I received an email from Arun Muralidhar in response to my sending him a link to my previous post Elizabeth Warren: We should be talking about expanding Social Security benefits.

Hi Steve:

Thanks for the email and for the link to Sen Warren’s comments on Social Security. I totally agree with her that benefits need to be preserved, but sadly preserving benefits without making any changes to the current system will place an unfair burden on our kids. The only way to do so would be to implement our plan immediately as every delay adds to the cost of bolstering the program.

On your idea about allowing the Social Security investment option to be an offering for 401(K) plans, Franco and I had anticipated this kind of need. In fact, the World Bank pension fund was reformed in 1999 to allow such an option so that even retirees in 401Ks could be protected from market volatility, and it became the default option for staff who did not want to select equity/bond funds.

Thanks again for your thoughts.

Arun Muralidhar
Founder
Mcube Investment Technologies

Arun is co-author with Franco Modigliani of the book  Rethinking Pension Reform. I was glad to hear Arun confirm that the idea of a 401K public option is not farfetched at all.  The fact that the World Bank offers this type of investment in its pension plan, is as close as I know to an existence proof that such a plan is possible  on a national scale.

I note in Arun’s comments the use of an insight I first read about in the works of behavioral economists.  That is, that when you offer a bunch of complicated options to people, the best outcome happens if you make a good option be the default option.

Reader RichardH sent me the link to The Guardian article Academics back students in protests against economics teaching.

The Academics said in a letter to the Guardian that a “dogmatic intellectual commitment” to teaching theories based on rational consumers and workers with unlimited wants “contrasts sharply with the openness of teaching in other social sciences, which routinely present competing paradigms”.

They said: “Students can now complete a degree in economics without having been exposed to the theories of Keynes, Marx or Minsky, and without having learned about the Great Depression.”

Before reading the article, I had no idea that the teaching of economics had deteriorated so badly since I first learned economics in the early 1960s. Perhaps this article explains why I was so mystified by what Paul Krugman had to say as noted in my previous post How Milton Friedman Fooled The Economists. In that post I marveled at how Krugman was seemingly only recently remembering what he learned in the early 1960s just as I had learned it.

If the award laden economists who had learned all of this in their youth could forgot it as they advanced in their careers, I guess I shouldn’t be so harsh on President Obama for his failure to understand economics.  After all he was taught by these forgetful bozos.

I can imagine in other disciplines that what previous scholars may have taught can go in and out of fashion, but it was hard for me to imagine that the teaching of fairly recent historical events can go out of fashion.

It’s as if some grad student in an economics class would say, “Professor, I just read in the news about the elimination of the Glass-Steagall act during the Clinton administration.  What was that all about, and why did we think we needed a Glass-Steagall act in the first place?”  Would the Professor say, “Oh we don’t teach about that anymore.  That pertains to historical events that can never happen again, because things like the Glass-Steagall act was created to prevent a recurrence.”

No wonder there was not a whole generation of new economics students reacting to the abolition of Glass-Steagall the way I reacted to it.  As it was happening, I was thinking, “How can they do that?  Do they want to repeat the Great Depression?”

Democracy Now has the video interview Leaked Memo Reveals U.S. Plan to Oppose Helping Poor Nations Adapt to Climate Change.

Newly leaked documents have revealed how U.S. negotiators at the U.N. climate summit in Warsaw are opposing efforts to help developing countries adapt to climate change. According to an internal U.S. briefing memo seen by Democracy Now!, the U.S. delegation is worried the talks in Warsaw will “focus increasingly on blame and liability” and that poor nations will be “seeking redress for climate damages from sea level rise, droughts, powerful storms and other adverse impacts.” We speak with Nitin Sethi, a journalist with The Hindu newspaper who first reported on the leaked document.

This seems typical of the U.S. strategy, say one thing in public, but be a roadblock in private, and here we are talking about a Secretary of State from a Democratic administration. Also we don’t want to allow messy lawsuits from people seeking that pesky concept called justice.

Also of interest is some talk about India’s role in climate change. The interview tries to mask, a little bit, the problem that India has as both a sufferer from climate change and a cause of climate change. Developing countries, rightly or wrongly, do not want their economic development constrained by rules that did not constrain the already rich countries when they were in a similar stage of development. Of course, we would all like to reap only benefits without taking on responsibility (as shown by the U.S. position). This is one reason this is such a tough issue to resolve.

Maybe this is the only way these international negotiations can work, but going in with a preconceived notion of what you want to get and what you are willing to give may prevent the discussion of the best and most equitable way to achieve the most success. For instance, if you wanted to achieve the least amount of global warming pollution, maybe the solution is to concentrate your efforts where the worst sources are. If some of those polluting sources are in or will be in developing countries, maybe the developed countries need to spend their money in helping the developing countries generate and use power more efficiently.

Talking Points Memo has the article Harry Reid Threatens ‘Nuclear Option’ — And Soon.

Senate Majority Leader Harry Reid on Tuesday threatened to “go nuclear” on filibuster reform in his strongest terms yet, one day after Republicans completed a triple-filibuster of President Barack Obama’s most high-profile judicial nominees.

“I’m considering looking at the rules,” said the Nevada Democrat. “All this [talk of the] sacred nature of the filibuster — I think what we need, and the American people want, is to get things done around here. I’m not talking about changing anything dealing with the Supreme Court or dealing with basic legislation. I am talking about executive nominations.”

“I’m at the point where we need to do something to allow government to function,” he said. “The obstruction we’ve seen in the last five years is nothing like we’ve ever seen before. … This is not how democracy is supposed to work, or function, and the American people are sick of this.”

An aide to the majority leader told TPM that “Reid’s keeping the whip count in his head and talking with each of his colleagues directly. When he feels ready, he’ll do it. Could be soon.”

Just reading the headline, I would have said, “It’s about time.  What’s he waiting for, the end of Obama’s term?”

I think the last paragraph of the excerpt makes it clear that Reid is just waiting until he has enough votes.

When someone mentioned this to me in passing in an email, I thought it might be a joke.  I decided to just Google it.  Surprisingly, I came up with this Worcester Telegram and Gazette article, Sturbridge selectman resigns citing town’s priorities at odds with his faith.

Thomas R. Creamer, a selectman since 2009 and whose second three-year term ends April 2015, dropped the bombshell Monday night, but not before he chastised his fellow board members and the community as a whole.

Calling the past year, a “journey,” Mr. Creamer said he was unable to escape the reality his personal relationship with Christ was at a “spiritual void” and “needed to become the single most important thing” in his life. He said he couldn’t achieve this goal if he remained a selectman.
.
.
.
Despite alleging that the needs and suffering are so prevalent in Sturbridge, Mr. Creamer said the 60 or so attendees at town meeting continue to approve every single expenditure and tax increase presented them, “based not upon validated need or true merit, but rather the social circles that they identify themselves with.”

As I read the first two paragraphs, I was having a hard time figuring out how this was going to connect to what I know about Tom Creamer’s political views.  The last paragraph excerpted above, makes the connection.  It must have been a half-gainer with a double twist that he made to get from the start of his remarks to the end.

I do hope Tom is alright. He has done a lot of good work in Sturbridge.

Truthout also has the article Greg Palast: Rand Paul’s Zombie-nomics Versus Janet Yellen.

Unbowed, Paul contends he is channeling Friedman from beyond the grave, invoking the Nobel Prize economist to support the senator’s quest against Yellen’s well-known commitment to easy money policies at the Fed.

I feel almost psychic for having posted my previous post, Paul Krugman | Alan Greenspan, Doing His Best to Make Things Worse.  Well, now the secret is out about which award in particular that I disparage.

As follows, I posted my feelings about Greg Palast’s article on the Truthout web site.

Greg, glad to see you correct the record that it was Friedman, not Keynes, that thought you could end a depression by pumping liquidity into the economy. Since you were his student, perhaps I can understand why you still think Friedman was correct, and that he deserved the Nobel Prize. Unfortunately, Keynes is still right about how to fix depressions, and Friedman is full of baloney. He even had to fake the data to prove his point. Even Yellen complained about the Congress working at cross-purposes to the Fed. In this complaint she meant that the Congress was not providing the Keynesian stimulus the economy needs. The monetarism the Fed is practicing, is at best a very weak tool beyond a certain point, and that fiscal stimulus is really what is needed. This is all according to Keynes Theory, which Friedman unsuccessfully tried to contradict.

If Friedman had been right, certainly the trillions of dollars that the Fed has pumped in would have solved the problem by now. What the Fed has done is far larger and far longer lasting than the puny fiscal stimulus Obama tried, and then counteracted after the first year of the stimulus. The deficit has been falling under Obama since his first year in office. Infrastructure spending is at historical lows. Perhaps Friedman would have applauded this, but Keynes would have been trying to warn us against such folly.

I don’t know if Keynes said this, but the current experience has validated the idea that pushing on a string does not get you very far.

Consortium News has the story How France Sank the Iran-Nuke Deal.

Lavrov implies that the Russian delegation, forced to make a quick up or down decision on the amended draft, did not realize the degree to which it was likely to cause the talks to fail. “At first sight, the Russian delegation did not notice any significant problems in the proposed amendments,” Lavrov said.

He made it clear, however, that he now considers the U.S. maneuver in getting the six powers on board a draft that had been amended with tougher language – even if softened by U.S. drafters — without any prior consultation with Iran to have been a diplomatic blunder. “[N]aturally, the language of these ideas should be acceptable for all the participants in this process – both the P5+1 group and Iran,” Lavrov said.

The crucial details provided by Lavrov on the timing of the amended draft shed new light on Secretary of State John Kerry’s claim in a press conference in Abu Dhabi on Monday of unity among the six powers on the that draft. “We were unified on Saturday when we presented a proposal to the Iranians.” Kerry said, adding that “everybody agreed it was a fair proposal.”

Kerry gave no indication of when on Saturday that proposal had been approved by the other five powers, nor did he acknowledge explicitly that it was a draft that departed from the earlier draft agreed upon with Iran. Lavrov’s remarks make it clear that the other members of the group had little or no time to study or discuss the changes before deciding whether to go along with it.
.
.
.
Although the nature of the changes in the amended draft remain a secret, Iranian Foreign Minister Mohammad Javad Zarif has charged that they were quite far-reaching and that they affected far more of the draft agreement that had been worked out between the United States and Iran than had been acknowledged by any of the participants.
.
.
.
Now the Obama administration will face a decision whether to press Iran to go along with those changes or to go back to the original compromise when political directors of the six powers and Iran reconvene Nov. 20. That choice will provide the key indicator of how strongly committed Obama is to reaching an agreement with Iran.

The United States has a long history of making offers to Iran such that the public face of the offer seems eminently reasonable, but hidden actions by the U.S. are slaps in the face of Iran.  I wonder why the U.S. press does not educate the U.S. public about this history.

For a few weeks, I thought that President Obama had finally learned his lesson and was turning toward making a valid offer to Iran that didn’t have any tricks in it.

Unfortunately for President Obama, the Iranians refuse to act the Charlie Brown to Lucy’s offer to hold the football for him.  It takes a lot of patience on Iran’s part to even be willing to talk to the U.S. given this history.  We didn’t like Ahmadinejad when he was leading Iran.  So we reward the Iranians for electing someone much more reasonable to us by trying to trick him.  Why do they hate us so?

The Progressive Change Campaign Committee sent me an email about this video.  Talking about some of the things Elizabeth Warren has done recently, they said:

And just this week, she gave an amazing speech on the floor of the Senate on Republican abuse of filibuster rules to block judicial nominees. She called it a “naked attempt to nullify the results of the last presidential election.”

Senator Elizabeth Warren delivered remarks on the Senate floor on November 13, 2013, about Republicans’ efforts to block three qualified nominees to the D.C. Circuit Court

If you really want something and the means to get it are readily at hand, what can explain why you don’t try to get it? Harry Reid could do away with the filibuster pretty readily. We are 5 years into the Obama administration and yet the Republicans filibuster almost everything. When is Reid really going to want to get these court positions filled? Is he waiting until Obama has left office? Why would he do that?

It is time someone lit a fire under Harry Reid. (Figuratively speaking)