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Social Security Should Buy Stocks, Like Norway Does
FYI: Norway’s giant state pension fund is in the headlines because it decided to stop investing in energy exploration and production, or upstream oil. That is surprising and ironic because much of the assets in the fund came from North Sea oil production.
The less obvious—and more important—point is that Norway’s state pension fund can make that shift because it invests in equities. The fund, known as the Government Pension Fund Global, is a globally significant asset manager that generates returns for citizens and expresses social policy in its investment decisions. Regards, Ted https://www.barrons.com/articles/social-security-funding-stocks-norway-oil-divestment-51552074915?refsec=funds
Yes, it does make financial sense, but of course with ownership comes voting rights.
I can already hear the protests from the Cato Institute et al. : "The government has no business influencing the free markets! Get the government off the back of Wall Street! Get the government out of our financial lives! The government has no business picking winners!! etc. etc. etc., ad nauseum.
Can you just imagine the reaction from the Trumpsters if SS were to emulate Norway and drop oil investments? Or, for that matter, from the environmentalists if SS were to invest in same?
To be honest, it's a terrible idea. Imagine what it would be like for someone in government to regulate Microsoft, Exxon and Amazon when the entire country's Social Security depends on their stocks performing well. It creates massive conflicts of interest. Norway is a tiny country with not much of a stock market--and interestingly a number of its biggest companies are oil companies. So divesting from oil creates less conflicts for regulators. You couldn't do that here. Not to mention the fact that during the worst bear markets in U.S. history it took many years for investors in the market to fully recover. It's a stupid, stupid idea.
@LewisBraham- Yes, exactly what I was trying to say. Strictly financially, I think a good idea. Mix in the inevitable political complications, forget it.
@BrianW: Yes, of course, that immediately occurred to me also. Then I tried imagining such a "governing body" that would be immune from political pressures. Good luck on that.
@BrianW: Yes, of course, that immediately occurred to me also. Then I tried imagining such a "governing body" that would be immune from political pressures. Good luck on that.
Certainly not in the USA ... where the common good is, these days, just a quaint, irrelevant concept to so many.
I'm not sure of what you mean by 'common good'. To me, 'common good' would be ensuring, to the extent possible, the welfare of aging Americans. From the moment Americans begin working, they pay into a program meant to provide a benefit once they retire, and yet it doesn't really belong to them (wrap your brain around that). Unfortunately, the program has been fleeced in a manner in which would land corporate CEOs in prison. But since it was politicians doing the fleecing, it is somehow 'legal'. It is sort of like the housing crisis. We all know there was illegality, but no one was ever punished.
Now back to Social Security: currently the 'plan' is broken but no one can do anything because of the political ramifications of doing so. The only difficulty is we have politicians making a decision regarding simple right or wrong. Where the 'right' decision may result in losing votes.
The 'wrong' decision maintains the status quo, but they keep their jobs. How's that for common good.
Comments
I can already hear the protests from the Cato Institute et al. : "The government has no business influencing the free markets! Get the government off the back of Wall Street! Get the government out of our financial lives! The government has no business picking winners!! etc. etc. etc., ad nauseum.
Can you just imagine the reaction from the Trumpsters if SS were to emulate Norway and drop oil investments? Or, for that matter, from the environmentalists if SS were to invest in same?
Unfortunately, the program has been fleeced in a manner in which would land corporate CEOs in prison. But since it was politicians doing the fleecing, it is somehow 'legal'. It is sort of like the housing crisis. We all know there was illegality, but no one was ever punished.
Now back to Social Security: currently the 'plan' is broken but no one can do anything because of the political ramifications of doing so. The only difficulty is we have politicians making a decision regarding simple right or wrong. Where the 'right' decision may result in losing votes.
The 'wrong' decision maintains the status quo, but they keep their jobs. How's that for common good.