My Weekly Reading for September 8, 2024
Washington Post Global Social Security Comparison Misses the Forest for the Trees
by Romina Boccia and Ivane Nachkebia, Cato at Liberty, September 5, 2024.
Excerpt:
The article fails to acknowledge the total replacement rate of the US retirement system, which includes both Social Security and voluntary pensions. When considering this broader perspective, the US approach replaces more than 73 percent of pre-retirement earnings for average workers, significantly higher than the OECD average of 55.3 percent. This places the United States ahead of many countries, including some with more robust government-run systems.
For example, the article shows that French public pensions replace 57.6 percent of pre-retirement earnings of an average worker, compared to Social Security’s 39.1 percent replacement rate. (As mentioned, when voluntary pensions are included, the total replacement rate for the US retirement system exceeds 73 percent.) On the other hand, the French system remains at 57.6 percent due to the limited coverage of voluntary pensions, so low that the OECD does not factor them into total replacement rate calculations. OECD data also highlight that American seniors are far less dependent on government for their retirement income compared to their French counterparts. Public benefits make up 39.3 percent of American seniors’ total income, while in France, they account for 78.1 percent.
DRH comment: This article is interesting in another way also. It shows a substantial degree of understanding among Americans that they can’t depend on Social Security for a large percent of their retirement income.
W.H. Hutt: An Economist for the Twenty- First Century
by Art Carden and Ilia Murtazashvili, SSRN.Com, September 2, 2024.
Excerpt:
As Thomas Hazlett wrote in a 1983 article for the Wall Street Journal, W.H. Hutt “may be the most important economist of this century.” Hutt’s University of Dallas colleague Samuel Bostaph prophesied that Hutt might be one of the most important economists of the twenty-first. Economists who know W.H. Hutt likely only know him because he popularized the phrase “consumers’ sovereignty.” This is unfortunate because he made many more substantial contributions that deserve revisiting in the 21st century. They still have much to teach us about how free societies function and flourish.
Personal note: I was at 3 different weeklong seminars with Hutt. The first was the first Austrian Economics conference in South Royalton, Vermont in June 1974. The second was a Liberty Fund seminar (and the first one I ever attended) at Ohio University in Athens, Ohio in June 1975. The third was immediately after and, indeed, he, his lovely wife, and I marched through an airport together to catch a flight to attend it. It was the second Austrian Economics conference, held at Hartford College in Hartford, Connecticut. Although I was very impressed with him, I had only an inkling of an idea at the time of his importance.
The second of these new theories-and the latest entry in the competition for the hearts and minds of political candidates-is a set of economic ideas and policy recommendations that goes by the name “industrial policy.” It has been the subject of a growing stream of books and articles; it has been endorsed as a concept by the AFL-CIO; its precepts have been incorporated in a number of bills now before the Congress; and it is receiving a sympathetic hearing from many of the candidates for the 1984 Democratic presidential nomination.
The phrase “industrial policy” means somewhat different things to different people; it refers not so much to a single theory as to a loose collection of similar diagnoses and proposals. The diagnoses generally cluster around two basic propositions:
DRH comment: This is an oldie but goodie. I reread it while writing my latest Substack post, “Brad Delong’s Unsatisfactory Case for an Industrial Policy,” I Blog to Differ, September 8, 2024. It’s full of good content. I read it when I was researching industry policy while I was a senior economist with President Reagan’s Council of Economic Advisers. It affected my work in two ways. First, I drew on it in writing my first article for Fortune, “The Myth of MITI,” August 8, 1983. I quote from that piece here. Second, I was one of the people at the CEA pushing hard for a chapter on industrial policy. My side won and we wrote it. I wrote the first draft and it was thrown into the trash can as being too basic. (I ultimately agreed.) But I had a lot of input on the version that finally emerged. Indeed, I made it into a talk that I gave to students at the Naval Postgraduate School in February 1984, a talk that led to my getting an offer to be on the faculty.