Tuesday, September 12, 2006
The 401(k) Shell Game
Writing in The Nation, Nicholas von Hoffman skewers the movement to substitute 401(k)s for pensions with some well-aimed invective. He notes that, while Congress passed a pension act that enables the dismantling of pensions for the privately employed masses, they exempted themselves. They and our other civil servants are among the few folks left in our society who still have healthy pension plans.
He also lambastes the folly of imagining that a 401(k) is an adequate substitute for any pension, much less Social Security, the point of both of which has always been "security". "The stock market disasters of six years ago should have warned the country off reliance on individual private investment accounts for retirement. Those not blessed with the mind of a hyena are in grave danger of arriving in their 60s to discover there is scarcely a farthing left for them to live on," he says. "Untold thousands or hundreds of thousands whose 401(k)s were decimated by the market swoon are available as walking warnings of what lies ahead."
On the privatizing Social Security, he is similarly scathing: "The think-tank doctrine has it that we proles have enough business savvy to manage our retirement accounts so that they will 'outperform' Social Security. In a pig's eye! The odds are that most people managing their retirement accounts will earn less money than you'd get on a low-interest government bond." It is hard not to agree with him. Those in power are looking at the world through business-colored glasses, and seem to imagine - or, more likely, pretend to imagine - that everyone in America has the wherewithal and the inclination to pore over the financial pages of the Wall Street Journal all day long, and then make the correct decisions. He stresses that investing "is a job for professionals, who are not always any better at it than the rest of us." He goes on, "Which is why they cheat and break the law so often."
Nicholas von Hoffman has been around for decades, at least since the early days of 60 Minutes, and he has lost none of his iconoclastic fire. It is bracing to have the buffoons who bilk us worked over by such a master of the zinger. Enjoy...
"Your 401(k) Won't Help When You Need It" from The Nation