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Sunday, October 27, 2013

What Will My Retirement Savings Be Worth? Elizabeth Warren on Economics & Finance (2013)

A retirement savings account is a type of retirement plan account that is envisioned to replace all three different types of individual retirement accounts that are currently used in the United States: traditional IRA, Roth IRA and Simple IRA. Contributions would be made on an after-tax basis. This is a major part of what the George W. Bush Administration called "ownership society."

Ownership society is a slogan for a model of society promoted by former United States President George W. Bush. It takes as lead values personal responsibility, economic liberty, and the owning of property. The ownership society discussed by Bush also extends to certain proposals of specific models of health care and social security.

As formulated by the Cato Institute (see original quote and external link below), the goals are that
patients have control of [decisions on] their personal health care,
parents control [i.e. have power over] their children's education, and
workers control [i.e. have some responsibility for the investment of, or explicit property rights in] their retirement savings.
Here the comments in brackets are an interpretation or paraphrase, consistent with a generalised idea of ownership. The conceptual link here is by means of the idea that private property, the most familiar and everyday form of ownership, is being extended. Control is closely associated with ownership in that sense.
This Cato Institute formulation is not, however, in terms of positive policies. It is more accurately a definition of ownership by taking the state out of the loop. So, for example, in health care ownership is not being defined just on the basis of informed consent.
There is no real originality, politically speaking, in the connection made between individual ownership of property and political stake-holding. This was an idea discussed in Europe and America in the eighteenth century. (For example that the franchise should only be for property holders.)
The novelty of the Cato Institute formulation would lie in the extrapolation. In the case of savings, for example, the extension would be an assertion of property rights in money held in savings or collected tax revenues.
The first desiderata was part of John McCain's campaign platform as the 2008 Republican presidential nominee. McCain's website says, "John McCain believes [that] the key to health care reform is to restore control to the patients themselves."

Consistently with the basic tenet, proponents of an ownership society usually support inherited wealth, and oppose inheritance taxes and wealth taxes. They are also likely to favour a pattern of property ownership based on the purchase, rather than rental, of accommodation.
The consequences for health and education are heavily dependent on details of implementation. For example, ownership in one's child's education, for a parent, might be in the form of an education voucher, a vote in the running of a school, influence on the school curriculum, or a generalised 'right' to have a child educated in line with one's own values.
One example from the UK of an unexpected or unintended consequence of government policy favouring direct share ownership, through some oversubscribed privatisation issues, was the holding of small parcels of shares by individuals numbered in millions. This broad-based ownership created an administrative overhead, for example in relation to every shareholder vote.

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