstrating a link between playing violent video games and violent thinking, attitudes and behavior. There has long been a debate about the regulation of sex and violence on TV and in video games. Does this study support the case for banning or regulating video games? Can any amount of empirical evidence justify government intrusion in personal choices?
-Marc
Should luge be cancelled?
Accounting for risk in sports.
The tragic death of young Georgian luger Nodar Kumaritashvili during a practice on the eve of the 2010 Olympics has not only cast a dark pall over this year’s Winter Olympiad, it has also raised questions about a notoriously dangerous sport. While debates will rage on over whether host-nation Canada afforded foreign lugers ample practice time, or whether exposed steel beams ought to have been covered, the deeper question is how and to what extent we allow athletes to risk their bodies.
Super Bowl Ads Con’t: The Green Police
Following on Colin’s post, the environmental website Grist has a post on the memorable “Green Police” Audi commercial (warning: sweet sweet “green police” music will get stuck in your head). The ad has the internet masses a buzz about whether such a world could ever come about and, more generally, the legitimate extent of government oversight in personal matters. Check out the youtube comment section for a spirited debate. And chime in if you are so inclined.
Wipes away wrinkles . . .
. . . beats erectile dysfunction, and keeps you alive for ever, too!
The federal Food and Drug Administration recently censured dermatologist Dr. Leslie Baumann for promoting a cosmetic drug before its FDA approval. According to the New York Times, this marks the first time the FDA has warned one of the investigators who oversees the clinical trials that lead to FDA review and, in some cases, approval for use by the public.
Depending on how you look at it, the Food and Drug Administration is either a basic requirement for exercising individual liberty, or the ultimate expression of the Nanny State. Which one is it? Read more
Government incentives revisited
The perfectionism-neutrality debate
Last week I wrote about government’s use of taxes, tax credits, fees and regulations, and legal punishment to incentivize and disincentivize personal behavior, such as the homebuyers tax credit, taxes on alcohol, parking meter fees and speeding tickets. As I noted, one of the key public philosophical questions that arises is “to what ends may government incentivize/disincentivize behavior?”. This question gets at the core of a philosophical debate over whether the state should promote certain conceptions of the good life (“goods”). One side of the debate - perfectionism - claims that the state can and should promote goods. Neutrality, on the other hand, argues that the state can and must refrain from promoting the good and instead promote only “the right.”
NYU Law Professor and sometimes public philosopher, Ronald Dworkin, posits that this debate ultimately sets liberalism, which Dworkin believes is grounded in neutrality, apart from other political theories. Other liberal theorists, such as Rice University philosopher George Sher, believe perfectionism can be compatible with liberalism. In this post I want to elaborate on this debate, though within the space limitations of a blog I will just get to skim the surface. Read more
Is having a child a right?
Ian Murray over at The Conrer has an interesting post on whether having a child is a right or, as one British MP asserts, a privilege. The discussion stems from a Sun article in which 59-year old Sue Tollefson tells the paper that she plans to use In vitro fertilisation (IVF) to have a baby. The MP, Tom Harris, contends that the state should be able to ban IVF at that age because “of course 60 is too old to become a mum.” Harris argument is actually quite interesting:
I agree that it’s not fair that some women who desperately want to have children reach the age when they can collect their pension but still haven’t achieved that ambition. But what’s even more unfair is knowing that a child is born with the near certainty of being left motherless before it reaches its teens, or will spend their formative years as a carer. Children are not lifestyle choices. They’re not possessions to be added to our collections of material wealth as we grow older: first car (used), first flat, first house, second car (new), baby, bigger house… Children are precious for their own sake. The happiness and fulfilment they offer to their parents is secondary.
As for Ian Murray at The Corner, he argues that there exists a right to have a child: “Now I’m not one for long lists of positive rights, much preferring short lists of negative rights, [ ] it says something that every statement of human rights since the 1948 U.N. declaration includes the right to marry and found a family.” I can imagine, though, that some of his colleagues will take an opposite position. For faced with a common conservative dilemma — what to do when rights conflict with religious belief — many will see IVF as unnatural and, thus, immoral in itself.
-Marc
Tyranny of the filibuster?
The New Republic carried an article last month arguing that there exists a realistic way to get the Senate to abolish the filibuster. Taking a page from John Rawls’ “veil of ignorance” principal, which states that people should choose just moral rules as if they have no knowledge of how they would be effected by the chosen rules, author Nicholas Stephanopoulos argues that the Senate should pass a law today to ban the filibuster in the future. Since there is no way to know which party would be in the majority in, say, seven years, senators would not know how the rule would affect themselves or their party (satisfying the Rawlsian test). And political self-interest could stop being an excuse for keeping the filibuster in place, as the current majority may very well be the minority in 2017 (satisfying the political feasibility test).
As Stephanopoulos writes:
A debate now on whether to eliminate the filibuster in the future would transform senators’ decision-making calculus. The key questions would no longer be whether they enjoy the personal clout conferred by the filibuster, or whether it advances or threatens their parties’ agendas. The issues, instead, would be whether it makes sense for almost all Senate business to require a supermajority.
Implicit in Stephanopoulos’ argument is that it does not in fact make sense for Senate votes to require a 60-person majority. But why not? Read more
Naked guy revisted
Remember naked guy who challenged our understanding of personal freedom and the boundary between public and private? Looks like a judge decided this morning that the case of Erick Williamson was one of indecent exposure. Naked guy is exercising his freedom, not surprisingly, to appeal.
-Marc
Personal responsibility and the nanny state
Helping people help themselves
Some Republicans have recently seized on small provision of health care legislation under consideration in the Senate:
For critics of the Democrats’ $849 billion health care bill, this may be the ultimate irony: millions of dollars set aside so the government can help teach citizens how to handle their own money better.
The funding is part of a broader, $375 million program aimed at promoting responsible lifestyles - a five-year plan to fund state efforts to educate adolescents on abstinence, contraception and other “adult preparation subjects” such as healthy relationships, increased child-parent communication and “financial literacy.”
Critics like Senator Jim DeMint (R-SC) say that “Personal responsibility is a good principle — but not the government doing it.” Senator Tom Coburn (R-OK) sarcastically calls it “a wonderful nanny state.”
This is an old, but important debate. Read more
-
Follow us on Twitter
