Why NOT private accounts?
So the President wants everyone to have the opportunity to invest their own retirement funds. Personal choice is good, right?Yeah? And do you depend on your own mechanical abilities to keep your car running so that it is available to get you to work? I don't. I don't have the tools, the experience or the time to do my own mechanic work. Investing requires education, experience, time and tools also. I have the education, but mostly I lack the time.
So why not just let the government invest in the stock market for us, and we all take the results from the Social Security trust fund? Dick Cheney has said that the business community does NOT want the government investing in the market. [Of course - those government investors would be experts and would be in a position to demand information from managers that the rest of us can never get. Enron and Worldcom could never have happened.]
But Cheney does have a point. Do we really want to have the federal government sitting on a huge supply of investible funds that it controls and then use those funds to decide which companies receive money and which companies don't? The risk of political manipulation of the stock and bond markets would be extremely high.
It already happens with private investors, of course, but this would take the practice to new levels because of the very size of the supply of funds. This is the most important reason why the current investment of the trust funds in government bonds is the best possible use of those funds.
So they propose private accounts and will offer a set of outsourced mutual funds with private managers contracting to manage them. The best that arrangement could provide is average investment results, and that is not likely.
Those are some of my objections. The Washington Post offers its' view of the situation.
posted by Richard @ 7:53 AM
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