Archive for December, 2007

Whining Quinn

Saturday, December 29th, 2007

There is not doubt that many times Congress squanders time and attention on hortatory resolutions that please narrow constituencies from comic book enthusiasts to Dutch-Americans. Although we might prefer that Congress spend its finite time more constructively, at least these resolutions do not generally diminish the treasury and may actually divert Congress from more mischievous pursuits. Of all the inconveniences we endure for a representative democracy, this represents but a small added price.

Nonetheless, if one has a fine-enough tuned sense of victimhood, it alway possible to find offense. Sally Quinn is an accomplished journalist who has spent over four decades at the center of the Washington Beltway culture and should have grown a hard crust to protect her feelings. Quinn is upset at the “bulling pulpit” of Congressional resolution 847 that:

“(1) recognizes the Christian faith as one of the great religions of the world; (2) expresses continued support for Christians in he United States and worldwide; (3) acknowledges the international religious and historical importance of Christmas and the Christian faith; (4) acknowledges and supports the role played by Christians and Christianity in the founding of the United States and in the formation of the western civilization; (5) rejects bigotry and persecution directed against Christians, both in the United States and worldwide; and (6) expresses its deepest respect to American Christians and Christians throughout the world.”

Quinn finds this praise of Christianity a too exclusionary. What about non-Christians? Well there is no cost to sponsoring a resolution, so there is always a handy Congressional resolution for others who may ask. Out of respect to our Islamic brothers and sisters, Congress passed resolution 635 which proclaimed:

“…during this time of conflict, in order to demonstrate solidarity with and support for members of the community of Islam in the United States and throughout the world, the House of Representatives recognizes the Islamic faith as one of the great religions of the world; and (2) in observance of and out of respect for the commencement of Ramadan, the Islamic holy month of fasting and spiritual renewal, the House of Representatives acknowledges the onset of Ramadan and expresses its deepest respect to Muslims in the United States and throughout the world on this significant occasion.”

It is hard to argue that Congressional has not paid appropriate to respect to all manner of religious faiths, so Quinn aim her complaint to the fact that non-believers have not be singled out for special celebration. The argument is as shallow as an inside-the-Beltway conscience. It is hard to pay tribute to a negative. For example, we might pay special thanks to veterans, it somewhat silly to argue that there ought special thanks to those that didn’t serve.

One important advantage of having children is the development of a sensitive ear to whining. Quinn’s plaintive complaints sounds to these ears like the mournful sounds of child who feels that she has not been treated fairly. Someone else has received attention an she hasn’t. Given a little time to reconsider her words, Quinn will undoubted realize the temporary foolishness of her gripe about something as trivial as a toothless Congressional resolution.

The Surge a Year Later

Sunday, December 23rd, 2007

Perhaps the greatest lesson of the Iraq War is that it is difficult to make any predictions with confidence. It is hard to imagine now the extreme pessimism on the prospects for success of the troop surge in Iraq that permeated the elites just one short year ago. The Hamilton-Baker Study Group had just been released and although the report did not totally reject the idea of a troop surge, it was definitely cool to the idea. The policy recommendation of the report essentially amounted to a phased troop withdrawal coupled with diplomatic overtures to states like Iran who would benefit from a chaotic Iraq.

Senator Joseph Biden, who represents as much as anyone, the foreign policy establishment of the Democratic Party confidently asserted in January of this year that, “We’ve tried the military surge option before and it failed. If we try it again, it will fail again.” Progress in Iraq may not be predictable, but the editorial page of the New York Times is. On the prospects of the surge they editors opined last January, “The disaster is Mr. Bush’s war, and he has already failed… There is nothing ahead but even greater disaster in Iraq.” Sidney Blumenthal, confidant of former President Bill Clinton, writing in Salon.com reported that the Pentagon was going over contingencies in case the troop surge failed and that:

“None of those who are taking part in these exercises, shielded from the public view and the immediate scrutiny of the White House, believes that the so-called surge will succeed. On the contrary, everyone thinks it will not only fail to achieve its aims but also accelerate instability by providing a glaring example of U.S. incapacity and incompetence.”

In a debate with Senator John McCain last January, Senator Barak Obama urged that we begin troop withdrawal in the middle of 2007. As it turns out in retrospect, this would have been precisely the wrong time to do so. The surge was only beginning to demonstrate a clearly measurable impact at that point.

In April 2007, before the troop surge began in earnest, US Senate Majority Leader Harry Reid, perhaps in a bid to appease the Left wing of the Democratic Party, infamously asserted, “I believe … that this war is lost, and this surge is not accomplishing anything, as is shown by the extreme violence in Iraq this week.” Reid’s negative assessment was premature.

It is possible to find many angry, Left-leaning blogs even more confidently predicting that the surge would fail militarily or painting a pejorative portrayal of the surge leader, General David Patraeus, but one should not grant them the credibility of citation.

The numbers are now in and they tell a different story, at least from a military standpoint. The surge began full-scale operations over the summer. The increased number of troops, critically coupled with General Patraeus’s new assertive anti-insurgency strategy pacified the Sunnis in Al Anbar province, drove Al Qaeda out of the cities where they were largely destroyed by special forces and airpower, and drove down civilian casualties by a factor of five. The number of Coalition casualties has mirrored the deep reduction in civilian losses. The graph below shows the rate of Coalition casualties per day (in blue) since the war began. The solid red line is the mean level and the dashed lines represent the plus-or-minus one standard deviation levels from this mean. Since the middle of summer the rate of Coalition casualties has plummeted and this trend has continued for months. At this point, we are close to having the lowest casualty rate for any month since the war began.



Of course, things may still go wrong. Iraqis have to step up and take advantage of the opportunity that the US military has courageously provided. We should not slide in to the same slip as surge skeptics and confidently extrapolate from the current course into the future. Iraq represents a difficult situation that will take some time to straighten out. Nonetheless, the surge has proved far more successful than even its supporters could have hoped for just months ago. If nothing else the current success of the surge should make opponents of US Administration strategy less sanguine in their embrace of defeat.

Religion and State

Sunday, December 16th, 2007

Roger Cohen was born in 1955 in London and raised with a European perspective. He can perhaps be forgiven for his profound ignorance and condescending arrogance with regard the relationship between religion and the state in the United States. In his article, “Secular Europe’s Merits,’‘ Cohen criticized Presidential candidate’s Mitt Romney sad allusion to the fact the grand cathedrals in Europe are largely empty because Europeans are too “enlightened” to go and actually fill those cathedrals. Cohen sarcastically remarks that, “Europeans still take the Enlightenment seriously enough not to put it inside quote marks.”

Here, Cohen reveals his fundamental misunderstanding. Romney placed “Enlightenment” in quotation remarks not because he disparages the authority of reason, but because too many in Europe, unlike our American Founders, have embraced the notion that reason and faith are incompatible. There is no logical reason why Europe cannot be both enlightened and have churches brimming with people. Is Cohen arguing that those who attend Church are, by definition, unenlightened?

Like many in Europe, he enjoys the blood sport of pulling President George Bush’s comments out of context to make him appear to be a religious zealot devoted to making the US a theocracy. For example, Cohen ridicules Bush’s “allusions to divine guidance — `the hand of a just and faithful God.'” The implication is that Bush feels himself as acting implicit direction of such a God.

It is kinder to assume that Cohen pulled this quotation from some blog without the knowledge of its full context than that he deliberately misquoted Bush. The phrase Cohen cites came from an annual prayer breakfast. In a full context, Bush was arguing the exact opposite of Cohen’s assertion that Bush was claiming some special knowledge of God’s will. Bush was saying that sometimes we don’t understand how God works in this world. Nonetheless, we have faith in the notion that God’s purposes will still be served.

“We can also be confident in the ways of Providence, even when they are far from our understanding. Events aren’t moved by blind change and chance. Behind all of life and all of history, there’s a dedication and purpose, set by the hand of a just and faithful God. And that hope will never be shaken.” [Emphasis added-FMM]

This is not much different in sentiment from Abraham Lincoln’s observation in his Second Inaugural Address that the Civil War was perhaps God’s way of eliminating the scourge of slavery.

“The Almighty has His own purposes. `Woe unto the world because of offenses; for it must needs be that offenses come, but woe to that man by whom the offense cometh.’ If we shall suppose that American slavery is one of those offenses which, in the providence of God, must needs come, but which, having continued through His appointed time…”

And Bush remarks were certainly less suggestive of a theocracy than Presidential candidate Barak Obama’s request to be an “instrument of God” to create “a Kingdom right here on Earth.” In the immediately preceding column, Cohen was rather complimentary of “Obama’s American Ideals.” One suspects that if a Republican had made the exact same remarks about bringing a Kingdom here on Earth, Cohen would have led the legions defending the secular state against the agents of theocracy.

It is possible to both moral and secular. However, our forefathers made the observation that a free society cannot long exist without being a moral society and that religion has proven to be a key agent of morality. George Washington Farewell Address:

“And let us with caution indulge the supposition, that morality can be maintained without religion. Whatever may be conceded to the influence of refined education on minds of peculiar structure, reason and experience both forbid us to expect, that national morality can prevail in exclusion of religious principle.”

The First Amendment’s protections of religious freedom were designed as least much to protect religion from the state as the state from religion.

Support the Troops

Sunday, December 9th, 2007

If one notices a bumper sticker on a car that says “Support the Troops,” the unspoken assumption is that the owner of the car not only supports the troops but the policies of the Bush Administration in Iraq and Afghanistan. This is unfortunate. The two positions are not logically connected. One could certainly think well of the troops and recognize their sacrifice on our behalf and strongly disagree with Bush’s policy. However, the Liberals and the Left have left the field open for Conservatives to associate themselves with the natural American inclination to support their sons and daughters in the military.

This began in Vietnam when the Left was so angry with the war that to discredit the war they habitually lapsed into discrediting the troops by exaggerating transgressions. Even Senator John Kerry, a decorated Vietnam veteran, who might have had strong reason to be sympathetic to troops, most of them drafted, painted a disquieting and largely inaccurate picture of American troops who,

“…personally raped, cut off ears, cut off heads, tape wires from portable telephones to human genitals and turned up the power, cut off limbs, blown up bodies, randomly shot at civilians, razed villages in fashion reminiscent of Genghis Khan, shot cattle and dogs for fun, poisoned food stocks, and generally ravaged the country side of South Vietnam in addition to the normal ravage of war, and the normal and very particular ravaging which is done by the applied bombing power of this country.”

The habit was renewed in the present Iraq conflict. The story of the very real abuse of prisoners at Abu Ghraib early after the conclusion of initial hostilities in Iraq were played and replayed on the front pages of the NY Times and other media outlets to the point that these media outlets succeeded in making that an early symbol of the war and unfortunately the war fighters.

This attack on soldiers has now become so habitual that sometimes it is impossible for certain elements of the media to support the troops in even modest ways. The FreedomWatch organization strongly supports Bush’s policies. It has tried to run some thank-the-troops television ads during the holiday season. CNN and Fox news have run the ads without a problem, but MSNBC and CNBC have refused to run the ads.

The ads are very benign and certainly not controversial. They are certainly less controversial than ads for Sicko, Michael Moore polemic masquerading as a documentary run by these and other networks including FoxNews. Click here to see the ads and make your own judgment about how controversial the ads really are. The refusal of MSNBC and CNBC to run these ads provide additional evidence that some in the media have unfortunately convinced themselves that anything positive about and for the troops should be suppressed lest they might accidentally lend support to Bush’s policies.

How Long Will Retirement Assets Last?

Sunday, December 2nd, 2007

It is a symptom of middle age that one begins to ponder the prospects of retirement and an occupational affliction of a scientist to marshal mathematics to consider this question. It is difficult to estimate how much income one needs upon retirement. There are many mitigating factors. A retired person is no longer contributing to Social Security and a retirement plan and so this portion of gross income can be dispensed with. The costs of commuting are no longer a factor and usually by the time of retirement one’s house has been paid for and children have left the home. On the other hand, idleness is not a hopeful retirement prospect. Engaging in activities such as travel introduce additional costs. For someone of modest retirement assets, Social Security will form a larger fraction of post-work income. At higher incomes, Social Security drops to a smaller fraction of the total expected income. For baby boomers, there is also the prospect that demographic trends will place strong downward pressure on Social Security payments, particularly for those whose may have other resources.

Here we put off the question of exactly how much income one needs and try to compute for a given amount of retirement assets, what is a reasonable spending level that will allow those assets to last a lifetime. There are two key factors to answering this question: (1) What is a reasonable rate of return on accumulated assets? (2) How much will inflation erode these assets. To answer this question, we performed a simple simulation, the results of which are shown below in Figure 1.


Figure 1. Retirement scenarios.

We begin the simulation with $1,000,000 in retirement assets. Any values we compute can easily be scaled based on actual assets. We also begin with the assumption that we can safely expect a long-term investment rate of return of 5%. We then assume that the first year we withdraw an income $40,000 (4% of the total). If we started with $2,000,000 in retirement assets, the yearly income would scale to $90,000.For the each subsequent year we increase the withdrawal amount by the inflation rate. Overtime, the $40,000 withdrawal gets nominally larger to maintain a real income of $40,000.

The blue curve starting at year 0 shows the remaining assets as a function of time for a 2% inflation rate (left scale). Note that for more than the first 25 years, there is actual growth in the nominal level of assets.

The other blue curve represents the nominal income as a function of time (right scale). After 40 years, the nominal income under this scenario would grow to nearly $90,000, but it would presumably purchase what $40,000 would have bought at the start of retirement.Note further, that after 40 years, there are sill significant assets remaining, nominally over $500,000. Assuming a retirement age of 65, retirement assets would still remain at age 105.

The red and yellow curves represent the results of similar scenarios assuming inflation rates of 3% and 4%, respectively. Even with a 3% inflation rate, we could maintain a $40,000 real income until age 100. At 4% inflation (or a real rate of 1% for a nominal 5% investment return), funds would last until age 95. In other words, if we can maintain real rates of return on our investment of 1% or greater, a retirement income of 4% of the original assets should should last a lifetime.

How reasonable is it to assume that such rates could last over the three or four decades of retirement? As Physicist Neils Bohr once quipped, “Prediction is very difficult, especially about the future.” If we knew with certainty future inflation rates, investment rates of return, and the number of years we would live, retirement planning would be substantially easier. We can, however, look at the past to determine whether our assumptions about the future are plausible.

Figure 2. Comparison of CPI-derived inflation rates with CD rates.

The yellow curve in Figure 2 is the inflation rate computed from the Consumer Price Index for Urban Areas (CPI-U) from the Bureau of Labor Statistics from 1913 to 2006 (left scale). There have been many oscillations in the past, yet over the last few decades these extremes seem to have modulated. The end of the 1970’s was the last time that we suffered under double-digit inflation. From the 1980’s to the present we have enjoyed inflation rates less that 5%, usually much less.

For our purposes here, the relationship between inflation rates and the nominal rates of return on safe investments is what matters. As long as the investment rate of return on accumulated assets is appreciably larger than the inflation rate, then inflation risks are alleviated. The blue curve inf Figure 2 represents the rate of return from an average of 3-month Certificate of Deport (left scale). Usually, but not always. CDs have rates of return greater than the inflation rate.The red curve is the difference between the CD and CPI-derived inflation rates (right scale). Since 1968, the period over which we have managed to find data, the difference between the two has averaged 2%. For the scenarios outlined in Figure 1, assuming an investment rate of return of 5% and inflation rate of 3% seems reasonable.

There are a number of factors which will mitigate inflation risks associated with retirement. First, a CD rate of return is about about as conservative as one can get. A slightly more aggressive investment strategy would likely improve the long-term investment rate of return. Moreover, the CPI is thought to overestimate the real inflation rate. We actually might be able to increase withdrawals from assets at a rate lower than the inflation rate and maintain the same standard of living. Finally, any retirement strategy need not be rigid. As the investment returns and inflation change, it is possible to alter the withdrawal strategies as accumulated assets increase or decrease unexpectedly.