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Brad DeLong's Thoughts of the Moment on Economics, and on Other Topics as Well
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September 06, 2002
Who Controls the Past Controls the Future. Who Controls the Present Controls the Past
I used to think that Paul Krugman was being too shrill when he described the Bush Administration's tactics as "Orwellian." I hereby confess: I was wrong. He was right.
The Bully's Pulpit: ...Ari Fleischer's insistence that Mr. Powell and Mr. Cheney have no differences over Iraq seems to have pushed some journalists into facing up, at least briefly, to the obvious.... "The Bush team has always had a credibility problem with some reporters because of their insistence on saying 'up is down' and 'black is white.'" But... if history is any guide, many reporters will... the next time the administration insists that chocolate is vanilla... won't report that the stuff is actually brown; at best they'll report that some Democrats claim that it's brown.
The Bush team's Orwellian propensities have long been apparent to anyone following its pronouncements on economics. Even during campaign 2000 these pronouncements relied on doublethink.... George W. Bush's plan to partially privatize Social Security always depended on the assertion that 2-1=4 — that we can divert payroll taxes into high-yielding personal accounts, yet still use the same money to pay benefits to retirees.
...Republican political consultants have found that in an era of plunging stocks and corporate scandal the word "privatization" has taken on negative connotations. The answer? Deny that personal accounts constitute privatization, and bully the press into going along....
Is it inaccurate to say that personal accounts equal privatization? We could argue on the merits. Under the Bush plan, a worker's personal account reflects any gains or losses on the stocks it represents. When risks and rewards accrue entirely to the individual, isn't that privatization?
But wait, we can do better. The push to convert Social Security into a system of personal accounts has been led by the Cato Institute. The Bush plan emerged directly from Cato's project on the subject, several members of Mr. Bush's commission on Social Security reform had close Cato ties, and much of the commission's staff came straight from Cato. You can read all about Cato's role on the special Web site the institute set up, socialsecurity.org.
And what's the name of the Cato project to promote personal accounts? Why, the Project on Social Security Privatization, of course.... The R.N.C.C. doesn't really think it can convince people that privatization isn't privatization. But that's not the goal. The memo doesn't talk about how to communicate with the public; it's a list of demands to place on journalists...
The Bully's Pulpit
ar is peace. Freedom is slavery. Ignorance is strength. Colin Powell and Dick Cheney are in perfect agreement. And the Bush administration won't privatize Social Security.
Ari Fleischer's insistence that Mr. Powell and Mr. Cheney have no differences over Iraq seems to have pushed some journalists into facing up, at least briefly, to the obvious. ABC's weblog The Note described it as a "chocolate-is-vanilla" claim, admitting that "The Bush team has always had a credibility problem with some reporters because of their insistence on saying 'up is down' and 'black is white.' "
But the administration needn't worry; if history is any guide, many reporters will soon return to their usual cringe. The next time the administration insists that chocolate is vanilla, much of the media — fearing accusations of liberal bias, trying to create the appearance of "balance" — won't report that the stuff is actually brown; at best they'll report that some Democrats claim that it's brown.
The Bush team's Orwellian propensities have long been apparent to anyone following its pronouncements on economics. Even during campaign 2000 these pronouncements relied on doublethink, the ability to believe two contradictory things at the same time. For example, George W. Bush's plan to partially privatize Social Security always depended on the assertion that 2-1=4 — that we can divert payroll taxes into high-yielding personal accounts, yet still use the same money to pay benefits to retirees.
The Orwellian tactics don't stop with doublethink; they also include newspeak, the redefinition of words to rule out disloyal thoughts. Again, Social Security is a perfect example. Republican political consultants have found that in an era of plunging stocks and corporate scandal the word "privatization" has taken on negative connotations. The answer? Deny that personal accounts constitute privatization, and bully the press into going along. A Republican National Campaign Committee memo lays out the new strategy: "It is very important that we not allow reporters to shill for Democrat demagoguery by inaccurately characterizing 'personal accounts' and 'privatization' as one and the same."
Is it inaccurate to say that personal accounts equal privatization? We could argue on the merits. Under the Bush plan, a worker's personal account reflects any gains or losses on the stocks it represents. When risks and rewards accrue entirely to the individual, isn't that privatization?
But wait, we can do better. The push to convert Social Security into a system of personal accounts has been led by the Cato Institute. The Bush plan emerged directly from Cato's project on the subject, several members of Mr. Bush's commission on Social Security reform had close Cato ties, and much of the commission's staff came straight from Cato. You can read all about Cato's role on the special Web site the institute set up, socialsecurity.org.
And what's the name of the Cato project to promote personal accounts? Why, the Project on Social Security Privatization, of course.
Which brings us back to the issue of intimidation. The R.N.C.C. doesn't really think it can convince people that privatization isn't privatization. But that's not the goal. The memo doesn't talk about how to communicate with the public; it's a list of demands to place on journalists. As Joshua Marshall put it at talkingpointsmemo.com, the goal is to "mau-mau reporters out of using the word 'privatization' in this context."
And the intimidation will probably succeed. Indeed, it's already working. As Mr. Marshall notes, in a recent interview of the House minority leader, Richard Gephardt, Judy Woodruff of CNN duly echoed the R.N.C.C.'s memo.
Unfortunately, this isn't just a question of Social Security policy. Once an administration believes that it can get away with insisting that black is white and up is down — and everything in this administration's history suggests that it believes just that — it's hard to see where the process stops. A habit of ignoring inconvenient reality, and presuming that the docile media will go along, soon infects all aspects of policy. And yes, that includes matters of war and peace.
The trouble is that eventually reality has a way of asserting itself. And in case you are wondering, ignorance isn't strength.
Posted by DeLong at September 06, 2002 12:54 PM
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OK, dumb kid question (although I'm not a kid anymore...):
What's the origin of the phrase (clause, I suppose) that heads this piece? Is it, in fact, Orwell?
I'm familiar with it from Rage Against the Machine, the thoughtful pop combo that occasionally brings social themes into their music...
I don't have the answer to your quesion but it does seem like some of the pigs around are more American than others... ;-)
Hasn't the Administration made it explicit that they would control information as part of its "war on terror"? Didn't they try to set up a "Ministry of Truth" for a little while? Supposedly abandonned. I hope it has been.
"Who Controls the Past Controls the Present" is a slight misquotation from Orwell. At least, digging through my copy of 1984 I found the following Party slogan:
"Who controls the past controls the future; who controls the present controls the past."
The context in the book is that the past has no real existence, but exists only in records and memories, and can therefore be controlled by those who control the present. The mechanisms are rewriting of documents and self-censorship of memories by the population.
In George Orwell's "1984", the protagonist -- Winston Smith -- has a job with the Ministry of Truth, the propaganda agency of Oceania, a large nation state. There are two other large nation states: Eastasia and Eurasia. Oceania is always allied with one of these states in a war against the other, but switches which one is the enemy and which is the ally from time to time. Winston Smith's job is to destroy records that Oceania was ever allied with its current enemy. He drops these records down a "memory hole", a garbage chute leading to an incinerator. He also rewrites the official history to make it seem that Oceania's current ally was always an ally. A lot of other employees do the same kind of thing. Once the history is rewritten, Oceania's elites can rally the public to hate the current enemy.
Paul Krugman appears to me the most significant general columnist on economics of this generation. Wish there were many more such economics columnists.
Speaking of things that have gone down the memory hole, how about this by Krugman in the Dec. '96/Jan. '97 Boston Review:
>> Social Security is structured from the point of view of the recipients as if it were an ordinary retirement plan: what you get out depends on what you put in. So it does not look like a redistributionist scheme. In practice it has turned out to be strongly redistributionist, but only because of its Ponzi game aspect, in which each generation takes more out than it put in. Well, the Ponzi game will soon be over, thanks to changing demographics, so that the typical recipient henceforth will get only about as much as he or she put in (and today's young may well get less than they put in). <<
Or, from the NY Times (Oct. 20, 96):
>> But aren't Social Security and Medicare basically pension funds, in which
workers' contributions are invested to provide for their retirement? Hardly.
A private pension fund that planned to pay the benefits these programs
promise would be accumulating huge reserves. In fact, the so-called "trust
funds" are making barely any provisions for the future. ....
>>... While the present
generation of retirees is doing very nicely, the promises that are being
made to those now working cannot be honored.
....
>> ...to avert the crisis ahead.....slow the growth in benefit levels,
gradually raise the retirement age, impose limits on expensive terminal
medical care that prolongs life for only weeks or days and -- last but not
least -- raise taxes moderately now, rather than massively later. ....
>> Something is bound to give -- but what? Will retired boomers -- who will
have even more political clout than today's smallish population of retired
voters -- be willing to accept a sharply reduced standard of living? That is
hard to imagine. Will younger voters be willing to accept huge increases in
tax rates to support the boomers in the style they have been promised? That
is equally hard to imagine. Or will the Government try to square the circle
by simply printing the money it needs, creating runaway inflation? Surely
that is inconceivable. Yet one or more of these unthinkable things will
happen, because something must. <<
Important Note: I can find NO comment by Paul Krugman attacking social security in the Boston Review. I find it impossible to believe Krugman could have made such commments.
Paul Krugman has shown strong support for social security for years. The above remarks are absurd.
http://bostonreview.mit.edu/BR21.6/
The post attacking Paul Krugman is simply a lie. There are no comments attacking social security by Krugman, only the pretend comments from the poster. Absurd nonsense.
A check of the New York Times from Ooct 20, 1996 shows no article attacking social security by Paul Krugman.
There are people who have been committed to destroying social security since the day it was implemented. The program has been a tremendous safety net and support for millions and millions of Americans, and the surplus revenue accruing to the program insures that there will be no benefits problem for more than 30 years. There may need to be modest changes in the program to further insure the future, but such changes are easily made if the intent is to save and not destroy the program. Social security and medicare have been of enormous help to Americans and will continue to be so.
I remember reading something like what Patrick Sullivan quotes in Paul Krugman's "Age of Diminished Expectations", which lived up to its title in its disappointing expectations for America's economic future. Krugman originally wrote that book, now in its third printing, sometime around 1990-92. Krugman did not predict America's productivity boom of the late 1990's, although I don't know anyone else who did with accurate timing either. Until the late 90's, we kept wondering when, if ever, the money spent on information technology would translate into increased productivity. I believe Krugman changed his assessment of Social Security solvency in light of America's recent productivity boom.
Now these are perfectly Orwellian comments!
>> The post attacking Paul Krugman is simply a lie. There are no comments attacking social security by Krugman, only the pretend comments from the poster. Absurd nonsense. <<
and
>> A check of the New York Times from Ooct 20, 1996 shows no article attacking social security by Paul Krugman. <<
Why do I have the suspicion the anonymous posters might also wish to have Paul's children?
Oh well, for the research challenged, on Oct. 20, 1996 Krugman reviewed two books for the Times under the title: "Demographics and Destiny". Peter Petersen's, "Will America Grow Up Before It Grows Old" and Charles R. Morris's "The AARP".
Here's an amusing quote from it: "...each party insists that its economic program will balance the budget in the year 2002. Neither will...."
Another ironic comment was: "Textbook political economy tells us that large, diffuse groups of people are usually ineffective at defending their interests.". Ironic, in that that may have been the last time Krugman ever betrayed a familiarity with the work of the Public Choice Economists, he certainly has forgotten it in his latest attack on CATO.
>> Important Note: I can find NO comment by Paul Krugman attacking social security in the Boston Review. I find it impossible to believe Krugman could have made such commments.
>> Paul Krugman has shown strong support for social security for years. The above remarks are absurd.<<
And Oceania has never been at war with Eastasia? Gee, this must really be embarrassing for the guy who was telling me how intelligent everyone posting here is. Try:
http://bostonreview.mit.edu/BR21.6/krugmann.html
>> Paul Krugman has shown strong support for social security for years. The above remarks are absurd.<<
I am completely confused or baffled or both.
1. Warning of the danger posed by the demographic structure of the population is not synonym to being an enemy of Social Security. Do you think W cares about the consequences of demographics on Social Security (at least as we know it)?
2. And concerning Krugman's critique of Cato, they have to do with his criticism of W's plan to privitize accounts while trying to bully the press not to use the term.
3. If we want to save Social Security, we will need growth to be as stong in this decade as it was at the end of the 90s, or some kind of reforms of the type Krugman and many others have advocated around the world + budget discipline.
Anybody who relies on spurious CBO forcasts to tell you there is no need to reform Social Security is the true enenmy of this program. Perhaps a political friend of current retirees but a true enemy of the survival of this program.
Paul Krugman is and has always been and will always be one of Social Security's only best friends... Nobody is going to wash my brain to think otherwise.
P.S. I obviously agree with the phrase I quoted in my previous post.
>>"Who Controls the Past Controls the Present" is a slight misquotation from Orwell. At least, digging through my copy of 1984 I found the following Party slogan:
"Who controls the past controls the future; who controls the present controls the past."<<
Thanks. I'll change it...
Paul Krugman did indeed liken social security to a Ponzi scheme from the stance of the recipient, and went on to question the long term viability of payments. Well, Paul Krugman was wrong in 1996. If we continue to protect the system, payments in can continue at present real value levels for decades. A Ponzi scheme analogy is not warranted.
Thanks Jean-Philippe.
Jean-Philippe now concedes the obvious, that previously Krugman wrote nearly the opposite of what we get this year, such as this from his April 2nd Times column:
"...the annual trustees' report on Social Security is released .... conclusion: that Social Security is in very good shape.
"...the bottom line is that the long-run sustainability of Social Security looks better than ever. The staff of the Social Security Administration, using conservative assumptions, now says that the system could operate without any changes at all — no cuts in benefits, no additional revenue — until 2041, three years longer than it projected last year.
"....There isn't any crisis: the system looks good for 40 years, and with a bit of extra resources can survive indefinitely."
Which brings us to the point of this thread (now re-titled): Who Controls the Past Controls the Future. Who Controls the Present Controls the Past.
It seems Krugman, and some of his allies, have taken that to heart.
Jean-Philippe
All right. We really must pay attention to the demographics of America and look to strengthen social security and medicare. The argument I have with your posts seems minor, neither of us wish to find the programs weakened.
I prefer to emphasize strengths of the programs, because I worry about the scare tactics of those who wish to end the programs.
The promise of social security to Americans must be preserved.
http://query.nytimes.com/search/full-page?res=9403E4D6133EF933A15753C1A960958260
Here is the New York Times review written by Paul Krugman. I would argue the review and the books questioning the viability of social security and medicare were more melodramatic than realistic.
Social security and medicare should be fixable in moderate ways. Europe has trickier demographics and strong benefits packages for the retired. Europe can be looked to for partial solutions.
Social security and medicare should be treated with significant respect in gradual reform.
The full part of the Boston Review article:
I like Freeman's idea of providing each individual with a trust fund when young rather than retirement benefits when old, but we had better realize that this is a significant change in the character of the social insurance system. Social Security is structured from the point of view of the recipients as if it were an ordinary retirement plan: what you get out depends on what you put in. So it does not look like a redistributionist scheme. In practice it has turned out to be strongly redistributionist, but only because of its Ponzi game aspect, in which each generation takes more out than it put in. Well, the Ponzi game will soon be over, thanks to changing demographics, so that the typical recipient henceforth will get only about as much as he or she put in (and today's young may well get less than they put in).
Freeman's scheme, however, will necessarily be frankly redistributionist, because the trust fund you receive when young cannot be based on what you will actually pay into the system over the rest of your life. Presumably the size of the trust fund will be the same for everyone-which means that some people will receive much more than the present value of the trust-fund taxes they pay over the rest of their lives, others much less. Now I don't have any problem with that kind of redistribution, but I think we had better realize that it will face intense opposition, that its "capitalistic" aspects will probably not buy off many of the critics.
I read this as "going forward, the Ponzi scheme aspect of the system will disappear due to changing demographics," not a value judgement about the worth of the system, or a political or economic opinion about the sustainability of the system. It's in the middle of an argument about how to make the U.S. more redistributionist, too.
That NYTimes article was written in a time a) when the concept of a balanced budget was fantasy and b) before the large productivity gains of the 1990s were really known.
But aren't Social Security and Medicare basically pension funds, in which workers' contributions are invested to provide for their retirement? Hardly. A private pension fund that planned to pay the benefits these programs promise would be accumulating huge reserves. In fact, the so-called ''trust funds'' are making barely any provisions for the future. In another spectacular statistic, Mr. Peterson notes that if Medicare and Social Security had to obey the same rules that apply to private pensions, the reported Federal deficit this year would be not its official $150 billion, but roughly $1.5 trillion.
In short, the Federal Government, however solid its finances may currently appear, is in fact living utterly beyond its means. While the present generation of retirees is doing very nicely, the promises that are being made to those now working cannot be honored.
I see this, blinded by my incredible partisanship, as "the government situtation in 1996, projected forward, was very bad." How this conflicts with a government position in, say, the fall of 2000, that was very good, I have no idea.
By all means, though, continue to come up with out-of-context scare quotes.
Wierd, it killed the italics on my second paragraph.
Thanks. Thanks. Thanks.
April 2, 2002
"...the annual trustees' report on Social Security is released .... conclusion: that Social Security is in very good shape.
"...the bottom line is that the long-run sustainability of Social Security looks better than ever. The staff of the Social Security Administration, using conservative assumptions, now says that the system could operate without any changes at all — no cuts in benefits, no additional revenue — until 2041, three years longer than it projected last year.
"....There isn't any crisis: the system looks good for 40 years, and with a bit of extra resources can survive indefinitely."
Paul Krugman
Social security is now indeed in fine shape and we must keep this wonderful wonderful program just so.
Jason McCullough wants to know how Krugman's writings in 1996 conflict with the situation in the fall of 2000. Given Krugman's recent pessimism about the economy in the future, I'd say he's stuck with his '96 predictions. He himself admitted in 2001 ("Fuzzy Math", W.W. Norton and Co.) that "nobody knows" what economic growth will be in the future
In fact, he wrote in that book: "…we know that the projected surpluses in Social Security and Medicare, though enough to postpone the eventual crises in the two systems, are not enough to put off those crises indefinitely."
And then admitted: "…there is a good case for reforming Social Security--turning it into something closer to a true, fully funded pension system for the middle class."
Followed shortly thereafter by a claim that the Bush Administration's rhetoric was "simply Orwellian", (because they believe some of the things economist Krugman says?). Perhaps, Who Controls What Is On Page 82 of his own book, Doesn't Control What Is On Page 81.
"Followed shortly thereafter by a claim that the Bush Administration's rhetoric was "simply Orwellian", (because they believe some of the things economist Krugman says?)."
But of course, this isn't at all what Krugman means by Orwellian, and I have a hard time believing that anyone intelligent enough to operate a mouse believes that it is. What is Orwellian is insisting that one has never said what one, in fact, said quite vociferously. When the RNC says that "privatization" is a scare term invented by Democrats to tar Republicans, that is an outright lie, and an Orwellian one. For the RNC to say, Privatization was a wrong-headed idea that we no longer support, would be honest and fair.
For Krugman to say that SS is in big trouble in 1996, that it is in some trouble in 2000, and to say that Republicans are exaggerating its troubles in 2002 is entirely reasonable.
I'll add that the anonymous poster's rather absolutist response was, evidently, exaggerated itself, but probably not Orwellian. Why? Because, unlike the Executive Branch of the Federal Gov't of the USA, anonymous posters to weblogs do not have the power to control the past, present, or future.
JRoth protests:
" What is Orwellian is insisting that one has never said what one, in fact, said quite vociferously."
Oh, like this?:
Krugman, NY Times, November 7, 2001:
"As little as three years ago Argentina's 'currency board' monetary
system was the subject of extravagant praise ... and economists at the
Cato Institute established lucrative consulting practices advising
other countries to mimic Argentina's approach."
Krugman, NY Times, December 11, 2001:
"Contrary to what some may have inferred from a previous column,
no staff members at the Cato Institute are in the currency-regime
consulting business."