Most Western nations have huge long-run fiscal problems because of unfavorable demographics and misguided entitlement programs.
That’s the bad news.
The good news is that dozens of nations have fully or partially shifted to mandatory private savings as a pro-growth way of modernizing bankrupt tax-and-transfer Social Security systems.
But good news in the short run doesn’t mean good news in the long run if greedy politicians decide to loot the wealth accumulated in personal retirement accounts.
That’s already happened in Argentina and Hungary, and now it’s happened in Poland. Here’s part of a Financial Times report about the government stealing money from private pension funds.
Poland’s government on Wednesday took an axe to part of the country’s pension system in a bid to bolster public finances. Premier Donald Tusk said that part of the country’s obligatory pension system run by private funds would be dramatically revamped, with 120bn zlotys ($37bn) in government bonds held by the 14 funds being transferred to the government pension scheme and cancelled… The funds will keep control of the 111bn zlotys they hold in equities and current benchmarks will be loosened. The funds will be banned from investing in more government debt. Tusk said that the millions of Poles currently enrolled in the privatised system would have the choice of staying in the scheme or of transferring their assets into the government-run pension system. Market reaction to the long anticipated move was negative. The Warsaw Stock Exchange, where the private funds, known as OFEs, have a big presence, was down by more than 2 per cent. Yields on 10-year Polish government bonds jumped to 4.75 per cent, the highest in a year.
Is anyone surprised by the “negative” reaction?!? Of course markets are unhappy when politicians arbitrarily seize wealth for short-term political games!
Sounds like Poland wants to become the Argentina of Europe. Though there’s always plenty of competition in the contest for bad government policy.
But we do have a bit of good news.
Here is some interesting polling data from an article on the political preferences of young Americans.
…51 percent of Millennials believe that when government runs something it is usually wasteful and inefficient, up from 31 percent in 2003 and 42 percent in 2009: “Hardly a ringing endorsement for a bigger government providing more services.” There’s more: 86 percent of Millennials support private Social Security accounts and 74 percent would change Medicare so people can buy private insurance. Sixty-three percent believe free trade is a good thing. Only 38 percent of Millennials support affirmative action.
Wow, 86 percent of young people support personal retirement accounts. That’s very encouraging, particularly since the general population supports this pro-growth reform by a more-than 2-1 margin.
Here’s a video that explains why a privatized or “personalized” Social Security system is the only way of dealing with the current system’s bankruptcy without screwing younger workers.
I think the video is a good summary explanation, but I also invite you to look at these two charts, one showing the impressive private wealth being accumulated in Australia thanks to personal retirement accounts and the other showing the staggering future shortfalls for America’s pay-as-you-go Social Security scheme.
If those charts don’t convince you, I suspect you’re a genetic statist.
P.S. The thievery of the Polish government is a helpful reminder of why it’s good to have some of your money offshore, preferably managed by a non-US company. After all, does anyone doubt that American politicians are capable of the same venal behavior? They’re probably looking at the money in IRAs and 401(k)s and salivating at the thought of how many votes they could buy with all that money. If (or when) that tragic day arrives, the Americans who have their money beyond the grasp of the federal government will be very happy.
P.P.S. Here’s a good joke about the Social Security system. Except it’s not really a joke because it’s too close to the truth.
P.P.P.S. You can see President Obama’s proposed “solution” to the Social Security crisis by clicking here. I don’t think you’ll be surprised to learn that it means a big shift of money from taxpayers to politicians.
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REGISTRATION: Private Retirement Scheme (PRS)
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If one parent has care, the noncustodial parent’s share is normally paid to the custodial parent, or by both parents to a third revelry, if a third party has care.
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You wrote: “The good news is that dozens of nations have fully or partially shifted to mandatory private savings…”
Well, thanks for that latest revelation of your libernuttian naïveté. It seems that you just can’t resist the urge to show off. Now, it should go without saying, but will bear repeating here, that a government powerful enough to force you to save on its terms is a government poised to confiscate your “private savings” once circumstances, probably some manufactured crisis, favor its doing so.
Of course, it would be shocking—yes, shocking—to learn that almost every instance of libertarian “good news” about “mandatory private savings” is just a case of some nerd cheering for a crony capitalism and employment protection racket designed from the outset to enrich financial planners, investment bankers, lawyers, and whatnot. But Cato Institute and other such outfits want to keep the donations coming in, no?
Still, maybe we can draw some good out of your silly cheering: Leftists have the opportunity to relearn an important lesson about organized crime, libernuttianism, and “Restraining Government in America and Around the World”. I’ll be certain to teach that lesson if the opportunity arises, and it’s probable that I’ll have one this evening or next with Patrick B., a 30 y.o. professional waiter who once lived in Boston and who seems to be wavering in his leftism. When I see him I’ll test him to see if he could be counted among the clueless who support “support personal retirement accounts”. I’ll tailor the lesson based on what he reveals, and once I’m done with him he’ll be firmly in the all-or-nothing camp of those who are willing to tolerate the SSA until it can be abolished unconditionally and without unearned profit to CI, financial planners, and so forth.
PS. Having offshore accounts will be of little use against the power of The People. Votes can be bought by criminalizing those who don’t turn over their international accounts to the People’s retirement fund. Just like those who refuse to have their offshore profits milked are criminalized now — even if they have migrated offshore!!
Dear American you shall work for the general benefit of your society whether you want to or not. AND, of course, with enough enthusiasm to outcompete the rest of the world so that your country can maintain the top worldwide prosperity you are accustomed to. That naive you are indeed.
PPS. The great leader of HopNChange is already testing the American voter-lemming market by stating that “at some point you have saved enough money” referring to 401k accounts with large balances. How much is “enough”? I don’t know, whatever the People decide in 4,8, 20 years. The more you keep saving, the sooner you”ll find out what The People consider enough.
PPPS. My 2c? If you have saved a few million dollars, don’t be foolish. Get away from the office and enjoy life. Help the wealth of your country by leaving your executive spot to some Occupy protester. He can sure figure it out and work enough to have your company outcompete seven billion souls on this planet. Or maybe, even better, small babies can be collectively groomed from young age to become People’s executives: Gifted people who will consume their youths at top schools and start ups to be paid a few multiples the average wage. I’m sure there will be enough of those per capita in America that American businesses will continue to outcompete the rest of the world so that Occupy protesters can continue to be in the top 20% of worldwide prosperity.
Americans need not worry. Only the 401k s of the top 2%will be used to buy votes. A small disliked minority, not potent enough to resist the will of the people. Then the 401ks of the next 2%, which again will be a minority, since the original 2% will join the 96% in “we got screwed, now lets get some others screwed the same way, see how that feels”, then the next 2% etc. Until unexceptional lifetime effort reward ratios drop to the point where the US cannot outcompete the rest of the world and thus maintain its #1 top worldwide prosperity. But, no wait, that has already happened, we are just living through the short period of accumulated momentum: “hey look this heavy boat keeps running, and outrunning other boats, even when you turn the engines on idle!!” “HopNChange does work!! More prosperity with less effort!! Nobody else could make it work before, but we, Americans, for the first time in human history are making it work!!! Flatter effort-reward curves, more growth!! The perpetual motion machine of prosperity finally found!!! Made in America too!!!
America haters throughout the world (at least those who have any brains) must be tickled pink that Americans are irreversibly adopting the French democratic mentality.
Pushed over the edge by the 9/11 events, American mandatory collectivism achieves majoritarian status, and American voters start thinking like the rest of the world. An irreversible point towards self- destruction is crossed. Looks like OBL is sleeping with another virgin tonight. Probably one from the Western world.
Reblogged this on Public Secrets and commented:
Let’s not give Obama any ideas, shall we?