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Article Artículo

Will New Cholera Initiative Treat the Epidemic as an Emergency?
As expected, the U.N. launched a new cholera eradication initiative yesterday at a press event in the late afternoon featuring U.N. Secretary General Ban Ki-moon and other speakers. The Miami Herald’s Jacqueline Charles leads off her article on the announ

CEPR / December 12, 2012

Article Artículo

Brooks Jackson Uses Annenberg FactCheck to Push for Cuts to Social Security

The Very Serious People have taken off the gloves. There are no rules when it comes to the battle over Social Security and Medicare as Brooks Jackson shows in his "FactCheck" on the use of the chained CPI to index the Social Security cost-of-living adjustments (COLA).

Jackson strongly endorses the use of the chained CPI, describing it in the first sentence as "a more accurate cost-of-living adjustment." The chained CPI would have the effect of reducing the annual COLA by approximately 0.3 percentage points. This reduction would be cumulative (e.g. 3 percent after 10 years, 6 percent after 20 years), leading to an average cut in lifetime benefits of approximately 3 percent for the typical beneficiary.

To push his case, Jackson seriously misrepresents the evidence. There is reason to believe that a chained index provides a better measure of inflation, since it takes account of the substitution between goods. However, the Bureau of Labor Statistics (BLS) has been producing an experimental elderly index (CPI-E) for almost three decades, which has generally shown a somewhat more rapid rate of inflation than the standard CPI currently being used to index Social Security benefits. The CPI-E would imply that the current COLA has been underadjusting for inflation, not overadjusting. 

Jackson notes the CPI-E, but dismisses it as:

"an unpublished, 'experimental' index"

He then cites BLS's warning that:

"'any conclusions drawn from it should be used with caution.' BLS also concedes that the CPI-E has a number of shortcomings because it simply re-weights the price data collected for its regular price surveys, without attempting to collect some important data specific to seniors."

Given that this experimental index has shown evidence that the elderly see a higher rate of inflation than the population as a whole, it would seem that anyone concerned about having an accurate measure of the rate of inflation experienced by the elderly would want to see the BLS construct a full CPI-E. In fact, several hundred economists recently signed a statement calling on BLS to construct such an index. This would be the obvious route to go for anyone interested in an accurate index for the inflation adjustment of more than $10 trillion in Social Security benefits over the next decade. 

Dean Baker / December 12, 2012

Article Artículo

Haitian Groups Protest UN on Human Rights Day for Introducing Cholera

The cholera epidemic, brought to Haiti by UN troops over two years ago, continues to spread throughout the country claiming lives and sickening thousands. Since the passage of Hurricane Sandy in late October, over 175 Haitians have died and nearly 20,000 have fallen ill. In November, an average of 4 Haitians died each day due to the disease. Since the introduction of cholera, nearly 7,800 have died and over 625,000 have been sickened.

Today, in observance of Human Rights Day, Haitian grassroots groups Fan Rezo BAI (Women’s Network of BAI), MOLEGHAF (Movement for Liberty and Equality by Haitians for Fraternity) and KONAMAVID (National Coordination of Direct Victims) are protesting outside the UN Logistics Base in Port-au-Prince. The groups are calling on the UN to take responsibility for the epidemic and to provide reparations to the hundreds of thousands of victims across the country. (For updates, pictures and video from the protest, see @BuddhistLawyer, @melindayiti, @gaetantguevara, and @BriKouriAyiti on Twitter.)

Francois Moise of KONAMAVID comments:

“You always have human rights, they die with you. No one gives them to you, we demand justice to victims of cholera. We see people in the streets that we can’t help. We ask the UN to take responsibility for cholera that its troops sent to Haiti.”

For his part, David Oxygene of MOLEGHAF, who recently spent over two months in prison after being arrested during a previous protest, accused the UN of “violating Haitian’s human right to health and water,” adding, “the laws are violated here, the right to housing, health, education, to work, which are protected in the Universal Declaration of Human Rights. We don’t have any of the rights we are supposed to.”

The calls from Haitians grassroots groups build on an international campaign to hold the UN accountable. The award-winning filmmaker and director Oliver Stone created an online petition on Avaaz last week calling on the UN “to help Haitians stamp out killer cholera for good.” The petition has so far received nearly 6,000 signatures from all over the world.

In part because of the pressure from both within Haiti and internationally, the UN, together with the Haitian government and other international agencies are expected to announce tomorrow a $2.2 billion, ten-year plan to eradicate cholera from both Haiti and the Dominican Republic. The plan, while a step in the right direction, comes over two years since the UN introduced cholera and numerous questions remain as to the plan’s implementation, not least of which is where the $2.2 billion will come from. The AP reported in November that the only confirmed funding was $15 million from the World Bank.

For photos from today's protest, click read more.

Jake Johnston / December 10, 2012

Article Artículo

The Nonsense About a Demographic Crisis

One of themes that recurs endlessly in news coverage is that the United States and other countries face a disastrous threat to their living standards as a result of a falling ratio of workers to retirees. This is one that can be easily dismissed with some simple arithmetic.

A falling ratio of workers to retirees means that a larger chunk of what each worker produces must be put aside to a support the retired population. (Btw, this is true regardless of whether or not we have a Social Security or Medicare system. The only issue is whether retirees are able to maintain something resembling normal living standards.) However, that does not imply that the working population must see a drop in their living standards.

Fans of arithmetic might note that the ratio of workers to retirees fell from 5 to 1 in the early sixties to 3 to 1 in the early 90s. This sharp drop in the ratio of workers to retirees did not prevent both workers and retirees from enjoying substantial improvements in living standards over this period. The reason is that productivity growth, what each workers produces in an hour of work, swamped the impact of a falling ratio of workers to retirees.

That will also be the case as the ratio of workers to retirees falls from the current 3 to 1 to a bit under 2 to 1 over the next 23 years under any plausible assumption about productivity growth. The chart below compares the impact of the decline in the ratio of workers to retirees in reducing the living standards with the impact of productivity growth in raising living standards, assuming that the average retiree consumes 85 percent as much as the average worker.

living-standards-2012-2035

Source: Author's calculations.

CEPR / December 09, 2012