By Dave Anderson
Matt Yglesisas passes along an interesting technocratic proprosal from Dean Baker on opening up the federal employees' Thrift Savings Plan to anyone with a 401(k) or a 403(b).
why not a public option for retirement savings? Baker points out that 401(k) management fees average 1.0 percent of the the value of assets while the federal Thrift Savings Plan has a mere 0.15 percent fee average fee. Why not open the TSP up to workers and employers in the private sector?
Besides which, the fees aren�t giant relative to any particular worker. But in the aggregate, the combination of the subsidy with the indirect selection of fund mangers creates a gargantuan sum of money available for skimming.
This is a good proposal. It would save lots of money for lots of people over a long time frame. It would improve savings, and it would improve retirement security for most Americans.
It won't pass.
The skim goes to our Galtian overlords, and they will buy off at least 1.75 political parties to protect their pointless revenue stream. It is the same reason why a public option for health insurance was never a serious option as it would put pressure on elite revenue streams. In either case, the federal government's ability to absorb and distribute massive amounts of intertemporal risk, cut frequent checks and negoatiate with massive leverage in order to improve the well-being of the bottom 95% of the income distribution would make the top chunk of the income distribution a little less rich. And we can't have that at all, not in America, praise be Galt.
I've been pondering an article I saw last week advancing the idea of deliberately turning loose the inflation demon for a bit as a way to stimulate the economy and accelerate liquidation of debts, both public and private. That was the old method, you know, to borrow money and repay it with inflated dollars (back in the day before "inflation-adjusted" budgets and bond yields). It worked great with government debt since the numbers were fixed and inflation did wonders for the relative tax revenue stream.
ReplyDeletehttp://articles.boston.com/2011-08-28/news/29938939_1_inflation-rate-financial-crisis-economy
Inflation hurts the lower end of the economic scale until wages catch up (which they ultimately must thanks to a cold-blooded supply and demand principle) but it really hurts those whose wealth is heavily invested in financial instruments. Lending and investment institutions go nuts when inflation rears its ugly head because they know the only way they can "make money' is literally just that. They gotta make it out of whole cloth unless it is coupled with one of the "inflation hedges" such as collectors items, real estate, precious metals, etc. -- places where "little people" only see on TV.
Just thinking out loud.