4 ms·

As opposed to forced retirement accounts you manage yourself? Make no mistake, no sane government would allow for completely voluntary contributions to any sort

As opposed to forced retirement accounts you manage yourself? Make no mistake, no sane government would allow for completely voluntary contributions to any sort of pension or superannuation scheme - it'd be setting its country up for a massive economic and social timebomb as the majority of the population put present wants over future needs. As for investing pensions in the stock market, I'll merely add that in Australia, where we've had superannuation for 20 -odd years, all usually invested in stocks, there were are a large number of people who thought they were going to retire in 2008 (my parents amongst them) who are now still working.

cookiecaper 15y ago
I strongly disagree that retirement accounts should be mandated by the government. If people won't save for retirement, they should understand that the government can't help them. This philosophy that the peon is too stupid and/or undisciplined to manage his own accounts and that the government must protect him from himself is what gets us into huge messes like this in the first place.
- jtheory 15y ago
  I understand this point of view, but at the end of the day, government policy needs to be based on what's going to work out the best for the public. It perhaps goes without saying that there are more than two approaches, but yours is one that I think we can rule out logically. Psychologically, does it work? In general, if you tell a 22-year-old that in 40-something years he's going to really need some of the money he's making now (even if he feels like he's barely paying his bills), that he absolutely must set aside enough (and invest it wisely, assuming he has the wisdom to do so), will he manage to do it? From what I understand of human psychology, the answer isn't "yes" nearly enough to make your solution palatable. It sets up a good learning experience for him when he finally gets to retirement age and finds himself as a greeter in Walmart, but it's way, way too late at that point. No one wore seatbelts before they were legally required (and still many don't, and many still die because of that dumb decision). People don't, as a rule, have a good grasp of the distant future and/or events that seem unlikely. How many people are still starting smoking, even though it says "cigarettes kill" in big black letters on that first pack they buy? There are plenty of problems with the US social security system, but removing the safety net entirely to teach a lesson to people who fail to adequately prepare for their old age doesn't feel like a sound approach to me.
  - 18pfsmt 15y ago
    Somehow, the Federalists have managed to change the conversation from, "should the state provide this service?" to, "should the government provide this service?" I don't quite understand why the state governments should not make their own choices, and people can move to the states that they find have the most acceptable laws to them.
    - nitrogen 15y ago
      One possible counterargument to the state-specific approach is that if you have a handful of states that really do well, a majority that do okay, and a few that really screw things up, it's unfair to the residents of the states that chose poorly. They may never be able to move to a better state because the decisions of their current state left them in a financial position too weak to afford life in a different state.
    - BrandonM 15y ago
      I like the idea of removing power from the federal government in favor of states, but in the case of a service like social security, mobility between states could cause massive issues. State x would not have a safety net, prompting companies and workers to operate there for the tax break. State y, providing a safety net, would be swamped with retirees but not productive workers. Citizens would be hugely incented to game the system. I don't see how it could be sustainable.
    - georgefox 15y ago
      If the discrepancies between state policies were large enough, I imagine you'd basically see white flight on a national scale. Essentially, supporting any type of social safety net would be optional for the people with the resources to move out of state. As a result, middle-class and wealthy people would flock to low-tax states without expensive social programs, leaving behind a higher concentration of needy people in the states with the stronger safety nets. What social programs remain would presumably go bankrupt while the nation's wealthiest individuals basked in the glory of their virtually tax-free lifestyles.
      - 15y ago
- digikata 15y ago
  So what do we do with people at the end of their working years, who, through bad luck or bad design, ended up with nothing. Do we stand by and let them suffer and die?
  - muzz 15y ago
    And do we realize that some may, at that point, turn to crime?
  - rmrm 15y ago
    You could devise a means tested welfare for elderly people. There are a lot of perfectly wealthy, perfectly capable people who retire at 60 whatever for no apparent reason other than ss and tax advantaged accounts make it seem like its time. I am a big fan of retirement, and I think safety nets for the disadvantaged are a good idea. I don't think we need a retirement safety net, however, or to make a retirement an entitlement.
    - digikata 15y ago
      I agree with means testing, but think it would have to be something that slowly phased in over a long period, and proportionally to smooth discontinuities so that people could shift their behavior to match expectations.
    - ChrisLTD 15y ago
      The trouble with means testing is that you drain support for the program from the parts of the population with the most political clout. In other words, how long does SS last when rich people get nothing for what they put into it?
      - digikata 15y ago
        I've always viewed Social Security more like catastrophic insurance than a future income stream. What do you get out of insurance? Hopefully, nothing because if you find yourself needing to exercise it, something has not gone according to plan.
  - deleted 15y ago
- bubbleRefuge 15y ago
  Actually retirement accounts are demand leakages. For example quantity theory of money gives us MV=PY money * velocity = prices * quantity of goods/services produced. So if money is squirreled away in retirement accounts it is no longer circulating in the economy and in order to maintain the same level of economic activity we have to 'make up' for the lost M. So retirement accounts are a drag on the economy.
  - zg 15y ago
    Retirement accounts aren't usually held entirely in cash except very near the end. For younger people the bulk would be invested in equity i.e. funding businesses and thus being fed back into the economy.
    - bubbleRefuge 15y ago
      Its money taken out of circulation that could have otherwise been spend on consumption. Buying IBM stock in my IRA doesn't do much for the economy compared to taking the same funds and buying an IPAD or 100 happy meals.

cookiecaper 15y ago

I strongly disagree that retirement accounts should be mandated by the government. If people won't save for retirement, they should understand that the government can't help them. This philosophy that the peon is too stupid and/or undisciplined to manage his own accounts and that the government must protect him from himself is what gets us into huge messes like this in the first place.

jtheory 15y ago
I understand this point of view, but at the end of the day, government policy needs to be based on what's going to work out the best for the public. It perhaps goes without saying that there are more than two approaches, but yours is one that I think we can rule out logically. Psychologically, does it work? In general, if you tell a 22-year-old that in 40-something years he's going to really need some of the money he's making now (even if he feels like he's barely paying his bills), that he absolutely must set aside enough (and invest it wisely, assuming he has the wisdom to do so), will he manage to do it? From what I understand of human psychology, the answer isn't "yes" nearly enough to make your solution palatable. It sets up a good learning experience for him when he finally gets to retirement age and finds himself as a greeter in Walmart, but it's way, way too late at that point. No one wore seatbelts before they were legally required (and still many don't, and many still die because of that dumb decision). People don't, as a rule, have a good grasp of the distant future and/or events that seem unlikely. How many people are still starting smoking, even though it says "cigarettes kill" in big black letters on that first pack they buy? There are plenty of problems with the US social security system, but removing the safety net entirely to teach a lesson to people who fail to adequately prepare for their old age doesn't feel like a sound approach to me.
- 18pfsmt 15y ago
  Somehow, the Federalists have managed to change the conversation from, "should the state provide this service?" to, "should the government provide this service?" I don't quite understand why the state governments should not make their own choices, and people can move to the states that they find have the most acceptable laws to them.
  - nitrogen 15y ago
    One possible counterargument to the state-specific approach is that if you have a handful of states that really do well, a majority that do okay, and a few that really screw things up, it's unfair to the residents of the states that chose poorly. They may never be able to move to a better state because the decisions of their current state left them in a financial position too weak to afford life in a different state.
  - BrandonM 15y ago
    I like the idea of removing power from the federal government in favor of states, but in the case of a service like social security, mobility between states could cause massive issues. State x would not have a safety net, prompting companies and workers to operate there for the tax break. State y, providing a safety net, would be swamped with retirees but not productive workers. Citizens would be hugely incented to game the system. I don't see how it could be sustainable.
  - georgefox 15y ago
    If the discrepancies between state policies were large enough, I imagine you'd basically see white flight on a national scale. Essentially, supporting any type of social safety net would be optional for the people with the resources to move out of state. As a result, middle-class and wealthy people would flock to low-tax states without expensive social programs, leaving behind a higher concentration of needy people in the states with the stronger safety nets. What social programs remain would presumably go bankrupt while the nation's wealthiest individuals basked in the glory of their virtually tax-free lifestyles.
    - 15y ago
digikata 15y ago
So what do we do with people at the end of their working years, who, through bad luck or bad design, ended up with nothing. Do we stand by and let them suffer and die?
- muzz 15y ago
  And do we realize that some may, at that point, turn to crime?
- rmrm 15y ago
  You could devise a means tested welfare for elderly people. There are a lot of perfectly wealthy, perfectly capable people who retire at 60 whatever for no apparent reason other than ss and tax advantaged accounts make it seem like its time. I am a big fan of retirement, and I think safety nets for the disadvantaged are a good idea. I don't think we need a retirement safety net, however, or to make a retirement an entitlement.
  - digikata 15y ago
    I agree with means testing, but think it would have to be something that slowly phased in over a long period, and proportionally to smooth discontinuities so that people could shift their behavior to match expectations.
  - ChrisLTD 15y ago
    The trouble with means testing is that you drain support for the program from the parts of the population with the most political clout. In other words, how long does SS last when rich people get nothing for what they put into it?
    - digikata 15y ago
      I've always viewed Social Security more like catastrophic insurance than a future income stream. What do you get out of insurance? Hopefully, nothing because if you find yourself needing to exercise it, something has not gone according to plan.
- deleted 15y ago
bubbleRefuge 15y ago
Actually retirement accounts are demand leakages. For example quantity theory of money gives us MV=PY money * velocity = prices * quantity of goods/services produced. So if money is squirreled away in retirement accounts it is no longer circulating in the economy and in order to maintain the same level of economic activity we have to 'make up' for the lost M. So retirement accounts are a drag on the economy.
- zg 15y ago
  Retirement accounts aren't usually held entirely in cash except very near the end. For younger people the bulk would be invested in equity i.e. funding businesses and thus being fed back into the economy.
  - bubbleRefuge 15y ago
    Its money taken out of circulation that could have otherwise been spend on consumption. Buying IBM stock in my IRA doesn't do much for the economy compared to taking the same funds and buying an IPAD or 100 happy meals.