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David John at Haverford...
March 16th 12:31:56 AM
On Wednesday, we had David John from the Heritage Foundation to speak at Haverford in Pennsylvania.
We had a great turnout, and there were a lot of really good questions asked. I think that the majority of people who attended came with an open mind and left convinced that Social Security has to be fixed and personal accounts are the way to go.
A couple of interesting facts I learned from Mr. John:
- Management fees for personal retirement accounts would be extremely small. Estimates range from as little as 16 cents per $10,000 invested to $3 to $6 per year. Good for the investment banks, but not exactly the windfall that our opponents had complained about.
- The impact on the stock market would be small. The volume of personal accounts would amount to only a very small percentage of assets traded in the stock market.
- Those who cannot (or do not wish to) manage their personal account actively would likely be able to choose a "Lifecycle Account" that would automatically set your portfolio to the correct mix of stocks and bonds according to your age. As easy as checking yes or no on your tax return!
We can't wait for Mr. John to speak again. Next time we'd like to get it on video so you all can hear it.
Posted by Jeremy Tunnell
Comments
Management fees will be small? The war in Iraq was extimated to cost about 1 billion, now 1 trillion and growing. Medicare Drug coverage was estimated to cost 400 billion over 10 years, then 500, then who knows.
Impact on the market will be small? Is he just talking in terms of trade volume or something because what would amount to a large portion of everyone's retirement would be a very significant portion of the equity in the stock market.
Correct mix according to whom? No one will be able to invest in anything that isn't "approved".
SS Equity Funds EQUAL Big Government Corruption!
S4 Sucks and Gives Change!
Posted by Noid on March 16th 01:13:34 PM
I disagree with you Noid:
First, there is a difference between management fees from a private business and costs to run a war or administer the drug benefit. We're not talking about government management fees, we're talking about private industry, and we already have a good candidate to look at --that's the Thrift Savings Plan (which happens to have very low management fees already).
Second, I believe the calculations are that the entire volume of Personal account investments would amount to no more than 5% of the entire value of the stock market. Furthermore, any effects on the market are likely to be positive instead of negative.
Third, "correct mix" is according to the management firm, which for the TSP is currently Barclays. Lifecycle accounts are out there and have been proven to work just fine (I have one myself in my Roth IRA). I don't know what you mean by people won't be able to invest in something that isn't "approved". The government won't be approving specific investments, just general criteria that must be followed to offer these accounts.
Posted by jeremy on March 16th 01:23:23 PM
First, there is a difference between management fees from a private business and costs to run a war or administer the drug benefit. We’re not talking about government management fees, we’re talking about private industry, and we already have a good candidate to look at –that’s the Thrift Savings Plan (which happens to have very low management fees already).
The bigger the government's involment with such accounts, the less efficient they'll be.
Second, I believe the calculations are that the entire volume of Personal account investments would amount to no more than 5% of the entire value of the stock market. Furthermore, any effects on the market are likely to be positive instead of negative.
That assumes that only a portion is invested and that SS isn't completely moved over to a TSP styled PSA. And the effects on the market are definitely negative. The goverment will control voting rights to an ever growing portion of our corporations and will control who is approved, all with the stroke of the legislative pen or worse, with the whim of a bureaucrat
Third, “correct mix” is according to the management firm, which for the TSP is currently Barclays. Lifecycle accounts are out there and have been proven to work just fine (I have one myself in my Roth IRA). I don’t know what you mean by people won’t be able to invest in something that isn’t “approved”. The government won’t be approving specific investments, just general criteria that must be followed to offer these accounts.
Every proposal for PSA includes the notion of "approved" funds, the idea being that some stocks aren't safe enough to be investing in. But that is in the case of TSP and will increasingly become a pretext for exerting even more influence over our corporate boardrooms by government peons. And just try proving it. The fact is that mutual funds aren't precise matches of any index. Fund managers always have to make choices about which companies to include and this will give Barclays and the head of the SSA lots of room to screw with the funds. Not to mention that this will also allow them the opportunity to, for example, withhold investment to politically incorrect industries.
Posted by Noid on March 16th 10:13:29 PM
Noid, I believe you fundamentally misunderstand what we're pushing for.
"The goverment will control voting rights to an ever growing portion of our corporations and will control who is approved"
This is just flatly incorrect. Since each individual american will own the shares in their personal account, the government will have no "voting rights" in the corporations you own. Can you point to one proposal where this would be a problem?
"Every proposal for PSA includes the notion of “approved” funds, the idea being that some stocks aren’t safe enough to be investing in."
This is also flatly false. If you can find one proposal that we support that indicates that individual stocks would have to be approved by the government, then I will concede this point. I just don't think you can.
"The fact is that mutual funds aren’t precise matches of any index."
This is also false. In fact, there are mutual funds that you can buy that exactly mirror the indexes.
Finally, If you think that fund managers are going to forego profits to make a political statement about "politically incorrect" industries, then please give me one example of that ever happening. Just one.
Your jingles are cute, but I'd love to see some evidence to back up all of your (baseless) assertions.
Posted by jeremy on March 16th 10:35:16 PM
Noid, I believe you fundamentally misunderstand what we’re pushing for.
“The goverment will control voting rights to an ever growing portion of our corporations and will control who is approved”
This is just flatly incorrect. Since each individual american will own the shares in their personal account, the government will have no “voting rights” in the corporations you own. Can you point to one proposal where this would be a problem?
Every SS Equity Fund proposal. The fund manager gets to vote and the government picks the fund manager. If the fund manager doesn't vote the way the SSA Czar and President thinks he or she should, well they can always find someone else. Of course Barclay's probably already sees eye to eye with the establishment bureaucracy or else they wouldn't have been picked to manage the Thrift Savings Plan. Should that change however, the feds can easily maintain control by switching fund managers.
“Every proposal for PSA includes the notion of “approved” funds, the idea being that some stocks aren’t safe enough to be investing in.”
This is also flatly false. If you can find one proposal that we support that indicates that individual stocks would have to be approved by the government, then I will concede this point. I just don’t think you can.
There was a "7.65% Solution" proposal for SS Equity Funds posted in an earlier post that made specific reference to "Approved Funds". Their exact phrase.
“The fact is that mutual funds aren’t precise matches of any index.”
This is also false. In fact, there are mutual funds that you can buy that exactly mirror the indexes.
They must have some pretty expensive management fees and suck for people in taxable accounts what with all the fund turnover. I want an example. Funds I know of all approximate the index to reduce transaction costs.
Finally, If you think that fund managers are going to forego profits to make a political statement about “politically incorrect” industries, then please give me one example of that ever happening. Just one.
Go read about the Chinese economy.
If you guys are actually successful in expanding the TSPs to everyone and putting a large chunk of equity in U.S. Government fund managers' hands, I'll show you an example.
Your jingles are cute, but I’d love to see some evidence to back up all of your (baseless) assertions.
I'd like to see some evidence of the WMD's, bushboy.
Posted by Noid on March 20th 01:20:39 AM
Noid, I believe you fundamentally misunderstand what we’re pushing for.
“The goverment will control voting rights to an ever growing portion of our corporations and will control who is approved”
This is just flatly incorrect. Since each individual american will own the shares in their personal account, the government will have no “voting rights” in the corporations you own. Can you point to one proposal where this would be a problem?
Every SS Equity Fund proposal. The fund manager gets to vote and the government picks the fund manager. If the fund manager doesn't vote the way the SSA Czar and President thinks he or she should, well they can always find someone else. Of course Barclay's probably already sees eye to eye with the establishment bureaucracy or else they wouldn't have been picked to manage the Thrift Savings Plan. Should that change however, the feds can easily maintain control by switching fund managers.
“Every proposal for PSA includes the notion of “approved” funds, the idea being that some stocks aren’t safe enough to be investing in.”
This is also flatly false. If you can find one proposal that we support that indicates that individual stocks would have to be approved by the government, then I will concede this point. I just don’t think you can.
There was a "7.65% Solution" proposal for SS Equity Funds posted in an earlier post that made specific reference to "Approved Funds". Their exact phrase.
“The fact is that mutual funds aren’t precise matches of any index.”
This is also false. In fact, there are mutual funds that you can buy that exactly mirror the indexes.
They must have some pretty expensive management fees and suck for people in taxable accounts what with all the fund turnover. I want an example. Funds I know of all approximate the index to reduce transaction costs.
Finally, If you think that fund managers are going to forego profits to make a political statement about “politically incorrect” industries, then please give me one example of that ever happening. Just one.
Go read about the Chinese economy.
If you guys are actually successful in expanding the TSPs to everyone and putting a large chunk of equity in U.S. Government fund managers' hands, I'll show you an example.
Your jingles are cute, but I’d love to see some evidence to back up all of your (baseless) assertions.
I'd like to see some evidence of the WMD's, bushboy.
SS Equity Funds EQUAL Big Government Corruption!
S4 Sucks and Gives Change!
Posted by Noid on March 20th 01:21:07 AM
QUOTE
Noid, I believe you fundamentally misunderstand what we’re pushing for.
“The goverment will control voting rights to an ever growing portion of our corporations and will control who is approved”
This is just flatly incorrect. Since each individual american will own the shares in their personal account, the government will have no “voting rights” in the corporations you own. Can you point to one proposal where this would be a problem?
/QUOTE
Every SS Equity Fund proposal. The fund manager gets to vote and the government picks the fund manager. If the fund manager doesn't vote the way the SSA Czar and President thinks he or she should, well they can always find someone else. Of course Barclay's probably already sees eye to eye with the establishment bureaucracy or else they wouldn't have been picked to manage the Thrift Savings Plan. Should that change however, the feds can easily maintain control by switching fund managers.
QUOTE
“Every proposal for PSA includes the notion of “approved” funds, the idea being that some stocks aren’t safe enough to be investing in.”
This is also flatly false. If you can find one proposal that we support that indicates that individual stocks would have to be approved by the government, then I will concede this point. I just don’t think you can.
/QUOTE
There was a "7.65% Solution" proposal for SS Equity Funds posted in an earlier post that made specific reference to "Approved Funds". Their exact phrase.
QUOTE
“The fact is that mutual funds aren’t precise matches of any index.”
This is also false. In fact, there are mutual funds that you can buy that exactly mirror the indexes.
/QUOTE
They must have some pretty expensive management fees and suck for people in taxable accounts what with all the fund turnover. I want an example. Funds I know of all approximate the index to reduce transaction costs.
QUOTE
Finally, If you think that fund managers are going to forego profits to make a political statement about “politically incorrect” industries, then please give me one example of that ever happening. Just one.
/QUOTE
Go read about the Chinese economy.
If you guys are actually successful in expanding the TSPs to everyone and putting a large chunk of equity in U.S. Government fund managers' hands, I'll show you an example.
QUOTE
Your jingles are cute, but I’d love to see some evidence to back up all of your (baseless) assertions.
/QUOTE
I'd like to see some evidence of the WMD's, bushboy.
SS Equity Funds EQUAL Big Government Corruption!
S4 Sucks and Gives Change!
Posted by Noid on March 20th 01:23:02 AM
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