A Critical Point of Differentiation in Framing

There are a couple of quotes that I want to pull from articles that I read this morning.  The first is from WSJ editorial writer Bret Stephens.  Stephens is writing about the collapse of Western Civ in education; and how Trump has leveraged this.  Stephens is no fan of Trump, but he is certainly a conservative or more appropriately a classical liberal which amounts to being a conservative these days.

Western Civilization (my add in italics) understood that its moral foundations had been laid in Jerusalem; its philosophical ones in Athens; its legal ones in Rome. It treated with reverence concepts of reason and revelation, freedom and responsibility, whose contradictions it learned to harmonize and harness over time. It believed in the excellence of its music and literature, and in the superiority of its political ideals. It was not ashamed of its prosperity. If it was arrogant and sinful, as all civilizations are, it also had a tradition of remorse and doubt to temper its edges and broaden its horizons. It cultivated the virtue of skepticism while avoiding the temptation of cynicism.

Personally, I am very interested in what happens to the Department of Labor ruling on retirement savings.  It strikes me as weird that the Department of Labor would stick it’s nose into finance.  It also strikes me as weird that we have to have a 1000 page edict to make sure people treat other people ethically.  The folks at Riskalyze have blogged extensively about the DOL law.  Trump has indicated that his administration would look at it.  Today in the WSJ, liberal Jason Furman passionately defends it.  Here is a quote that I want you to ponder:

Because the tax code subsidizes retirement savings, the government has an important role to play in ensuring their safety and security.

The individual, and corporate tax code in the US is totally screwed up.  It creates all kinds of economic incentives that are not optimal for efficiency.  We need to fix it with an eye on efficient economic outcomes, not lobbied outcomes.

Putting these two quotes together sums up the current divide in America quite nicely.  Do we start the framing of things from the basis of what government allows us to do-or what we allow government to do to us in order to run a civil society?  The way I read the Declaration and Constitution it’s the latter.

Is it my work that earned the money?  Or is it the government’s money since they print the currency and write the laws/regulations?

Why does the government have to have a special tax code for retirement?  What if the tax code was a flat, straight consumption tax?  Would the DOL law go away?  Should we let private companies innovate in the way they set fees and allow people to be free to choose?

The other point is if you don’t believe the first one, it’s pretty hard to think critically about the second.

 

 

 

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  • Andrew Page

    Are the special tax codes for retirement referenced here the 401(k) and other employer-provided defined-contribution plans that have special tax treatment?

    If those were to be eliminated, would old fashioned defined-contribution pensions for retirement savings take their place again?

    On the DOL law, I like Matt Levine’s take:

    https://www.bloomberg.com/view/articles/2017-02-06/fiduciaries-rules-and-progressives

    I wouldn’t place Trump in the small government category until there’s proof in the 2018 budget to be released in March. I think his administration would be walking the walk if there are significant spending reductions and a plan to reduce federal govt debt in that budget. For now I appreciate Levine putting him in the doublethink-populist category:

    “Anyway, one thing about America in 2017 is that a successful populist presidential campaign resulted in the former president of Goldman Sachs announcing plans to make it easier to rip off retirement savers.”