Friday, October 29, 2010

Private Social Security Accounts Are Still a Good Idea -

In addition to the math explained in this article, Social Security is a Ponzi (pyramid) scheme that collapses when the bottom doesn't grow fast enough.  It really is that simple.

Shipman and Ferrara: Private Social Security Accounts Are Still a Good Idea -

Suppose a senior citizen who retired at the end of 2009, at age 66, had been able to set up a personal account when he entered the work force in 1965, at the age of 21. Suppose that, paying into his personal account what he and his employer would have paid into Social Security... ...their account, having earned a 6.75% return annually from 1965 to 2009, would still pay them about 75% more than Social Security would have.

It is a mathematical fact that the least expensive way to provide for an almost certain future liability is to save and invest in capital markets prior to the onset of the liability. That's why state and local pension funds, corporate pension plans, federal employee retirement plans and Chile's successful Social Security personal accounts (since copied by other countries) do so. It is sound practice.

And it's why Mr. Obama is wrong to assert that personal Social Security accounts are "ill-conceived," and why each of us should have the liberty to opt into one.

Wednesday, October 27, 2010

Licensing to Kill -

Review & Outlook: Licensing to Kill -

When most people think of occupations requiring fingerprints and police reports, corner bookshop owners don't spring to mind. Try telling that to Los Angeles, where many used booksellers are required by law to get a police permit and take a thumbprint from every 40-something trying to offload his collection of French poetry.

That's one scene from a study to be released this week by the Institute for Justice, which has collected dozens of examples of regulations choking economic growth by taxing and over-licensing small businesses. In a survey of eight major cities, the study found that entrepreneurs routinely face obstacles of bureaucracy and red tape that deter them from otherwise promising opportunities.

In addition to the economic cost of such inanity, the regulations take a personal toll on many aspiring small business owners, often immigrants who thought America was still a land of opportunity. Consider the case of Muhammed Nasir Khan, who lost most of his family's savings thanks to Milwaukee's messy regulations and the whim of a local alderman.

Despite following all the rules, his food license was retracted at the request of Alderman Robert Bauman, who suggested he would rather see a place "with a little class" in the location, instead of Mr. Khan's restaurant. Reopening Judy's Red Hots, he argued, would somehow encourage crime and disorder and stall the redevelopment of the community. The real crime is how easily an entrepreneur's dream was destroyed by the caprice of a politician and the regulations that empower him.

Politicians of all stripes like to celebrate "small business" while running for office, but the reality is that they often strangle entrepreneurs once they get in power. Read the Institute for Justice study and you'll better understand why the business of America is no longer business. It's bureaucracy.

Tuesday, October 19, 2010

Why Liberals Don't Get the Tea Party Movement -

Peter Berkowitz: Why Liberals Don't Get the Tea Party Movement -

Highly educated people say the darndest things, these days particularly about the tea party movement. University educations and advanced degrees notwithstanding, they lack a basic understanding of the contours of American constitutional government.

Born in response to President Obama's self-declared desire to fundamentally change America, the tea party movement has made its central goals abundantly clear. Activists and the sizeable swath of voters who sympathize with them want to reduce the massively ballooning national debt, cut runaway federal spending, keep taxes in check, reinvigorate the economy, and block the expansion of the state into citizens' lives.

In other words, the tea party movement is inspired above all by a commitment to limited government. And that does distinguish it from the competition.

But far from reflecting a recurring pathology in our politics or the losing side in the debate over the Constitution, the devotion to limited government lies at the heart of the American experiment in liberal democracy. The Federalists who won ratification of the Constitution—most notably Alexander Hamilton, James Madison and John Jay—shared with their Anti-Federalist opponents the view that centralized power presented a formidable and abiding threat to the individual liberty that it was government's primary task to secure. They differed over how to deal with the threat.

Whether members have read much or little of The Federalist, the tea party movement's focus on keeping government within bounds and answerable to the people reflects the devotion to limited government embodied in the Constitution. One reason this is poorly understood among our best educated citizens is that American politics is poorly taught at the universities that credentialed them. Indeed, even as the tea party calls for the return to constitutional basics, our universities neglect The Federalist and its classic exposition of constitutional principles.

Neither professors of political science nor of history have made a priority of instructing students in the founding principles of American constitutional government. Nor have they taught about the contest between the progressive vision and the conservative vision that has characterized American politics since Woodrow Wilson (then a political scientist at Princeton) helped launch the progressive movement in the late 19th century by arguing that the Constitution had become obsolete and hindered democratic reform.

Those who doubt that the failings of higher education in America have political consequences need only reflect on the quality of progressive commentary on the tea party movement. Our universities have produced two generations of highly educated people who seem unable to recognize the spirited defense of fundamental American principles, even when it takes place for more than a year and a half right in front of their noses.

Monday, October 11, 2010

If Schools Were Like 'American Idol' . . . -

Rupert Murdoch: If Schools Were Like 'American Idol' . . . -

There is, however, another hidebound American institution that is also finding it difficult to respond to new challenges: our big-city schools.

Today, for example, the United States is home to more than 2,000 dysfunctional high schools. They represent less than 15% of American high schools yet account for about half of our dropouts. When you break this down, you find that these institutions produce 81% of all Native American dropouts, 73% of all African-American dropouts, and 66% of all Hispanic dropouts.

At our grade schools, two-thirds of all eighth-graders score below proficient in math and reading. The average African-American or Latino 9-year-old is three grades behind in these subjects. Behind the grim statistics is the real story: lost opportunities, crushed dreams, and shattered lives. In plain English, we trap the children who need an education most in failure factories.

Clearly it's not for any lack of money. Over the past three decades, we've nearly doubled spending on K-12 education in real terms. So President Obama was absolutely right to declare the other day that "we can't spend our way out of this problem." Which begs the question: How can we spend so much with so little to show for it?

The answer is that while the system is failing our children, it works very well for some adults. These adults include the leaders of the teachers unions. They include the politicians whom the unions reward with their cash and political support. They include the vast education bureaucracies. In business terms, we have a system that rewards the providers and punishes the customers.

We all know that good schools begin with good teachers. We also know there are many heroic teachers. Unfortunately, our system is set up to protect bad teachers rather than reward good teachers.

In the existing system, we have incentives for almost everything unrelated to performance (seniority, tenure, etc.) and zero incentive for adapting new technologies that could help learning inside and outside the classroom. On top of it all, we have chancellors, superintendents and principals who can't hire and fire based on performance.