This paper explains, first, that, since households disregard the impact in the aggregate of their fertility and education choices on the return to their own savings, the market does not implement the mix of population and skills that a planner internalizing all externalities from fertility and education would choose. It then shows that for an economy without capital over-accumulation—the empirically relevant case, cf. Abel et al. (Rev Econ Stud 56(1):1–19, 1989)—a market supplying efficiency units of labor beyond the planner’s level does so by leading households to go for quality over quantity in their reproductive choices—over-investing in education and depressing fertility with respect to the planner’s levels—a feature reminiscent of reproductive patterns in developed economies. It is finally shown that a pension scheme contingent to the household’s fertility and education investment decentralizes the planner’s allocation as an equilibrium outcome. Such pension scheme is financed through a tax on the increase in labor income that results from households education investment. Interestingly enough, the usual tax-financed compulsory education does not decentralize the planner’s allocation, even when the mandatory level of education is the planner’s, since it does not address the misalignment of incentives at the heart of the problem.
This conceptual research reflects the understanding of the wider and more coherent use of crypto-currencies and Blockchain' algorithms for the security and equity of operations. This is especially important for the transactions between the collective actors on different hierarchical positions, e.g., the State and private companies or associations, or individuals. The fog computing' hardware and software are helpful for the aims of improving taxation and ensuring reliability of any transactions. The neuron technologies provide creating and developing a multi-criteria assessment of assets or actions, which represent more correct system of affective and socially acceptable evaluations, than it can be calculated on the basis of the cognitive judgments. The ability to provide a high level of information security through systems like Etherium allows of building a reliable and transparent system of taxation and of regulation of all interactions between social, economic and political agents, including the financial and non-financial measurements.
A recent Eleventh Judicial Circuit Court of Florida decision has raised concerns over how both federal and state courts consider the unregulated cryptocurrency, Bitcoin. In State of Florida v. Michell Abner Espinoza, Judge Teresa Pooler held that Bitcoin did not fall under the statutory definitions of “payment instrument” or “monetary instrument” because virtual currency is not directly specified nor could it be included within one of the defined categories listed in Fla. Stat. § 560.103(29) or 896.101(2). Furthermore, Judge Pooler, alluding to the doctrine of lenity, refused to hold Espinoza responsible under a statute that is “so vaguely written that even legal professionals have difficulty finding a singular meaning.” Judge Pooler thus disagreed with earlier decisions by several federal judges. The federal courts have uniformly held that Bitcoin is “money” or “funds” for the purpose of money laundering. Additionally, the federal courts, analyzing the applicable federal money laundering statutes, have refused to apply the doctrine of lenity because there were no ambiguities such that “an ordinary person would [not] know that engaging in the challenged conduct could give rise to the type of criminal liability charged.” State and federal courts can interpret similar state and federal statutes in differing ways based on each statute’s respective canon of construction and legislative intent. However, because the Florida Money Laundering Act (Fla. Stat. § 896.101) is modeled on the federal Money Laundering Control Act (18 U.S.C. § 1956), it is reasonable to assume that the courts would reach the same conclusion. Part I of this comment describes Bitcoin, discussing the cryptocurrency’s origins as well as how it works. Part II analyzes both the state and federal anti–money laundering statutes in light of Florida v. Espinoza and the opinions of the federal courts. Part III discusses the state and federal business services statutes in light of Florida v. Espinoza and federal court decisions, including U.S. v. Ulbricht, which held Bitcoin to be within the plain meaning of “money” and “funds” under the applicable federal money laundering statute. Finally, Part IV of this paper addresses the public policy implications of how Bitcoin is interpreted under criminal statutes pertaining to money laundering. A brief synopsis will provide information on how other countries and states have considered Bitcoin and the steps that the U.S. Congress has begun to take to address Bitcoin in criminal prosecutions.
In the terms of decentralization and local autonomy, increase of financial capacity, is the result of more use of fiscal and financial instruments, as well as increasing the effectiveness work of the local government. They are facing a series of complex issues related to the functions they have to carry and their financial capacities against these needs. Local Government Units in Albania have few funds to fill the needs for financing great projects mainly infrastructure, so in this paper we aim to analyze the financing instruments of local government. Borrowing from financial institutions and second level banks is the main financial instrument for Local Government to financing their great investment for the community. This is a new financing instrument for LGUs in Albania that is considered as a strong financial lever to enable the financing of their budgets and great projects capital investment. Another instrument are guidelines constructed in similar models and experiences of countries in political and economic tradition with that of Albania, the issue of bonds of LG / municipal bonds which are regulated by laws. Programs of international agencies to support lending to the local government is also another a significant financing instrument for LGUs in Albania to fulfilled their needs. DOI: 10.5901/ajis.2016.v5n3s1p387
This paper considers an overlapping-generations model with pay-as-you-go social security and retirement decision making by an old agent. In addition, the paper assumes that labor productivity depreciates. Under this setting, socially optimal allocations are examined. The first-best allocation is an \nallocation that maximizes welfare when a social planner \ndistributes resources and forces an old agent to work and \nretire as she wants. The second-best allocation is an allocation that maximizes welfare when she can use only pay-as-you-go social security in a decentralized economy. The paper finds a range of an old agent’s labor productivity such \nthat the first-best allocation is achieved in the decentralized economy. This differs from the finding in Micheland Pestieau [“Social security and early retirement in an overlapping-generations growth model”, Annals of Economics & Finance, 2013] that the first-best allocation cannot be achieved in the decentralized economy.
White House Conferences on Aging, held roughly every 10 years since 1961, have “generated ideas and momentum prompting the establishment of and/or key improvements in … programs that represent America’s commitment to older Americans” (The White House, 2015a). In terms of economic security, notably, the 1961 conference gave a push to the enactment of Medicare by recommending the provision of medical care for the aged through Social Security (Senate Special Committee on Aging, 1961). In 1971, President Nixon advocated inflation-proofing Social Security benefits, saying “It does not make sense to have … benefits constantly behind inflation” (Nixon, 1971), language backed-up when he signed the 1972 amendments to the Social Security Act implementing automatic cost of living adjustments (the “COLA”). While unlikely that this year’s conference will see the fruits of its labor enacted into sweeping policy change in the near term, it could play an important agenda-setting role for future congresses and presidents if conference planners and delegates: Explicitly reject the “entitlement crisis frame” and language; Advance the intergenerational understanding of Social Security; Highlight economic insecurity among today’s seniors Sound the alarm on the looming retirement income crisis; Consider benefit increases in Social Security as a critical option Once a neutral budget term, “entitlement” has taken on new meaning in policy, media and even everyday discourse—one that diminishes the dignity of the old and contributes to the mis-framing of policy discussions about the economic consequences of the aging of America. Conference planners and participants should reject “entitlements” language and urge politicians and the press to do likewise. Here’s why. Americans properly understand Social Security and Medicare as benefits they have earned through lifelong contributions from their (or a family member’s) earnings, not as a “hand-out.” Medicaid, in turn, ensures that the poor as well as many very sick Americans obtain needed health care. Subtle or not, “entitlement” terminology implies that somehow such benefit protections are not deserved. Intended or not, the language chips away at the self-esteem and reinforces negative stereotypes that somehow the old—like spoiled, overly entitled children or adults—are demanding and taking more than they deserve (Altman & Kingson, 2015). The terminology of entitlement is functional for those wanting to scale-back or otherwise radically change—Social Security, Medicare, and Medicaid. Rather than frontally attacking these popular programs, it allows them to obfuscate their intentions by attacking “entitlements.” Lumping these programs together as a “unified entitlement problem” provides a convenient frame for advancing and reinforcing the claim that entitlement spending is the largest cause of federal deficits and the national debt, and that left unchecked this spending will bankrupt the nation. As William Greider writes in The Nation, the political consequences of this shift in meaning are not benign: For many years, the smug elites of Wall Street have peddled “entitlement reform” as a sly euphemism for cutting Social Security. And Washington’s political elites, including President Obama, bought into the propaganda. Social Security, not to mention Medicare and Medicaid, was driving the nation into ruinous debt if government did not act to curb this venerable New Deal program. Think tanks and editorial writers, political reporters and TV talkers, witlessly embraced the big lie and promoted it as indisputable truth (Greider, 2014). Equally problematic, the terminology of “entitlement,” “entitlement problem,” and “entitlement crisis” distracts attention from tax spending sprees (e.g., profligate tax cuts and expenditures primarily benefitting well-off constituencies), two wars paid for with credit cards, financial mismanagement leading to the near collapse of our economy, and widening inequalities of income and wealth. Whatever the problem, this frame offers cuts to spending on Social Security, Medicare, and Medicaid as solution. At any one point in time Social Security serves all age groups and, over time, all generations. Princeton economist J. Douglas Brown, an architect of the Social Security Act, spoke eloquently of Social Security as a covenant reaching across generations and arising from a commitment to mutual responsibility that undergirds civilization. This covenant “underlies the fundamental obligation of the government and citizens of one time and the government and citizens of another time to maintain a contributory social insurance system” (Brown, 1977, 31–32). The most important source of income for retirees, Social Security is also working American’s most reliable disability insurance and the nation’s largest children’s program. Indeed, 3.4 million dependent young children and one million dependent adults disabled before age 22 receive benefits each month. The most significant source of income flowing into the homes of 7.4 million children being raised by grandparents or other older relatives, Social Security is also the most important life and disability insurance working parents have, protecting nearly all of the nation’s 74 million children. As important as Social Security is for today’s old, it is likely to be even more so for today’s young- and middle-aged workers. Indeed, it is they who have more at stake if benefits are cut or expanded (Altman & Kingson, 2015). Unfortunately, in policy discourse Social Security is often presented—by both friends and foes—as if it is only a program for the old. And, the prime sponsor of this year’s WHCOA contributes to this mischaracterization. The President’s 2007–2008 presidential primaries and general election campaigns and the White House website provide case in point. Unionists, women, religious groups, environmentalist, and the like were listed among the 25 or so groups providing special support for candidate Obama (e.g., “_____ for Obama”). “Seniors for Obama” was nowhere to be found on this list. Instead, seniors were assigned to the “Issues” section of the website under “Seniors and Social Security.” The problem here is that “Seniors” are not issues, and, “Social Security” benefits and policy concerns everyone, not just seniors. A one-time occurrence would be of little concern. But in spite of requests by supporters engaged in the campaign and followed by similar requests at White House meetings, “Seniors” and “Social Security” remain joined under the “Issues” tab on The White House (2015b) website (see Figure 1). Seniors are not issues. Like the contemporary use of the word “entitlement,” intended or not, defining seniors as “an issue” is, at best, inaccurate, and, at worst, disrespectful. And presenting Social Security narrowly as an issue primarily of concern to the old misframes policy discussions. So, it is time for the White House to push the “reset” button… Language frames issues and conveys attitudes. Like the contemporary use of the word “entitlement,” intended or not, defining seniors as “an issue” is, at best, inaccurate, and, at worst, disrespectful. And presenting Social Security narrowly as an issue primarily of concern to the old misframes policy discussions. So, it is time for the White House to push the “reset” button with regard to how it talks about older Americans and Social Security. Failing this, the WHCOA delegates could perform an important service by raising such concerns. By virtually any measure, the economic status of the old has, on average, improved since the 1950s, with, for example, poverty rates declining under the official poverty measure from roughly 35% in 1959 to 9% today (15% when the Census Bureau’s new Supplemental Poverty measure is used). But contrary to stereotypes, most seniors are not living on easy street. A small percentage is wealthy, while many more live in poverty or near the margin of economic insufficiency. Indeed 48% of seniors are economically vulnerable when 200% of the New Supplemental Poverty Measure is used as the standard. Others—including many among the one out of four senior households with annual incomes in excess of $50,000—are comfortable but often only one shock away from serious financial problems (Altman & Kingson, 2015). Monthly Social Security benefits for seniors are modest, averaging just $1,328 in January 2015. Yet, two thirds of beneficiaries, 65 and over, receive at least half of their income from Social Security (U.S. Social Security Administration, 2014). While the struggle to make ends meet is a burden many seniors face, this pattern of economic stress is generally more pronounced among particular demographic groups—notably Latinos, African Americans, unmarried women, and the oldest old—who are very much at risk for living in poverty based on their limited access to resources and societal limitations that have prevented many from accumulating wealth over their lifetimes. Also, a large numbers of older workers, with health limitations and/or little opportunity to work, accept Social Security retired worker benefits at early ages (e.g., 62), thus sustaining large, permanent reductions in their monthly benefits. Social Security has helped maintain a standard of living for many families of color in America that may otherwise not be possible. People of color rely more heavily on survivor and disability benefits, reflecting lower educational attainment and higher incidence of poverty and morbidity (Martin, 2007). While non-Hispanic whites are more likely to possess wealth outside of their Social Security retirement benefits, many people of color rely solely on what they earned from Social Security for financial stability (Rockeymoore & Lui, 2011). Many people of color have also been unable to obtain wealth through their lifetimes due to past racial discrimination in American policies, yielding a disproportionate reliance on Social Security benefits to ensure that they are able to meet basic monthly expenses. While acknowledging the heterogeneity of economic circumstance among today’s old, the 2015 WHCOA provides opportunity to highlight the very real financial insecurities facing the majority of seniors today, especially those who are most vulnerable. American workers face a looming retirement income crisis, where far too many will find themselves unable to maintain their standards of living when they grow old. Allianz Life Insurance Company reported, from its 2010 survey of 3,257 people, that “an overwhelming 92%” answered that they absolutely (44%) or somewhat (48%) believe that the nation faces a retirement income crisis, with “more than half (54%)” of persons ages 44–49 saying they are “totally unprepared” for retirement (Allianz Life Insurance Company, 2010). In their 2013 retirement confidence survey, the Employee Benefit Research Institute found that only “13 percent are very confident they will have enough money to live comfortably in retirement,” the lowest ever reported in the 23 years of conducting this annual survey. This lack of confidence is not surprising as the past 35 years have not been good to most American workers. Only the top 10% of the income distribution have seen aggregate gains in household income (Picketty, 2014). From 1979 until the eve of the Great Recession in 2007, almost two fifths of all gains in household income were received by the top 1% (Hacker & Pierson, 2010), while men in the bottom 60% saw their real wages decline (Economic Policy Institute, 2012). Further, traditional private sector defined benefits are rapidly disappearing, public sector plans under political attack, and 401K and related retirement vehicles primarily benefit the well-off. And changes enacted in the 1983 (e.g., raising retirement ages, taxing benefits) have reduced benefits by roughly 24% for persons born after 1959 (Altman & Kingson, 2015). The economic crash furthered the deterioration of retirement prospects for countless individuals. Since 2008, many people in their 40s and 50s have been balancing substantial losses of 401(k), IRA and other savings, pension protection, housing equity, and job security with the rising cost of health care and college tuitions. The median income of households headed by persons 55–64 dropped from $61,700 in 2009 to $58,626 in 2012 (Kingson, 2013). Post-crash in 2013—after the stock market increased and housing prices improved—52% of households were on a glide path to an inadequate retirement income (Munnell, Hou, & Webb, 2014), presumably as much as two thirds more if health and long-term-care costs were included in this risk assessment (Altman & Kingson, 2015). According to the Pension Rights Center there is a $6.6 trillion deficit between what Americans have saved for retirement and what they should have saved in order to maintain their current standard of living. According to the National Institute on Retirement Security 38.3 million working-age households (45%) do not have any retirement account assets (National Institute on Retirement Security, 2013). Even among working households with retirement savings, “Four out of five working households have … less than one times their annual income” (National Institute on Retirement Security, 2013, 11). Thus, the WHCOA has an important opportunity to sound the alarm on the retirement income crisis. … the WHCOA has an important opportunity to sound the alarm on the retirement income crisis. Responding to the looming retirement income crisis of today’s workforce and tenuous economic circumstances of many among today’s retirees, legislative proposals are being advanced which increase Social Security’s modest, though vital, protections while simultaneously strengthening program financing. These proposals include revenue measures such as lifting the payroll contribution ceiling, gradually increasing the contribution rate over 20 years, and diversifying trust fund investments. With respect to today’s and tomorrow’s retirees, on the benefit side, they include such proposals as modest across the board increase in benefits, larger minimum benefit payments for low wage-workers, caregiver credits, and use of the Consumer Price Index for the Elderly (CPI-E) to calculate COLAs. A poll by the National Academy of Social Insurance (NASI) indicates that our Social Security system is supported across all political groups; self-reported Democrats, Republicans, and Tea-Partiers alike agree that Social Security benefits should be expanded because they understand the importance of the system to their families and communities (Tucker, Reno, & Bethell, 2013). Americans favor having millionaires and billionaires pay the same rate by raising the payroll contribution cap, currently set at $118,500 for 2015 (U.S. Social Security Administration, 2015). Of course, many disagree with the proposition that it is time to expand Social Security, but that should not stop the WHCOA from recommending that very serious consideration be given to such proposals. Whatever the outcome, the nation will benefit from a full and open debate and the WHCOA can serve as vehicle to facilitate such debate. The 2015 White House Conference on Aging has the opportunity to delve into diverse issues affecting older Americans, their families, and caregivers. As 2015 begins, we look forward to the 80th Anniversary of the Social Security Act as well as the 50th Anniversaries of Medicare and Medicaid—institutions that have reduced poverty, helped families sustain their standard of living and strengthened the national community. Addressing the retirement income crisis and significant income problems of today’s retirees in a way that recognizes the importance of intergenerational commitments and supports the expansion of the nation’s most successful and popular domestic policy will resonate most effectively with the American people. E. Kingson, Professor of Social Work at Syracuse University is Founding Co-director, Social Security Works and Co-chair of the Strengthen Social Security Coalition. M. Checksfield is Legislative Director of Social Security Works and the Strengthen Social Security Coalition. Partial support for the writing of this article was provided from a grant received by Social Security Works from The Atlantic Philanthropies.
David E. Bloom, Ajay Mahal, Larry Rosenberg, Jaypee Sevilla
Abstract The rapid ageing of India's population, in conjunction with migration out of rural areas and the continued concentration of the working population in the informal sector, has highlighted the need for better economic security arrangements for the elderly. Traditional family ties that have been key to ensuring a modicum of such security are beginning to fray, and increased longevity is making care of the elderly more expensive. As a result, the elderly are at increased risk of being poor or falling into poverty. In parallel with its efforts to address this issue, the Government of India and some of the Indian states have initiated an array of programmes for providing some level of access to health care or health insurance to the great majority of Indians who lack sufficient access. Formal‐sector workers have greater social security than those in the informal sector, but they only represent a small share of the workforce. Women are particularly vulnerable to economic insecurity. India's experience offers some lessons for other countries. Although there is space for private initiatives in the social security arena, it is clear that most such efforts will need to be tax‐financed. The role that private providers can play is substantial, even when most funding comes from public sources, but such activity will face greater challenges as more individuals seek benefits. India has also shown that implementation can often be carried out well by states using central government funds, with a set of advantages and disadvantages that such decentralization brings. Finally, India's experience with implementation can offer guidance on issues such as targeting, the use of information technology in social security systems, and human resource management.
Tertiary education in the U.S. requires large investments that are risky, lumpy, and well-timed. Tertiary education is also heavily subsidized. By making the risk of human capital investment more acceptable, especially to low wealth households, subsidies may increase investment in human capital, lower long-run inequality, and reduce aggregate precautionary savings. However, subsidies also encourage more poorly prepared students to attend and are usually financed via distortionary taxes. In this paper, we find that observed collegiate subsidies improve welfare substantially relative to the fully decentralized (zero subsidy) outcome. We show that subsidies help smooth consumption, lower skill premia, increase interest rates as precautionary savings fall, lower the inequality of both consumption and wealth, increase intergenerational income mobility and raise welfare, even when financed by distortionary taxes.
Escalating costs of the pension system is forcing the Indian Government to reevaluate the formal programmes that provide social security to employees. The government has so far received three official reports (namely, OASIS, IRDA and Bhattacharya), which have examined the issue and suggested several measures to provide a safety net to the aging population. This paper examines the recommendations made in these reports and analyses the potential effects of them. It is organized around five policy questions: 1. Should the reformed system create individual (funded defined-contribution) accounts, or should it remain a single collective fund with a defined-benefit formula? The changeover involves a larger public policy choice issue: who should ultimately bear the risk? Should employees/retirees shoulder those risks alone arising from variations in asset yields and unexpected changes in longevity, or should these risks be shared more broadly across participants, if not society? Choice would depend upon to which group the individual belongs. Financially successful people may believe in individual ownership and choice, while low wage earners may want assured returns because they do not have other resources to fall back upon. Unfortunately most Indians, unlike those in many other countries, are in the latter category which cannot bear any risk, more so in the old age. 2. If individual accounts are adopted, should the reformed system move toward private and decentralized collection of contributions, management of investments, and payment of annuities, or should these functions be administered by a public agency? In privately managed funds, associated problems would be intermediation costs, agency problem (principal-agent fiduciary relationship), and greatly increased costs to administer the plan. Several studies across the world have shown that periodic fee may look deceptively low but, over longer time horizons, the cumulative effect can be dramatic, sometimes reducing the benefits by 30 to 50 per cent. 3. Should fund managers of retirement savings be allowed to invest in a diversified portfolio that includes stocks and private bonds? In recent years equity investments, particularly index investing, have become a favoured strategy. Index funds are subject to tracking error, and being loaded with few big stocks, there are much higher risks in index investing than people perceive. Over the period, real annual return on index funds may be more, but people retire only once. Equity markets are highly volatile and go through long periods of feasts and famine. Guarantees would have to be provided in the form of minimum return or providing minimum basic pension on retirement. World bank studies show that government ends up acquiring conjectural liabilities wherever a pension system based on private providers is mandated. How would that be different from the present system where a government agency (EPFO) provides retirement benefits? 4. Should the government move toward advance funding of its pension obligations for its employees, or should these obligations continue to be financed on pay-as-you-go basis? Studies have shown that a simultaneous implementation of funded, diversified, individual accounts is not a "free lunch" once you properly account for existing unfounded obligations and risk. The Bhattacharya Committees estimates show that the government would have to pay out more on account of pensions to its employees for the next 38 years before the new scheme starts showing reduced government expenditure. These amounts do not include the tax foregone by the government on the employees contribution. Several assumptions have been made about the scheme, which the committee hopes would remain valid and that the future governments would behave responsibly. The proposed scheme does not consider intermediation costs and agency risks; in fact, the committee presumes that agents would behave more responsibly than principals. 5. What should be the level of government fiscal support in the form of tax subsidy, foregone tax collections, grants, administrative costs incurred by its agencies, and level of assumed contingent liabilities in case the government guarantees minimum pension? The crucial question is: how much and to whom is this subsidy accruing? Are beneficiaries of the proposed system the ones who need subsidy? Tax treatment of pension is a critical policy choice. A generous tax treatment may promote savings but may be costly in terms of revenue foregone. Apparently, an exercise in balancing is necessary. The priority should, therefore, be putting in place a policy vision and road map with specific goals in relation to pre-determined milestones. These should include a tax financed and means-tested system for lower income groups. If government cannot afford it, then it has no moral or political justification to even consider providing further tax benefits to privileged income groups. If there are no government funds for the first pillar in the World Bank recommended multipillar system, the third pillar should remain out of policy discussions. Emphasis should be on strengthening the second pillar. Suggested reforms neither enhance efficiency nor make the social security system more equitable. It would only privatize the gains while costs and risk for the government would increase considerably. It would only help well-off segment of society in availing more tax concessions. Present problem in the government pension system is due to successive governments behaving like Santa Clauses ignoring the cost to exchequer. Fund managers would not be able to solve these problems. Specific fiscal and other measures for implementing a feasible and viable pension system in Indian conditions have also been suggested in the paper.
Decentralization of public program administration and financing to subnational units of government is examined in the context of hospital and nursing home assistance programs in the United States. Do subnational governments (i.e., states) adapt service utilization controls and tighter program eligibility during periods of fiscal austerity? Are these actions affected by expenditure levels, state budget balances, tax revenues, and the state's proportion of low income persons? Published data covering the period 1978-1982 from each of the 50 U.S. states were analyzed using multiple regression. States with a low proportion of low-income persons and a high per capita tax base were likely to increase minimum income eligibility standards to keep pace with inflation. All other states, regardless of fiscal condition, tended toward more restrictive income standards. States were equally likely to adopt utilization controls for health and long-term care services regardless of state revenue or health expenditures.