Bill Ackman in his firm, Pershing Square's recent interim financial statement release to investors makes a rather unconventional proposal to reduce economic disparity in the United States and ensure every American the right to retirement. This proposal entails spending approximately, $26 billion annually or $6,750 per person, assuming birth rates remain constant to create retirement accounts for each person which would be invested in a basket of index funds whose returns if compounded at the average annual return of the past few decade of roughly 8 %, should provide in excess of $1 million for retirement. Of course, this is contingent upon access to the account being restricted until the individual turns 65 or retirement age at which point they opt to make account disbursements.
To put the cost of this proposal into perspective, the United States spends more than $80 billion annually on education alone. Hypothetically, if it were to cut spending on education subsidies and grants which presently fail to adequately address the ever increasing socioeconomic disparity and inability for citizens retire to secure funds for this new program, then it may be worth the risk; especially, if it succeeds to achieve what education often cannot for those of lesser means.
The average millennial will require approximately $1.8 million to retire and a typical Gen Z'er will need around $2.6 million. This comes out to about $14,787 which equates to $57 billion, far less than the government pends on education. Implications of this idea consist of proxy voting for all citizens who determine the vote of the large mutual funds who in turn participate in voting as to the governance of the companies. This effectively allows citizens to have a stake in the companies they work for, and vote regarding how they should operate and govern themselves; thus, rendering our system more democratic and equitable without destroying capitalism or raising taxes above the Laffer curve.
No comments:
Post a Comment