livin'thesim
Well-known member
- Joined
- Apr 6, 2005
- Posts
- 926
Igneousy2:
You are correct that underfunding is the core problem, but there is a more practical reason why pensions are risky:
Inadequate understanding on the part of participants about changing demographics and markets.
When times are flush:
1) The public gets testy about what they feel to be overfunding
2) Greedy operators in the financial system find creative ways to borrow or co-opt the financial power of large pension balances.
This creates a real dilemma for an individual-liberty person like myself.
I have learned though many cockpit conversations that 90% of the general public is financially illiterate. The kinds of actions required to preserve and grow wealth will likely result in at least half of plan participants screaming about how their funds are being 'mishandled'.
This means that a large pension manager has to play a political game with his idiot participants as well as find ways to maximize returns.
The reason the rich get richer and the rest of you get poorer is that they are willing to admit the truths about economic principles and act on them.
You could give people a cross between Warren Buffet and Jesus Christ and they would still eventually soil their own economic nest with stupid decisions.
Human beings are too stupid and too driven by passion and emotion to sustain anything as logical as a pension program for more than a generation or two.
Just look at Europe and their imploding pension situation.
As someone once said, "right idea, wrong species".
You are correct that underfunding is the core problem, but there is a more practical reason why pensions are risky:
Inadequate understanding on the part of participants about changing demographics and markets.
When times are flush:
1) The public gets testy about what they feel to be overfunding
2) Greedy operators in the financial system find creative ways to borrow or co-opt the financial power of large pension balances.
This creates a real dilemma for an individual-liberty person like myself.
I have learned though many cockpit conversations that 90% of the general public is financially illiterate. The kinds of actions required to preserve and grow wealth will likely result in at least half of plan participants screaming about how their funds are being 'mishandled'.
This means that a large pension manager has to play a political game with his idiot participants as well as find ways to maximize returns.
The reason the rich get richer and the rest of you get poorer is that they are willing to admit the truths about economic principles and act on them.
You could give people a cross between Warren Buffet and Jesus Christ and they would still eventually soil their own economic nest with stupid decisions.
Human beings are too stupid and too driven by passion and emotion to sustain anything as logical as a pension program for more than a generation or two.
Just look at Europe and their imploding pension situation.
As someone once said, "right idea, wrong species".
