Harriet Miers and hyperbolic discounting.
Berkeley economist Brad Delong has come out in favour of Harriet Miers for the Court. I was wondering if any prominent liberal thinkers would do that -- especially as her situation gets more and more precarious and when there's such a huge chance that whoever replaces her will be much, much worse from an ideological perspective. Plus, just imagining the waves of right-wing self-congratulation that are going to accompany the withdrawal of her name is enough to give anyone pause.
While her nomination battle is a clown show, Miers herself increasingly strikes me as poignant, sort of a gritty manifestation of the American dream. By any standard except those required for Supreme Court nominees these days, her resume, and her personal story, is impressive, but impressive in that quintessentially turn-of-the-21st-Century-in-the-West, starting-to-feel-the-demographic-crunch sort of way -- which is to say that it's sad and perplexing as well as hopeful. Henry Blodget really drove the point home, looking at Miers' financial records for Slate:
Miers, like many of her fellow Americans, has not saved enough for retirement. According to her latest financial filing, submitted last week, Miers' IRA contains about $207,000, a sum that would fund comfortable golden years for a cocker spaniel, perhaps, but not an average American, even a single one (at a typical 5-percent-per-year withdrawal rate, Miers could spend only about $10,000 annually, pre-tax). Her investing strategy also shows her to be excessively cautious. She has invested her nest egg mainly in cash and Treasuries and is therefore in grave danger from inflation. In today's environment, Miers' IRA probably generates a paltry real return of about 1 percent a year...
When Miers left Dallas law firm Locke Liddell in 1999—and the $624,000 salary she earned as a managing partner—her IRA (then a firm profit-sharing account) contained between $500,000 and $1 million...So, where has all that retirement money been going? Perhaps to another expense category depressingly familiar to most Americans: health-care costs. According to the Journal and AP, Miers is the primary caretaker for her 91-year-old mother, who has required in-home and nursing-home care since the mid-1990s. That a decade of her mom's health care could consume several hundred thousand dollars set aside for Miers' own retirement won't come as a surprise to anyone who has had (or paid for) a long-term illness in recent years.
Blodget goes on to make the point that Miers would be in a lot of trouble without social security to fall back on. If she were retiring today, the program would provide her (most likely, given her earnings history) an additional $1,939/month (US2005) of income in addition to whatever personal savings she has left when her mother passes. With Medicare benefits and a house of her own, that ensures her a dignified retirement, even if she doesn't make it to the Court. So Miers is a great testament both to the basic need for social security and to why means-testing is a bad idea, beyond just the politics. She is the classic American undersaver, living proof that even the wealthy, not the ur-wealthy but the wealthy, can't seem to put money away for long periods of time in today's liberal economy.
As it is, I've been working all summer to model this formally on my computer, following (actually just copying) the work of a bunch of economists who've popularized a formal representation of impatience called "quasi-hyperbolic discounting" -- that is, of people who discount discreet measures of time in the near-future (like between today and tomorrow) more steeply than they discount over the same length of discreet time in the more distant future (like say between Tuesday and Wednesday viewed on Sunday). If Miers was a quasi-hyperbolic discounter, she'd probably show signs of impatience or a tendency to make impulsive consumption decisions you'd expect her to regret later. She'd trade up her car more often than her financial records suggest she does, or have at least a few "Monets, sloops, or cavernous wine cellars", or maybe more or nicer houses. Her short-run goals -- I've got to have that Monet! -- wouldn't coincide with her more prudent, life-cycle comfort-smoothing long-run goals, leading to chronic undersaving and self-recriminations.
But myopia, and a failed strategic battle with her younger selves, doesn't in fact look to be Miers' primary problem. Rather, she seems to have run up against a slew of unwanted expenses that are just very difficult to plan for early in life (especially given how much society has changed over the past forty years) and that yield her little utility other than the satisfaction of fulfilling her filial duty. In a modern rich country, we live longer and so do our parents, and the lifestyle we (and they) believe we need in order to live with dignity and comfort is much greater than it's ever been before, as is the amount we expect the medical establishment to do to keep us alive. It's true that "there is no crisis" with respect to social security. But there is a broader demographic crisis coming, and it's exacerbated when women like Harriet Miers (and most likely me and several of my friends) choose to spend our energies and talents and sympathies climbing the career ladder rather than settling down to produce a new generation who will fund our retirements.
All of which is to say that Miers represents something real. That's a point in her favour. People who make it all the way in public life ought to represent, symbolize, things that are real, not just things that make us happy and smug... like, say, unfettered brilliance. If you want unfettered brilliance, there's always Justice Scalia. Here he is, eloquently and powerfully dissenting from the 6-3 Supreme Court decision to strike down that embarrassing Texas sodomy law in 2003:
Today's opinion is the product of a Court, which is the product of a law-profession culture, that has largely signed on to the so-called homosexual agenda ... Many Americans do not want persons who openly engage in homosexual conduct as partners in their business, as scoutmasters for their children, as teachers in their children's schools, or as boarders in their home. They view this as protecting themselves and their families from a lifestyle that they believe to be immoral and destructive ... So imbued is the Court with the law profession's anti-anti-homosexual culture, that it is seemingly unaware that the attitudes of that culture are not obviously 'mainstream'; that in most States what the Court calls 'discrimination' against those who engage in homosexual acts is perfectly legal; that proposals to ban such "discrimination" under Title VII have repeatedly been rejected by Congress ... that in some cases such 'discrimination' is mandated by federal statute ... and that in some cases such 'discrimination' is a constitutional right."
Just to round this out, if Miers really was a quasi-hyperbolic discounter, she'd be easier to sneer at. And she'd be much easier to assign welfare-enhancing policy prescriptions (less financial market liquidity; steeper withdrawal penalities from IRAs... that's what I'm arguing in my paper.) But life is more complicated than economics, even really cool numerically simulated behavioural economics. And how we live together and respect one another and meet our social challenges and contextualize our problems and work toward their solutions is the Big Deal. Scalia is "brilliant" and he can be surprising (like in Ring vs. Arizona) but it's a brilliance the US would be better off without. Miers may well be a rock-ribbed conservative who agrees with the above passage in substance if not in tone. And maybe her relative mediocrity would just let her brilliant colleagues lead her around by the nose and we should be glad she's going down. But maybe not. Right now I'd say being real -- ambivolant, complex -- beats being "qualified", at least the way they mean it at The Corner.
While her nomination battle is a clown show, Miers herself increasingly strikes me as poignant, sort of a gritty manifestation of the American dream. By any standard except those required for Supreme Court nominees these days, her resume, and her personal story, is impressive, but impressive in that quintessentially turn-of-the-21st-Century-in-the-West, starting-to-feel-the-demographic-crunch sort of way -- which is to say that it's sad and perplexing as well as hopeful. Henry Blodget really drove the point home, looking at Miers' financial records for Slate:
Miers, like many of her fellow Americans, has not saved enough for retirement. According to her latest financial filing, submitted last week, Miers' IRA contains about $207,000, a sum that would fund comfortable golden years for a cocker spaniel, perhaps, but not an average American, even a single one (at a typical 5-percent-per-year withdrawal rate, Miers could spend only about $10,000 annually, pre-tax). Her investing strategy also shows her to be excessively cautious. She has invested her nest egg mainly in cash and Treasuries and is therefore in grave danger from inflation. In today's environment, Miers' IRA probably generates a paltry real return of about 1 percent a year...
When Miers left Dallas law firm Locke Liddell in 1999—and the $624,000 salary she earned as a managing partner—her IRA (then a firm profit-sharing account) contained between $500,000 and $1 million...So, where has all that retirement money been going? Perhaps to another expense category depressingly familiar to most Americans: health-care costs. According to the Journal and AP, Miers is the primary caretaker for her 91-year-old mother, who has required in-home and nursing-home care since the mid-1990s. That a decade of her mom's health care could consume several hundred thousand dollars set aside for Miers' own retirement won't come as a surprise to anyone who has had (or paid for) a long-term illness in recent years.
Blodget goes on to make the point that Miers would be in a lot of trouble without social security to fall back on. If she were retiring today, the program would provide her (most likely, given her earnings history) an additional $1,939/month (US2005) of income in addition to whatever personal savings she has left when her mother passes. With Medicare benefits and a house of her own, that ensures her a dignified retirement, even if she doesn't make it to the Court. So Miers is a great testament both to the basic need for social security and to why means-testing is a bad idea, beyond just the politics. She is the classic American undersaver, living proof that even the wealthy, not the ur-wealthy but the wealthy, can't seem to put money away for long periods of time in today's liberal economy.
As it is, I've been working all summer to model this formally on my computer, following (actually just copying) the work of a bunch of economists who've popularized a formal representation of impatience called "quasi-hyperbolic discounting" -- that is, of people who discount discreet measures of time in the near-future (like between today and tomorrow) more steeply than they discount over the same length of discreet time in the more distant future (like say between Tuesday and Wednesday viewed on Sunday). If Miers was a quasi-hyperbolic discounter, she'd probably show signs of impatience or a tendency to make impulsive consumption decisions you'd expect her to regret later. She'd trade up her car more often than her financial records suggest she does, or have at least a few "Monets, sloops, or cavernous wine cellars", or maybe more or nicer houses. Her short-run goals -- I've got to have that Monet! -- wouldn't coincide with her more prudent, life-cycle comfort-smoothing long-run goals, leading to chronic undersaving and self-recriminations.
But myopia, and a failed strategic battle with her younger selves, doesn't in fact look to be Miers' primary problem. Rather, she seems to have run up against a slew of unwanted expenses that are just very difficult to plan for early in life (especially given how much society has changed over the past forty years) and that yield her little utility other than the satisfaction of fulfilling her filial duty. In a modern rich country, we live longer and so do our parents, and the lifestyle we (and they) believe we need in order to live with dignity and comfort is much greater than it's ever been before, as is the amount we expect the medical establishment to do to keep us alive. It's true that "there is no crisis" with respect to social security. But there is a broader demographic crisis coming, and it's exacerbated when women like Harriet Miers (and most likely me and several of my friends) choose to spend our energies and talents and sympathies climbing the career ladder rather than settling down to produce a new generation who will fund our retirements.
All of which is to say that Miers represents something real. That's a point in her favour. People who make it all the way in public life ought to represent, symbolize, things that are real, not just things that make us happy and smug... like, say, unfettered brilliance. If you want unfettered brilliance, there's always Justice Scalia. Here he is, eloquently and powerfully dissenting from the 6-3 Supreme Court decision to strike down that embarrassing Texas sodomy law in 2003:
Today's opinion is the product of a Court, which is the product of a law-profession culture, that has largely signed on to the so-called homosexual agenda ... Many Americans do not want persons who openly engage in homosexual conduct as partners in their business, as scoutmasters for their children, as teachers in their children's schools, or as boarders in their home. They view this as protecting themselves and their families from a lifestyle that they believe to be immoral and destructive ... So imbued is the Court with the law profession's anti-anti-homosexual culture, that it is seemingly unaware that the attitudes of that culture are not obviously 'mainstream'; that in most States what the Court calls 'discrimination' against those who engage in homosexual acts is perfectly legal; that proposals to ban such "discrimination" under Title VII have repeatedly been rejected by Congress ... that in some cases such 'discrimination' is mandated by federal statute ... and that in some cases such 'discrimination' is a constitutional right."
Just to round this out, if Miers really was a quasi-hyperbolic discounter, she'd be easier to sneer at. And she'd be much easier to assign welfare-enhancing policy prescriptions (less financial market liquidity; steeper withdrawal penalities from IRAs... that's what I'm arguing in my paper.) But life is more complicated than economics, even really cool numerically simulated behavioural economics. And how we live together and respect one another and meet our social challenges and contextualize our problems and work toward their solutions is the Big Deal. Scalia is "brilliant" and he can be surprising (like in Ring vs. Arizona) but it's a brilliance the US would be better off without. Miers may well be a rock-ribbed conservative who agrees with the above passage in substance if not in tone. And maybe her relative mediocrity would just let her brilliant colleagues lead her around by the nose and we should be glad she's going down. But maybe not. Right now I'd say being real -- ambivolant, complex -- beats being "qualified", at least the way they mean it at The Corner.
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