Raising the Retirement Age on Social Security Is Good Policy, But It Should Still Raise Some Objections

Let's face it. Social Security is not in good shape. If reforms are not passed, Social Security disability is projected to be depleted in 2016, and the Social Security Trust Fund itself will exhaust its funds in 2033 (SSA 2013 Trustees Report). As much as I do not like the program, I still think that if the program is going to be in existence for some time, something needs to be done to improve it. I was reading an article from the Manhattan Institute entitled Four Reasonable Social Security Reforms, and the first reform that popped up on the list was raising the retirement age, which is the more formal way of saying "let's find a way to cut Social Security benefits." People can currently collect partial retirement benefits at the age of 62. For those born after 1958, the full retirement age (FRA) is 67. I have to ask myself: would raising the retirement age to something like 70 years actually help Social Security solvency woes?

The rationale behind this policy alternative, whether it is in the form of raising the early retirement age (ERA) or the FRA, is that since the Social Security retirement age increase in 1983, the average lifespan has increased from 74.6 years to 78.4 years. Without an increase in retirement age, the program is paying for longer benefit periods, which is something that the government cannot afford. The increase in retirement age would compensate for longevity by adjusting for that previous benefit period elongation, not to mention that the life expectancy is only expected to rise over time. Raising the retirement age would come with benefits. One is that it would incentivize workers to work longer and save more money before retiring (Butrica et al, 2006; Rust and Phelan, 1997; Gorry and Slavov, 2012), which I like. In "Working Longer: The Solution to the Retirement Income Challenge" (p. 57-58), it is pointed out that setting the retirement age plays a vital role in diminishing the willingness of workers to work longer. According to a McKinsey Report (2008), this policy would add $13T to the economy over 30 years due to the economic productivity of those who would stay in the workforce longer. Work is also less physically demanding than it used to be because we went from a manufacturing-based to service-based economy. The decrease in physically demanding labor makes it easier for workers to work longer (Johnson, 2007). A National Institutes of Health (NIH) report, which gathered data from 15 government agencies, shows that the health and overall quality of life for older citizens has improved over the years, which would dispel notions that older workers are pushed too hard.

One of the complaints of raising the retirement age is that it will hit poor and minority workers the hardest because they do not experience the life expectancy gains in the same way that rich and/or white workers do (Weller, 2005, Rosnick and Baker, 2012). However, the lifespan differential between races closes considerably once the life expectancy is measured at 65 (Census) [as opposed to being measured at birth], as can the differential between socioeconomic classes (CBO, 2008, p. 2). It can also be argued that older people have a harder time finding a new job due to ageism, and even if they did find work, they would not get paid as much. I would conjecture that the demographics are much different than they were in the past. In the 1970s, Baby Boomers had to be integrated into the workforce, which displaced some older workers. With the pending retirement of Baby Boomers, there will be droves of experienced workers looking to retire while there are not as many younger workers with comparable skills to replace them. This structural demand issue should mitigate worries about more elderly workers not getting paid at market value. And if the worry is still not abated, Congress can pass a Social Security payroll tax exemption for workers in their sixties so that employers would be incentivized to hire or retain more elderly workers. Furthermore, it's nice that the work is less physically demanding, but does little good if the worker has prior health problems that impede further work, which could very well qualify the worker for disability. Not only could those costs be transferred over to the Social Security Disability program, which is in even worse shape than the retirement program, but it would provide workers approaching retirement an incentive to apply for disability (CBO, 2013). On the other hand, although 18 percent of workers retire by age 65 due to health issues (Munnell, 2006, p. 8), it should be safe to assume that health care quality will improve over time, thereby decreasing the number of those who require such assistance.

There could be reforms to the disability program to close the loophole or to protect disadvantaged workers in their early sixties, but still, how much money would be saved by raising the retirement age? Raising the full retirement age to 70 would only decline by 0.4 percentage points of the GDP in 2040 (CBO, 2010, p. 31), which is less than ten percent of the overall Social Security spending. In 2012, however, the CBO estimated that it would reduce overall outlays by 13 percent. Raising the full retirement age to 70 would reduce overall returns by fifteen percent, which could be devastating for those who are more dependent on Social Security. Aside from raising the FRA, there are other ways to create incentives for workers to retire later (Templin, 2013, p. 1250-1252).

Even so, this comes with a couple of concerns of mine. The first is that raising the retirement age will not be sufficient to deal with the looming federal debt crisis. It's rare that a single policy can effectively change the course of governance, and it's not expected to do so. If raising the retirement age can help mitigate some of the fiscal concerns, I am all for it. This leads into my second concern, which is even more gargantuan than the first. Whether it is in the form of increasing payroll taxes or cutting benefits, both of these policy alternatives deal with Social Security quantitatively. Nothing is done to ameliorate the quality of the program itself or even overall retirement prospectives for Americans. Since Social Security is a) financed by taxing wages, and b) the benefits are linked to wages, the benefits will increase at about the same rate as wages. This would certainly explain why Social Security provides such a lousy rate of return. Alternative retirement options are linked to savings and investment in capital markets, which is why they produce a higher rate of return. Although I think raising the retirement age is a good idea, it does nothing to address the quality of retirement in America. Until we approach Social Security by addressing root problems, the state of Social Security will be as stagnant as ever.

Fast-Food Workers Playing Fast and Loose by Protesting for a $15 Minimum Wage

One-day labor walkouts were planned at fast-food restaurants in over a hundred cities today. Those who work at fast-food restaurants were protesting the low wages they receive. By increasing the minimum wage to $15 per hour, it would provide these workers with a "living wage" so they can make ends meet. At first glance, it seems hard to argue against it. You'd have to be heartless to ignore a plea for higher living standards. But is that really the case? Is increasing the minimum wage to $15 per hour a good idea, or is it merely a feel-good policy with unintended consequences?

I've tackled the issue of minimum wage before (see here and here), and truth be told, I am not a fan of minimum wage. The vast majority of economic literature shows that minimum wage causes a non-negligible increase in unemployment. Minimum wage also makes it more difficult for unskilled workers to acquire work experience so they can escape their current economic situation.

Let's look at how minimum wage affects those specifically in the fast food industry. Looking at elasticity of demand, which is the responsiveness of the customer to consume more or less based on shifts in prices, fast food has higher elasticity than food consumed at home or even at your average restaurant. This both makes intuitive sense and is backed up by the data (also see NIH study), which is something that even the Left-leaning Economic Policy Institute has to concede (EPI, p. 2). Let's combine that with the fact that an unskilled labor supply is going to be more elastic than skilled labor, which means that a wage hike such as the one suggested is going to cause an even larger surplus of labor, i.e., unemployment. With relatively high elasticity of demand and an elastic supply of labor, such a price increase will be unpropitious.

This all harkens back to a point of productivity of a fast-food worker. Under a competitive market system, wages would be determined by supply and demand of labor. In spite of government interventionism, supply and demand still play the primary role in determining wages, and not the ill-conceived notion that a "money-grubbing employer who wants to maximize profits" arbitrarily sets his own wages. All of that notwithstanding, it's safe to assume that the marginal value of labor for fast-food workers is not worth $15 per hour, especially in comparison to other jobs. This would mean that an employer that decides hire a fast-food worker at a wage of $15 per hour would be doing so at an economic loss.

If there is a minimum wage of $15 per hour, you better believe that employers are going to adjust their business practices accordingly. As already mentioned, laying off workers is one of many ways to adjust. Cutting hours and/or benefits is another way. One could theoretically cut the wages of middle and upper management, but not only does this go back to marginal value of labor, it also touches upon bargaining power, which makes sense. Unskilled labor would have less bargaining power because unskilled labor is, well, unskilled. Alternatively, the employer can decide to pass the cost on to the customer, but given the elasticity of fast food (see above), this will most likely result in decreased profits, which does nothing to help the fast-food worker because the customer will most likely respond by eating elsewhere, not to mention that increased costs would defeat the purpose of the low-cost business model upon which the fast food industry is built. Another form of adaptability is having production more automated. If you think having machines replaced by human labor sounds like science fiction, take a look at fast-food restaurants in Europe. Europeans have started to install machines that are capable of taking food orders and vending the food. Granted, there are certain tasks that only a human can perform, but increasing the cost of unskilled labor by more than double will translate into decisions that will adversely affect the fast-food worker.

Ultimately, the issue here is not wages, but bargaining power, costs on the employer, and the cost of living for unskilled labor. Bargaining power is an issue for unskilled labor because they do not possess the education or the skills to ask for more. The whole premise behind minimum wage jobs is to gain work experience that will allow for greater leeway in bargaining. Raising the price floor of minimum wage by twofold during economic hard times, which will only make it more difficult for unskilled labor to acquire skills, is not the way to go. Education reform is great topic to address with regards to bargaining power because let's face it: if a K-12 education in this country has a difficult time creating a skilled labor force, then we know something is wrong.

It's not only a matter of bargaining power. There are government policies that get in the way of employers being able to maximize productivity, whether that is in the form of high levels of taxation, premium costs mandated by Obamacare, costs that come with occupational licensing, zoning restrictions that prevent people from using their homes for commercial purposes, or other onerous regulations. Removing unnecessary regulations, which would be most regulations, is a good start. Even dealing with cost of living is important when discussing poverty issues because making goods and services cheaper will increase one's purchasing power. We should look at policies that distract from that very notion. Some examples are food stamps (see here and here), rent controls that create substandard housing, or zoning laws that separate residential areas from commercial areas, thereby increasing the cost of transportation. Minimum wage laws are like putting a bandage over a cold. Only by addressing root issues will we ultimately be able to help those currently trapped in poverty.

Liberty versus Security: Does Privacy Trump the NSA Collecting Metadata?

Edward Snowden leaked various documents from the National Security Administration (NSA) back in May 2013, which made Americans realize the extent of NSA surveillance that was done in the name of national security. Some have called Snowden a hero and a whistleblower, and others a traitor. Ever since, the NSA has been under scrutiny for overreach of its surveillance. Congressman Jim Sensenbrenner (R-WI) is at the helm of NSA reform, and is trying to pass the USA Freedom Act (H.R. 3361) in hopes to curtail NSA surveillance and to bring transparency to the process. This brings us to determining whether there can be some reasonable tradeoffs made between security and privacy, or if Benjamin Franklin was correct in asserting that "those who surrender freedom for security will not have, nor will they deserve, either one."

Let's address the standard argument of "if you have nothing to hide, why worry?" Let's start off with a need for privacy. Freedom is a vital part of a democratic society. We should be able to develop our ideas, personalities, beliefs, and lives without fear of government intervention or oversight. The vast majority of people in the developed world have a deep desire to keep aspects of their life private (that includes Facebook), even when that information or what they have done is moral and righteous. For argument's sake, let's give the NSA a benefit of a doubt and assume the information is used strictly for national security reasons, and the information gathered is not leaked. Even so, it still ends up being an invasion of privacy because the information is extracted without an individual's consent. Some famous Supreme Court cases dealing with the issue of privacy include Griswold v. Connecticut, Roe v. Wade, Cruzan v. Department of Health of Missouri, and Lawrence v. Texas. The right to privacy is also implied in the First, Third, Fourth, and Fourteenth Amendments. Furthermore, given all the laws and regulations on the books, even if you think you are not violating something, there are so many criminal laws that you very well are without knowing it, and the NSA could easily exploit obscure laws as a justification to spy on anybody and everybody.

Proponents of NSA surveillance might opine that data mining of phone records, like that of Verizon, is harmless. Before determining whether it is innocuous, we should ask what sort of data is being mined. The NSA is not listening in on phone conversations and acquiring the content of those conversations, which is a good thing, mind you. However, they still know who you called, how long the call lasted, and the location of where you made the call. If the information was so "useless," like proponents state, then why collect it in the first place? From this metadata, the NSA can glean information about people's relations, beliefs, and activities, which, once again, is private information unless the NSA obtains a warrant and extracts the information with due process.

There is little to no evidence that extracting warrantless metadata works (It very well could have just been used to foil one plot, and even in that one plot, using PRISM was unnecessary). Such surveillance makes us less safe, and furthermore, it is also estimated that using PRISM will cost US cloud computing industry up to $35 billion over the next three years. And this does not even take Bullrun into account, which was a highly classified NSA program that allowed the NSA to hack into targeted computers and catch encrypted messages before being encrypted.

There are other ways of gathering intelligence without warrantless data extraction. There is a reason why our government has a system of checks and balances, and warrants are a check on the government to make sure they do not abuse their power. With the development of technology, it is easier than ever for the government to spy on its citizens without us even knowing it, which is why there needs to be oversight (e.g., increased inspections) and transparency. If the government is to be entrusted with national security, it needs the trust of the people. Engendering reform and requiring warrants for metadata is the very sort of oversight that provides accountability, as well as avoiding the erosion of the confidence of the people and the social contract. Liberty is much more fragile than security. Even after a terrorist attack like 9/11, the American people showed that they can overcome it, rebuild, and move forward. If liberty takes a hit like that, it is significantly more difficult to recover that liberty.

The odds of an American dying in a terrorist attack is one in 3.5 million, which is really low compared to other causes of death. Considering the improbability of a terrorist attack, we should ask ourselves if throwing away vital liberties is worth preventing such a statistical improbability. There are ways the government can acquire information without resorting to warrantless searches, and I sincerely hope the government can implement methods to gather data and intelligence without violating the Constitution and trampling our right to privacy.

So How Are the Netherlands in an Austerity Trap?

In response to Standard and Poor's decreased credit rating of the Netherlands, an Oxford professor wrote a blog entry about how the Netherlands was suffering from what is labeled as an austerity trap. The idea behind the austerity trap is that the government imposes [steadily] deeper spending cuts via pro-cyclical fiscal policy in response to large budget deficits. According to Keynesian economic theory, spending cuts during a recession beget an even higher debt-to-GDP ratio, in which the country can neither meet its deficit targets nor crawl out of its debt-ridden state. Much like with the case in Britain, I have to wonder if there was actually austerity or not. Looking at Eurostat data, I compiled government expenditure data:

If this theory is to be tested, there need to be spending cuts in the first place. Instead, what we have here is an overall upward trend both in expenditures in absolute euros and expenditures as a percent of GDP.  There is a bigger definitional issue here. For some, the definition of austerity is a combination of spending cuts and tax increases. If we do decide to include tax increases as part of the definition of austerity (as opposed as the definition solely including spending cuts), then yes, the Dutch government has increased taxes (Eurostat), which would make the fiscal-adjustment packages very much on the tax side.

If austerity is defined solely by spending cuts, then the austerity is non-existent. If tax increases are included in the definition of austerity (which they theoretically are), then yes, there is austerity because the taxes have a slight upward trend. For me personally, I prefer that the definition encompasses both spending cuts and tax increases because it better reflects the full extent of what government attempts to do to remedy debt-to-GDP ratios during a recession. I also prefer it because when there is a discussion about austerity with the tax increases, the austerity that has been taking place in European nations over the past few years usually do not entail actual spending cuts, but even when they do, the spending cuts are significantly smaller than the tax increases. For those who have read my blog, one can surmise that I am hardly an aficionado of tax increases, which is to say that with this definition of austerity, I would not be 100% for it as a remedy for mitigating an increased debt-to-GDP ratio.  

Economic theory and the usage of political buzzwords are two separate notions. For those who prefer the tax-and-spend method, which is popular for those on the Left, when the word "austerity" is used by economists like Krugman, it is code for "spending cuts," which are anathema to proponents of advancing stimulus packages to boost aggregate demand. Since the definition of "austerity" in political discourse typically refers to only spending cuts, it makes me wonder where the austerity trap is.

Do the Netherlands need to make some improvements? Fitch and Moody's seem to think so. Given that it's part of the Euro zone and the Euro zone has its issues, so do I. However, let's not blame the credit rating downgrade on non-existent spending cuts.

Chanukah and Thanksgiving: Double the Holidays, Double the Gratitude

This year, Chanukah comes so early on the Gregorian calendar that we will experience a rare phenomenon that has been dubbed as Thanksgivukkah, which is the intersection of Thanksgiving and Chanukah. This convergence is literally a once-in-a-lifetime opportunity. Since Thanksgivukkah will not happen again for another 78,000 years, and since many people do not believe in coincidences, it should give us time to pause and reflect on the relationship between Chanukah and Thanksgiving. What commonalities can we find between the two holidays?

Let's briefly take a look at the history behind the two holidays. Chanukah is an eight-day celebration commemorating the Maccabean revolt during the 2nd century BCE against the Hellenistic Greeks occupying Judea. Practicing Judaism was de facto banned under this regime, for which the Maccabees fought for and won their freedom of religion. The Thanksgiving story is traced back to a 1621 harvest commemorated by Puritans who emigrated from England to America in order to avoid religious persecution.

Aside from the motif of religious persecution, these two holidays have something in common: gratitude. For Thanksgiving, the gratitude is self-evident. The word "thanks" is in the holiday name. Although people celebrate Thanksgiving differently (e.g., watching football, eating turkey, praising G-d), the most common practice is expressing gratitude in some shape or form. For Chanukah, the theme of gratitude is not so clear, especially when looking at the secular adaptation. People usually associate Chanukah with lighting the menorah or spinning the dreidel. However, the secularized version, which is based on the erroneous assumption of "Chanukah is the Jewish Christmas", misses a major component of Chanukah. The Talmud (Shabbat 21b) provides great insight to the meaning of Chanukah. After discussing the military victory and discussing how the oil was supposed to last only one day but lasted eight days, the Gemara says something that is simply relevant:

לשנה אחרת קבעום ועשאום ימים טובים בהלל והודאה.

The next year, the Sages instituted those days and made them holidays with recitation of Hallel and of thanksgiving.

On Chanukah, we praise G-d by saying Hallel, which are a series of Psalms (113-118) based on the theme of thanksgiving. The הודאה is in reference to the recitation of Al Hanisim (על הנסים), which is a benediction added both to the Modim blessing of the Amidah, as well as Birkat Hamazon. Both of these additions are added to blessings that express gratitude. There is also the Shecheheyanu, which is yet another blessing of gratitude (this blessing is for new experiences), that is recited on the first evening of candle lighting. To say that Chanukah has nothing to do with gratitude is like saying Yom Kippur has nothing to do with atonement or fasting.

The fact that Al Hanisim or the second blessing over the Chanukah candles emphasize miracles does not take away the motif of gratitude. If anything, it is enhanced. How so? Gratitude is about perception. One of the impediments of feeling a sense of gratitude is having the impression that everything comes by itself, and that it is meant to come to that individual (R. Shlomo Wolbe). This impression creates a self-entitlement mentality. Another impediment is taking things for granted. When we become accustomed to receiving something in our lives, it is all too easy to assume it is a given. Additionally, it is easier to focus on what we do not have, as opposed to what we have. When it comes to gratitude, perspective is key. Not only is gratitude about focusing on what we have or assuming that we should never take things for granted, but it is also about viewing life as a miracle. If we can perceive life as a miracle, rather than a burden or a pain in the toches, our sense of gratitude becomes unprecedentedly amplified.

"But what about when times are rough? How can you be grateful then?" That's a good question. It is not easy to be thankful when you are down on your luck. Even so, my answer is that gratitude is not reserved for when it is convenient. When everything is going great, it is so easy to be grateful. It is during the arduous times when we see just how genuine our sense of gratitude is. No one learned this better than Leah, who the Talmudic Sages (Berachot 7b) said was the first person to express thanks to G-d. Given who preceded her, I find the literal statement of "Leah was the first one to express gratitude to G-d" hard to believe. What the Sages were saying was that Leah was the first one to authentically be thankful because she was able to be thankful amidst the complications and disappointments that her life delivered. The ideal form of gratitude is to be thankful, regardless of what is going on in life. The protagonists of the Thanksgiving and Chanukah stories knew that best. Both the Maccabees and the Pilgrims took on arduous tasks, faced incredible odds, and celebrated their successes, even in spite of the hardships. Much like the Pilgrims or Maccabees, we face challenges in life. But it is during those challenges that we are to be most thankful.

Whether we are currently experiencing calamity in life or not, we should seize the moment of these two holidays and fully express our thanks for the miracles we have in life. Keeping the day doubly focused on gratitude is, without fail, the best way to celebrate this rare convergence.

Sierra Leone Doesn't Have a Credit Rating, So Why Don't I Provide One?

Lately, I have become more interested in the world of credit ratings. Although it might seem like a bunch of financial jargon, how it reflects and impacts macroeconomic stability is quite intriguing. I was reading an International Monetary Fund (IMF) report on Sierra Leone this past weekend. I thought to myself, "What do the credit rating agencies think of Sierra Leone?" Much to my shock, I found that neither Moody's, Standard and Poor's, nor Fitch have credit ratings for Sierra Leone. Maybe it was the years of political instability. Whatever the case may be, I thought that I could take a look at the country's overall macroeconomic trends and devise something myself.

Sierra Leone had been marred by a particularly nasty civil war that lasted from 1991 to 2001. Political stability is an important factor in credit ratings because warfare creates economic inefficiencies. With 2 million people (i.e., about a third of the population) displaced by the war, it takes time to recoup (see World Bank report). Although Sierra Leone is a constitutional republic, as Freedom House points out, there have been periods of political upheaval, which have this subsided. Its improvement in governmental institutions would explain why Freedom House gave it a score of 2.5 (Free). But looking at the score from Transparency Institute, an international organization looking at corruption levels, Sierra Leone ranks 123 out of 176, which is to say it has a while to go.

Political factors are important, but so are economic factors (see World Bank fact sheet). There are two main economic indexes measuring economic freedom. The Fraser Institute (p. 147) shows enough improvement where it is ranked 115 out of 152. The Heritage Foundation, on the other hand, shows a decrease in its scoring, as well as a score that is below the regional average. The World Bank's Doing Business Index shows that it is a tad more difficult to do business in Sierra Leone that it was the previous year (Sierra Leone is ranked as the median in regional ease of doing business). Overall tax revenue as a percent of GDP is small, which is good because it signals that the government does not have to tax the citizenry to death to fund its expenditures. Conversely, top tax rates are around 30 percent, which is not exactly optimal. Recent iron ore production (see IMF report, p. 4) has caused a great boost in GDP. As nice as it is to see the boost in GDP, it is a bit disconcerting to rely on one industry because it signals a weak resource base, and without diversification, the economy of Sierra Leone becomes heavily dependent on iron ore. At least external public debt has decreased dramatically. And although poverty has decreased in Sierra Leone since the civil war, the poverty rate is over 50 percent (see IMF report; World Bank report). Even with the tapering inflation, it is still a concern because it exceeds GDP growth, which means lack of growth in real dollars. Debt distress is only moderate because compared to where it was a decade ago, the debt-to-GDP ratio is much lower. Being able to service debt is a plus in Sierra Leone's favor.

Conclusion: There are a plethora of factors to consider, and the hyperlinked documents cover the factors in much detail. If I were working at Standard and Poor's right now (credit rating system here), I would give Sierra Leone a CCC rating. Sierra Leone has shown remarkable improvement in the past decade, but it has a while to go. As long as the political situation can remain stable, I would consider reevaluating its credit rating within the next year or two. Both the World Bank and the Heritage Foundation show economic instability within their indexes. If there is a continued downward trend in economic progress, then I would consider a downgrade. Relying on one industry is suspect. The iron ore industry would have to prove medium-term growth to be substantive, and not just a short-term blip that would send Sierra Leone to more political upheaval once the resource has been extracted to its maximum potential. However, if inflation decreases, GDP growth increases, and Sierra Leone can maintain political stability, then I very well would consider an upgrade in the near future.

Scanning for the TSA's Ineffectiveness and Why We Need to Privatize Airport Security

Nothing says "fun at the airport" like a good-old fashioned, unsubstantiated pat-down from a TSA employee. Sarcasm about my recent travels set aside, I have to wonder if the Transportation Security Administration (TSA) does a good job in providing airport security, thereby preventing another 9/11, or if its unproductive "grope or scan" policy is a waste of taxpayer dollars and a violation of the Fourth Amendment.

One of the complaints lodged against the TSA is due to their mismanagement and abuse of power. I'm sure we can all find TSA abuse stories, like the 400 TSA employees fired for theft, the pat-down of a six-year old, having a the TSA use pliers to remove the nipple ring of a passenger, or cases of inappropriate groping. As illustrative as anecdotal evidence can be, it suffers from selection bias and does not reflect overall trends. That is why studies are more effective, like the 2013 GAO report showing a 26% increase in misconduct from 2010 to 2012. The graph below shows a breakdown of abuses (p. 11), including the 949 cases of inappropriate comments or conduct:

In addition to TSA abuse, one has to question the effectiveness of the TSA's methods (See recent Cato Institute study).  One of the methods used by the TSA is a program known as SPOT (Screening of Passengers by Observation Technique), which is supposed to prevent terrorist attacks by observing behaviors. This is another example of the government throwing lots of money at a project without researching the effects. Accordingly to a GAO report published this month, the SPOT program has been a waste of $1 billion in taxpayer dollars because the program doesn't work. Then there is the matter of the full-body scanners. For one, there are safety issues with the radiation from the scanners. Also, there is the matter of whether they work (GAO, 2010) and if it's possible to bypass the machines. Pat-downs are security theatre. You would think that with an annual budget of over $7 billion, they could at least foil a terrorist plot, but they have not.

It would be better to focus on intelligence and investigation than taking a "reactive approach to security" (House, p. 3) and trying to prevent a method of attack that has hundreds of tactics and hundreds of potential targets. The House of Representatives recommends making a leaner TSA, but I would get rid of the agency and privatize airport security. Airport screening needs to be separate from regulation of airport security if there is to be any notable success. Relegating security hiring to the airports would allow for market competition in airport security, which is preferable to a government monopoly that is very unresponsive to adapting to change. Through Catapult Consultants, the GAO found that private security performs just as well, if not better than the TSA. We should follow Canada and Europe's example and privatize airport security. It would certainly be an improvement to save taxpayer dollars and increase the quality of airport security.