Tuesday, August 03, 2004

Fans of social security privatization believe that people are better managers of their own retirement savings than the government. But of course, if government were just going to be there to bail them out if they screwed up their investments, they'd invest in all kinds of risky stuff, and use the government cushion if it didn't pan out. (In economics jargon, it's a classic moral hazard). So, private management of retirement savings only works if the government isn't there to bail people out quickly.

Unless the private entities managing peoples retirement funds are corporate. Then it's OK:

In an echo of the savings and loan industry collapse of the 1980's, the federal agency that insures company pensions is facing a possible cascade of bankruptcies and pension defaults in the airline industry that some experts fear could lead to another multibillion-dollar taxpayer bailout.

Obviously, what these companies needed to do was make themselves subject to the discpline of the mark... er, never mind.

via Suburban Guerrilla...


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