@Phil Sage (sagenz)

Hi Phil,

The way I see it, those are specific assumptions about individuals in society that I would be uncomfortable making – but it is perfectly reasonable to make them as you have as long as they are mentioned.

However, I wouldn’t call it a “public” benefit per see – as it really just stems from people ignoring their future selves too heavily rather than impacting on other people (which is the public bit).

The point is the public benefit of people being forced to save. That is the non economic benefit that building an equity stake will have on people’s self respect and happiness. Someone who is completely reliant on the state in their declining years because they never had the discipline to forgo current consumption will be less happy than the individual who has built a pool of funds to assist their retirement.

The investment available from compulsory super will also provide positive benefits to the economy by making more local money available. I understand your previously made points about the pool of money for investment being effectively infinite for NZ purposes but that money still requires a return and it sacrifices independence to foriegn actors in favour of current consumption.

Hi Phil,

People can defer consumption now voluntarily – if they don’t then it is fair to assume that they don’t want to. If someone genuinely doesn’t want to defer consumption they shouldn’t have to IMO.

If there is a problem with universal superannuation that is truely a seperate issue – as you say “taxation is compulsory and superannuation is currently paid by the small number of high taxpayers in favour of the lower earning high current consumption voters”, so it acts as a form of redistribution. If the redistribution is socially preferable it is socially preferable – if it is not it is not.

Given that the scheme is universal, it doesn’t influence marginal savings anymore than the benefit influences marginal work.

In order to justify compulsory super we HAVE to say one of two things:

1) People are irrational,
2) There is some public benefit from an individual being forced to save.

I have heard both these arguments, and I’m not sure if I personally believe them.

I am not a fund manager and actively try to avoid being placed in the position where my money is tied up with fund managers. I describe myself as financially sophisticated with libertarian instincts.

And yet I am in favour of compulsory superannuation saving. Not because I seek to feather my own nest but because I recognise that it is improving future prosperity by deferring current consumption.

The reason that a period of compulsory saving is necessary is that taxation is compulsory and superannuation is currently paid by the small number of high taxpayers in favour of the lower earning high current consumption voters.

That is inequitable. When people are enabled to provide for their higher future welfare through deferral of current consumption the situation is more equitable for lifetime welfare for more people.

Phil, I believe it is up to the farmer to decide what they want to do – that is all.

“Wonkian analysis uses the jargon of economics while ignoring its content.”

Love that. Thanks Paul.

“I am most skeptical of the argument that compulsory superannuation will deepen local capital markets, as I dont think it is necessarily true (or even that it would be a good thing if it was).”

Completely agreed.

“The “transformation” of the Australian economy”

Agreed with the quotation marks here 😉