The first style of pension setup is also a thin abstraction over a welfare system. The only difference is that instead of taxation, it uses savings to inflate a

The first style of pension setup is also a thin abstraction over a welfare system. The only difference is that instead of taxation, it uses savings to inflate asset prices to generate additional retiree consumption at the expense of current worker consumption. >But your main point goes to the fact that 'investment' is typically in pieces of paper rather than real things. Investment in tangible things also is typically in the form of pieces of paper allocating economic rights. Real estate and corporations are investing in titles and shares, respectively. Extra money doesn't generate any more land or any additional business ideas, it simply bids up the prices of what's out there. >If a company losing billions can make its owners billions; there is no particular incentive to do the legwork to actually think about the future and come up with a plan that works. We are starting to see the results of that thinking, which is pervasive, in the pension funds. I'd characterize it more that simply adding more money to the system does not materially increase the pool of useful ideas and innovation out there. I know that I couldn't come up with any better of a business plan if I was handed a hundred million dollars rather than a million, and anyone I hire to do so would just be a zero-sum activity that reallocates who owns their resultant plans.