From the 2015 Year in Review

Let's peek ahead to the New York Times' 2015 Year in Review article (only available via TimesSelect, but I've hacked into the system):

Medicine

2015 was a year to remember in the world of medicine. Geneco's pioneering work with viruses genetically engineered to hunt down and kill cancer cells was approved by the FDA, stopping most forms of cancer. And SmallCorp's nanobot therapy to clear away plaque and blood clots from blood vessels have made heart attacks and strokes largely a thing of the past. Scientists estimate these two technologies will keep people healthy well into their nineties.

Now, imagine what would happen if these therapies did in fact get developed, and a the Baby Boom generation was all retired, on a system that assumed people would live fifteen years after retirement, not 30.

One reason to move away from pensions and Social Security to a system of personal accounts is simple. If YOU had to fund your retirement, you would work longer in the face of life expectancies that were 15 years longer than what is currently anticipated. If you were relying on the government and companies to fund you, though, would you give up your guaranteed benefits? It would be the right thing to do, to maintain the social contract and not bankrupt your grandkids. But given how the AARP reacts to Social Security changes that don't even affect its members, I am not hopeful.

The problem with pensions

Scott Adams reveals a solution to save a struggling company's pension plan.

I'll respond to Honest Partisan's request for comment and start by saying the New York Times article is less about pensions and more about human failure.

Part of the reason for the problems with defined benefit pension plans is that raising future benefits is appealing to both union leaders and management. Management gets agreement with its workers in a manner that doesn't impact the current year's budget. Union leaders get to tell their workers "Look at this benefit I got you! Now, re-elect me to this cushy job with its six-figure salary and boatloads of power." (The description of the actions of public employee unions is particularly sickening.

The moral hazard issue [that companies invest more aggressively because the Pension Benefit Guaranty Corporation guarantees pension benefits] certainly isn't unique to pensions. It's the same reason why people don't buy flood insurance for homes in a flood plain; they know the government will pick up the tab for repairs.

The larger problem is simple: politicians, lobbyists, union leaders, and MBAs are meddling in work that should be left to actuaries. There is nothing inherently problematic with a defined benefit pension plan. You can accurately estimate the present value of all promised benefits, and you can accurately estimate how your plan's assets will grow to fund these benefits. To the extent you later believe assumptions are wrong, you come up with new assumptions, and balance the equations again.

Consider the following example:

Company A offers a defined benefit pension plan with an annual benefit equal to 62.14% of final average salary for an employee that works 40 years.

Company B offers company matching to a 401(k) plan, up to 6% of salary.

A person aged 25 starts work at each company, for a salary of $40,000. Salaries are increased 5% each year. These people retire at age 65.

Both the company and the 401(k) plan earn a 6% return.

The cost of a $1,000 annual annuity for a person aged 65 is $11,000.

The worker for Company B, getting the 6% match, will accumulate $825,713 from that match, good for an annuity of $75,065.

Company A estimates the employee will retire at age 65 with an average salary of $120,800 and a pension obligation of $75,065 a year. The company chooses to pay for the obligation by setting aside a portion of the employee's salary each year. The amount to be set aside is exactly 6% of salary.

In other words, there's no difference just because one plan is defined benefit and the other defined contribution. The difference comes from the design of defined benefit pension plans. A typical plan is a percent of average salary (career or last 10 years) times years of service. Most plans don't vest until someone has worked 5 years. I worked at one company with a DB plan, but left before 5 years, so I get nothing. (That allows higher benefits for those who stay, of course, and it's all calculated in designing the plan.)

The article is entirely wrong in saying that without pensions, people may be forced to work until death. There's nothing in a defined benefit pension plan that can't be imitated with a defined contribution plan rolled into a life annuity. Without someone else calling the shots, some people may make bad decisions, of course. They may not save enough, or they may not annuitize when they should. But it's less likely that an insurance company's annuity will fail than a pension plan will be taken over by the government.

To the extent that pension accounting isn't accurate, due to the design of the laws, they should be changed. And PBGC should be charging a greater premium. Everything is legal, of course. Again, these laws were designed by politicians and lobbyists.

Pension plans have been on their way out since ERISA. The regulation makes it more costly to maintain a DB plan than a DC plan, and few workers expect to stay in one job long enough to make a DB plan attractive.

In defense of Social Security privatization

Jack Stoller at Honest Partisan highlights an article in the New York Times magazine on the problems with underfunded defined benefit pension plans. What's amusing is his comment:

The article doesn't mention this, but it's another argument against Social Security privatization, in my view.

Actually, it's an argument FOR Social Security privatization. Social Security is, essentially, an underfunded defined benefit pension plan. ($11 trillion underfunded, as I highlighted previously.) There's one difference, though: unlike pension plans, the terms of Social Security can be changed. Yes, there's nothing preventing the government from cutting or eliminating your Social Security benefits (other than politics). A company experiencing financial troubles can't cut pension benefits for its retirees by 30%. Yet people who say that current payroll taxes will be able to fund 70% of Social Security's needs when the "trust fund" runs out are implicitly saying that there will be a 30% benefit cut.

It's Samuel Alito!

Normally, I don't have the television on in the morning, but today, I saw the news flash! Samuel Alito is the new nominee for the Supreme Court.

There's an immediate roundup of reaction over at Instapundit. Apparently, Glenn Reynolds has a direct cybernetic connection to the Internet and news feeds!

High school sports logos

An interesting article on high schools who use logos similar to college and pro teams. I remember that one of the high schools I attended used the pointed-C logo like that of the Chicago Bears (and also seen on other C teams). However, I wonder just how much one can trademark a pair of interlocked letters in a particular font.

I particularly like the arrangement Kansas State has made:

Dilley had Healy Awards adapt Kansas State's Wildcat and brought it to athletic director Grant Nesbit. Nesbit contacted the university and signed a two-year contract for $1 that allows Lawrence North to use the logo on uniforms, stationary, signs and equipment. A scholarship program at Kansas State receives 8 percent of the wholesale price from any apparel that Lawrence North sells with the logo.

"We're proud to have our mark in other states," said Tami Breymeyer, Kansas State's associate director of licenses, who noted that Lawrence North is one of 63 schools in 22 states using the logo, including South Vermillion in Clinton, Ind., and Kankakee Valley in Wheatfield, Ind. All told, KSU makes approximately $2,000 a year from the program.

"Our philosophy is, we don't want to be the big, bad bully. It's very costly to change a logo; we don't want to create a hardship on a program and it's a great mark," Breymeyer said.

It's a win-win situation.

Preparation for a female President

Have you been watching that new TV series that's preparing us for the future presidency of Hillary Clinton? Just watching a woman in a seat of power in Washington D.C. will make people accepting of the day when it happens for real. And this series really has Hillary down pat.

But why is she being portrayed as the Vice-President?

No, I'm not talking about Commander in Chief. I'm talking about Prison Break. In the most recent episode, we've seen that the woman intimately involved in killing the Vice-President's brother, framing another man, and covering it up is... the Vice-President herself!

Less liquor, more drunkenness

A great comment from James Taranto:

From a Reuters dispatch on U.S. crime statistics:

The U.S. prison population continued to grow last year even though reports of violent crime during 2004 were at the lowest level since the government began compiling statistics 32 years ago, according to a government report released in
September.

The other night, we realized that our degree of drunkenness was continuing to grow even though the liquor in the bottle was at the lowest level since we opened it. Life is full of paradoxes, isn't it?

It's fairly safe to assume that those people who have committed crimes in the past are more likely to commit crimes in the future than is the non-criminal population. It's common sense that increased prison population would contribute to lower crime rates.

Top Ten Reasons why Saddam Might Go Free

From Riding Sun, here they are:

TOP 10 REASONS WHY SADDAM MIGHT NOT BE FOUND GUILTY
10. Executive privilege
9. Statute of limitations on genocide expired last Tuesday
8. Not enough homicidal dictators left in the world to serve as a jury of his peers
7. Arranged to have lead prosecutor replaced with Marcia Clark
6. Plans to pack courtroom with Saddam look-alikes, hope witnesses can't pick him out
5. Whole thing was one big Mossad plot
4. Cop who wrote the ticket might not show up in court
3. Dan Rather is reporting he's guilty
2. Thought he dropped laughing gas on Kurds to cheer them up; tragic mistake led to disaster
1. Twinkie defense

How about:

:: Oil-for-food bribery so widespread that majority of judges are on the take.
:: Has too important a job to do as President of Iraq.
:: Plans to blame Michael Brown for not sending FEMA to rescue Marsh Arabs.
:: Will win tiebreaker round of rock-paper-scissors to win freedom.
:: Will claim to be Santa Claus; how will the judges tell their grandkids that they're going to kill Santa Claus?

Bankruptcy lawyers: CYA!

After making a snide comment earlier, it looks like there will be actual lawyer malpractice in at least one field! Part of the new bankruptcy law requires that "attorneys sign off on the veracity of their clients' claims after a 'reasonable investigation,'" according to columnist John Ketzenberger. He cites bankruptcy lawyer Mark Zuckerberg, who saw opportunity in the new law, and created a firm to handle these investigations.

If insurance companies have to deal with Sarbanes-Oxley, then it's only fair lawyers get their own controls.

So as the area's bankruptcy attorneys recalculate the legal landscape,
Zuckerberg recognized a business opportunity. It's called Bankruptcycya.com, and
it's a service for lawyers who need to, ahem, cover their butts under the new
law.

Among the changes Congress made to the bankruptcy law is the requirement that attorneys sign off on the veracity of their clients' claims after a "reasonable investigation." If the client is lying and the lawyer didn't check it out, that lawyer could face fines or criminal charges.

The heartburn really kicks in when lawyers contemplate how to show whether the debtor's car is really worth $15,000, whether he really is listed on the title to his house or if he has other judgments against him.

The prospect of combing countless databases for the relevant information was daunting to Zuckerman. As he prepared himself and the attorneys who work for him for the changes, he had an epiphany. He could contract with the various providers of the information, then offer it to lawyers in a one-stop-shopping format over the Internet.

For a fee, Bankruptcycya.com will conduct information searches on clients in 10 categories such as credit reports, asset valuation or Social Security number verification. Voila! Documentation to prove a lawyer made a "reasonable investigation" into his clients' claims.

21st Century Scholars

In two and a half years, you're sure to hear Indiana Senator Evan Bayh on the national campaign trail, talking about all his accomplishments (and primarily focusing on his accomplishments as Governor). One of them he's been talking about now is Indiana's 21st Century Scholarship program, which he started 15 years ago while governor. Poor students in junior high school who maintain passing grades and good citizenship get free college tuition at any participating public university.

It's even a voucher program! A student who chooses a private school gets an equivalent scholarship amount.

However, a report in the October 9th Indianapolis Star shows that 75% of childreh who sign up for college under this program never earn a degree, though they have 10 years to complete the degree.

Granted, many people who enroll in college never earn a degree. But one of the reasons people don't earn a degree is the inability to afford college. The 21st Century Scholars don't have that concern.

The article predictably focuses on the challenges these students face in transitioning to college. Fixing poor performing schools will go a long way to helping these students.

When you hear commentators praise this program in the future, look to see if they point out its flaws. Remember, you heard it here first!

This about sums it up

Visiting a gas station bathroom, from a panel of the Web comic Better Days.

You'd almost think they have a competition to come up with the most ridiculous thing to attach to a key.

DeLay vs. Earle

I haven't commented on the Tom DeLay indictment, because it's been covered well by more popular bloggers. It's quite clearly a partisan attack from Democratic prosecutor Ronnie Earle.

I will say this, though:

If there were such a thing as malpractice lawsuits against lawyers, and my company held a malpractice insurance policy for Ronnie Earle, I'd be setting up some pretty big reserves for the future claim.

Dangerous to your health!

In the Wall Street Journal today, Stephen Moore makes a good point: where are the lawsuits against Ben and Jerry's?

Most of my fellow tourists are a bit on the chubby side, and a few start wheezing as we climb the half-flight of stairs to the observation area. These folks need another scoop of Cherry Garcia like a hole in the head. Although this company touts its "wholesome and natural ingredients mixed with euphoric concoctions," the truth is that Ben & Jerry's ice cream mostly contains two hazardous ingredients: fatty cream and sugar.

Herein lies a second irony: This product is probably about as good for your health as a pack of Camel cigarettes--and at least cigarettes carry the Surgeon General's warning labels. At Ben & Jerry's, the saying goes "if you can't eat a whole pint . . . in one sitting, you aren't really trying." But if you do, you might as well be injecting your arteries with Elmer's glue. And they have no qualms about marketing this dangerous product to children. If you want to know the definition of a liberal's dilemma, just wait till the trial lawyers slap Ben & Jerry's with a billion-dollar
lawsuit.

There are, of course, double standards involved here. On a similar note, I've been waiting for the Center for Science in the Public Interest to do a report on soul food for over a decade. Chitlins, greens cooked in bacon grease, and red velvet cake are surely as unhealthy as the fettucine alfredo, cappucino, and sandwiches they've opposed in the past.

Advice and consent

As much as I'm not thrilled with the nomination of Harriet Miers, reading the back-and-forth discussion has led me to one conclusion.

If a Senator believes the nominee is qualified to serve on the Supreme Court, the Senator must vote for the nominee. It doesn't matter if he or she believes there are hundreds of better qualified nominees. After all, it is only the place of the Senate to offer advice and consent. The President nominates the judges.

Voting against Harriet Miers because you don't like her politics allows Democratic Senators to do the same to any nominee Republicans nominate in the future.

If you oppose the candidate, do it because she isn't qualified. If you vote in those terms, it is easier to vote against any Democratic President's nominees on the ground that they aren't qualified. (One can argue that most aren't, if they have a history of legislating from the bench. Activism is not the Constitutional role of a judge.)

Ambiguity

Take a look at this picture. It reminds me of the mythical beast called a cockatrice, or it could just be an overgrown mutant chicken.

Notice anything else about it?

Back to $10 Million

Sadly, I got no return from the $10 voluntary tax I paid Wednesday.

(That's 10 Powerball tickets, for those playing from home.)

It had been so long since I had bought tickets, that the Scantron form I had filled in was no longer valid. Powerball had added another two numbers to the "choose 5" bucket. (Like a 1 in 120 million chance of winning wasn't low enough.)

Now that the prize is back to a "measly" $10 million, I'll be ignoring the lottery again.

Why couldn't I be as lucky as Senator Judd Gregg?

On a whim prompted by the frenzy over Wednesday's $340 million Powerball jackpot, the New Hampshire Republican bought a ticket that matched five of the six numbers in the Powerball game.

He collected a $853,492 check Thursday.

This is good news!

The leaders of Zimbabwe and Venezuela teamed up at a U.N. hunger forum Monday to blame the United States and other wealthy nations for famine, war and pollution, with the African leader calling President Bush and British Prime Minister Tony Blair "unholy men."

I'll only say this: You know your governmental policies are rock-solid when they upset a pair of murderous despots like Mugabe and Chavez.

Keep up the good work, President Bush and Prime Minister Blair!

No rogues

I'm stealing this comment from a mailing list, on the subject of rogues/thieves/shady types in a fantasy city known for them:

Nah, there are no rogues in Dyvers. There are, however, many jugglers, locksmiths, dancers, merchants, warriors, magicians, streetwalkers, urchins, bouncers, serving wenches, contractors, beggers, chimney sweeps, and gentry.

The impact of Columbus

Albion's Seedlings discusses Columbus, Britain, and the transformation of the world from a slavery-based economy to a free-market economy. It's well-written, and well worth a read.

(Via Instapundit)

Bennett's mistake

Bill Bennett made a serious blunder when he said the following, no matter how true it is, or how much he despises the idea:

"If you wanted to reduce crime, you could -- if that were your sole purpose -- you could abort every black baby in this country and your crime rate would go down.

"That would be an impossibly ridiculous and morally reprehensible thing to do, but your crime rate would go down."

Bill Bennett should have said "abort every male baby." In one way, it would make a stronger argument. While blacks are more disproportionately represented in the justice system (47.4% of prisoners, according to this report from the Bureau of Justice Statistics, compared to 12.3% of the population), the percentage of males in the justice system (93.5% of prisoners, for slightly under 50% of the population) is considerably higher. The impact of eliminating 93.5% of the most violent criminals would make a bold and ridiculous point.

More importantly, no one cares about men. No one cares if you stereotype men as more concerned about their fishing boat than their family. No one cares if you say men never stop to ask directions. Are in a perpetual state of childhood. Don't understand feelings.

And no one cares about how men are disproportionately represented in the justice system. Never have, never will.

License to care

An interesting short news item in the paper:

A religious group that runs two facilities that counsel gays to give up homosexuality has sued the state in federal court, claiming Tennessee is violating the group's religious freedom by requiring a license to care for the mentally ill.

Is it just me, or is it odd that this is not a huge controversy? Here you have a government agency implying that homosexuality is a mental illness! Psychiatrists have long ago given up that assertion that homosexuality is a mental illness, so why is this state agency claiming it is so?

I of course don't know what the group (Love in Action) does, but I suspect it involves a lot of prayer and discussion. It's probably apparent that it's not caring for the mentally ill.

New controversy at the Daily Tar Heel

Check out the latest controversy at the Daily Tar Heel! Less than a month after firing columnist Jillian Bandes for ascribing to some university Muslims that they were okay with being “sexed up” and cavity-searched, reporter Natalie Hammel has been dismissed for a similar offense. In a story on interracial couples at UNC, she stated that a black student was attracted to his girlfriend because she looked different, i.e. not black.

Understandably, the student was not happy to be ascribed this superficial trait (almost self-loathing). He corrected the record with a letter to the editor, where he made the point that it was possible to identify with one’s race while embracing another’s race. That’s an admirable example of tolerance.

When a journalist chooses words that misrepresent a subject’s beliefs and feelings, he or she commits a cardinal sin of journalism. It’s a shame, but the integrity of the Daily Tar Heel must be maintained.

Everything I’ve just said is true, except there’s no controversy, the reporter has not been fired, and the editors of the Daily Tar Heel have been exposed as hypocrites. It didn’t even take a month for this to happen. Natalie Hammel is just as guilty of “creating an inaccurate reflection” as opinion columnist Jillian Bandes was, but she got away with it.

Windfall profit taxes

Coyote Blog suggests an industry in need of windfall profit taxing. No, not the oil industry, one that is even more profiting from a bubble.

If you feel like the oil companies should be taxed on their windfall profits, then read Warren's post, and decide if everyone benefitting from this other industry's bubble should be similarly treated

Nobel Peace Prize

Thursday, the Indianapolis Star ran an article that this might be the year that Senators Lugar and Nunn win the Nobel Peace Prize for their efforts to deactivate nuclear weapons and other weapons of mass destruction in the former Soviet Union and elsewhere.

Friday, we learned that the prize instead went to Mohamed El Baradei and the IAEA. This same organization couldn't stop two nations (signatories of the nuclear non-proliferation treaty as non-nuclear powers) from working towards or developing nuclear weapons. Obviously, this prize is well-deserved recognition for a very successful year. *gag*

So, instead of an organization that has overseen the reduction of nuclear weapons, the prize goes to an organization that has overseen an increase in nuclear weapons. Just wonderful.

So, in recent years, the prize has gone to the UN, which failed to stop wars in Rwanda, Sudan, and elsewhere; Jimmy Carter, who failed to stop the belligerence of North Korea; and Yasser Arafat, who failed to stop the belligerence of the Palestinians.

I suggest we rename the prize the Nobel Prize for Failure.

East German National Anthem

Your morning dose of humor: the East German National Anthem, courtesy of the excellent movie Top Secret!:

"Heil Heil East Germany
Land of vine and grape
Land where you'll regret
Any try to escape
No matter if you take a running jump,
or tunnel under the wall
Forget it, the guards will kill you--
if the electrified fence doesn't first"

Of Empires and Human Spirit

Sigmund, Carl, and Alfred writes on the subject of the American Empire, and whether or not it is in decline. They reject the notion that the American Empire is doomed to fail, or is already failing.

In truth, the American Empire is nothing like the 'empires' that preceded her, because in fact, the American Empire is not dependent on foreign influence. It is our own desire to ever self assess and self improve that fuel America. We look to fix our problems, rather than hide them. Foreigners look to our shores for inspiration, not to far flung outposts, where we might temporarily find ourselves. America herself is still the preferred destination for most of the worlds immigrants, political posturing notwithstanding.

The longevity of the American government is pretty much unprecedented in history, when you look at the amount of change it has survived. Egypt may have had its centuries of dynasties, but in those centuries, not much changed. I've found a useful measure of change to be turns in the computer game Civilization. At the start of the game, each turn is 20 years, but once you hit 1850, each turn is 1 year. We've lasted a lot more turns than Egypt.

Helpful tip for family disaster recovery

"Wear Protective clothing and study shoes"

So this is what happens when you quickly throw together a document with information from the Red Cross and don't proofread.

Thoughts on Harriet Miers

I, of course, have no particular education, experience, or training that makes me a knowledgeable commenter on the nomination of Harriet Miers. And, of course, that won't stop me from commenting.

Five years from now, we'll know if President Bush made a good choice. But for now, we can only speculate.

Reasons to dislike the nomination:

1. A tin ear for politics

Harriet Miers is a close Bush confidant (or should that be confidante?). In other words, she will be called a crony. Coming so close after the Michael Brown hullabaloo, was this the best time to promote a woman whose biggest asset is a close relationship to the President?

(Aside: the whole Brown crony allegation is rather unfair; why wasn't he a crony when his agency effectively managed four Florida hurricanes? Why did he only become a crony when disaster hit corrupt Louisiana?)

2. 55

That's the number of Republican senators. Even if you lose RINOs Snowe, Chafee, and Collins, you can still approve anyone. Why not nominate a stronger conservative with well-known conservative credentials? And if you rile up the Democrats and end up with ending filibusters on judicial nominations, all the better.

3. A backroom deal?

It was quickly reported that Senate Minority Leader Harry Reid approved of the nomination. That's a bad sign, indicating that perhaps President Bush cut a deal to get a quick approval. Cutting deals is what you do when the other party controls the Senate, not when your party controls the Senate.

4. Who belongs in the Baseball Hall of Fame?

Not every baseball player, not even every baseball player with a ten year Major League career, belongs in the Hall of Fame. That honor is reserved for players with exemplary careers. Similarly, the Supreme Court is thought of as a place for jurists with distinguished careers. Typically, they will include graduation from a top law schools, clerkships in top courts, teaching law, and of course service on various lower courts.

I'm sure Harriet Miers is qualified to be on the Supreme Court, as are thousands of other people. But people will see (again, the political tin ear) that she isn't the best person, and isn't the Supreme Court a place for the best people?

Reasons to like the nomination:

1. A stronger conservative than could otherwise be nominated

If we trust that President Bush's close relationship ensures he knows Harriet Miers is a dedicated conservative and strict constructionalist, then she will have an easier time with confirmation than an equally conservative person with a strong paper trail.

2. It's a trap!

Conspiracy theorists are already suggesting that the Miers nomination is meant to be disapproved, allowing President Bush to nominate someone else. If, for example, she were to be rejected because she isn't distinguished, President Bush could nominate a very distinguished and staunchly conservative judge. It would be hard to argue that you wanted a more distinguished candidate, then vote against a more distinguished candidate. (Many Democrats would act in this hypocritical manner, of course.)

This hypothesis doesn't sound like something President Bush would do, but it is interesting.

Here's what I wanted President Bush to say:

"A month ago, I nominated John Roberts to the Supreme Court. Chief Justice Roberts is an extremely distinguished jurist, extremely knowledgeable about the law, and importantly, not an extreme ideologue. I expected a smooth confirmation hearing, where senators would respect that judges cannot discuss how they would rule on cases, without forcing themselves to recuse themselves from cases. I expected the Senate Minority Leader would support such a strong nominee, and urge his party to support the nominee. I expected a margin of approval similar to that enjoyed by Justices Ginsberg and Breyer.

"Instead, half of the Senate Democrats voted against this obviously well-qualified nominee. They even acknowledged that he was well-qualified, but voted against him because they didn't like what they thought his political beliefs were.

"It is clear that no candidate, regardless of ideology, will be treated fairly by Senate Democrats. Thus, I have not chosen to nominate another politically uncontroversial candidate. I have instead nominated (Brown/Luttig/McConnell) for Associate Justice of the Supreme Court."

See the discussion at the RINO Watering Hole.

Update:
For N.Z. Bear's tracking purpose, let me say:
I am neutral on the Miers nomination.

Harriet Miers

More signs of Mayor Nagin's incompetence

Wizbang reveals another satellite picture of New Orleans school buses. Unlike the ones that were flooded, these weren't flooded. And they weren't used. At all.

Thank you, Paul, for once again proving that we can fact-check your ass from orbit.