Quote of the Week (Japan Edition)

I wanted to pull this week's Quote of the Week from Arnold Schwarzenegger's Q&A on Reddit last week, I really, really did. The concept of 1,000 duck-sized Predators is just too great to not mention, and I couldn't get that mental image out of my head all week. Brilliant stuff.

But I decided instead to give the honor to Japan's new Finance Minister (their 11th since 2007!) Taro Aso, whose brutal bout of honesty this week added a neat little twist onto Japan's growing fiscal problems (and demographic nightmare). In a statement that is almost certainly intended directly for the ears of Jiroemon Kimura, the oldest man in recorded history, Aso uttered a phrase (well, a few of them, really) that you might end up hearing a lot of around the world over the coming decades...

This week's QUOTE OF THE WEEK

"Taro Aso said on Monday that the elderly should be allowed to 'hurry up and die' to relieve pressure on the state to pay for their medical care.

'Heaven forbid if you are forced to live on when you want to die. I would wake up feeling increasingly bad knowing that [treatment] was all being paid for by the government,' he said during a meeting of the national council on social security reforms. 'The problem won't be solved unless you let them hurry up and die.'

Aso's comments are likely to cause offence in Japan, where almost a quarter of the 128 million population is aged over 60. The proportion is forecast to rise to 40% over the next 50 years.

To compound the insult, he referred to elderly patients who are no longer able to feed themselves as 'tube people'. The health and welfare ministry, he added, was 'well aware that it costs several tens of millions of yen' a month to treat a single patient in the final stages of life."
                                                     - Justin McCurry; Guardian

So, first of all, it needs to be said that this dude is completely off his rocker. If you read Mish Shedlock's whole piece, you'll see that Aso has previously made bizarre off-color remarks about Jews, Taiwanese, and blue-eyed U.S. diplomats, so clearly he has a habit of saying outlandish things to provoke a reaction (sort of like another economist we all know and love).

That said, this little moment of honesty might hit just a little close to home for all of us here in America. Our Medicare costs are already projected to go through the roof over the coming decades, in large part because we continue to refuse to have difficult conversations about end-of-life care (specifically, how much is it worth to keep somebody alive for an extra year at age 65, versus at age 75, versus at age 85? Is there an infinite value? A declining value? Do we even begin to know?).

We can choose to spend an infinite amount of money to keep a person (any person) alive for another day, and hospitals and doctors will surely be glad to dispense those services as long as somebody (i.e. the taxpayer) is willing to pay. But sooner or later, we simply can't afford to do so for everybody, and we have to have that difficult little conversation with each other. Japan is having it now; it's coming our way sooner than you might think.

[Mish Shedlock]

Quote of the Week (bonus edition)

Okay, this week I couldn't make a choice, so you're getting two Quotes of the Week. They're not related in any way, I just thought they both deserved recognition, so here goes.

First of all, in advance of this Friday's highly-anticipated monthly jobs report, former Reagan economic adviser David Stockman decided to put things in perspective for those of us who are getting (maybe a little too) excited about our apparently improving economy. In a wide-ranging interview that is highly critical of Fed policy (attaboy, Stockman), we're reminded that while things may be getting somewhat better in the job market, they're still pretty ugly.

QUOTE OF THE WEEK #1

"Look at the data that really counts. The 131.7 million (jobs in November) was first achieved in February 2000. That number has gone nowhere for 12 years."
                                                 - David Stockman

This is a gentle reminder that without a SIGNIFICANT number of new jobs and a MUCH higher labor force participation rate among the younger generation, there is NO WAY that we can possibly afford to subsidize the Baby Boomers' retirement years via Social Security and Medicare without going completely bankrupt as a nation. While the debt and deficit numbers are already staggering, our biggest liabilities have barely even begun to show up, and our tax base is showing no signs of expanding. This is a big problem.

And hey, on that note, it's Super Tuesday!! The day on which we will (maybe) choose who will try to lead this country out of the problems that Stockman has so kindly pointed out for us in his interview. So we'll turn things over to Joe Nocera, who has some... interesting words about Rick Santorum (a candidate I've briefly discussed here). In a piece that is highly critical of what the modern Republican party has become, Nocera gives his best endorsement of Santorum:

QUOTE OF THE WEEK #2

"An alcoholic doesn’t stop drinking until he hits bottom. The Republican Party won’t change until it hits bottom. Only Santorum offers that possibility."
                                     - Joe Nocera, New York Times

Yeah, that's pretty much how I feel about him. I support neither party, but I've voted Democrat in three straight Presidential elections because the Republican alternative was so distasteful to me (I have few kind words for George W. Bush, and John McCain ruined any good feelings I had about him the day he picked Sarah Palin as his running mate). And yet, if I had to choose between Bush, McCain/Palin, and Santorum... Santorum would be the absolute last choice on my list. But enough of that.

Nocera makes some solid points (it's not all snark), and I think his take on the matter is worth a read. I will now go vote for Ron Paul. Go America.

[USA Today]
[New York Times]

Is disability the new unemployment?

Did you hear the good news? New jobless claims are falling, and they're now hovering at a four-year low! That's excellent news for the economy, right? Maybe... maybe not. As has been reported in several places recently, the drop in people filing for unemployment has been accompanied by a sharp rise in those filing for (and receiving) disability.

More than 8.5 million workers are now collecting disability insurance, in other words almost 6% of the labor force is officially disabled. Perhaps not surprisingly, disability applications shot up just as unemployment benefits started to exhaust... 

Since 1995 the number of disabled workers has doubled and expenditures have increased even faster than disabled workers, tripling since 1995. The increase in workers receiving disability insurance has come at the same time as the US working age population has become healthier. A large fraction of the increase in disability has come from increases in hard-to-verify back pain and mental problems... 

After the 2001 recession, disability applications also shot up and they never fell back to their old levels. We may be reaching a new, permanently higher, plateau. 

Disabled workers do not count as unemployed, they have been bought out of the labor force.

Ugh. This is a terrible development--as Karl Denninger described it, this is in many situations a case of "I lost my job, now I'm crazy!"

I've said here before that the national unemployment rate (as currently calculated) is an incredibly noisy and easily-gamed statistic, as are jobless claims. When considering the overall health of our economy--especially in the face of a rapidly aging population with monstrous entitlement benefits--the most important statistic to track is the employment rate of the population, which of course continues to plummet even amid an "improving" economy.

Having more people on permanent or semi-permanent disability only adds weakness to the overall fiscal condition of our country, as people who should be wage-earners (and taxpayers) are instead transformed into tax recipients. With our country already gaining tax recipients by the day as the Baby Boomers retire in droves, who is going to be left to pay all of these bills? Warren Buffett? Good luck with that.

The massive impending liabilities of Medicare and Social Security require that our overall labor force be growing, not stagnating or shrinking. That absolutely is not happening, regardless of underlying improvement in the official unemployment rate. We can't hide these people on the disability rolls forever--sooner or later, we need to find ways for them to contribute, rather than add to our already bloated federal dole. Any ideas?

[Marginal Revolution]
[Market Ticker]

Quote of the Week

For this week's Quote of the Week, I was incredibly tempted to give the honors to Metta World Peace (some of you may still know him as Ron Artest, but he's way more insane now), who summed up the Jeremy Lin mania (which I'm enjoying immensely) in a way that only a certifiably crazy person could--by ranting about leather pants, cigars, and Allen Iverson jerseys. Sure.

But I decided I'd go with a more "serious" Quote of the Week (I put "serious" in quotations because I honestly hope the speaker was joking when he said it), courtesy of Republican Presidential candidate Mitt (aka "Mittens") Romney. Mitt was formerly the Governor of my home state of Massachusetts, and I voted for him when he ran (way back in 2002). I'm pretty sure I won't be doing so this time around, and this little tidbit is part of the reason why.

This week's QUOTE OF THE WEEK

“This week, President Obama will release a budget that won’t take any meaningful steps toward solving our entitlement crisis. The president has failed to offer a single serious idea to save Social Security and is the only president in modern history to cut Medicare benefits for seniors.”
                                - Mitt Romney

Yeah. That doesn't make a lick of sense. It's quite possibly the most contradictory statement made to date by a man who has seemingly made a living off of contradicting himself. His platform makes absolutely no sense--the only consistent thing about it is that he will clearly say or do anything to get elected, sort of like John McCain four years ago.

I'm not sure what Mitt would consider a "meaningful step" toward solving our entitlement crisis if "cutting Medicare benefits for seniors" doesn't qualify, but then, I'm not sure what Mittens thinks at all anymore.

[Marginal Revolution]

Quote of the Week

This week's Quote comes courtesy of Karl Denninger, who has inspired more than a couple of my rants here in the past. It stems from the Congressional Budget Office's projections released yesterday, which are absolutely chock full of ugly numbers and statistics (ignore them at your own peril). Let's get right to it:

This week's QUOTE OF THE WEEK

"Government spending for Medicare, Medicaid and other healthcare programs will more than double over the next decade to $1.8 trillion, or 7.3 percent of the country's total economic output, congressional researchers said on Tuesday.


In its annual budget and economic outlook, the non-partisan Congressional Budget Office said that even under its most conservative projections, healthcare spending would rise by 8 percent a year from 2012 to 2022, mainly as a result of an aging U.S. population and rising treatment costs. It will continue to be a key driver of the U.S. budget deficit."
                                           - David Morgan, Reuters

Look at that first paragraph: that's 7.3 percent OF THE COUNTRY'S TOTAL ECONOMIC OUTPUT! Not of tax revenues, not of total government spending, of the ENTIRE ECONOMIC OUTPUT. In case you were wondering, total federal tax receipts in 2011 were approximately $2.3 trillion, on total economic output (GDP) of $14.6 trillion--about 15.8% of total economic output. That means that our expected expenditure on health care programs would be a full HALF of everything that we currently bring in from tax revenues.

That is, in a word, untenable. There's absolutely no way to make these programs solvent, and we need to stop pretending that there is. We can't grow our way out of this problem, we can't inflate our way out of this problem (hi, Ben), and we certainly can't default our way out of it (although that's where we're heading).

Oh yeah, and just repealing Obamacare doesn't do anything to help matters either, in case any of you Republican-lovers were wondering.

This country is bumping up against fundamental problems with respect to how it cares for its elderly, and it's clear that we've made promises that we mathematically cannot keep. A millionaire tax or a wealth tax or an inflation tax or whatever other tax can't compensate for the fact that there's just simply not enough money to go around. We need to admit that we've made promises that we can't keep, and begin the ugly and unpleasant process of reneging on those promises. The longer we wait, the worse the problem will get--procrastination is an expensive vice that we simply cannot afford.

[Reuters]
(h/t Karl Denninger)