The Failed Critique of Personal Accounts

Even though President Bush's Commission to Strengthen Social Security has yet to produce a specific proposal to establish a personal account option for Social Security, opponents of the idea have already put forward a barrage of objections and criticisms. Those criticisms generally reflect fundamental misconceptions of and confusion about Social Security's current problems. Social Security is facing a financial crisis as early as 2016. The Social Security Trust Fund will not delay the onset of Social Security's problems. The critics are equally mistaken about individual accounts. Individual accounts do not involve simply switching investments from bonds to stocks. There would be no reduction in survivors' or disability benefits. Although the mix of benefits would change, workers would have higher, not lower, overall benefits under individual accounts. Finally, benefits under the current system are not guaranteed, but workers would have a property right to the funds in their individual accounts

European Energy Security: What Should It Mean? What to Do? ESF Working Paper, No. 23, 30 October 2006

[From the Introduction]. • Is energy a strategic good? If it is, to what extent does it make sense to deny the extraction of political leverage from energy policy? In criticising Russian energy policy, are we not protesting too much against the fact that Russia (as others) is using energy for political ends – instead of criticising, as we should, the content of Russia’s policy? And if energy is strategic, should a European Union energy policy be primarily about the liberalisation of the energy market? • Is claiming reciprocity always smart? After all, do we really want Russian firms to control both the downstream as well as the upstream elements of the EU’s energy supply chain, in exchange for access by EU firms to Russian energy production and transport? • Should it really be EU policy to help Turkey to make full use of its potential as a major energy hub? After all, half of Russia’s oil exports already pass through the Bosporus, creating a major risk if that very vulnerable route were to be cut

“Financial alchemy” or a zero sum game? Real estate finance, securitisation and the UK property market

Following the US model, the UK has seen considerable innovation in the funding, finance and procurement of real estate in the last decade. In the growing CMBS market asset backed securitisations have included $2.25billion secured on the Broadgate office development and issues secured on Canary Wharf and the Trafford Centre regional mall. Major occupiers (retailer Sainsbury’s, retail bank Abbey National) have engaged in innovative sale & leaseback and outsourcing schemes. Strong claims are made concerning the benefits of such schemes – e.g. British Land were reported to have reduced their weighted cost of debt by 150bp as a result of the Broadgate issue. The paper reports preliminary findings from a project funded by the Corporation of London and the RICS Research Foundation examining a number of innovative schemes to identify, within a formal finance framework, sources of added value and hidden costs. The analysis indicates that many of the gains claimed conceal costs – in terms of market value of debt or flexibility of management – while others result from unusual firm or market conditions (for example utilising the UK long lease and the unusual shape of the yield curve). Nonetheless, there are real gains resulting from the innovations, reflecting arbitrage and institutional constraints in the direct (private) real estate marke

The Oil Weapon: Myth of China's Vulnerability

The geopolitical canvass on which China plots its strategy for energy security displays a ubiquitous presence of one country: the United States. Chinese energy security planners must reckon with America's ravenous consumption of imported oil, its strategic alliances with other heavy importers of oil in Asia, its overseas military operations in the heart of the world's leading oil producing region, its naval dominion over the world's oil transportation routes, and the global domination of U.S. oil companies or multinational oil companies heavily capitalized by American investment. This is the context in which China pursues its energy security, sometimes blandly described as 'conservation and diversification of supply', which masks the nation's real struggle to satisfy its rapidly growing energy needs without exposing its energy lifelines to external forces that may, intentionally or not, betray China's interests

Generation Adequacy and Investment Incentives in Britain: from the Pool to NETA

Three years after the controversial change of the British market design from compulsory Pool with capacity payments to decentralised energy-only New Electricity Trading Arrangements (NETA) market framework, we compare the two designs in terms of investment incentives. We review the biases of the Pool capacity payments design, the drought of investment following the introduction of NETA, and the reaction of the market during the first “stress-test” of NETA during the winter 2003. In an energy-only market such as NETA, it is essential that price signals are right and the system operator has a crucial role in contracting ahead for reserve. We recommend that NETA adopt a single marginal imbalance price as dual imbalance pricing distorts price signals in times of scarcity. The lack of long-term contracting that causes hedging and financing difficulties for power projects can becompensated by vertical and horizontal reintegration at a cost of increased market power

Globalization and Decent Work, Options for Panama

An analysis of economic trends in Panama, including the effects of trade liberalization and poverty on employment and child labor

Just and sustainable? : examining the rhetoric and potential realities of UK food security

The dominant discourse in 20th century UK food and agricultural policies of a liberal, free trade agenda was modified at the turn of the 21st to embrace ecological sustainability and "food security." The latter term has a long international history; the relationship between issues of technical production and equality of distributional access are also much debated. The paper examines shifts in UK policy discourse in the context of international research, policy, and initiatives to promote food security, and highlights the implications for social justice in and through the food system

How Secure Are Retirement Nest Eggs?

Life's uncertainties can upend the best-laid retirement plans. Health can fail as people grow older, or their spouses can become ill. Older people can lose their jobs, and often have trouble finding new ones. Marriages can end in widowhood or divorce. Health, employment, and marital shocks near retirement can have serious financial repercussions, raising out-of-pocket medical spending, reducing earnings, disrupting retirement saving, and forcing people to dip prematurely into their nest eggs. This brief examines different types of negative events that can strike near retirement. It reports the incidence of widowhood, divorce, job layoffs, disability, and various medical conditions over a 10-year period, and estimates their impact on household wealth. Data come from the Health and Retirement Study (HRS), a nationally representative survey of older Americans conducted by the University of Michigan for the National Institute on Aging. The survey interviewed a large sample of non-institutionalized adults ages 51 to 61 in 1992 and re-interviewed them every other year. The analysis uses data through 2002, the most recent year available. The results show that many people in their 50s and 60s experience negative shocks that threaten retirement security. Job layoffs, divorce, and the onset of work disabilities near retirement substantially erode retirement savings. The findings highlight the limitations of the safety net when things go wrong in late midlife. This Brief was written for the Center for Retirement Research based at Boston College