Dear Friends,
It seems to me, anything put in the hands of government is quickly politicized, because politics is the nature of government, and a thing cannot divest itself from it’s very nature. So why would we want to put anything, let alone our retirement, in the hands of politicians? That is an absurdity. It is an assured way for the people to get bilked eventually. Put our retirement funds in a universal account that draws it’s income from dividends and bond payments instead, rather than the “full faith of the government,” and the people are far more likely to profit. Especially, since we are not being forced to pay off the government’s debt to us, at gun point. The answer to universal retirement is, Capitalist Social Security (CSS), I have put forth this idea in the past, and in this article I will revisit the concept.
The central theme is to create a fund independent of government, but government sanctioned, that invests in firms that pay dividends and to a lesser extent, in bonds. Chartered by the shareholders with minimum overhead. The goal of the CSS fund would be to drive corporations to productivity, rather than conniving, create a safe vehicle for the public to invest their hard earned money, and drive down speculation, in favor of long term investing to grow innovation and production, while diminishing profits by political favor. The beauty of this idea is in it’s multi generational design. Once someone invests money, that money cannot be withdrawn, but will pay dividends forever, to them, their heirs and their heirs, until the end of time… or the end of the CSS fund, whichever comes first.
The CSS fund would be required to invest only in firms that pay dividends. The stock would be held onto until the dividends become jeopardized or are cut. Then the fund would divest the same amount of stock as the dividends are cut. No firm could be owned more than forty nine percent by the CSS fund. Moreover, every CEO, board member and executive leading firms that cut dividends, pay fines for corporate wrongdoing, or any other management misconduct… would be blacklisted by the CSS fund. Firms they are involved in would be off limits to investment and or divested if they become involved. Controls on executive pay would also be required. The principle agent dilemma would not be tolerated. The CSS fund would only invest in firms and bonds to grow the productive base and foster innovation.
Once someone invests in the CSS fund they will have options. They could take immediate dividends from that investment, reinvest dividends until they reach any age they wish, or differ payments for their heirs. Once a CSS fund share is passed to someone they will be given the same options. As the fund grows, so will the payments. The CSS fund will distribute fifty percent of it’s monthly earnings as dividends and the rest will be reinvested to grow income. That fifty percent dividend will be evenly distributed per share to the owners… every month. If there were five shares for example, and the monthly earnings was twenty dollars, ten would be reinvested and ten would be distributed to the shareholders… two bucks each. That income would continue “forever…” and grow.
A CSS fund would counter drastic swings in the markets, acting as a dead weight, giving the markets a moment of inertia they don’t presently have. This would smooth out recessionary pot holes. The predilection of the trustees, of any fund, to engage in politics might be stifled by using some form of AI, to administer the buy and sell contracts. The code would have to be open sourced… obviously. Such a system would create an underlying ocean of wealth in the hands of working people. Providing capital for innovation, and increases in productive capacity, it would also smooth the transition to a zero unit cost of labor economy. The CSS fund would also create consequences for the malfeasance of corporate executives. A CSS fund would be a boon to any nation that implemented it.
Sincerely,
John Pepin
