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Posts Tagged ‘retirement

“A republic, if you can keep it”*…

Nathan Gardels on one of the deepest issues at play in the social and political sphere in the U.S and around the world…

It is a mark of just how deep the crisis of governance across Western democracies has become that conflict irresolvable through political competition is giving way to the reconsideration of founding constitutions and the institutions they invest with legitimacy.

At its heart, this crisis is about trust. As the political scientist Francis Fukuyama has argued, “Belief in the corruptibility of all institutions leads to the dead end of universal distrust. American democracy, all democracy, will not survive a lack of belief in the possibility of impartial institutions; instead partisan political combat will come to pervade every aspect of life.” And so it has.

The ongoing populist surge of recent years did not cause the crisis. It is a symptom of the decay of democratic institutions that, captured by the organized interests of an insider establishment, failed to address the dislocations of hyper-globalization, the disruptions of rapid technological change and the attendant creep of widening cultural cleavage. Too many were left behind and struggled while others prospered and played.

Adding danger to decay, the fevered partisans of populism are intent on throwing out the baby with the bathwater, assaulting the integrity of the very institutions which protect republics from themselves through checks and balances, or that are critical to the fair administration of complex societies. The rebellion against a moribund political class has become a revolt against governance itself and the infrastructure that goes with it.

Populists who fashion themselves as tribunes of the people have never met independent and impartial institutions they can happily abide. Believing they are the embodiment of majority will, any constraint on their power is portrayed as a contrivance by elites to keep the masses down.  When cemented with cultural resentment against those at the top who look down on the unsophisticated rabble living in the sticks and outside the fashionable status sphere, anti-elitist sentiment has enough truth value to stick.

We’ve seen versions of this over recent years where the previous governments in Poland and Brazil, as well as the present government in Israel, have sought to politicize the top courts and limit their independence from the powers that be. Hungary under Viktor Orbán, an outright proponent of illiberal democracy, has done the same, seeking further to stifle independent media, think tanks and civil society organizations for good measure.

In Mexico, Claudia Sheinbaum, the president-in-waiting elected by a landslide earlier this year, has pledged to continue pursuing President Andrés Manuel Lopez Obrador’s plan for popular election of that nation’s Supreme Court, thus making its slant coincide with the interests of the ruling party. Sheinbaum, like her predecessor, is also bent on disempowering the independent electoral commission that oversees the polls and certifies voting outcomes.

With the U.S. Supreme Court already dominated by ultra-conservative judges, partisans of Donald Trump have turned their attention to slashing the powers of what it calls “the administrative state” — those agencies with the discretionary authority under legislative mandate to regulate private sector activities in realms from environmental impact to food and drug safety to publicly traded securities to the monopolistic conduct of large companies. Most of these agencies have been in place since the early 20th century as the Progressive Era’s response to the vast inequality, child labor, unsanitary industry, crony corruption and robber barons of the unregulated Gilded Age.

The aim of modern-day populists is to both diminish and politicize the regulatory technocracy to fit their agenda. The famous Project 2025 plan prepared by the Heritage Foundation in anticipation of another Trump presidency has gone so far as to propose the abolition of the National Oceanic and Atmospheric Administration — the key body monitoring climate change, which they don’t believe in. My colleague Nils Gilman aptly calls this endeavor “institutional vandalism.” [See here for a taste of Gilman’s sharp thinking on the more general issue at play.]

Though the Trump campaign has sought to distance itself from the details of Project 2025, which may scare sensible voters in the runup to the November election, few have any doubts that it provides the essential roadmap for action if Republicans come to power.

Following verdicts to overturn Roe vs. Wade on abortion, blunt the scope of regulatory agencies and codify presidential immunity, the realization of what a stacked Supreme Court means has prompted President Joe Biden to engage the battle over institutions head on.

As his last stand after bowing out of the presidential race, the president is embarking on a quixotic quest to undo the impact of recent rulings and seek a constitutional amendment to reform how the Supreme Court works. First, arguing that “no one is above the law,” he would repeal the presidential immunity recently granted and impose a “binding code of conduct” with strict ethics guidelines prohibiting political activity by justices and requiring transparent disclosure of gifts.

The core structural change of Biden’s proposal is to get rid of lifetime terms and limit them to 18 years, with staggered appointments every two years (when one of the terms expires) to avoid the enduring sway of justices chosen by one political regime and ideological persuasion. In short, a process which would perpetually unstack the highest court instead of invite and enable its stacking.

This is an uphill battle, for sure, since amending the constitution would entail a 2/3 vote of both houses of Congress and approval of ¾ of all state legislatures.

“Defend the institutions” is hardly a rallying cry that will stir the passions of the public in the same way as the instinctive appeal of demagogues who promise simple solutions to complex problems while blaming all misfortune on the world outside or perceived enemies within. But repairing and restoring the integrity of democracy’s infrastructure is the only path back to trust. That is a tall order in the short term.

Popular emotion is the Achilles heel of democracies. Institutions that temper emotion through the cool deliberation of disinterested reason are what make the system work to the benefit of all.

As Fukuyama rightly says, democracies can’t survive without at least a belief in the possibility of impartial platforms for the administration of justice and governance. That proposition will be tested as never before in the battle over institutions in the near years ahead…

A challenge to democracy’s infrastructure: “The Battle Over Institutions,” from @NoemaMag, with @FukuyamaFrancis and @nils_gilman.

* Benjamin Franklin’s response to Elizabeth Willing Powel‘s question in 1787: “Well, Doctor, what have we got, a republic or a monarchy?”

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As we rally around the rudiments, we might recall that it was on this date in 1935 that President Franklin D. Roosevelt signed the Social Security Act, part of his New Deal program that created a government pension system for the retired.

By 1930, the United States was, along with Switzerland, the only modern industrial country without any national social security system. Amid the Great Depression, the physician Francis Townsend galvanized support behind a proposal to issue direct payments to older people. Responding to that movement, Roosevelt organized a committee led by Secretary of Labor Frances Perkins to develop a major social welfare program proposal. Roosevelt presented the plan in early 1935 and signed the Social Security Act into law on August 14, 1935. The Supreme Court upheld the act in two major cases decided in 1937.

The law established the Social Security program. The old-age program is funded by payroll taxes, and over the ensuing decades, it contributed to a dramatic decline in poverty among older people, and spending on Social Security became a significant part of the federal budget. The Social Security Act also established an unemployment insurance program [only a few states had poorly-funded programs at the time] administered by the states and the Aid to Dependent Children program, which provided aid to families headed by single mothers. The law was later amended by acts such as the Social Security Amendments of 1965, which established two major healthcare programs: Medicare and Medicaid.

source

Roosevelt signs Social Security Bill (source)

“Before beginning, plan carefully”*…

A dummy is used to demonstrate the first steps of cryopreservation (source)

The marvelous Matt Levine on one of the vexing challenges facing those who preserve themselves cryogenically…

See, if you go to a regular trusts and estates lawyer, she will ask you questions like “if your spouse and children die before you, whom do you want to inherit your estate,” but if you go to a science fiction trusts and estates lawyer, she will ask you questions like “if your frozen head cannot be attached to a fresh body and reanimated in 200 years, but your consciousness can be cloned in a computer simulation, would you like your estate to go to the cloned consciousness or stay with the frozen head?” Meanwhile I suppose if you go to a regular financial planner, he will ask you questions like “how much equity risk are you comfortable taking between now and retirement,” while if you go to a science fiction financial planner, he will ask you questions like “where are you most comfortable investing for the next 200 years, given that you will not be able to change your asset allocation decisions during that time, because you’ll be dead?”

When you are a kid, science fiction is fun because it imagines amazing futuristic technologies. And then you grow up and you realize that what’s really fun are the legal and financial technologies that are called into being by those physical technologies: Sure sure sure reviving a frozen head is great, but how does the frozen head get a credit card? Bloomberg’s Erin Schilling reports:

Estate attorneys are creating trusts aimed at extending wealth until people who get cryonically preserved can be revived, even if it’s hundreds of years later. These revival trusts are an emerging area of law built on a tower of assumptions. Still, they’re being taken seriously enough to attract true believers and merit discussion at industry conferences.

“The idea of cryopreservation has gone from crackpot to merely eccentric,” said Mark House, an estate lawyer who works with Scottsdale, Ariz.-based Alcor Life Extension Foundation, the world’s largest cryonics facility with 1,400 members and about 230 people already frozen. “Now that it’s eccentric, it’s kind of in vogue to be interested in it.”

He and others are trying to answer questions that at times seem more like prompts in a philosophy class.

Can money live indefinitely?

Are you dead if your body is cryonically preserved?

Are you considered revived if you have only your brain?

And if you’re revived, are you the same person?

So many good legal questions — “House considers the revived person to be different in the eyes of the law, in part because a person can’t be the beneficiary of their own trusts” — but also great financial ones.

Here’s one: Should you buy Bitcoin for your long sleep? The argument for Bitcoin is that you can hold it, indefinitely, without relying on anyone else: If you put 10 Bitcoin in a wallet and only you know the private key, and then you die and get frozen and come back in 200 years, no one will have taken your Bitcoin, legal rules about inheritance and perpetual trusts don’t matter, and you don’t need some succession plan for the trustees and financial advisers who will take care of your assets. You just have to make sure you remember your private key as you’re dying. Legal rules can change, human institutions can change, but your Bitcoin is immutable.

The argument against Bitcoin is, of course, what if people stop valuing Bitcoin? Putting your money in Bitcoin is a hedge against change in other human institutions, but it puts a lot of eggs in the basket of one human institution, “treating Bitcoin as money.” It’s a bit weird to bet that that’s more permanent than anything else.

More generally, what is money anyway? “It may be difficult to know what role money will play in a post-[artificial general intelligence] world,” says OpenAI to its investors, and what if OpenAI gets to artificial general intelligence before anyone gets around to unfreezing the heads? You might be leaving your future self all the wrong stuff…

Very long-term planning: “Cryogenics Law,” from @matt_levine via Ingrid Burrington’s wonderful newsletter, “Perfect Sentences” (in this instance, “Sure sure sure reviving a frozen head is great, but how does the frozen head get a credit card?).

* Marcus Tullius Cicero

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As we chill, we might recall that it was on this date in 1983 that the coldest (natural) temperature ever recorded on Earth was registered by the research station at Vostok, Antarctica: -128.5 degrees Fahrenheit (-89.2 degrees Celsius).

The Vostok Research Station (source)

We might also note that today– July 20, 2024– is the date on which the action in Octavia Butler’s Parable of the Sower begins: “…in 2024, when society in the United States has grown unstable due to climate change, growing wealth inequality, and corporate greed…”

“We use the term risk all too casually, and the term uncertainty all too rarely”*…

How private-equity giants are overhauling the financial system, and its potential impact on pensions…

A decade or so ago private equity was a niche corner of finance; today it is a vast enterprise in its own right. Having grabbed business and prestige from banks, private-equity firms manage $12trn of assets globally, are worth more than $500bn on America’s stockmarket and have their pick of Wall Street’s top talent. Whereas America’s listed banks are worth little more than they were before the pandemic, its listed private-equity firms are worth about twice as much. The biggest, Blackstone, is more valuable than either Goldman Sachs or Morgan Stanley—and has the confidence of a winner. “It’s the alternatives era,” proclaimed the company’s ebullient Taylor Swift-themed festive video in December. “We buy assets then we make ’em better.”

This is not, though, the business that has recently boomed for them. Traditional private equity—using lots of debt to buy companies, improving them, and selling or listing them—has been lifeless. High interest rates have cast doubt on the value of privately held companies and reduced investors’ willingness to provide new funds. It does not seem to matter. Core private-equity activity is now just one part of the industry’s terrain, which includes infrastructure, property and loans made directly to companies, all under the broad label of “private assets”. Here the empire-building continues. Most recently, as we report this week, the industry is swallowing up life insurers.

All of the three kings of private equity—Apollo, Blackstone and KKR—have bought insurers or taken minority stakes in them in exchange for managing their assets. Smaller firms are following suit. The insurers are not portfolio investments, destined to be sold for a profit. Instead they are prized for their vast balance-sheets, which are a new source of funding.

Judged by the fundamentals, the strategy makes sense. Insurance firms invest over long periods to fund payouts, including annuities sold to pensioners. They have traditionally bought lots of government and corporate bonds that are traded on public markets. Firms like Apollo can instead knowledgeably move their portfolios into the higher-yielding private investments in which they specialise. A higher rate of return should mean a better deal for customers. And because insurers’ liabilities stretch years into the future, the finance they provide is patient. In banking, long-term loans are funded with lots of instantly accessible deposits; with private assets and insurance, the duration of the assets matches the duration of the liabilities.

Yet the strategy brings risks—and not just to the firms. Pension promises matter to society. Implicitly or explicitly, the taxpayer backstops insurance to some degree, and regulators enforce minimum capital requirements so that insurers can withstand losses. Yet judging the safety-buffers of a firm stuffed with illiquid private assets is hard, because its losses are not apparent from movements in financial markets. And in a crisis insurance policyholders may sometimes flee as they seek to get out some of their money even if that entails a financial penalty. Last year an Italian insurer suffered just such a bank-run-like meltdown…

Funding pension providers with private equity: “The risks to global finance from private equity’s insurance binge” (gift article) from @TheEconomist. 

And lest we think that publicly-funded defined benefit pensions are less risky, see “Akin to Fraud” by Mary Willliams Walsh, an account of the sorry state of the public pension fund in New Hampshire (the state with the second-oldest population in the nation).

John Bogle

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As we rethink retirement, we might recall that it was on this date in 1728 that John Gay‘s The Beggar’s Opera premiered. A “ballad opera” (a satirical work with lyrics set to vernacular music), it was a huge hit–  it has been called “the most popular play of the eighteenth century“– a watershed in Augustan drama.

The original idea of the opera came from Jonathan Swift, who wrote to Alexander Pope in 1716 asking “…what think you, of a Newgate pastoral among the thieves and whores there?” Their friend, Gay, decided that it would be a satire rather than a pastoral opera.

In 1928, Bertolt Brecht (working from a translation into German by Elisabeth Hauptmann) adapted the work into Die Dreigroschenoper (The Threepenny Opera) in 1928, sticking closely to the original plot and characters but with a new libretto, and mostly new music by Kurt Weill.

Painting based on scene 11, act 3 by William Hogarth, c. 1728 (source)

“These fragments I have shored against my ruins”*…

 

gerontacracy

 

Hate crime is rising, the Arctic is burning, and the Dow is bobbing like a cork on an angry sea. If the nation seems intolerant, reckless and more than a little cranky, perhaps that’s because the American republic is showing its age. Somewhere along the way, a once-new nation conceived in liberty and dedicated to the proposition that all men are created equal (not men and women; that came later) became a wheezy gerontocracy. Our leaders, our electorate and our hallowed system of government itself are extremely old.

Let me stipulate at the outset that I harbor no prejudice toward the elderly. As a sexagenarian myself, not to mention as POLITICO’s labor policy editor, I’m fully mindful of the scourge of ageism. (I’ve had the misfortune on occasion to experience it firsthand.) But to affirm that America must work harder to include the elderly within its vibrant multicultural quilt is not to say it must be governed almost entirely by duffers. The cause of greater diversity would be advanced, not thwarted, if a few more younger people penetrated the ranks of American voters and American political leaders.

Let’s start with the leaders.

Remember the Soviet Politburo? In the waning years of the Cold War, a frequent criticism of the USSR was that its ruling body was preposterously old and out of touch. Every May Day these geezers would show up on a Moscow reviewing stand, looking stuffed, and fix their rheumy gaze on a procession of jackbooted Red Army troops, missiles and tanks. For Americans, the sight was always good for a horselaugh. In 1982, when Leonid Brezhnev, the last of that generation to hold power for any significant length of time, went to his reward, the median age of a Politburo member was 71. No wonder the Evil Empire was crumbling!

You see where this is going. The U.S. doesn’t have a Politburo, but if you calculate the median age of the president, the speaker of the House, the majority leader of the Senate, and the three Democrats leading in the presidential polls for 2020, the median age is … uh … 77.

It doesn’t stop there. We heard a lot last November about the fresh new blood entering Congress, but when the current session began in January, the average ages of House and Senate members were 58 and 63, respectively. That’s slightly older than the previous Congress (58 and 62), which was already among the oldest in history. The average age in Congress declined through the 1970s but it’s mostly increased since the 1980s…

Timothy Noah (@TimothyNoah1) points out that our leaders, our electorate, and our hallowed system of government itself are aging. And it shows: “America, the Gerontocracy.”

* T. S. Eliot, “The Waste Land”

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As we ponder progression, we might recall that it was on this date in 1796 that George Washington, having decided to decline a run for a third term as president, “delivered” (via a long letter published in the the American Daily Advertiser) his Farewell Address.  Characterizing it as advice from a “parting friend,” he celebrated the Constitutional logic of separation of powers and warned against permanent alliances with foreign powers, large public debts, a large military establishment, and “the devices of any small, artful, enterprising minority” to control or change the government– among many other topics.  His letter became the foundation of the Federalist Party’s political doctrine, and is considered one of the most important documents in American history. 

Starting in 1862, the Farewell Address was read, first in the House of Representatives, then from 1899 in the Senate as well on Washington’s birthday.  The House abandoned the practice in 1984, but the Senate continues the tradition.  A member of the Senate, alternating between political parties each year since 1896, reads the address aloud on the Senate floor, then upon finishing, makes an entry into a black, leather-bound journal maintained by the Secretary of the Senate .

250px-Washington's_Farewell_Address source

 

Written by (Roughly) Daily

September 19, 2019 at 1:01 am

The Golden Years…

 

At Chaseley Trust, a British assisted living facility, residents have an alternative to bingo and sing-alongs:  Chaseley occasionally employs the services of strippers and escorts for their guests.

“People have needs,” manager Helena Barrow told The Sun. “We are there to help. We respect our residents as individuals so that’s why we help this to happen. If we refused, we would not be delivering a holistic level of care.”

Read more about this hands-on healing (and the controversy it has stirred) in The Sun (from whence, the photo above) and in Salon.

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As we plan for early retirement, we might recall that it was on this date in 1692 that a doctor in Salem, Massachusetts (generally believed to have been William Griggs), was unable to find a physical explanation for the ailments (fits, pins-and-needles) of three young girls.  As other young women in Salem began to evince the same symptoms, the local preacher declared them “bewitched”… and the stage was set for The Salem Witch Trials.

 source

 

Written by (Roughly) Daily

February 8, 2013 at 1:01 am