Sorry, I misread the piece. It was the Social Security and Medicare trust funds that he wants to abolish. It would be the same thing -- destroying large amounts of wealth, just different people involved.

In the case of Peter Peterson and Bill Gates, we would be destroying the wealth of two very rich people. In the case of the Social Security and Medicare trust funds we would be destroying $3 trillion in wealth that belongs to the country's workers. Of course I should have realized off the bat that Samuelson could not be talking about destroying Peterson and Gates' bank accounts. The Post never would allow a column in the paper suggesting that we confiscate the wealth of the rich.

Okay, what is Samuelson's argument? It's a bit hard to tell.

He tells us:

"In the public mind, the trust funds suggest that Social Security and Medicare are quarantined from the rest of government. As long as the funds remain solvent, promised benefits can be paid. So policy focuses on strengthening the trust funds. Against that background, it was inevitable that the trustees’ latest reports would be cast as good news. Slower-than-expected increases in health-care costs have extended the life of the Medicare trust fund until 2026, two years later than last year’s estimate. The Social Security trust fund is projected to pay promised benefits through 2033, the same as last year. This seems comfortably distant."

Yes, this is exactly right. The trust funds are legally quarantined from the rest of the government, which is all that matters for these programs. The mind that Samuelson attributes to the public is 100 percent on the mark. So where is the problem?

Ahead of today’s closing of the Organization of American States (OAS) General Assembly in Guatemala, numerous drug policy, human rights and other organizations called on the governments of the Americas [PDF] to consider alternatives to the decades-long U.S.-led “war on drugs.” The open letter appeals from these groups echo those made ahead of the Central American Integration System summit at the beginning of May: “Prohibitionist policies and the war on drugs have intensified violent conflict in the region,” and human rights have suffered. Human Rights Watch Americas Director José Miguel Vivanco made a similar declaration: “The ‘drug war’ has taken a huge toll in the Americas, from the carnage of brutal drug-trafficking organizations to the egregious abuses by security forces fighting them,” and “Governments should find new policies to address the harm drug use causes while curbing the violence and abuse that have plagued the current approach.” Human Rights Watch recommends decriminalization of personal drug use.

The drug question was the focus of the meeting, which followed the release of an OAS report that considers alternative policies including legalization and treatment, as opposed to criminalization and incarceration. Timed to coincide with the OAS General Assembly, an op-ed in the Guardian of London on Tuesday by Colombian president Juan Manuel Santos summarizes four drug policy scenarios described in the OAS report.

The OAS report is just the latest in a tide of policy papers, studies, opinion pieces, rallies and marches all with a similar refrain: it’s time for a change on drug policy. While the U.S. continues to express resistance (Kerry is reported to have remarked at the assembly that “I say to all those who speak about legalization and reform:  the challenges go far beyond a single ingredient. Drugs destroy lives, destroy families.”), countries in Latin America are moving ahead. Most notably, Uruguay is poised to become the first country in the region to legalize and regulate marijuana, with the lower house expected to soon approve such reforms that are backed by President José Mujica and his Frente Amplio party.

Dean Baker
Truthout, 7 de mayo, 2013
El Mono Político, 9 de mayo, 2013
En Inglés

Dean Baker
Truthout, June 5, 2013

Brad Plummer shows us two charts from a new publication from the International Labor Organization (ILO) that purport to tell us we face a tradeoff between job quality and jobs. The charts, one for wealthy countries and one for developing countries, seem to show that countries that had a deterioration in job quality saw the most job growth.

That would be bad news. The intended take away is that if we want to have jobs then workers will have to take lower pay and fewer benefits. However it is not clear that this is the story the charts actually show.

For some reason the ILO opted not to publish the regression results on which these charts are based so we have to rely on visual inspection to get a sense of the story. In the case of the developing country chart, it doesn't look like we have much. In fact we have more countries in the wrong quadrants (negative job growth and job deterioration or positive job growth and job improvement) than in the right quadrants (positive job growth and job deterioration or negative job growth and job improvement). There are 11 countries in the wrong quadrants and 8 in the right quadrants. (I'm not counting Ukraine and Thailand, which are right on the line to my eyes.) That does not look like really solid evidence where I sit.

Dean Baker
The Guardian Unlimited, June 3, 2013
En Español

Dean Baker / June 03, 2013

Annie Lowrey at the NYT continues a mini-debate about whether the Fed is promoting inequality with its quantitative easing program. The argument is that by pushing down interest rates it is contributing to the run-up in stock prices and housing prices. Since stock is hugely disproportionately held by the wealthy and homeowners are better off than the population as a whole, this policy is increasing inequality.

This is undoubtedly true, although the extent of the impact can be debated. (High corporate profits are also a big factor behind the rise in stock prices. Also, they began their run-up at unusually depressed levels.)

However, a little income accounting here would go along way in helping this discussion. The country has an output gap of around 6 percent of GDP. This is due to the plunge in residential construction following the collapse of the housing bubble and also the lost consumption that resulted from the loss of $8 trillion in housing equity. Standard measures of the housing wealth effect imply that a reduction of $400 billion to $560 billion in annual consumption.

There are a limited number of channels to fill this lost demand and thereby make up the 9 million jobs deficit we now face. One route is large government deficits, either from increased spending or tax cuts. That is probably the quickest and surest way to make up the demand gap, but the Serious People insist that we can't run large deficits.

Another obvious route, and probably the best long-term solution, is to get the dollar down. This will improve the international competitiveness of U.S. goods and bring the trade deficit closer to balance. Unfortunately this has not been a high priority for the Obama administration. There are powerful interests like Walmart, many large manufacturers, and the financial sector which benefit from an over-valued dollar. As a result, getting the dollar back to a more sustainable level has not been a priority for the administration.