So, anyway, pension reform is a big topic now that Enron has gone belly-up. Bush is talking about reform to the 401(k) regulations that would allow people to diversify themselves out of owning their company's stock more quickly than current regulations. This seems like a sound idea, but as with anything in America, there's someone willing to dispute it. J. Michael Keeling, President of the ESOP Association, and David Wray, president of the Profit Sharing/401(k) Council of America, both come out against modifying the 401(k) in the above article on MSN.
"We are fearful we're heading down a road where you put your money in and three months later you can take it out," said J. Michael Keeling, president of the ESOP Association, an advocate for employee ownership.
An ESOP (employee stock ownership plan) is a defined contribution retirement plan in which assets are invested primarily or exclusively in the securities of the sponsoring employer. Examples of better-known ESOPs are the airline UAL Corp. and consumer products giant Procter & Gamble Co.
But there are also hundreds of small companies that do not have publicly traded shares, but do use the ESOP structure to provide for employee ownership.
David Wray, president of the Profit Sharing/401(k) Council of America, worries that some of the changes being discussed could place small companies in dire straits. If required to allow employees to diversify, these small ESOPs would need bank loans or financing from venture capitalists to fill the void.
"Some of these little companies will go out of business if you do this," he said in an interview Friday.
Now, this probably sounds like a pretty reasonable set of arguments. How can I disagree with helping small business, especially at a time when our economy is looking fairly shitty? It's because I realize that
trying to help and
actually helping can be different things. Economic meddling is the same thing that has kept Argentina on the verge of collapse for decades, remember?
If you will pause to recall, the US is supposed to be based on a government "for the people". I'm not sure when that changed to "for the corporations", but I think it has. My personal philosphy doesn't fall squarely into a neat little box, but I do have some pretty strong libertarian tendencies. To me, there's two major issues at stake in this debate. Protecting the interests of business, in this case, the access to large pools of capital from employee retirement funds. And secondly, protecting the ability of an individual to develop and execute a sound strategy for funding his own retirement.
What Mr. Keeling and Mr. Wray are really saying is "giving people this flexibility might hurt businesses". But not giving people this flexibility makes it harder for them to effectively provide for themselves during retirement. If these changes mean we stream-line the economy by ridding it of non-viable businesses more quickly while reducing the dependence of retired persons on government aid, I'm all for it. As to the businesses that get shutdown due to these new competitive pressures, I can only say "good riddance". Efficiency is what capitalism's all about, remember?
This blog brought to you by the letter "C", and my neighbor's cute little doggie. (He was afraid of the camera, hehe.)
I'm a little frustrated at my laptop tonight. As you can tell from my little sketch here.
