Saturday, January 7, 2012

Dangerous Misconceptions

Click here to access article by Peter Radford from Real-World Economics Review. 

The author is responding to an essay by Alan Greenspan, one of the chief architects of the current economic disaster, carried recently in Financial Times, a key economic publication that investors follow. (Access to the link is behind a free registration wall.)

To understand Radford's attack on Greenspan's article, one must understand the difference between defined benefit and defined contribution pension programs. As I recall, this shift began in the 1990s until now whereby most pension plans are of the latter type. As one would expect, this shift has been enormously popular with the One Percent who live largely off of their ownership of corporations. Not only does this allow corporate executives to engage in more risky endeavors, but it also has the advantage of encouraging more of the 99% to identify with corporate interests. 

Based on the wealth that the US corporations have accrued especially since WWII, ruling class salespeople were able to make a plausible case for selling this new pension arrangement. However, now given the instability of the economy under casino capitalism, the expected disasters related to climate change, and the diminishing supplies of cheap fossil fuels, it is very doubtful that this track record can be duplicated in the future.