We've been called the "reality based" party. I'll accept that. But that means we have to argue and think in real terms: rather than in the pseudo-wonkish that is used currently. Right now, both sides spew at the American public, and see which line of bullshit they like better. Since the Republicans, the "unreality based party" realized that you don't need to have any substance, they win more often.
So how to we get real about issues? By talking about real results of real policies. Let's take social security. The debate isn't over privatization of social security. There is no such thing, the Republicans want to repeal social security, and allow Americans to buy junk bonds in drag.
Getting real, then, means talking about where we are going, not the rpm of the wheels.
The real question is how do we make it so that we can afford to assure a certain reasonable standard of living to those who have worked, with the percentage of our national effort that we are willing to spend on it. That's the question, the rest is how we set ourselves on that course.
The real question then is not "what amount of money?", because dollars can be devalued, markets can crash. Nor, "where is money to be put?" Because there is no such thing. Saying "if you could put money into stocks you would have more" is merely raising taxes on the future. The Republicans are arguing that our grandchildren should be taxed more to pay for consumption now. That's all there is to it. They could have the government buy securities - but that would defeate the purpose. A big pension fund, or government owner of securities, could tell companies not to engage in creative accounting, not to pay executives too much, and would have a large incentive to prevent giant raids on the company's finances for the benefit of a few directors.
Where as small owners with no effective voting rights can't do that. To prove that it is about pumping money into the system, without control, say "well then the government should just start buying stocks rather than treasuries with the social security fund." Watch the explosion as the other person rails about how evil it is for government to "pick winners and losers". They want you to make a high risk loan without any control - the lack of control is as important as the money.
The only way dumping money into equities would work is if the US were a net creditor nation, stocks were undervalued, and we could count on more of the world's savings to flow into the US. Then "privatizing", or rather equitizing social security might work, because it would be broadening the base of people paying in.
Guess when this describes? 1979. The US is a net creditor, stocks are at a P/E of 8, and more of the world's savings will, after the short gold bubble, flow to US equities. But, guess why this happened. That's right, because the American consumer was willing to borrow to consume, and spent more and more for brand names so that earnings went up. Which was, in no small part, driven by their being social security to help prop up prices.
In short, any plan to move money from public to private hands assumes that the public money was there to be spent. It's spending the same dollar twice.
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So what is reality here?
The reality is that we have an increasing population of older people. This same reality is faced by Western Europe and Japan, and will ease somewhat when the baby boom passes from the stage. But it is a permanent fact of being developed, highly industrialized society: people need and want fewer children, since children are no longer capital, but an expense - and we reduce the poisons and effects of manufacturing which shorten people's lives. Longer life, fewer children, more old people.
The reality then is to say "what will the ratio between people working and people drawing from that work be?" And "what precentage of the time of those working people is to be spent supporting those people?" What we can produce in that fraction of our time, is the living standard of the people retired. However one juggles the books. Pretending to give the present more claims over the future because the money was "invested" is merely that: pretense.
The answer to that question is to ask "what are the big inefficiencies in our economy? What do we have to do much more efficiently to reach our goal?"
In short, what do we use raw labor and rent for, that should be done with capital - that is, equipment, ideas and social organization.
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The first answer can be found in what we import. The answer is first and foremost energy - which consumes a great deal more of our national effort than GDP reflects, since energy used for production is buried inside of consumer sales. Second of all it is in simple manufactured goods that we import - simple home goods.
The second answer can be found in how older people live today. What do we have to hire people to do for them? What can't they do as well because houses and appliances are designed for more flexible bodies and more nimble fingers?
In otherwords, the real answer to our question is how do we go from renting energy from Arabs and Russians, to creating it with capital - and how do we create far more automated systems of health and home environment.
The answer is not dumping billions into Citibank so that its old owners can cash out now while tax rates are unsustainable low.
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The answer to the first part is a more general question: as with the expansion of the US westward, and then the building of rail and telegraph lines, and then the creation of road networks and industrialized systems, it is a great national project. It will occupy much of our free capital, and effort, over the next two generations. More over, we are not quite as barbaric as previous generations were: we cannot simply overrun native nations, or load the environmental cost forward, which were parts of, though not the whole of, previous national projects.
The answer to the second part is the same answer that created the internet: the government makes it a strategic objective, and begins funding private and academic research to advance it, creates a system of subsidizing participation in economies of scale, and releases the results to the private sector for bringing to market. It is the liberal triple play: public effort to protected research to private employment. With the procedes of the private profit to be taxes to pay for the next go round of the cycle.
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So what of your libertarian acquaintance who screams this is socialism. I mean, other than pointing out that he uses dozens of object a day that are the result of this process - including the telephone and the internet and the interstate highway system.
The answer is that it is final results that matter. Under the current system the market has every incentive to strip an old person clean of every available cent they have saved ip over life, so that their children get nothing to be passed on. The system which liberal government would produce would leave behind more for the estate to sell, to the next wave of older person, and therefore to benefit the next generation of the family.
In otherwords - it is the liberal position that more and more of the stored up wealth of the society should be passed down through families, rather than consumed in a last orgy of stripping the dead for the final years of their life. And the way to do this, is to rely on capital and production, rather than the Republican solution, which is to rely on demand and consumption, and hope everything works out.