Monday, December 20, 2004
Bush's plan for reforming Social Security is a BAD IDEA... here is REASON #2...
According to Bush, there will be "reasonable guidelines" that will restrict our investment options, to keep us from investing OUR money in, according to Bush, a "frivolous fashion". What this means is that the government will determine what is and what is not a suitable investment and whether a company is included on the list will be determined by the government's assessment of whether the company meets the criteria, such criteria being determined by whatever politically correct standards' exist at the time.
And what standards will be established (it's for our own good, remember)? Let's start by remembering who is going to write the rules. It will be the Washington bureaucracy, which is very liberal, notwithstanding GOP control of both Congress and the White House, and which in turn takes their marching orders from liberal advocacy groups.
So, we'll end up standards that mandate proper (racial and sexual) diversity of management. Proper 'concern' for the environment. Whether the company takes steps to avoid 'obscene' levels of profitability. Whether the company shows the proper respect to its workforce (evidenced by the presence of a union). The degree to which the company is supportive of the 'community' (whether they contribute to various interest group shakedowns). Whether the company plays nice with its competitors. Whether the company and everybody in the corporate supply chain contributes to the social good (no outsourcing, no moving operations overseas, no purchasing from countries that don't enforce stringent labor and environmental laws). Whether company's products and services are 'worthwhile' and contribute to the good of society, as opposed to those companies deemed irresponsible (by the plaintiff's bar). And so on.
Notice I haven't included anything about maximizing profits. Or about earnings growth. Or ROI. Or the level of product innovation. Or the growth curve of revenue per employee. Or any of the standards currently in vogue for determining whether a particular investment will pay off. This is because, in a world where (liberal) interest groups get to write the rules, these standards don't matter.
As with automobile manufacturers who can not afford to write off the California market and are forced to design their entire product line around the far more environmentally strict California standards, no company will be able to have their stock declared off limits to a significant portion of the investing public. Thus corporate management will be forced to run their businesses, not to maximize profit opportunities, but rather to comply with the standards established by the Washington-based liberal advocacy groups. Which can only lead to companies forsaking profitable opportunities, being less efficient and less responsive to the marketplace and changing economic and market conditions, to MAKING LESS MONEY for their shareholders.
Does anybody think Bush is really looking for this to be his legacy... the idea that Corporate America will exist to meet the needs of the bureaucrats, and not the needs of their investors?
UPDATE: Ramesh Ponnuru at NRO was kind enough to link to this and offer his thoughts... to which I've responded here