adrian2 wrote:Via prefblog, a debatable idea from Bogle:
Bloomberg wrote:John Bogle, founder of fund manager Vanguard Group, echoed Miller in his testimony before the committee, saying, “the 401(k) plan is an idea whose time has come” yet “our existing defined contribution system is failing investors” because of high fees, low levels of saving, excess flexibility that permits cashing out and too much borrowing and inappropriate asset allocation. Bogle recommended a single defined contribution plan with annuities from low-cost providers. The single system would be overseen by an independent Federal Retirement Board to protect the interests of plan participants, Bogle said.
Retirement savings are too exposed to market risk, according to Dean Baker, co-director of the Center for Economic and Policy Research in Washington and another witness at today’s hearing. Baker proposed a government-managed system that would provide a modest rate of return for employees. He said it would build on Social Security and allow workers a voluntary default contribution of at least 3 percent of their salaries.
Employees must work longer to extend retirement savings and Social Security, which “has shined during this crisis,” could be stabilized and supplemented by target-date funds, said Munnell. Target-date funds shift money into more conservative investments as an investor approaches retirement.
Arms-length, opt-out, supplementary pension schemes have, over the past year, rather quickly become the consensus default, it seems.
As has another Bogle take on greed:
[url=http://online.wsj.com/article/SB124027114694536997.html]A Crisis of Ethic Proportions
We must establish a 'fiduciary society.'[/url]
Commerce, business and finance have hardly been exempt from this trend. Relying on Adam Smith's "invisible hand," through which our self-interest advances the interests of society, we have depended on the marketplace and competition to create prosperity and well-being.
But self-interest got out of hand. It created a bottom-line society in which success is measured in monetary terms. Dollars became the coin of the new realm. Unchecked market forces overwhelmed traditional standards of professional conduct, developed over centuries.
The result is a shift from moral absolutism to moral relativism. We've moved from a society in which "there are some things that one simply does not do" to one in which "if everyone else is doing it, I can too." Business ethics and professional standards were lost in the shuffle.
The driving force of any profession includes not only the special knowledge, skills and standards that it demands, but the duty to serve responsibly, selflessly and wisely, and to establish an inherently ethical relationship between professionals and society. The old notion of trusting and being trusted -- which once was not only the accepted standard of business conduct but the key to success -- came to be seen as a quaint relic of an era long gone.
The proximate causes of the crisis are usually said to be easy credit, bankers' cavalier attitudes toward risk, "securitization" (which severed the traditional link between borrower and lender), the extraordinary leverage built into the financial system by complex derivatives, and the failure of our regulators to do their job.
But the larger cause was our failure to recognize the sea change in the nature of capitalism that was occurring right before our eyes. That change was the growth of giant business corporations and giant financial institutions controlled not by their owners in the "ownership society" of yore, but by agents of the owners, which created an "agency society."
Webring
