Why subsidize retirement saving if the subsidies don't work?
Imagine there were no 401(k)s. You wouldn't stop saving for retirement, right? Right? Don't worry, I won't tell Suze Orman. Not that CNBC's personal finance guru would get mad at you -- according to a new paper, most households wouldn't sock away any less for their golden years if we eliminated 401(k)s. Which raises a $100 billion question...
Why subsidize retirement saving if the subsidies don't work?
As far as tax expenditures go, the one for retirement savings is a biggie. Remember, "tax expenditure" is just econospeak for the various deductions, exclusions, and preferential rates -- in other words, subsidies -- that litter the tax code. According to the Congressional Budget Office (CBO), excluding pension contributions and earnings from taxes will cost us about 1.2 percent of GDP over the next decade, or an average of $240 billion a year. That's a lot of spending -- that's what tax expenditures are, just disguised spending -- without much bang for the buck. Maybe just a penny's worth.
In fact, one penny's worth is exactly how much extra saving a dollar's worth of retirement subsidies produced in Denmark, according to the recent paper by Raj Chetty and John N. Friedman of Harvard, Soren Leth-Petersen and Tore Olsen of the University of Copenhagen, and Torben Heien Nielsen of the Danish National Centre for Social Research. In other words, we might be spending $240 billion to get people to save $2.4 billion more.
But don't the trillions of dollars in 401(k) accounts tell a different story? Not necessarily. There isn't enough data for the U.S., but Chetty et. al. looked at the numbers for Denmark, which has accounts similar to our 401(k)s, to examine how much more incentives to save get us to save. The first chart shows how much households contributed to tax-preferred accounts after subsidies increased and the second chart shows how much they contributed to non-tax-preferred accounts, again after subsidies increased. It's a bit hard to see, but the decrease in the latter almost completely offsets the increase in the former -- households saved an average of 1 cent more.
Households save where the subsidy is, but don't save more because of the subsidy. It turns out the best way to get households to save more is ... to make them save more. In other words, automatically take a percentage of each person's paycheck and put it in a retirement account, as a default. If this sounds familiar, it's because that's how the payroll tax works -- except it's how you think the payroll tax works now. There's a misconception that the money the government withholds from you every month ends up in an account with your name on it that eventually becomes your Social Security benefits. It doesn't. The money the government withholds every month pays for current retirees, which is why the system needs some kind of tweak over the next few decades as the Boomers retire.
A system of forced, or nudged, saving wouldn't replace this social insurance, but rather the wasteful dinosaur that is the 401(k). It's mostly the well-off, who have retirement savings to move around, who move their savings to where the subsidies are. The 401(k) doesn't do much if your goal is to get people who don't save much to save more, and it doesn't do this at quite the cost.
We need Suze to tell Congress that we can't afford it.
When new countries rise to power, the transition can end badly, often in war. Harvard’s Graham Allison has argued in The Atlantic that “judging by the historical record, war is more likely than not” between the United States, the world’s current reigning superpower, and China, a rising military and economic force. There is considerable debate on this point, but American pundits and presidential candidates often talk as if China were already an American adversary; Donald Trump has warned, for example, that China will “take us down.” Yet few in the United States seem worried about Asia’s other rising giant, India.
To the contrary, there’s a temptation to support India, a like-minded democracy, as a counterweight against the growing power of authoritarian China. But if American leaders feel confident India can accumulate power without becoming an antagonist, can they find a way to make the same true for China?
For centuries, philosophers and theologians have almost unanimously held that civilization as we know it depends on a widespread belief in free will—and that losing this belief could be calamitous. Our codes of ethics, for example, assume that we can freely choose between right and wrong. In the Christian tradition, this is known as “moral liberty”—the capacity to discern and pursue the good, instead of merely being compelled by appetites and desires. The great Enlightenment philosopher Immanuel Kant reaffirmed this link between freedom and goodness. If we are not free to choose, he argued, then it would make no sense to say we ought to choose the path of righteousness.
Today, the assumption of free will runs through every aspect of American politics, from welfare provision to criminal law. It permeates the popular culture and underpins the American dream—the belief that anyone can make something of themselves no matter what their start in life. As Barack Obama wrote in The Audacity of Hope, American “values are rooted in a basic optimism about life and a faith in free will.”
Narcissism, disagreeableness, grandiosity—a psychologist investigates how Trump’s extraordinary personality might shape his possible presidency.
In 2006, Donald Trump made plans to purchase the Menie Estate, near Aberdeen, Scotland, aiming to convert the dunes and grassland into a luxury golf resort. He and the estate’s owner, Tom Griffin, sat down to discuss the transaction at the Cock & Bull restaurant. Griffin recalls that Trump was a hard-nosed negotiator, reluctant to give in on even the tiniest details. But, as Michael D’Antonio writes in his recent biography of Trump, Never Enough, Griffin’s most vivid recollection of the evening pertains to the theatrics. It was as if the golden-haired guest sitting across the table were an actor playing a part on the London stage.
“It was Donald Trump playing Donald Trump,” Griffin observed. There was something unreal about it.
Recent polls shown increasing support for the former governor, who’s hoping to win the Libertarian Party’s nomination this weekend.
If Gary Johnson wants to make it onto a primetime presidential-debate stage as the Libertarian Party’s nominee, he needs to qualify by polling above 15 percent. If he wants to be the nominee, he needs a strong showing at the party’s convention this weekend. And if he wants a strong showing at the convention, he needs to demonstrate to delegates that he’s their party’s ideal standard-bearer—a candidate who can be even a little competitive in a three-way matchup with Donald Trump and Hillary Clinton. Johnson just got good news: A poll released Tuesday morning shows the candidate with 10 percent of the national vote.
The Morning Consult survey puts Clinton at 38 percent, Trump at 35 percent, and Johnson, the two-term former New Mexico governor who also ran for president in 2012, trailing with 10 percent. For any other candidate, that low number would be a sign that the end is near. But not for Johnson, or other third-party candidates hoping to make it big in an election year when many voters will likely hold their noses as they cast their ballots. The 10-percent figure is close to a personal best for Johnson as a presidential candidate; poll analysts note that it is roughly twice as high as Johnson’s figures from the last cycle.
Beginning in July of this year, most everywhere we look, there will be a giant number on our food. The change will affect hundreds of thousands of edible products, and, so, hundreds of millions of people. It will affect the way we think about food for decades. (This update is the first in more than 20 years—so long ago that the FDA earnestly describes its current label design as “iconic.”)
Current nutrition labels, legally required on all packaged foods, are to be be replaced with the explicit purpose of improving people’s health. As Michelle Obama said at the unveiling of the new labels on Friday, “Very soon, you will no longer need a microscope, a calculator, or a degree in nutrition to figure out whether the food you’re buying is actually good for our kids.”
The deadline to enter the National Geographic Travel Photographer of the Year Contest is fast approaching—entries will be accepted until May 27, 2016.
The deadline to enter the National Geographic Travel Photographer of the Year Contest is fast approaching—entries will be accepted until May 27, 2016. The grand prize winner will receive a seven-day Polar Bear Safari for two in Churchill, Canada. National Geographic was once more kind enough to allow me to share some of this year’s entries with you here, gathered from three categories: Nature, Cities, and People. The photos and captions were written by the photographers.
It’s not easy fitting 1.2 million annual visitors onto an island of 330,000 residents.
Iceland may be beautiful, but it’s dangerously close to full. This is the message currently filtering out from the North Atlantic island as it struggles to absorb unprecedented numbers of visitors. Last year, the nation hosted 1.26 million tourists, a staggering number for a chilly island whose population barely scrapes past 330,000 citizens.
Those numbers are powered partly by a “Game of Thrones Effect” that has seen fans of the TV series flock to its shooting locations. The 2010 eruption of the Eyjafjallajökull volcano, which has since become a tourist attraction, also helped to push up its profile as a vacation spot—perversely so, given that the eruption initially led to 107,000 flights across Europe being canceled. Given the rocky waters the country has been sailing through since the 2008 financial crisis, the revenue brought in by this spike in tourism is no doubt welcome. But the sheer volume of visitors to what was until recent decades a remote part of the world is still causing major stress. So how can Iceland keep welcoming people while making sure it isn’t trampled underfoot?
A continuation of Valve’s acclaimed sci-fi series has been promised for 10 years, but seems no closer to fruition.
Ten years ago today, the video-game company Valve announced that Half-Life 2: Episode Three, the newest and much-anticipated chapter in its acclaimed sci-fi shooter series, would be out by the end of 2007. This was hardly surprising news: Valve had already released one episodic sequel to its smash hit Half-Life 2, and the second was due out soon. Still, news of Episode Three as “the last in a trilogy” was exciting to fans. Ten years later, they’re still waiting—and the new edition of Half-Life has gone from a eagerly awaited work to gaming history’s most famous piece of “vaporware”—a product announced to the public that the developer has no plans of actually making or releasing.
Since that announcement, Valve has released a dozen games, including the acclaimed Portal and Portal 2 and multiplayer smash hits like Left 4 Dead and Team Fortress 2. But Half-Life 2 sequels ended with Episode Two, and over the years, Valve’s party line on a new installment went from a firm commitment to vague promises to tight-lipped refusals to say anything at all. The longer things go on, the more impossible everyone’s expectations become—if a new Half-Life were ever released, the hype would be unimaginably hard to match, and yet Valve’s initial promise hasonly added to the franchise’s mystique.
The author Moira Weigel argues that the various courtship rituals of the past hundred-odd years have reflected the labor-market conditions of their day.
Love, it turns out, has always been a lot of work.
While every generation will lament anew the fact that finding love is hard, history seems to indicate that this particular social ritual never gets any easier or less exciting. In Labor of Love, a new book documenting the history of dating in America, Moira Weigel, a Ph.D. candidate in comparative literature at Yale University, confirms this lament: Since dating was “invented,” it has always been an activity that required a lot of effort.
As part of her research, Weigel read dating-advice books from the 1800s and hundreds of articles on dating from teen and women’s magazines over the years, and she found two common themes: First, there is usually an older part of the population that perceives dating to be “dying,” or, at least, as not being done “appropriately.” Second, Weigel found that the way people date has almost always been tied to the market forces of their era.
How a strange face in a random 19th-century newspaper ad became a portal to a forgotten moment in ASCII art history
One of the joys of modern technology is how easy it is to immerse yourself in the past. Every day, more libraries and archives are pushing pieces of their collections online in easily browsable interfaces.