Saturday, September 23, 2006

A Power Liberal case for Social Security choice

Posted by Craig Westover | 7:49 AM |  

I posted a comment the other day at the Power Liberal site making a point I’ve made here often; Amy Klobuchar’s mutual fund holdings in oil companies are no big deal -- every person that has mutual funds in their retirement plan is invested to some degree in oil companies. Klobuchar’s hypocrisy, if you can call it that, is that she claims to be working for the middle class, but wants to implement policies that arbitrarily change the rules, redistribute oil company profits, and indirectly hurt the investments of millions of middle-class families and fixed-income individuals with mutual fund investments. REW takes me to task --


Want to know what I did Thursday? I went to M&I banks downtown. See, I have an employer run 401K, and now that I don't work there, I needed to flip the funds into an IRA.

The banker sat down and explained the American Growth fund that I had 20% of my funds in currently. After going through the paperwork, I learned what bits they invested in. Part of it is in oil.

I now officially know that rather than having money in various funds in my IRAs, I have "thousands of dollars in oil."

But the interesting part of this "high risk, high yield" growth fund that I have is that the other part of the fund is invested in something that will do well if oil does tank (ha!), to try and buoy it up.

That's how investment funds work, they have variety to balance in case one thing doesn't perform well. Yep, even those high risk funds that they encourage those of us who have 30+ years before retirement to take advantage of.
That’s an interesting response, coming from the Power Liberal, because she’s just made a very powerful argument for choice in Social Security.

(Yes, I'm taking her comment out of the context of the thread, but REW is a pretty straight-up lady. I don't think she'd change her opinion of mutual funds just to fit the issue she's talking about. I'm going to take her at her word and trust that what she says here about mutual funds is what she really believes.)

A smart and prudent person, REW is putting some of her discretionary income into her retirement. I’m going out on a limb and guessing that she doesn’t think of her investment as a “risky stock market scheme,” and she’s probably not too upset that she’s paying some fees and commissions along the way for the service of people that know more about investing than she does. I’m also going to guess that she expects a decent return on her money, and if she doesn’t get it, she might change investment firms.

Now, the big question -- so why if REW thinks she’s smart enough and willing enough to choose investments to make with her own money, why isn’t she smart enough and willing enough to do it with the percentage of her pay that is taken for social security. Why is she against letting other people make that decision for themselves?

Again, we have an example, as with Klobuchar’s mutual fund investments in oil, of liberal policy that is impractical to follow in real life. If REW really believed that allowing people to put social security dollars in mutual funds was a “risky stock market scheme meant to enrich Bush’s friends in the investment industry,” then instead of rolling her 401K into a mutual fund, wouldn’t she have purchased some nice safe Treasury Bonds?

Of course not. She wants a better return than Treasury Bonds give her. And she should. But by investing in mutual funds, she is acting exactly contrary to the political position that government knows best how to invest for our retirement. Even for Power Liberals, liberal policies don’t work in the real world.