It would appear there is a building argument against the "Free market economy" as opposed to the free enterprise economy of 40 years ago. The definition of which is the management of the economy by private individuals. We now see the effects of that in the loss in the wealth of average Americans of 25% that continues even today.
We see Goldman Sachs quite profitable while the unemployment rate continues to climb, it was Goldman Sachs that was instrumental in removing the regulations that protected Main Street, people like Bush. Gramm and Greenspan were enablers
We see it in the $1.4 million the insurance companies spend per day to thwart health care reform. Fully half of Congress has been bought and paid for by Wall Street and the Insurance companies to insure their continued profitability and control as America sinks into the abyss.
It would appear giving the responsibility of financial policy and health care policy to the private sector was not the best thing for the greater good of American and that is what the ???Free Market Economy??? is all about.
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Good Luck With That Retirement!
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A similar trend can be seen in private-sector retirements savings. Over the last few decades, America has embarked on an experiment to replace defined-benefit plans, pensions that guarantee a certain level of income to retirees, with defined-contribution plans, in which assets are based on a combination of individuals' and companies' contributions to 401(k) plans and the performance of the markets. This excellent report from the Boston College Center for Retirement Research found that in 2007, 63 percent of workers had only a 401(k)-type plan, compared with 12 percent in 1983. Before the recession began, there was good news and bad news. The good news: 91 percent of companies offered matching contributions to employees. The bad news: employees simply weren't saving much. In 2007, according to the report, the typical worker aged 55-64 had a 401(k) balance of only $73,000.
And since 2007, 401(k) investors have been hit by a triple whammy. First, markets have slumped sharply. The Center for Retirement Research estimates that a typical 55-64 401(k) investor with two thirds of assets in stocks would now be down to $56,000. Second, big private-sector job losses means fewer people have paychecks from with to deduct 401(k) contributions. Third, those who still have jobs are finding that employer matches are dwindling. As U.S. News reports "Some 22 percent of companies report they have recently reduced their contributions to employee 401(k) or 403(b) accounts, up from 12 percent in February and just 2 percent in October 2008, according to a Watson Wyatt survey of 141 employers conducted this month." The 401(k) has become a 201(k).
Some of this misery could be cyclical. In theory, as the economy comes back and employment and the markets rise, 401(k) contributions and health-care coverage will return. Alas, that ignores the trend line showing that the percentage of people receiving employment-based health-care coverage fell every year since 2000, a period of low unemployment. It's just as likely that matters will worsen. We could be in for a couple of years of slow growth, cost-cutting and a weak employment market, which would only accelerate the trends of companies shedding health care and slashing 401(k) benefits. And we haven't even discussed the crisis surrounding old-style defined-benefit pension plans.
So as the days of fiscal reckoning for Medicare and Social Security draw nearer, more people— not less—will be looking to the government for health and income insurance. That may turn out to be the real entitlement crisis.
© 2009
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