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Archive for January 2013

Dear Mother Marshall, You Are Wrong; Really NPR, Really!?! And The Mystery Of The Missing Research Note

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A few days back NPR Marketplace ran a program on the US fiscal cliff which focused on the what the House of Representatives would do once the Senate passed its solution to the fiscal cliff.

During the course of the program, the correspondent, Nancy Marshall Genzer, uttered something which was so egregiously wrong, I was surprised that the most popular business program in the US could let it go without an immediate correction either from the anchor or the correspondent. Below is the audio of the program. Listen carefully starting at the 3’40” mark, when she starts talking about the payroll tax:

Now Sarah, I’m going to digress just a little bit here and I’m going to quote my mom. <Crosstalk> My parents own a small business and they have a couple of employees and the employees are concerned that the payroll tax is going up. But my mom said to them, “Keep in mind the money from that social security payroll tax goes towards your social security. So its really not such a bad thing that it is going back up to where it was because you’ll be saving more towards your social security. Your paycheque may go down a bit now but your social security cheque will be a bit higher when you retire.

Mother Marshall is telling her employees that the FICA tax (specifically the social security bit) the government deducts from the payroll is going into a pot with her employees’ name and when they retire they will get their pot. So if they pay more in tax now, there will be more money in the pot when they receive it. Unfortunately this does not correspond with reality.

Social Security is a pay-as-you-go scheme. In this system, the current beneficiaries are paid from proceeds obtained by taxing current workers. Since a picture[1] is worth a thousand words:

A pay-as-you-go system can be visualized as a pipeline, with money from current contributors coming in the front end and money to current beneficiaries paid out the back end.

Thus current benefits are being paid from current taxes.[2] This means that the money taken from each worker’s paycheque is immediately paid to the current beneficiaries as their Social Security income.[3] So just because the payroll tax is going up does not mean that when the current employee retires (which could be as far as 40-45 years away) s/he will get a higher benefit.

At this point one may reasonably ask, what happened to all the money which was paid into Social Security, at the very beginning, by the then taxpayers? Wasn’t that tax money used to pay those taxpayers’ Social Security benefits when they retired? The answer is that the very first payroll taxes collected for social security were paid out to the very first retiree-beneficiaries! As Nobel Prize winning economist (and former Enron adviser[4]) Paul Krugman explained (in the context of explaining the different between the rate of return on private retirement accounts and Social Security):

where does the return go? The answer – which I guess isn’t that obvious – is that it goes to pay a hidden debt. When the pay-as-you-go system starts up, there is a generation of retirees who receive benefits without having made contributions. (What this corresponds to in the real world is the very high rate of return received on contributions by early recipients of Social Security.)

The Social Security Administration in its “Historical Background And Development Of Social Security” webpage gives two such examples:

  • Ernest Ackerman who

retired one day after the Social Security program began. During his one day of participation in the program, a nickel was withheld from Mr. Ackerman’s pay for Social Security, and, upon retiring, he received a lump-sum payment of 17 cents.

worked for three years under the Social Security program. The accumulated taxes on her salary during those three years was a total of $24.75. Her initial monthly check was $22.54. During her lifetime she collected a total of $22,888.92 in Social Security benefits.

Another of Mother Marshall’s misconception is that the she thinks the amount of a beneficiary’s benefit is completely determined by the amount s/he has paid in payroll taxes.[5] However Congress can change the law governing the calculation of benefits.[6] As the Social Security Administration’s Retirement Estimator states:

Your estimated benefits are based on current law. The law governing benefit amounts may change because, by 2033, the payroll taxes collected will be enough to pay only about 75 cents for each dollar of scheduled benefits.

Congress has also reserved for itself

The right to alter, amend, or repeal any provision of [Social Security] … 42 USC § 1304.

Thus Congress can alter the amount of benefits to be paid to the beneficiaries irrespective of the amount they paid into Social Security.

Finally, the US Supreme Court case Flemming v Nestor (1960) is quite instructive. The Court very clearly contradicts Mother Marshall when it says:

Of special importance in this case is the fact that eligibility for benefits, and the amount of such benefits, do not in any true sense depend on contribution to the program through the payment of taxes, but rather on the earnings record of the primary beneficiary.

The Court also makes an appropriate distinction between Social Security and retirement portfolios. Social Security is a form of social insurance where taxpayers pay premiums to cover for unforeseen and catastrophic losses in the future.[7] If I pay premiums to cover my property from fire damage and I then sell it at a later date, before any fire damage took place, then I do not have the right to recover the premiums paid. Those premiums help to cover the payout to those who actually suffer from fire damage. I don’t have a property right in the premiums I paid. And in the same way, those contributing into Social Security do not have some property right on their contributions. The Court says:

each worker’s benefits, though flowing from the contributions he made to the national economy while actively employed, are not dependent on the degree to which he was called upon to support the system by taxation.

The Court provides an explanation for Congress’ reservation of the right to alter, amend or repeal the provisions of Social Security

[Social Security] was designed to function into the indefinite future, and its specific provisions rest on predications as to expected economic conditions which must inevitably prove less than wholly accurate, and on judgments and preferences as to the proper allocation of the Nation’s resources which evolving economic and social conditions will of necessity in some degree modify. To engraft upon the Social Security system a concept of ‘accrued property rights’ would deprive it of the flexibility and boldness in adjustment to everchanging conditions which it demands.[8]

Thus the Court, finally, held that

a person covered by [the Social Security] Act has not such a right in benefit payments as would make every defeasance of ‘accrued’ interests violative of the Due Process Clause of the Fifth Amendment.[9]

So dear Mother Marshall:

  • The money from your employees’ social security payroll tax is NOT going towards their social security. It is going to the social security of current beneficiaries (retirees, survivors and disabled). Current beneficiaries != Current contributors
  • Your employees’ are NOT saving more towards THEIR social security.
  • Your employees’ paycheques may be going down a bit now but nobody knows how much their social security cheque will be for when they retire.

Note: This radio segment was broadcast in Jan 1, 2013. Until this post was published there was no update or correction on the segment webpage regarding this issue. Does NPR think Mother Marshall was correct?

Further Reading: The Concise Encyclopaedia of Economics entry on Social Security, A Young Person’s Guide to Social Security

And one final thing. I cannot help but remember Schweddy Balls every time I hear the women of NPR.

And for those outside the US


[1] This picture is taken from the Ludwig von Mises Institute website. The von Mises institute is an organisation which espouses Austrian economics. Interestingly the Social Security Administration webpage this image has purportedly been taken from no longer exists. However, a search on the wayback machine indicates that this webpage was last indexed on November 10, 2010. Even more interestingly Research Note #25 (the subject of the missing webpage), prepared by the Social Security Historian’s Office and which compares and contrasts Social Security and Ponzi schemes, is no longer available at the current webpage for the Historian’s office. The von Mises Institute blogpost, from which I initially became aware of the comparison by the Social Security Administration’s of itself with a Ponzi scheme, is dated September 19, 2011. Around that time the comparison between Social Security and Ponzi schemes was in the public consciousness because Texas Governor Rick Perry analogized the two in the Republican presidential primary debate held on Sept. 7, 2011 at the Ronald Reagan Presidential Library. The Social Security Research Note (and associated webpage), which is the subject of this footnote was removed sometime after September 19, 2011. There may be a reasonable explanation for the removal, and I would be grateful if someone makes me aware of it.

[2] As Matthew Yglesias pointed out in the context of costs of transitioning from Social Security to private retirement accounts: [reporters] must ask [proponents of private retirement accounts] how we’re going to pay current benefits of this happens … current retirees can’t get benefits if my money is in a private account.

[3] Not ALL the contributions are given out as benefits. In the beginning decades contributions outstripped benefit payments and Social Security built up a surplus which it was (and is) required, by law, to invest in Treasury Bonds. Given the retirement of the baby boomers and thus the increase in the total benefits paid, the trust fund is anticipated to be exhausted by 2033.

[4] Thank you, James Taranto

[5] Now obviously there is some link. The more taxpayers pay into Social Security the greater the solvency of the program and the more assurance of receiving benefits (and higher benefits).

[6] Examples of such calculation can be seen here.

[7] Given that ageing and a concomitant reduction in income is not an unforeseen event, it does raise the question of how meaningful is it to “insure” against such events. One should also keep in mind that Social Security does insure against disability also.

[8] Just wanted to make it clear that the difference between Social Security and individual private retirement accounts is not that the former can be changed while the latter is unchanging. The latter fluctuates too, but according to market conditions while the former can be changed by Congress contingent upon changes to the economy and demographics. Note that there is a class of private retirement benefits called defined benefit plans where, like Social Security, the benefits are calculated by a formula known in advance. Defined benefit plans are being increasingly phased out in favour of defined contribution plans.

[9] The Court does say that Congress does not have arbitrary power to modify Social Security and that its actions will have to abide by Due Process. Presumably the level of scrutiny given to Congressional action would be Rational Basis Review. A tangential question which arises is, is the protection afforded to a beneficiary equal to the protection afforded to a property owner whose property is being condemned? At the time Flemming was decided maybe not but after Kelo v City of New London that question, for me, is up in the air.

Boycotting Republic Day? Why not?

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Over the past 3 weeks in India at large and in Delhi in particular, there have been many large protests to highlight the plight of women in India vis-a-vis the violence and rape perpetrated against them, The proximate cause of these protests was the gang rape in Delhi of a 23 year old women, who later succumbed to her extensive injuries. An in depth discussion of this rape is beyond the scope of this post which would focus on one small tangential aspect and the response of an academic thereof. Please consult Wikipedia for a reasonably extensive summary of the incident.

In the aftermath of the rape, a demand was raised in various corners to boycott India’s Republic Day, which is held on January 26 of every year.

The Republic Day holds a two fold significance for India:

  1. On January 26, 1930 the Indian National Congress, the main political group agitating for Indian independence from British colonial rule, meeting in Lahore (now in Pakistan), promulgated the declaration demanding Purna Swaraj or complete Independence from the UK. Following this January 26 was celebrated as Independence Day.[1]
  2. On 26 January 1950 the Constitution of India was adopted, declaring India to be a sovereign democratic republic. This date was chosen to commemorate the Purna Swaraj Declaration (see above).

The Republic Day Celebrations in Delhi mostly consist of a parade of the different regiments of Armed Forces and the paramilitary forces, trucks towing aircraft, missiles and howitzers, and tanks (not in this exact order), followed by tableaux exhibiting the culture of the different parts of India. The forces salute their commander-in-chief, namely the President. This is replicated in the capitals of the States with the Governor substituting for the President. While the day is meant to celebrate the adoption of the Constitution and refreshing one’s loyalty and fealty to it, it is mostly a celebration of the power of the State as manifested by the guns, rifles, tanks, howitzers, missiles and combat aircraft.

Given the significance of the date, there has been a backlash to the call for boycotting the Republic Day. Given that Kashmiri separatists and Maoist guerrillas have called for similar boycotts in the past, opponents of the boycott call have equated those advocating a boycott this year as ideological bed fellows of the separatists and guerrillas.

This argument is puerile. It is similar to saying that since ISCKON promotes vegetarianism and the Swaminarayan sect also promotes vegetarianism, their adherents are no different from Nazis. There can be many reasons for boycotting the Republic Day Celebrations. One reason may be to not identify with the Indian State and the Indian people. I will not go into the legitimacy or illegitimacy of this reason in this post. Another reason can be to not identify with the Indian State while still pledging one’s loyalty and fealty to the Constitution and one’s identity as a people. As explained above, the formal governmental celebrations are a celebration of the State and its lethal power. It is perfectly reasonable to reject the celebration of this power of the State which is powerless to prevent heinous crime. It is perfectly reasonable, instead, to swear an oath of loyalty to the preamble of the constitution

WE, THE PEOPLE OF INDIA, having solemnly resolved to constitute India into a SOVEREIGN SOCIALIST SECULAR DEMOCRATIC REPUBLIC[2] and to secure to all its citizens:

JUSTICE, social, economic and political;

LIBERTY, of thought, expression, belief, faith and worship;

EQUALITY of status and of opportunity;

and to promote among them all

FRATERNITY assuring the dignity of the individual and the unity and integrity of the Nation;


(emphasis mine)

As has been explained in numerous opeds to reduce rapes in India requires not just law and order reform, it requires a change in society, a change in thinking which gives women equal status as men, where little girls are treated the same as little boys, where every individual’s dignity is assured from birth and is honoured and protected by all.

Swearing an oath to uphold the constitution and its guarantees to all people is a more meaningful gesture (and if followed up a more meaningful action) compared to the routine genuflection to the might of the Indian State, a might which is powerless not just to prevent but to even account for the acts of violence and injustice its citizens (or, given the attitude of the State, its subjects).

However trust a historian[3] of Modern Political History to make a knee-jerk accusation that any boycott of the Republic Day celebrations is anti-national. No explanation of why the boycott is anti national or why the boycott strikes at the people rather than the State. One would expect him, being a professor and an intellectual, to engage with the substance of the argument and attempt to educate others, rather than make some inane pun. Such an attitude is not just a reflection on him but on his employer. I would not be surprised if Prof. Habib defends the principle of academic freedom. But the flip side of academic freedom is the duty to communicate ideas or facts, not evade questioning via clever wordplay. Not surprisingly I was subsequently blocked on twitter by the esteemed professor.[4]

Given that January 26,1950 was the day when the Constitution of India was adopted, the words of late Justice Hans Raj Khanna[5] are appropriate

If the Indian constitution is our heritage bequeathed to us by our founding fathers, no less are we, the people of India, the trustees and custodians of the values which pulsate within its provisions! A constitution is not a parchment of paper, it is a way of life and has to be lived up to. Eternal vigilance is the price of liberty and in the final analysis, its only keepers are the people. Imbecility of men, history teaches us, always invites the impudence of power.[6]

(emphasis mine)

One, final point. There could, conceivably, be objections that a boycott of the Republic Day is tantamount to disrespecting the sacrifices the Armed Forces have made for India’s security. However such objectors would have to explain how celebrating one day, according to the diktats of the State, amounts to honouring the soldiers who have served and sacrificed much for the nation. One can honour them on other days also e.g. the Army Day (January 15), Navy Day (December 4), Air Force Day (October 8) and Coast Guard Day (October 8). Moreover if one truly wishes to honour the sacrifice and service of the Armed Forces let them truly help the veterans (most of whom come from lower economic classes of society) and the widows and orphaned children of those who have made the ultimate sacrifice by giving them the love and support (both emotional and financial) they are entitled to, not just on one day but over the long term. After all, this is the same State, which while insisting that the Republic Day is a celebration of the sacrifice of the brave soldiers also pays the widow of a decorated army major an insulting Rs 80 (not even US $2) per month in 2010.[7]


[1] This is similar to July 4 which is celebrated as Independence Day in the US but is actually the date when the US Declaration of Independence was adopted by the Second Continental Congress. The American War of Independence formally ceased under the Treaty of Paris while the last hostilities ceased in 1781 with the fall of Yorktown

[2] Initially the preamble did not include the words socialist and secular when the constitution was initially adopted. They were added to the preamble by the Forty-second Amendment. Interestingly this amendment was enacted during The Emergency when the then Prime Minister Indira Gandhi suspended elections, civil liberties and bestowed on herself the power to rule by decree. Not surprisingly I oppose the inclusion of both words; secular because it is superfluous given the protections under Articles 25-28 and socialist because socialism led to the economic stagnation of India for 45 years after independence. Moreover the very same amendment also introduced, for the first time, Fundamental Duties on the part of every citizen. Trust a State which abrogates the fundamental rights (including habeas corpus) of its citizens to also demand fundamental duties of them.

[3] According to the Times of India, he is the Maulana Abul Kalam Azad chair at Delhi’s National University of Educational Planning and Administration. However at the university’s website he is not listed amongst the faculty. Probably because the website is not up to date.

[4] I had also been previously blocked by Kanchan Gupta. That is a story I may tell some other time.

[5] Notably Justice Khanna was one of the dissenting judges in Additional District Magistrate of Jabalpur v. Shiv Kant Shukla which shamefully upheld the government’s decision to suspend habeas corpus. His dissent stated

The Constitution and the laws of India do not permit life and liberty to be at the mercy of the absolute power of the Executive . . . . What is at stake is the rule of law. The question is whether the law speaking through the authority of the court shall be absolutely silenced and rendered mute… detention without trial is an anathema to all those who love personal liberty.

[6] Khanna, H. R., Making of India’s Constitution. Eastern Book Co, Lucknow, 1981. ISBN 978-81-7012-108-4

[7] “The petitioner before us in the present case is a widow Pushpa Vanti, whose husband was an army major who had fought in three wars (in 1948, 1962 and 1965) and was decorated with fourteen medals. However, the petitioner is getting only Rs.80/- per month as pension, in these days when a kilogram of arhar dal costs that amount.” Pushpa Vanti vs Union Of India & Ors. (2010).

Written by Polevaulter Donkeyman

January 4, 2013 at 05:31

If You Oppose Circumcision Then You Must Be An Excessive Masturbator

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Emily Yoffe is the advice columnist for Slate Magazine. In her live chat on Dec 4, 2012 she printed the question of a writer (Circumcision Standoff), who wants to circumcise her future son based on some scientific studies which have shown beneficial effects of male circumcision but whose fiancé (who was circumcised) is vehemently opposed. The letter writer claims that this opposition could be a dealbreaker since her desire for circumcising her future son is borne out of her concern for his well being.

Ms. Yoffe replies that the fiancé is probably opposed to circumcision since his circumcision interfered with his masturbation. She goes on to say that she is a supporter of the physical abuse of male infants since she is Jewish. However thankfully she does mention to the letter writer that circumcision is not a panacea for HIV, HPV, herpes, urinary tract infections and possibly cancer. Finally she mentions to the letter writer that she and her fiancé should talk over their disagreement with a neutral party.

As is natural, I was disappointed on reading Ms. Yoffe’s response. While it could have been worse (e.g. uncritically praising the letter writer’s selective reading of the scientific literature) she continues to support the barbaric physical abuse of male infants.

As luck would have it, Ms. Yoffe was scheduled to participate in a reddit IAmA the next day. In that IAmA I asked her the following questions:

  1. In this column “Circumcision standoff” you trivialized a man’s objection to circumcision as due to excessive masturbation. Do you think men cannot have principled objections to circumcision?

  2. You say “I’m Jewish, so a big believer in circumcision” — Does that mean Parents’ religious convictions should trump bodily integrity of their children? How then can you disagree with the cultural imperatives for female circumcision?

  3. Would you be ok with Type Ia female circumcision where the clitoral prepuce is removed (An exact analogue to male circumcision)?

  4. Would you be ok with a ceremonial pricking or nick of the clitoris?

  5. Why didn’t you point out to the letter writer that she should not shirk her duties towards her son regarding teaching him genital hygiene instead of making her life easier by physically abusing him as an infant? Do or do you not think she is a bad mother for attempting to make her life easier?

  6. Do you think the woman would be endangering the life of her child by creating a false sense of security around her and her son that circumcision will prevent HIV, HPV, herpes (which could potentially motivate the son to forego wearing condoms)

  7. If a man wrote to you asking for advice on how to convince his wife to agree to circumcising their baby daughter (Type Ia or ritual nicking) would you advise him to seek out a neutral party?

  8. Why couldn’t you advise the woman that she should wait until her son attained the age of majority and then try to convince him of the advantages of circumcision and then leave the decision to her son on whether or not to proceed with non-emergency, non-lifesaving permanent body modification surgery?

  9. Would you recommend labiaplasty of infant females so as to prevent/reduce occurrence of urinary tract infections?,

Unsurprisingly Ms. Yoffe chose not to answer the question. Interestingly my questions were voted the most controversial post of that particular IAmA. I got pushback from other posters that I wasn’t asking a “real” question (whatever a real question might be), I wasn’t asking an “honest” question (and what exactly is or is not an “honest” question was left unclear), I was pushing an agenda, I was a loon. One poster stated that the IAmA is only for asking Ms. Yoffe questions regarding her life as an advice columnist and thus my question was irrelevant. However Ms. Yoffe herself had stated:

I’m happy to talk about being Dear Prudence, how I choose letters, your favorites, what you think I’ve gotten right and wrong. … I’m happy to talk about whatever’s on your mind.

Finally, a poster raised a nice hypothetical for anyone who wants to circumcise their son so that he resembles his circumcised father::

So if [the mother] had big boobs and [the] daughter was flat, would [the circumcision-supporter] support her getting a boob job to “look like mom”?

The similarity argument, i.e. the son of a circumcised father should also be circumcised so that he doesn’t get confused over why he does not resemble his father, and that he would also resemble his circumcised peers in the school locker room (and so would avoid bullying), is an argument trotted out by a lot of circumcision enthusiasts. I wonder if they would also support the similarity argument raised by this father (written under the pseudonym “Want To Be a Dad”) here

Unsurprisingly Ms. Yoffe’s answer in the above case is quite different to what one would expect if the question was regarding male circumcision.

Written by Polevaulter Donkeyman

January 3, 2013 at 04:28

Posted in hypocrisy

Tagged with ,

2012 in review

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The stats helper monkeys prepared a 2012 annual report for this blog.

Here’s an excerpt:

The new Boeing 787 Dreamliner can carry about 250 passengers. This blog was viewed about 1,300 times in 2012. If it were a Dreamliner, it would take about 5 trips to carry that many people.

Click here to see the complete report.

Written by Polevaulter Donkeyman

January 3, 2013 at 04:19

Posted in Uncategorized