Arnold Kling  


Democracy: What We Want Is Wha... The Banana Subsidy Bubble?...

The seasteading discussion. Patri Friedman gives a good presentation. My comments start about half way through, at about the 45 minute mark. Some of my jokes went over well.

A reminder that Raghu Rajan understood the fragility of the financial system in 2005.

Menzie Chinn's Discussion of Phil Swagel's paper. I need to read the paper at some point.

Steve Malanga offers right-wing opposition to corporatism. Meanwhile, Simon Johnson is among the founders of A New Way Forward, which offers left-wing opposition to corporatism.

Megan McArdle on public pensions.

According to the Pension Benefit Guaranty Corporation, which regulates and insures pensions, the total deficit in private plans covering about 34 million workers was a little over 10 billion as of September 2008. That's almost certainly multiplied quite a bit since then. But the current underfunding in public plans, which cover about 22 million workers, seems to be something north of a trillion dollars. And they're not insured.

Read the whole thing. When people argue that individual retirement accounts are too risky because human investors are irrational, yada-yada, just remember that government employees who run public pension programs are human beings, too.

UPDATE: see Megan's update. The private sector pension shortfall is larger than what she originally wrote.

Comments and Sharing

COMMENTS (7 to date)
Mark writes:

And let's also not forget that the politicians who are responsible for funding the public pension programs have incompatible incentives. If the next election is two or four years away and pensions won't be drawn against for twenty years, politicians will spend the proceeds today and let someone else worry about funding retirements when they come due in twenty years . . . albeit, never.

wd40 writes:

There is a big difference between being underfunded and making irrational investment decisions. And when it comes to social security, just be glad that Bush's plan for privatization did not go through.

kebko writes:

The deficit on the private plans is approx. $300 per insured person. I would put that very squarely in the "Not anywhere near a problem" box.

Dan Weber writes:

The debt on the public plans, though, is something like $45,000 per recipient.

Dan Weber writes:

Patri's part of the seasteading talk underwhelmed me.

1. He spent way too much time trashing government. Okay, we get it.

2. Seasteads need to start out under US protection. Even if to show that they can float.

3. Seasteads would work against themselves by getting rid of intellectual property. If I'm on an island, one of the best things I can sell is things that can be transmitted over radio.

I really like the concept of re-opening the frontier, though. Are the slides available?

The Snob writes:

As best as I can tell, the difference between seasteading and Dungeons & Dragons is that the players know the latter is just a fantasy game.

Every frontier in the modern era has been opened and maintained by transfers or implicit subsidies from the home territory. Siberia is perhaps the best example of this right now, but Alaska and the Canadian arctic are not so dissimilar.

Likewise, the American West benefited enormously from the federal government's support of railroad-building and the protection of the US cavalry.

Building and maintaining marine infrastructure of this kind is extremely expensive. Logistics and infrastructure are a huge challenge. If the government was willing to offer 0% 100-year loans to pay for platforms, and would operate regularly-scheduled ferries (like the Alaska Marine Highway), and have a Coast Guard cutter on station nearby, then I'd give this a chance of growing large enough to be self-sustaining.

Matt writes:

Arnold briefly mentions the early adopters to seasteading as being libertarian zealots.

I see the early adopters as being those who gain the most from having no rules. People motivated by behaviors which are extremely unacceptable to a modern society will have the strongest incentive to start a seastead. Pedophiles are the people that come to mind.

In this scenario, the first seasteads will be so outrageously unpopular to voters in land governments, that all the of initial difficulties (having to import many of the goods) will face embargoes.

This idea is just an interesting twist, in general, I think Patri hits the nail on the head with changing the structure that produces bad governments.

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