Quotulatiousness

January 31, 2012

Andrew Coyne on the sudden appearance of Stephen Harper’s “hidden agenda”

Filed under: Cancon, Economics, Government, Politics — Tags: , , , , — Nicholas @ 12:19

We’ve been waiting for it to appear since the 1990′s, so it’s about time that it finally put in a cameo:

At last, the hidden agenda, and not a moment too soon. Vague, indirect and overseas as it was, Stephen Harper’s Davos speech was perilously close to a vision statement, of a kind the prime minister has seldom made until now, and will henceforth have to make often.

It would be nice if he had shared with us his concerns about the ageing of the population, and the threat it poses to our long-run social and economic health, sometime before the last election, rather than joining in the all-party consensus that there was nothing wrong with Canada that could not be fixed with more and richer promises to the elderly.

[. . .]

How serious is the cost side of this conundrum? The president of the C. D. Howe Institute, Bill Robson, has projected the “net unfunded liability” implied by this unprecedented demographic shift — that is, promises to pay benefits out of public funds for which we have made no provision in taxes, “net” of any savings from having fewer children about — at about $2.8-trillion. With a T, ladies and gentlemen: about 160% of GDP. (That’s in addition to the $800-billion unfunded liability in the Canada Pension Plan and its Quebec counterpart — yes, they are pulling in enough each year to meet their current obligations, but that does not mean they are “fully funded,” the prime minister’s claims to the contrary — to say nothing of the $600-billion national debt.)

January 15, 2012

As you’d expect, healthcare costs are not evenly distributed

Filed under: Economics, Health, USA — Tags: , , , — Nicholas @ 12:20

Jordan Weissmann in The Atlantic:

When it comes to America’s spiraling health care costs, the country’s problems begin with the 5%. In 2008 and 2009, 5% of Americans were responsible for nearly half of the country’s medical spending.

Of course, health care has its own 1% crisis. In 2009, the top 1% of patients accounted for 21.8% of expenditures.

The figures are from a new study by the Department of Health and Human Services, which examined how different U.S. demographics contributed to medical costs. It looked at the $1.26 trillion spent by civilian, non-institutionalized Americans each year on health care.

The top 5% of spenders paid an annual average of $35,829 in doctors’ bills. By comparison, the bottom half paid an average $232 and made up about 3% of total costs.

December 27, 2011

Retirement age will have to rise: The Economist

Filed under: Economics, Government, Health — Tags: , , , — Nicholas @ 10:38

In a development that should surprise nobody at all, governments around the world are slowly, reluctantly, grudgingly starting to make changes to their state pension systems:

Put aside the cruise brochures and let the garden retain that natural look for a few more years. Demography and declining investment returns are conspiring to keep you at your desk far longer than you ever expected.

This painful truth is no longer news in the rich world, and many governments have started to deal with the ageing problem. They have announced increases in the official retirement age that attempt to hold down the costs of state pensions while encouraging workers to stay in their jobs or get on their bikes and look for new ones.

Unfortunately, the boldest plans look inadequate. Older people are going to have to stay economically active longer than governments currently envisage; and that is going to require not just governments, but also employers and workers, to behave differently.

December 13, 2011

Japan’s even-worse-than-Greek debt situation

Filed under: Economics, Japan — Tags: , , , — Nicholas @ 12:13

By way of Monty’s daily DOOOOOOM post, here’s some disturbing information on Japan’s eyewatering debt situation:

It seems “debt,” “Greece,” “crepe,” or any other words that might relate to the current Euro crisis prompts a flurry of activity on stocks around the world. But if you thought Greece’s and Italy’s debts were high, there exists a country with an even higher debt-to-GDP ratio. Surprisingly, it also has some of the lowest government bond rates in the world. Let’s take a look at this macro mystery.

Japan’s 2011 gross public debt as a percentage of GDP is estimated by the IMF at 234%. Compare this to down-but-not-yet-out Greece’s at 139% and Italy’s at 119%, and the United States’ at 99%. With those numbers, you may ask how Japan hums along while investors berate Europe for their lack of strict budget controls and U.S. politicians wrestle to cut the deficit.

This is because of one main difference: 95% of Japan’s debt is Japanese-owned. Compare this to Greece, which owns 29% of its debt. The Japanese have been happy to fund their government at incredibly low bond rates, currently around 1.1% for a 10-year bond. Why don’t the Japanese invest elsewhere for higher returns? For one, Japan likes to keep its yen in the country. This is due to a natural bias to favor one’s domestic investments (home bias), the strength of the yen, and domestic institutions’ required participation in bond auctions. Also, it’s difficult to find domestic positive returns. The Nikkei, since Japan’s trouble in the early 1990s, has lost about half its value

December 2, 2011

QotD: “Pretty sure we, as a country, were drunk”

Filed under: Cancon, Football, Humour, Media, Sports — Tags: , , , — Nicholas @ 12:13

I was at the urinal next to Bob Costas once. It was at the 2010 Winter Olympics, just before the Closing Ceremony, during which Canada said goodbye to the world with a nightmarish glowing dreamscape of giant beavers and plaid-wearing lumberjacks and dancing Mounties and flying moose and looming table hockey players and William Shatner, among others. Pretty sure we, as a country, were drunk.

But Bob Costas was not drunk, because Costas is a sober and professional man who disapproves of you and your shenanigans, probably. Costas is among the great broadcasters of his generation, as witnessed most recently by his stellar on-camera interview with accused Penn State pedophile Jerry Sandusky. And despite some creases in his face, and perhaps a whisper of greying hair, Costas remains youthful, even boyish.

Like just about everything in television, however, that is at least partly a facade, as Costas’ monologue on Football Night in America on Sunday last week demonstrated. As if channeling Andy Rooney in 1978, Costas inferred that touchdown celebrations are basically ruining the minds of our children, with their iPhones and their pornography and their touchdown dances. If life is a football field, it is time to leave Bob Costas’s lawn.

Bruce Arthur, “NFL Picks, Week 13: NFL players can dance if they want to”, National Post, 2011-12-02

October 27, 2011

Postponing retirement: late Boomers and Gen X’ers face reality

Filed under: Cancon, Economics — Tags: , , — Nicholas @ 00:04

Jonathan Chevreau shows that those of us getting a bit closer to retirement will have to wait longer than the previous generation before retiring:

The “double whammy” of falling stock prices and low interest rates has impacted members of DC pensions and RRSPs, who must cover the deficit through reduced personal spending and/or deferred retirement.

Towers Watson has issued its first quarterly DC Retirement Age Index, which it describes as a pension freedom tracker. It tracks the performance of a balanced portfolio of a DC plan member who has contributed to the plan from age 40 to 60. At that point, an annuity would be purchased but its value and monthly payout would depend on the performance of the plan over those 20 years.

[. . .]

With recession threatening, ongoing market volatility and falling interest rates, Towers Watson expects the Pension Freedom Age could move up to 67, or two years after the traditional retirement age (when Old Age Security and full Canada Pension Plan benefits commence).

October 11, 2011

What the “Occupy #LOCATION” folks should really be protesting

Filed under: Economics, Liberty, Politics, USA — Tags: , , , , , — Nicholas @ 12:09

Caroline Baum puts her finger on the real looming crisis that the folks out in all the various Occupy Wall Street/Bay Street/Seattle/Edmonton gatherings should really be agitating about:

Oh, sure, some protesters have posted lists of pie-in-the-sky demands. (The occupywallst.org website insists there is no official list of demands.) One of these includes a $20 minimum wage regardless of employment, tariffs on all imports, trillions of dollars in new spending on alternative energy and infrastructure, and debt forgiveness — all debt “on the entire planet.”

In other words, lots of benefits and no consideration of the cost. You’d think one of these kids — and that’s how they come across — would have taken an economics course along the way. Where do they think the government gets the money for its largesse? Imposing usurious taxes on the top 1 percent of earners won’t yield enough money to provide for the other 99 percent. (One of the protesters’ slogans is, “We are the 99 percent that will no longer tolerate the greed and corruption of the 1 percent.”)

It’s not as if young adults couldn’t find good targets for their anger. If these protesters are looking for something to get exercised about, they might want to wander into Chris McHugh’s Monetary Economics class at Tufts University in Medford, Massachusetts, and learn about “generational economics,” the idea that government is going to stick the younger generation with the bill for supporting the retiring baby boomers. McHugh asked his students to identify grass-roots youth groups that are agitating about this, but all they found were a couple of minor groups that tended to be Tea Party and Ron Paul spinoffs.

Talk about haves and have-nots. The debt burden that the younger generation is staring at almost guarantees it will have a reduced standard of living. After all, if more dollars are directed at keeping Granny alive until age 102, that means fewer dollars for productivity-enhancing investments.

This idea clearly hasn’t resonated with today’s youth.

Maybe that’s because the numbers — tens of trillions of dollars in unfunded Social Security liabilities, for example — are hard to fathom. It’s much easier to vent their anger at bank bailouts and preferential treatment for corporate interests, much of which is justified. They seem to be ignoring Capitol Hill, where the rules are made by our bought-and-paid-for government.

August 15, 2011

Terry Pratchett’s views on assisted suicide

Filed under: Britain, Law, Media — Tags: , , , — Nicholas @ 09:02

Terry Pratchett is considering the option of assisted suicide as his own early-onset Alzheimer’s is starting to degrade his ability to write:

“I believe everyone should have a good death,” he tells NPR’s Steve Inskeep. “You know, with your grandchildren around you, a bit of sobbing. Because after all, tears are appropriate on a death bed. And you say goodbye to your loved ones, making certain that one of them has been left behind to look after the shop.”

Pratchett has become an advocate for legalized assisted suicide in Britain, making him one of many voices in a global debate. Many oppose the practice for religious reasons or because they fear a slippery slope to involuntary euthanasia; but Pratchett has turned the legalization of assisted suicide into something of a personal crusade.

“I prefer not to use the word ‘suicide’ because suicide is an irrational thing whereas I think that for some people asking for an assisted death is a very rational thing,” he says. “People who I have met who have opted for it are very rational in their thinking. And indeed so are their families, quite often, because they know they are in the grip of a terrible disease for which there is no cure and they do not want to spend any more time than necessary in the jaws of the beast.”

Pratchett says that’s why he’s considering assisted death — even though his diagnosis could make it hard to recognize the right time to go.

“[It's] always a problem for someone with Alzheimer’s,” he says. “Regrettably, quite a few people go earlier than they might need to, to make certain that they are totally coherent when they are asked various questions and fill in the various forms that they have to fill in.”

June 10, 2011

With extended lifespans . . . will come later retirement dates

Filed under: Economics, USA — Tags: , , , — Nicholas @ 16:49

For all of us who’ve spent our working lives assuming that 65 was the age of retirement (or 55 for those of you who paid closer attention to retirement planning 20 years earlier than the rest of us), you won’t like this:

Americans better get used to working longer, even until they are 80 years old, according to a study by the Employee Research Benefit Institute (via Robert Powell at MarketWatch).

Naturally, those with lower incomes will need to work longer.

Here’s how it breaks down (via MarketWatch):

  • If you make around $11,700 dollars a year you have to work to age 84 to have a 50% chance of affording retirement.
  • If you make between $11,700-$31,200 a year you have to work to age 76 to have a 50% chance affording retirement
  • If you make between $31,200-$72,500 a year you have to work to age 72 to have a 50% chance of affording retirement.
  • If you make $72,500 or more a year you have to work to age 65 to have a 50% chance of affording retirement.

This study does point out one bright spot for those working past 65 though. If you are putting your money into some kind of retirement fund, your chances of saving enough increase substantially.

May 26, 2011

Here’s a different way to pay for socialized medicine

Filed under: Economics, Government, Health, USA — Tags: , , — Nicholas @ 09:35

Kevin Drum has an interesting proposal in Mother Jones:

So here’s an idea: why not reform Medicare by means testing it? Conservatives should love this idea.

Here’s how it works. Basically, we leave Medicare alone. Oh, we can still go ahead with some of the obvious reforms. Comparative effectiveness research is a no-brainer for anyone who’s not part of the Republican leadership. Ditto for some of the delivery reforms on the table. Or allowing Medicare to negotiate for lower prices. It would be great if that stuff works. But if it doesn’t, then people will need to pay more for their care. So why not have dead people pay? They don’t need the money any more, after all.

So Medicare stays roughly the same, but every time you receive medical care you also get a bill. You don’t have to pay it, though. It’s just there for accounting purposes. When you die, the bill gets paid out of your estate. If your estate is small or nonexistent, you’ve gotten lots of free medical care. If it’s large, you’ll pay for it all. If you’re somewhere in between, you’ll end up paying for part of the care you’ve received.

Obviously this gives people incentives to spend all their money before they die. That’s fine. I suspect they wouldn’t end up spending as much as you’d think. What it does mean, though, is that Medicare has first claim on their estate, not their kids. But that seems fair, doesn’t it?

It has the virtue of acknowledging that free healthcare isn’t actually “free” at all.

May 13, 2011

QotD: The financial legacy of the Baby Boomers

Filed under: Economics, Quotations — Tags: , , , , , — Nicholas @ 00:05

Greg Mankiw links to a WSJ piece about our negative bequest to our children. It’s a point I’ve made many times myself (and am sometimes accused of bashing the elderly because of this). A good quote from the WSJ piece:

     [R]egardless of how much they have contributed, the hard reality is that the federal government has already spent it. No matter how deserving they are, it is younger generations of workers who have to come up with the money.

It is morally wrong to force young people to make good on false promises made before they were even born. It is an outrage, a scandal, a shame on our society. A society that invests in the old at the expense of (actually, to the large detriment of) the young cannot survive. A caring and kind society cares for the weak and elderly and helpless; a dynamic and just society allows the young to grow and prosper on their own merits. If America is to prosper as a nation, the young must be given room to build families and careers. To build lives, without the onerous, crushing burden of debt run up by their forebears.

Never mind questions of ethics or “fairness”: it’s just math. The numbers do not, cannot, and will not ever even up, no matter what accounting tricks the government uses. Until we fundamentally change how the Big Three entitlement programs (SS, Medicare, Medicaid) work, we will continue to load up our young people with a crippling load of debt they had no hand in accruing.

“Monty”, “A hot cup of DOOM!, no cream, no sugar”, Ace of Spades H.Q., 2011-05-12

May 11, 2011

QotD: The instinctive reaction to progress

Filed under: Humour, Media, Quotations, Technology — Tags: , , — Nicholas @ 12:39

I suppose earlier generations had to sit through all this huffing and puffing with the invention of television, the phone, cinema, radio, the car, the bicycle, printing, the wheel and so on, but you would think we would learn the way these things work, which is this:

1) everything that’s already in the world when you’re born is just normal;

2) anything that gets invented between then and before you turn thirty is incredibly exciting and creative and with any luck you can make a career out of it;

3) anything that gets invented after you’re thirty is against the natural order of things and the beginning of the end of civilisation as we know it until it’s been around for about ten years when it gradually turns out to be alright really.

Apply this list to movies, rock music, word processors and mobile phones to work out how old you are.

Douglas Adams, “How to Stop Worrying and Learn to Love the Internet”, Sunday Times, 1999-08-29

April 27, 2011

The xkcd Guide to Making People Feel Old

Filed under: Humour, Media — Tags: , — Nicholas @ 07:32

xkcd Guide to Making People Feel Old
Original here.

April 25, 2011

Grameen Bank cleared of “irregularities”, but Yunus will not be re-instated

Filed under: Asia, Economics, Law, Liberty — Tags: , , , , — Nicholas @ 11:06

The Bangladeshi government has completed their investigation into financial irregularities at microfinance specialist Grameen Bank, but the founder, Muhammad Yunus, will not be brought back:

Yunus, 70, was dismissed by a central bank order — upheld by the high court and supreme court — on the grounds that he had overstayed in his position and refused requests to quit.

Yunus, winner of the 2006 Nobel peace prize, set up Grameen, which means village in Bengali, and had been the bank’s managing director since 2000.

Lauded at home and abroad by politicians and financiers as the “banker to the poor”, he has been under attack by the government since late last year, after a Norwegian documentary alleged the bank was dodging taxes.

Yunus denied any wrongdoing and a Norwegian government investigation later also cleared him of any malpractice.

April 13, 2011

Delaying retirement: expect to see lots of articles like this

Filed under: Britain, Economics — Tags: , , , — Nicholas @ 07:57

This Guardian article is a pattern for lots to follow in the next few years, as would-be retirees discover that they can’t afford to retire when they’d hoped:

Two-fifths of people who intended to retire this year will have to work for an extra six years because they cannot afford to stop working, according to a study by Prudential.

The pension provider’s Class of 2011 report found that 38% of people are delaying their retirement, and 40% of those say they will have to work until they are 70 to have a comfortable income.

It also shows that 22% of those delaying retirement are doing so because they can’t afford to stop working, up from 15% last year. They had intended, on average, to retire at 62, but now believe they will be at least 68 before they can draw a pension.

Governments in the western world are slowly moving the mandatory retirement age (where it exists), but even in some unionized environments, the benefits workers depend on start to phase out before retirement age. The expectation is that government programs would be there to cover older workers, but governments have little chance of expanding programs during tough economic times.

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