Frank Field on universal pensions

September 24th, 2018

The British politician Frank Field, on the 70th anniversary of the famous Beveridge report that established a welfare state in his country, expressed very clearly my own views regarding the important but limited role of government in provision of old age pensions: there should be a universal pension for everyone of pensionable age, financed from general government revenue, regardless of the income or wealth of a beneficiary. Everyone is free to supplement this basic pension with his or her own savings, or wages from working beyond the official state retirement age.

This system, though simple, is rarely put into practice. Read the rest of this entry »

towards universal pensions in the Philippines

September 10th, 2018

A Philippine Senator has introduced a bill in Congress to double the social pension for his elderly countrymen and remove the means test, leaving only a pension test. If his bill passes, every resident aged 60 years and older without access to a contributory pension will receive a monthly benefit of one thousand Philippine pesos (approximately 18.50 US dollars). Pension coverage, currently 72% of the country’s senior citizens, would increase to 100%.

The proposed social pension is far below the poverty line (8,378 pesos a month in 2014), but would mark a beginning towards guaranteed basic pensions for all in the Philippines. Read the rest of this entry »

targeting the poor does not work

September 4th, 2018

Targeting the poor provides opportunity for corruption in delivery of benefits, even when the beneficiaries are older persons. Here is an example from Nueva Ecija, a province in the Central Luzon region of the Philippines. Read the rest of this entry »

‘universal’ pensions in South Korea

August 29th, 2018

The only thing universal about South Korea’s “universal pension system” is the rate of contribution. The more a worker contributes, the higher the pension she receives. With no contributions, there is no pension.

The pension system is supposedly pre-funded, but the contributions are not sufficient to pay the pension promises. Actuarial projections predict that assets in the fund will be exhausted by the year 2057. To prevent this, the government proposes to either (1) raise contributions to 10.8% of salary from the current 9% rate or (2) lower the promised income replacement from 45% to 40% “while raising contributions to 13 percent by 2033”. Read the rest of this entry »

basic income pilot in a California city

August 27th, 2018

Beginning in 2019, a demonstration of basic income will begin in Stockton, a city of about 300,000 residents, in California’s Central Valley. One hundred households will be selected randomly from neighbourhoods where the median household income is at or below the city median of $46,033 a year. One person, 18 years of age or older, in each selected household will receive $500 a month for 18 months. It is not clear how the recipient within each household will be selected. Benefits will be unconditional, meaning that there are no work requirements and no restrictions on how the money is spent. This makes the experiment more universal than most of this type. The benefits will be funded entirely from private donations, so there is little chance that payments will continue beyond the 18-month period. Read the rest of this entry »

air conditioning and global warming

August 24th, 2018

Air-conditioning has been a godsend for hot countries, and hot regions of otherwise temperate countries, but it comes with a huge environmental cost: the electricity needed to power these machines fuels global warming. A leader in this week’s Economist magazine argues that more needs to be done to make these machines more energy efficient, and that buildings, even entire cities, should be designed so that less air-conditioning is required. Here is a self-explanatory excerpt, with a link to the full article. Read the rest of this entry »

map of the day: China’s high-speed rail tracks

August 14th, 2018

This is amazing. In December 2009, China inaugurated its first long-distance high-speed rail service, moving trains 1,100km between the cities of Guangzhou and Wuhan in just three hours. Today, two-thirds of the world’s HSR tracks have been laid in China.

Critics point out that the rail construction has been financed with debt, and the interest costs of this debt exceeds the operating revenue of China Railway. I am not worried. It takes time to attract riders, and travel by electric rail is better for the environment than travel by air, provided electricity is not produced by burning coal or other fossil fuels.

For more information, see Tom Mitchell and Xinning Liu, “China’s high-speed rail and fears of fast track to debt“, Financial Times, 14 August 2018.

 

the plateau of human mortality

August 14th, 2018

Here is information from the Financial Times that I filed away last month, but forgot to post. A columnist summarizes the findings of Elisabetta Barbi and associates, who published an article on human mortality in the journal Science, Vol. 360, Issue 6396 (29 June 2018), pp. 1459-1461. If you don’t have a subscription or library access to the journal, it will cost you USD 15 to download the issue in which the full three-page article appears. The report is titled “The plateau of human mortality: Demography of longevity pioneers“, and is based on a study of the more than 3,800 Italians, aged 105 and above, who were living between 2009 and 2015. Read the rest of this entry »

the rise of American authoritarianism

July 25th, 2018

More than two years ago Amanda Taub, a journalist and former human rights lawyer, published an amazing article that I somehow missed. Drawing on the work of several political scientists, Ms Taub explains why Donald Trump was elected, and why we can expect US voters to elect authoritarian figures similar him in the future. In other words, Trump is not a passing phenomenon. Read the rest of this entry »

factor investing vs hedge funds

July 22nd, 2018

In 1992 Eugene Fama and Kenneth French, two professors at the University of Chicago Booth School of Business, published a paper that showed how investors could beat the stock market’s returns … by taking advantage of two simple factors: the tendency of small or cheap companies to outperform over time.

… [T]he Fama-French paper was a bombshell, largely because Prof Fama is the father of the “efficient markets hypothesis”, which argues that investors cannot consistently beat the market.
Read the rest of this entry »