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George W. Bush wanted to do that, but it died a nasty death due to politics and his complete and total lack of political capital. It's a real pity, IMHO, becau

by zeveb 6y ago

George W. Bush wanted to do that, but it died a nasty death due to politics and his complete and total lack of political capital. It's a real pity, IMHO, because transitioning from the tax-by-another-name Social Security system to something closer to a mandatory 401(k) plus a disability scheme is vital to spreading the wealth of the country. It would be awesome if even the poorest labourer owned — and could vote — shares in the wealthiest corporations.

StillBored 6y ago
That might be a bit charitable. The GWB SS fix, was basically as you mention turning SS into a mandatory 401k. Without any kind of backstop, limit on fees, etc. Which means the burden and risk were shifted entirely to the individual with a guaranteed cut for the financial services industry. That is a terrible idea, given that the market goes up and down, and not everyone necessarily makes enough money to fully fund a 401k style retirement account. The only winners in that situation are the retirement fund managers, and people at the top of the income distribution who suddenly don't have to pay for the less fortunate. Much the same argument can be made WRT pensions, which are guaranteed benefit systems. Its the company/govemerments responsibility to assure that the pension is funded sufficiently to grow. Market failure risks, and the like are the responsibility of the pension, which can do a better job of averaging returns over decades than the individual can. Say someone wants to retire in 2008, instead of their 401K dropping by 40% and eating heavily into their principal they are just part of a larger fund which can absorb that hit with the understanding its over funded from the previous 20 years of returns and the fact that it could be additionally funded a small amount over the next couple decades to make up for the loss if to much of the principal is reduced. Its basically the same argument for any kind of insurance. You spread the risk over a larger pool and everyone benefits.
- narag 6y ago
  The fund must be backed by the country as such, like a reverse sovereign bonds and of course have provisions for people that can't afford to pay full for justified reasons. Basing it in private entities is just asking for problems. Actually I've heard that there are a few countries that have something like that, but I don't remember which ones. The fact that for most of the countries it isn't considered, no matter the party in power in each moment, makes me suspicious of everyone's intentions. Sometimes it seems politicians doesn't like when citizens are too happy. Am I being cynical? Maybe. When I read in the article that the government massively buying real state is socialism, my first reaction is that prices will keep dropping and someone will buy cheaper later.

by zeveb 6y ago

StillBored 6y ago

That might be a bit charitable. The GWB SS fix, was basically as you mention turning SS into a mandatory 401k. Without any kind of backstop, limit on fees, etc. Which means the burden and risk were shifted entirely to the individual with a guaranteed cut for the financial services industry. That is a terrible idea, given that the market goes up and down, and not everyone necessarily makes enough money to fully fund a 401k style retirement account. The only winners in that situation are the retirement fund managers, and people at the top of the income distribution who suddenly don't have to pay for the less fortunate. Much the same argument can be made WRT pensions, which are guaranteed benefit systems. Its the company/govemerments responsibility to assure that the pension is funded sufficiently to grow. Market failure risks, and the like are the responsibility of the pension, which can do a better job of averaging returns over decades than the individual can. Say someone wants to retire in 2008, instead of their 401K dropping by 40% and eating heavily into their principal they are just part of a larger fund which can absorb that hit with the understanding its over funded from the previous 20 years of returns and the fact that it could be additionally funded a small amount over the next couple decades to make up for the loss if to much of the principal is reduced. Its basically the same argument for any kind of insurance. You spread the risk over a larger pool and everyone benefits.

narag 6y ago
The fund must be backed by the country as such, like a reverse sovereign bonds and of course have provisions for people that can't afford to pay full for justified reasons. Basing it in private entities is just asking for problems. Actually I've heard that there are a few countries that have something like that, but I don't remember which ones. The fact that for most of the countries it isn't considered, no matter the party in power in each moment, makes me suspicious of everyone's intentions. Sometimes it seems politicians doesn't like when citizens are too happy. Am I being cynical? Maybe. When I read in the article that the government massively buying real state is socialism, my first reaction is that prices will keep dropping and someone will buy cheaper later.