Monday, February 10, 2014


Over the last 10 years I've spent quite a bit of time planning investments, particularly because I've been retired for 6 of those years.  This experience highlights to me the absurdity of the American economic system.

In order to follow the program here, the constraints are quite extreme. First, you must figure out at a relatively young age how to procure sufficient earnings to live your life and save an amount sufficient for retirement.  Most people are at the mercy of the job market and the economy, unpredictable forces beyond anyone's control.  Generally you are on your own, and you won't find much help.  Once you get a job, your employer is likely to be indifferent to your career path and will fire you on short notice if you are perceived to be a subpar performer.

Assuming that you are somehow able to save enough money for investing, you are then faced with another series of daunting challenges.  The financial services industry is there to make money, and whether you happen to make money or not is incidental to its goals. This in itself would not necessarily be an insurmountable problem, but it becomes so because of the complexity of investing these days.  Most of the investment advice I've come across is either incomplete or incorrect.  Even Nobel Prize winners in Economics don't seem to have a handle on it.  It is clearly too much to expect of the 70% of U.S. adults who lack four-year college degrees to navigate these murky waters.

The absurdity here has to do with faith in private markets.  We know from the health care system that private markets don't always work as well as large-scale public operations.  Left to doctors, hospitals, insurance companies, pharmaceutical companies and medical suppliers, health care in the U.S. became the most expensive in the developed world.  Here it was obvious that a federal system had to be put in place, but the Affordable Care Act is only in its infancy.  What is needed is a comprehensive retirement savings program at the federal level that will make financial decision-making much simpler and less voluntary, like Obamacare. As it stands, the financial services industry is primarily a wealth-redistribution device that makes a very small number of people extremely wealthy at the expense of the majority, who are increasingly finding themselves underpaid, uninformed, and facing bleak retirements. The majority needs far more help than will ever be supplied in this free-market system.

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