I infer from his column lead that Paul Krugman has never played, or watched, a three card monte game in the Greatest City in the World. Too bad - even a college prof could learn something standing on the street corner. His lead:
Hell hath no fury like a scammer foiled. The card shark caught marking the deck, the auto dealer caught resetting a used car's odometer, is rarely contrite. On the contrary, they're usually angry, and they lash out at their intended marks, crying hypocrisy.
Not so, at least in my experience. Back when I was young and bold, circumstances would sometimes place me in the vicinity of Times Square on a Saturday night, taking the long and adventurous walk to the (relative) calm of the Upper West Side. One of my diversions was to watch the three-card monte games, in which a card sharp, generally working with a shill, tries to entice passersby into pointing out the red card as he mixes it amongst two black cards, all of which are face down.
It's fun to watch, and you really only need to play once to experience the cross-currents of greed and fear - can it it be that easy, c'mon, I can guess that, the red card is on the left, will I really get paid my twenty bucks, gee, is that guy who just won three times in a row legit, or a shill... well, it did pass the time. And no, you won't win.
On one occasion (as I build towards something resembling a point), several spectators watched as the card sharp and a shill matched wits with a just-off-the-boat, just-off-the-farm sailor who was spending his evening in Times Square a bit less prudently than I.
"Go ahead", the shill says to the sailor, "the red card is on the left". Oh, but it's not! Down $20.
"Yeah, you've got it, it's on the right" says the shill. Ooops, wrong again!
"C'mon, you can't miss, I bent the card while he wasn't looking", was the third enticement. Yet even with the "marked" card, the sailor loses yet again.
And now, a moment of drama - the sailor turns, stares in puzzlement at the shill, and the dawn comes up like thunder - "Wait a second, you're working with him! Hey, you're cheating me!"
Do tell. And what would follow this bulletin? Would there be a brawl? Would the sailor be dragged into an alley and silenced? Not at all. Without saying a word the dealer pockets the cards and heads south, the shill heads north, and the sailor is left to commiserate with three essentially useless spectators, none of who were inclined to expound upon life's lessons.
Well. Paul Krugman vigorously debunks his latest strawman, and we will not interrupt. However, we enjoy this puzzle he poses:
If the economy grows as fast over the next 50 years as it did over the past half-century, Social Security will do just fine.
Good news! But when he gets around to reading the work of, say, Paul Krugman, what will his position be? It was only last Feb 1 that Krugman explained that privatization advocates were evil schemers who were maliciously failing to incorporate the low growth forecasts for the US economy into their stock forecasts. Back then, anyway, the Earnest Prof understood that GDP growth came from both increases in productivity, and increases in the size of the work force. Since the work force is expected to grow more slowly over the next fifty years than formerly, GDP growth will also be reduced. His point then (later modified substantially) was that if the economy grows more slowly, the realized return on capital must be less.
In fact, in February Krugman said that "a rate of return that high is mathematically impossible unless the economy grows much faster than anyone is now expecting."
Is he still "anyone", or is he now expecting a higher growth rate for the economy?
UPDATE: Tim Worstall notes a "time value of money" issue. Let's excerpt Krugman:
Suppose you're earning $60,000 a year. On average, Mr. Bush cut taxes for workers like you by about $1,000 per year. But by 2045 the Bush Social Security plan would cut benefits for workers like you by about $6,500 per year. Not a very good deal.
Hmm, if I can save $1,000 per year until 1945, and then give up $6,500 per year, is that a good deal?
Well, how long will I live after age 65? And what is the interest rate? And are these real or nominal dollars? Who knows (or cares?)
Regardless, by my quick calculation, if I can save $1,000 per year for thirty years at 5%, and then lose $6,5000 per year for fifteen years, I roughly break even. Now, breaking even is not "a very good deal", just as Krugman told us. But breaking even is not so bad, either.
And let's note that Krugman picked 2045, which is forty years away, whereas I used thirty years in my calculation.
STILL MORE: My apologies to Professor Krugman - Jim Glass has reminded me that some scammers, once caught, can indeed be angry and lash out at their critics.
As an example, Mr. Glass offers P Krugman himself. This column (which opened with an Eerily Self-Aware reference to "The Onion") made a ghastly mistake, confusing the (relatively small) future liabilities of Medicare Part A with the ginormous liabilities of the full Medicare program. In his response to his critics, the Offended Prof demanded an apology for being unfairly maligned.
His defense was that "When people talk about the financial crisis facing "Medicare", they are talking about the trust fund, i.e., Medicare part A.". That must have been a "True For One Special Day" defense, since that subtle distinction eluded the Prof both before and after.