Why Can’t They Just Leave Us Alone?

We had Obamacare, now we have ObamaSave. It’s the proposed rules on retirement courtesy of President Obama. When you roll over a 401(k) to an IRA, you will have to be advised by someone acting in your best interest. Do you know who acts the best in your best interest? You.

This is pure stupidity and just layers on another cost.

As a matter of fact, there should be zero cost to undertaking this transaction. Just roll it over. Pick an online broker. All of them have plenty of information on their websites. If someone wants to go outside of an online brokerage website to find information on how to invest, there is a cornucopia of information out there. This is not rocket science.

There are computerized algorithms that can invest for you. There are computerized algorithms like Riskalyze that can keep your investments aligned with your risk tolerance.  The shows that Eugene Fama was right.  For 99% of the people out there if you put your money in a no load mutual fund which replicates the market, you will do better than if you pay a bunch of fees to advisors that actively manage money.

Why can’t government just leave us alone? They re-engineered health care, badly. Total fail. They had a curriculum redo in education, total fail. They over regulated and over subsidized in energy policy. Total fail. They re-regulated housing, total fail and totally misaligned with core microeconomic concepts.

It’s really time to recognize how badly the regulatory state is in America.  It’s time to recognize that individuals acting in their own self interest do better for themselves than a government bureaucrat creating a one size fits all solution.  Today, they gave the Economic Nobel Prize to Angus Deaton for his research on consumption, poverty and welfare.  Guess what? He doesn’t agree with Thomas Piketty who got so much play in the chattering class.

Deaton developed the Almost Ideal Demand System – a flexible, yet simple, way of estimating how the demand for each good depends on the prices of all goods and on individual incomes.  Again and again, what we find in economics is that it depends on the individual.  This means that the more power and choice policy gives to the individual, the better off everyone will be.

That means that instead of some broad based education spending, giving vouchers to individuals would work better.  It means instead of a bloated Obamacare program, setting up individual health savings accounts would be better.

Here is what he says about global poverty,

Mr Deaton’s most recent book, “The Great Escape” was published in 2013. In it he argues that foreign aid from western government’s has done more harm than good to developing nations, saying that it has helped prop up corrupt governments and rarely reaches the poor.

“The idea that global poverty could be eliminated if only rich people or rich countries were to give more money to poor people or to poor countries, however appealing, is wrong.”

What a surprise.  The trillions the US spends on foreign aid doesn’t do anything to change the cycle of poverty?  Pinch me.

It is high time for government to recognize that it should empower the individual, not the collective.  The village will be better when we are all making choices that maximize our own pursuit of happiness. By the way, technology has arrived that allows you to do that every day.  You hold it in your hand.