Comments on: Some Positive News on Social Security http://www.nakedcapitalism.com/2007/02/some-positive-news-on-social-security.html Sun, 22 Nov 2009 07:56:24 -0500 http://wordpress.org/?v=2.8.4 hourly 1 By: Anonymous http://www.nakedcapitalism.com/2007/02/some-positive-news-on-social-security.html#comment-14 Anonymous Wed, 14 Feb 2007 19:27:00 +0000 http://www.nakedcapitalism.com/2007/02/some-positive-news-on-social-security/#comment-14 One not-so-small point about the assumptions described here. Note how the Bush official blended/conjoined two things: productivity gains AND real wage gains. The two no longer are Siamese twins. As you've noted in other posts about income inequality, real wages have stagnated for nearly three decades; and, the share of GDP growth going to labor instead of corporations/shareholders is at historic lows.<br/><br/>If actual real wage gains were used, I'm guessing that productivity gains would have to be ridiculously high. Here's just a suggestive picture of what I mean (Please note: I'm not saying this is accurate -- just 'directionally suggestive'):<br/><br/>Say the assumed real wage gains are twice as high in the Bush analysis as is supported by recent history. If so, then the productivity gains would need to increase dramatically at these more accurate wage gain levels. And, if 3% seems at the upper limit of possibility, then 4.5% or whatever the appropriately adjusted number might be would be roundly laughed at.<br/><br/>There's an additional, related point. Again, just a guess. But it is that the Bush Administration is now faced with the inherent risk of contradiction that always arises when numbers are cooked. In order to support privatizing Social Security, they have to keep the gap scary -- which means understating productivity gains, etc. But, in order to brag about how wonderful the economy is doing they have to talk about the high productivity levels. Then, someone gets the bright idea to close the Social Sec gap through projecting these higher productivity levels. Only problem is that real wage assumptions don't add up -- meaning even higher productivity assumptions. But then the problem is how can productivity be sustained at such high levels when workers are stressed, have multiple jobs, each spouse works, there's no job security, folks are maxing out on credit, etc etc?<br/><br/>Frankly, only by seeing the economy is two parts: those who participate in the real, global economy and those who are the new 21st century sharecroppers (the word comes from Warren Buffet -- well known radical Islamofascist). So, actually, productivity and wages for the 'in's' actually are stratospheric and they certainly don't need social security. Problem being that only, at best, 20% of the population are part of the 'ins'. And, the rest who do need social security, face huge gaps in Social Security that cannot be filled with any assumptions of productivity rises that do not link to reversing the real wage stagnation. That, though, is not possible with a Bush Administration who believes in individual freedom, shareholder primacy, private government, Enron accounting and so on.<br/><br/>It's all gobbledy gook. One not-so-small point about the assumptions described here. Note how the Bush official blended/conjoined two things: productivity gains AND real wage gains. The two no longer are Siamese twins. As you’ve noted in other posts about income inequality, real wages have stagnated for nearly three decades; and, the share of GDP growth going to labor instead of corporations/shareholders is at historic lows.

If actual real wage gains were used, I’m guessing that productivity gains would have to be ridiculously high. Here’s just a suggestive picture of what I mean (Please note: I’m not saying this is accurate — just ‘directionally suggestive’):

Say the assumed real wage gains are twice as high in the Bush analysis as is supported by recent history. If so, then the productivity gains would need to increase dramatically at these more accurate wage gain levels. And, if 3% seems at the upper limit of possibility, then 4.5% or whatever the appropriately adjusted number might be would be roundly laughed at.

There’s an additional, related point. Again, just a guess. But it is that the Bush Administration is now faced with the inherent risk of contradiction that always arises when numbers are cooked. In order to support privatizing Social Security, they have to keep the gap scary — which means understating productivity gains, etc. But, in order to brag about how wonderful the economy is doing they have to talk about the high productivity levels. Then, someone gets the bright idea to close the Social Sec gap through projecting these higher productivity levels. Only problem is that real wage assumptions don’t add up — meaning even higher productivity assumptions. But then the problem is how can productivity be sustained at such high levels when workers are stressed, have multiple jobs, each spouse works, there’s no job security, folks are maxing out on credit, etc etc?

Frankly, only by seeing the economy is two parts: those who participate in the real, global economy and those who are the new 21st century sharecroppers (the word comes from Warren Buffet — well known radical Islamofascist). So, actually, productivity and wages for the ‘in’s’ actually are stratospheric and they certainly don’t need social security. Problem being that only, at best, 20% of the population are part of the ‘ins’. And, the rest who do need social security, face huge gaps in Social Security that cannot be filled with any assumptions of productivity rises that do not link to reversing the real wage stagnation. That, though, is not possible with a Bush Administration who believes in individual freedom, shareholder primacy, private government, Enron accounting and so on.

It’s all gobbledy gook.

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