On 2005 May 13, JDG <[EMAIL PROTECTED]>
When a worker relies upon an employer's pension plan, that worker
is essentially putting his or her savings nest egg ... into the
hands of the managers of a single corporation. ...
This is one of the stronger arguments I have seen for the current
mechanism for social security.
The argument could be made even stronger by pointing out the higher
risk aversion of people who are poorer compared to those who are
richer, at least with regard to late-in-life income. A person who
expects a late-in-life income of one million US dollars per year is
likely to be less averse to the risk of losing $5,000 per year of that
income than a person who expects a late-in-life income of $20,000 per
year.
To answer Bob's question, I don't think that the question is how
can Congress make employer's pension plans illegal.
I did not ask that question, or anything near it. I asked
... how well can non-bankrupt companies can make competitive
financial returns ...
In other words, the question is what kind of political arrangements
will be needed?
That is very different.
However, JDG is correct when he says that (I presume he means in
practice, rather than possible theories)
... the government is the ultimate insurer against catastrophic
risk,
This is also an argument for the current mechanism for social
security.
(This leaves aside the questions of whether the tax ought to be
regressive or whether the rich should benefit from the poor, which are
different from the question of which entity should bear the risks,
each individual or all taxpayers as a group.)
--
Robert J. Chassell
[EMAIL PROTECTED] GnuPG Key ID: 004B4AC8
http://www.rattlesnake.com http://www.teak.cc
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