Although I don't have the time I would like to follow popular media, I have been doing a moderately good job keeping up with reports on the "Occupy Wall Street" protesters. I found it interesting that the majority of the people participating, according to various polls, including one I viewed in New York Magazine, flat out don't know about what they claim to be protesting against. They don't know the names or terms of certain economic policies influencing their "area of attack," they know hardly any economic terminology, and most did not vote in the most recent mid-term elections. And yet, they are out on Wall Street and in cities across the United States and the world fighting for change. It is my opinion that if you are going to give up an indefinite amount of your time to literally just wait around outside (think of all the other things you could be accomplishing), then you should...at the very least...take a little more time to do some research about the subject of your protest!
I don't mean to make this post a pure rant. I'm sorry I don't have specific articles to offer (I have been quite sick all week, so I'm a little behind in my work and reading and there are too many out there for me to sort through now), but I do think this would be an interesting topic to look more into. What are the specific economic issues the occupiers are attempting to address? Is it purely about too much intervention into the economy by the financial sector? If so, what specific evidence exists to suggest that the financial sector is who we should really be targeting with our complaints?
The bottom line for today is this: I don't claim to know the answers to all of the questions I just posed. But I am also not occupying Wall Street right now. It is my belief that if you ARE going to bring attention to an issue, you need to have an understanding of that issue.
Thursday, October 27, 2011
Tuesday, October 18, 2011
The Insecurity of Social Security
I must begin this post with a confession: I was among the vein of people who thought (some still think) that Social Security was on its way out the door. I foresaw only a disastrous downfall for the program within the next 20-25 years, with a complete stoppage of all benefits. It came as a great relief to find out that, even assuming the Social Security trust fund is completely depleted by 2036 as predicted by the 2011 trustee's report, the program would not cease its distribution of benefits altogether; it would not be able to pay full benefits at the same rate it is now, but it would still function nonetheless due to the fact that it could still draw from its income-tax revenue. Relief, therefore, was my first reaction to Kathy Ruffing's report.
Having said that, after reviewing the information Ruffing provides, I do still have some doubts about the total security of Social Security. Because the demographic of both workers and beneficiaries is constantly shifting, it is impossible to ground Social Security in income-tax revenue alone. Something much more stable must be in place to ensure its foothold, thus the reason there is a trust fund in existence in the first place. The depletion of that trust fund would mean no cushion to fall back on and with no stabilizing mechanism in place, Social Security's effectiveness from year to year would surely falter. So...will benefits stop? No. Will benefits be surrounded by uncertainty and will their amounts fluctuate greatly? Most likely.
It is the changing demographic that most frustrates me. For the most part it seems to me that Social Security has not adapted quickly or efficiently enough to the rapid increase in the average death age and the influx in the working population. Longer life spans mean more individuals simultaneously receiving benefits, which in turn means more payouts for the program. A greater working population would theoretically counter this issue, but flaws in the program, such as the three-year gap between cost-of-living adjustments, have created what I see as an avoidable deficit. If it is not avoidable, it is at least possible to keep it to a minimum.
I also raise my eyebrows at the great increase in people who "qualify" for disability benefits. Although I understand Ruffing's justification, I just don't think that the number of disability qualifiers should have DOUBLED in the last 16 years. You see this a lot: people who needed benefits at one time, but then become comfortable with the convenience the system provides and continue taking advantage of it even after they no longer need assistance. As a part of Social Security reform, I think the means used to evaluate people's continuing eligibility for disability benefits should be examined and modified.
As usual, I don't pretend to know a lot about what I write about on this blog. But writing is intended to stimulate conversation, just as reading is intended to stimulate thought. Ruffing's report definitely got me thinking. Hopefully, this post will get you talking. I welcome your responses.
Having said that, after reviewing the information Ruffing provides, I do still have some doubts about the total security of Social Security. Because the demographic of both workers and beneficiaries is constantly shifting, it is impossible to ground Social Security in income-tax revenue alone. Something much more stable must be in place to ensure its foothold, thus the reason there is a trust fund in existence in the first place. The depletion of that trust fund would mean no cushion to fall back on and with no stabilizing mechanism in place, Social Security's effectiveness from year to year would surely falter. So...will benefits stop? No. Will benefits be surrounded by uncertainty and will their amounts fluctuate greatly? Most likely.
It is the changing demographic that most frustrates me. For the most part it seems to me that Social Security has not adapted quickly or efficiently enough to the rapid increase in the average death age and the influx in the working population. Longer life spans mean more individuals simultaneously receiving benefits, which in turn means more payouts for the program. A greater working population would theoretically counter this issue, but flaws in the program, such as the three-year gap between cost-of-living adjustments, have created what I see as an avoidable deficit. If it is not avoidable, it is at least possible to keep it to a minimum.
I also raise my eyebrows at the great increase in people who "qualify" for disability benefits. Although I understand Ruffing's justification, I just don't think that the number of disability qualifiers should have DOUBLED in the last 16 years. You see this a lot: people who needed benefits at one time, but then become comfortable with the convenience the system provides and continue taking advantage of it even after they no longer need assistance. As a part of Social Security reform, I think the means used to evaluate people's continuing eligibility for disability benefits should be examined and modified.
As usual, I don't pretend to know a lot about what I write about on this blog. But writing is intended to stimulate conversation, just as reading is intended to stimulate thought. Ruffing's report definitely got me thinking. Hopefully, this post will get you talking. I welcome your responses.
Tuesday, October 4, 2011
"People you know"
I don't know much about the financial sector or about the functions of the big banks in our economy. In fact, I learned a lot just by listening to "The Breakdown" podcast. But even with my limited understanding of the so-called financial economy, I feel like I can safely answer the question of whether or not production and the middle-class are "held hostage" by it. And my answer is, simply put, yes they are. As the podcast addressed, there are several underlying reasons for this and you could write a book explaining them in detail. But the most obvious and interesting one to me is that the restructuring of banks has removed an essential part of doing business: people. Personnel and the personal attention they can pay to consumers goes a long way. It's something we've lost with the emergence of international banks that operate in massive downtown skyscrapers and on the Internet. Consolidation and buy-out of local banks has turned an industry that depends entirley on the people's trust and willingness to surrender their livelihood (their savings, mortgages, etc.) into an impersonal business. This to me seems fundamentally wrong.
As was pointed out in the podcast, one of the banking industry's primary functions is the transfer and management of money. Without banks, people would have no central place to store their money and no way to access it whenenver they needed to complete a transaction. A world where everyone stored their money in their homes and had to constantly guess how much they would need to carry with them any given day sounds like complete chaos; thus banks serve a very crucial purpose. But what happened to your central storehouse being your friendly, community savings and loan officer? Whatever happened to the scnerio desrcibed in the podcast where the man interested in opening a pizzaria walks into his local bank and the banker determines whether he is a worhty candidate for a loan based on personal experience? I bank with a local bank in upstate South Carolina, The Commercial Bank, which consists of a headquarters office and four branches. By today's standard, this is like a flashback to the pre 1980 days. The Commercial Bank's slogan is "People you know." I can honestly attest to the fact that I really do know the poeple in my home branch and that the local, "people you know" approach is effective in making me want to continue doing business with The Commerical Bank. I think it is time we returned to the model of banking portrayed in "It's a Wonderful Life," where the bank helps out its patrons and its patrons help out the bank.
I also think that we need to migrate away from the current mindset of play the game to make short-term profits and deal with the consequences later. Wrenching not-yet-realized profits into the present sounds awfully speculative to me and yet banks allow and encourage this! Practices like this ARE bringing our economy down. END OF STORY.
All in all, the podcast a) taught me about the difference in structure of banks pre-1908s and banks post-1980s, b) confirmed my belief that smaller, local banks are better for the economy, and c) made me even more wary of the speculative way we do business these days. Hopefully, history will repeat itself and America will return to the "people you know" montra of the good 'ol days.
As was pointed out in the podcast, one of the banking industry's primary functions is the transfer and management of money. Without banks, people would have no central place to store their money and no way to access it whenenver they needed to complete a transaction. A world where everyone stored their money in their homes and had to constantly guess how much they would need to carry with them any given day sounds like complete chaos; thus banks serve a very crucial purpose. But what happened to your central storehouse being your friendly, community savings and loan officer? Whatever happened to the scnerio desrcibed in the podcast where the man interested in opening a pizzaria walks into his local bank and the banker determines whether he is a worhty candidate for a loan based on personal experience? I bank with a local bank in upstate South Carolina, The Commercial Bank, which consists of a headquarters office and four branches. By today's standard, this is like a flashback to the pre 1980 days. The Commercial Bank's slogan is "People you know." I can honestly attest to the fact that I really do know the poeple in my home branch and that the local, "people you know" approach is effective in making me want to continue doing business with The Commerical Bank. I think it is time we returned to the model of banking portrayed in "It's a Wonderful Life," where the bank helps out its patrons and its patrons help out the bank.
I also think that we need to migrate away from the current mindset of play the game to make short-term profits and deal with the consequences later. Wrenching not-yet-realized profits into the present sounds awfully speculative to me and yet banks allow and encourage this! Practices like this ARE bringing our economy down. END OF STORY.
All in all, the podcast a) taught me about the difference in structure of banks pre-1908s and banks post-1980s, b) confirmed my belief that smaller, local banks are better for the economy, and c) made me even more wary of the speculative way we do business these days. Hopefully, history will repeat itself and America will return to the "people you know" montra of the good 'ol days.
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