This article reinforces many of the points I have been
making about discipline, responsibility, media hype and how if we don’t take
care of ourselves, help will be inflicted upon us.
In America we don’t have any problems because very soon each
one becomes a crisis. The news media
can’t keep us interested in stories unless they are cute, outrageous, scary or
otherwise emotionally engaging. Instead
of straight news we get pets or wild animals in unusual situations, freaks, celebrity
gossip, natural disasters, epidemics and the crisis of the week.
This story is about the retirement crisis. It features an interview with a US Senator
from Oregon asking him “why he is worried about the ability of Americans to
save for a successful retirement and what he plans to do about it.” He considers his concern that not enough
people are saving for retirement as a call to action. He wants to make it easier for them. Apparently, spending less money than you earn
is too difficult for us to figure out, so the government must come to the
rescue.
The basic problem is that the IRA was “intended for a
typical person,” but it’s primarily well-off people taking advantage of
it. With the decline in traditional pension plans, typical people are not saving enough. This is all old news. His idea, based on a law in his home state is
to require employers that don’t offer a pension or 401(k) plan to withhold a
set percentage from each paycheck as an automatic IRA contribution. Participation is not mandatory for
employees. This, of course, is something
employees could do for themselves, on-line with their bank requiring very
little effort if they were interested.
On one hand he says that “it seems to be popular” in
Oregon. He goes on, however, to bemoan
the low level of retirement savings in his state. “If steps aren't taken to make (saving)
easier, this country will find a lot of people hurting and there will be real
consequences.” Gee, unsatisfactory
behavior in the dimension of discipline has consequences – what a revelation!
He is a Democrat but expects bi-partisan support. That also is not surprising since the program
is remarkably similar to a Republican plan a decade ago to partially privatize
social security by assigning a portion of FICA tax to an individual
account. No doubt steps will be taken
and hopefully a few more people will save a few more dollars for retirement. Will “the crisis” be diverted? – Not
likely. Government programs can’t fix
individual failings. Behavior has
consequences and further programs will doubtless be proposed to protect people
from the consequences of their own actions in order to get reelected.
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