Month: July 2005

…it’s a myth that aid is doomed to failure. Foreign aid funded the campaign to eradicate smallpox, and in the sixties it brought the Green Revolution in agriculture to countries like India and Pakistan, lifting living standards and life expectancies for hundreds of millions of people. As for the Asian nations that Africa is being told to emulate, they may have pulled themselves up by their bootstraps, but at least they were provided with boots. In the postwar years, South Korea and Taiwan had the good fortune to become, effectively, client states of the U.S. South Korea received huge infusions of aid, with which it rebuilt its economy after the Korean War. Between 1946 and 1978, in fact, South Korea received nearly as much U.S. aid as the whole of Africa. Meanwhile, the billions that Taiwan got allowed it to fund a vast land-reform program and to eradicate malaria. And the U.S. gave the Asian Tigers more than money; it provided technical assistance and some military defense, and it offered preferential access to American markets.

Coincidence? Perhaps. But the two Middle Eastern countries that have shown relatively steady and substantial economic growth–Israel and Turkey–have also received tens of billions of dollars in U.S. aid. The few sub-Saharan African countries that have enjoyed any economic success at all of late–including Botswana, Mozambique, and Uganda–have been major aid recipients, as has Costa Rica, which has the best economy in Central America. Ireland (which is often called the Celtic Tiger), has enjoyed sizable subsidies from the European Union. China was the World Bank’s largest borrower for much of the past decade.

Read more here.  The quality of this debate has improved markedly in the last ten years.  I’ll predict that most MR readers are skeptical about foreign aid, but I still regard this as an open question.  The key question is whether the above favorable conditions can be replicated by policy or foreign aid formula.

…the president’s rhetoric is unconvincing. Yes, he’s made the case that Social Security is headed for insolvency — tax receipts from workers and employers won’t cover benefits for retirees starting in 2018. But he has not managed to connect insolvency with his idea of personal accounts.

No wonder. These are two completely separate issues. Personal accounts won’t prevent Social Security’s impending bankruptcy. Personal accounts are great for other reasons: they will encourage savings, provide a more comfortable retirement, give people a nest egg they can own and increase personal responsibility. But the accounts won’t solve the insolvency problem.

Bush should stop talking about these two issues — insolvency and personal accounts — as though they are connected. He needs to concentrate on one or the other to start.

Which?

You probably think I’ll say "personal accounts." I might have, but a few months ago I took the administration’s position in a debate in Reason magazine with innovative economist Tyler Cowen of George Mason University. Sometimes, you learn something from such an encounter. I now see that Tyler was right [TC: thanks!], and what follows is adapted from his argument.

I believe the president should focus on putting Social Security on a sound footing. The best way to do that is to adjust benefits by increasing the retirement age, cutting back payments further for those who choose to retire early and indexing the growth in benefits to the consumer price index (that is, inflation) rather than to wages. Raising payroll taxes — or increasing the ceiling below which those taxes are collected — should be off the table. Such a hike would have a disastrous effect on the economy.

Should we give up on personal accounts?

Not at all. Those accounts will grow organically as Social Security withers.

The inevitable result of benefit adjustments will be to reduce, slowly over time, the importance of Social Security in the overall retirement scheme. The system would become more of a safety net. Retirees would, very naturally, fill in the gap by saving more.

The vehicle for those savings would be personal stock and bond accounts — which already exist!

Here is the TCS link.  Here is Robert Barro’s change of heart.

The cruise ship Voyager holds more than a half-million gallons of fuel, five tons of meat, forty thousand eggs, and more than two tons of flour.  Its eight thousand passengers form a floating mini-city.  The cruise ship operator provides a large number of public goods.  Its laws are private, and imposed by contract.  Do not expect democratic procedures.  To the extent they treat you well, it is due to reputational concerns.  Many of the doctors and nurses do not have proper governmental credentials.  The laborers come from around the world, and the manual labor typically comes from very poor countries, such as Honduras or the Philippines.  Customers choose across a large number of cruises, and typically seek out similar demographics.  The sector is close to tax-exempt and encounters only minimal regulation.

Those facts are from Kristoffer Garin’s Devils on the Deep Blue Sea: The Dreams, Schemes and Showdowns that Built America’s Cruise-Ship Empires, an interesting new book.  By the way, this book claims that fraud and food poisoning are rampant on cruise ships.

Here is an article about seasteads as a means of realizing libertarian ideals.  Randall Parker proposes cruise ships instead of nursing homes. 

Outside of a brief Galapagos jaunt, I’ve never been on a cruise — I would not be able to stand the socializing, bland food, and forced confinement — so I am in no position to judge.  But if I were a libertarian anarchist, this is what I would be studying.