In the spirit of International Workers Day, I’m gonna expropriate the labors of a couple of regular commentors. Schrodinger’s Cat highlighted some particulary Friedmanwankery the Moustache of Understanding’s latest column:
We now live in a 401(k) world — a world of defined contributions, not defined benefits — where everyone needs to pass the bar exam and no one can escape the most e-mailed list.
I thought this was the nut graf, insofar as a Friedman column possesses such a graf:
… If you are self-motivated, wow, this world is tailored for you. The boundaries are all gone. But if you’re not self-motivated, this world will be a challenge because the walls, ceilings and floors that protected people are also disappearing. That is what I mean when I say “it is a 401(k) world.” Government will do less for you. Companies will do less for you. Unions can do less for you. There will be fewer limits, but also fewer guarantees. Your specific contribution will define your specific benefits much more. Just showing up will not cut it…
But commentor PeakVT introduced us to the best reaction, from Felix Salmon:
… In other words, we’re in a vicious cycle, where low incomes create low demand which in turn means that there’s no appetite to hire workers, who in turn become discouraged and drop out of the labor force. Blodget’s third chart is one we’re all familiar with: the employment-to-population ratio, which fell off a cliff during the Great Recession and which will probably never recover. The current “recovery” is not actually a recovery for the bottom 99%, for real people who need to live on paychecks. And today is exactly the right day to point that out.
Conversely, today is exactly the wrong day to declare that these broad and inexorable trends are not really big top-down trends at all, and in fact merely reflect the inability of individual workers to “access learning, retrain, engage in commerce, seek or advertise a job, invent, invest and crowd source”. And yet that’s Tom Friedman’s column this May Day… Friedman is a billionaire (by marriage) who — like all billionaires these days — is convinced that he achieved his current prominent position by merit alone, rather than through luck and through the diligent application of cultural and financial capital…
The ultimate Friedman kick in the balls, however, doesn’t come from his lazily meritocratic priors. Rather, it comes from his overarching metaphor: the idea that if you have a 401(k) plan, then you’re somehow in charge of your own destiny. Friedman might be right that we’re living in a 401(k) world, but if he is then he’s right for the wrong reason. In Friedman’s mind, a 401(k) plan is an icon of self-determination: you get out what you put in. “Your specific contribution,” he writes, italics and all, “will define your specific benefits.”
In reality, however, a 401(k) plan is an icon of futility and the way in which the owners of capital extract rents from the owners of labor. Yves Smith is good on this, as is Matt Yglesias, although the real expert is Helaine Olen: the 401(k) is a way for both your government and your employer to disown you, and to leave your life savings to be raided by the financial-services industry and its plethora of hidden and invidious fees. The well-kept secret about old-fashioned pension funds is that, for the most part, they’re actually very good at generating decent returns for their beneficiaries. They tend to have extremely long time horizons, and are run by professionals who know what they’re doing and who have a fair amount of negotiating leverage when they deal with Wall Street. Savers are always strengthened by being united: disaggregating them and forcing them to take matters into their own hands is tantamount to feeding them directly to the Wall Street sharks….
Petorado
The 401(k) is the brilliant way to get the majority of the population to really believe that if the Dow Jones goes down it’s bad for all of us, and if it goes up it must mean prosperity for all. Which of course is bullshit.
S. cerevisiae
Freedom and equality! You are free to live under an overpass just like Bill Gates is.
BGinCHI
You are Tom Friedman if:
–You barely work but make a huge salary
–Your retirement looks exactly like your current work schedule
–Your mustache shows no signs of stress or worry about finances
–You are too fucking stupid to realize that there are other people in the world in what is generally called a “class structure”
–You are in the line to Hell right behind David Brooks
Johnnybuck
Yeah, and so in the Georgia, at good ol’ Zell Miller’s Alma mater degrading hazing is going on apparently with faculty and alumni in attendance, and there’s a cover-up reaching up to the President of the college, one Cathy Cox, a possible Democrat candidate for the open seat in the Senate.
BGinCHI
@Johnnybuck: You can’t make peach-aid without hazing some peaches?
? Martin
Over the last 20 years, the S&P 500 has averaged 8.2% return. That’s starting from a recession and ending at an all time high. About as good as you can hope.
My pension has averaged 7.5% over the same period.
Any investment vehicle I could have chosen would have eaten up the 0.7% gap through amortized fees. And the market is going to do what it does independent of when I start working or decide to retire. I’ll need to shift out of that 8.2% return quite far out to ensure I’m not in some 2009 chasm when I plan to retire, and move into bonds or cash, which will return half that rate at best. The pension has no such issues – there’s a constant flow of new workers entering and old worker retiring that the whole thing just comes out in the wash.
catclub
TSP.gov apparently beats private company 401k programs all to pieces. Lower costs (lower than Vanguard). no fees. You can transfer you IRA INTO your TSP account.
private company 401k programs have fund operators paying payola to 401k managers to include their funds (they get it back by raising fees), the 401k managers pay payola to the company management and getting it back with excess fees and expense ratios. The only ones not getting paid in this game are the employees
RaflW
John’s rant above this post is epic, but this, this is why the moustache should be ripped bodily and with serious pain from the face of that billionaire uber-prat Friedman.
Jim, Foolish Literalist
he would be referring to all the semi-invisible drones who actually work hard around him to make his pampered life more pampered, doing things a tad more physically demanding than typing and making phone calls: The waitrons, the cleaners, the gardeners, the… cab drivers. They “just show up”
Though in fairness I think at the worst of crash Friedman’s in-laws fell from billionaire status to mere hundreds-of-millions-aire status.
James E. Powell
I just can’t take anymore Friedman. I can’t even talk abouto the guy without getting furious. Yet my tote-bagger friends regard him with respect and find comfort in his wisdom.
The prophet Nostradumbass
Friedman yammering on about 401ks in this way is particularly offensive when you consider that, due to his being married into an extremely wealthy family, he doesn’t actually need a retirement account of any kind.
Villago Delenda Est
It’s easy to be so cavalier about all this when you married into rentier billions.
Friedman really needs to be put to a slow death.
Gex
I have officially had it with 2013. Well, I suppose I got to that point in January.
On January 1st, I posted “Good riddance 2012. By far the worst year I’ve ever had. Happy New Year!” Two days later Kate was in the hospital.
I had to make a decision whether I was going to make a claim against the estate. A key question I asked the attorney was whether I could sell the house before probate is up. She said yes. Given that the house costs me over $2k monthly in upkeep, when I sell it can make a big difference. It would be possible for me to lose money pursuing the equity in the home. I made that decision in February.
Last week the attorney told me that I can’t sell it for 70 days. Way to wait until the check cashes. Gee, I wonder how lawyers get bad reps? Hey lady! Perhaps that info might have been helpful when I was asking questions about when I can sell it. If I knew all the ins and outs of probate, I wouldn’t need your expertise now would I?
Just about every time I’ve scheduled a trip to deal with the apartment people we have a snow storm. Today’s threatened snow storm kept me from picking up the keys and moving my couch in. So instead of the boost I was looking forward to getting the keys to my new place, I’ve been sitting home alone instead.
Oh, and I woke up this morning to my first dream about Kate. I’m almost positive that is why I have not been able to sleep tonight.
Anyhow, suffice it to say, 2012 did not hold the Worst Year title for very long.
ETA: And if I have to reschedule the pool opening again due to a snow storm I am going to lose my friggin’ mind.
Tom M
Now, if only the people with an available 401(k) could afford to make that 4 or 5% of their salary contribution each month. Our company has a decent program but only 40+% contribute because the lower wage employees actually have to live paycheck to paycheck.
If Friedman is correct, or will be in six months, I guess they are pretty much fucked. Alas, I knew them well.
dr. bloor
Unless, of course, you manage to marry a supermarket heiress.
Patrick
I could be OK with that if this also means that I can trust my government will no longer use MY money for dumb wars, like the Iraq war, that the far far right wants. If they want the wars, let THEM pay for them.
Tokyokie
@The prophet Nostradumbass:
@Villago Delenda Est:
Exactly. Wish I had been self-motivated enough to marry a billionaire heiress. Instead, I was laid off from my declining industry (the same one that provides that loathsome asshole his position of influence) in my late 50s and am now training for a completely different career, and if things work out, I just might get in enough time in the new field to enjoy a somewhat comfortable, albeit belated, retirement. And all the while he will pontificate as to how the other 99.9% should live their miserable existences in a way conducive to his continuing to enjoy the life of luxury that he achieved through no particular talent of his own (while encouraging wars of aggression and other crimes against humanity).
As Cole says above, FUCK HIM. He needs to be perpetually accompanied the rest of his not merely useless but detrimental existence by a 6-8, well-spoken goon who will punch him in the face every time he utters a line of bullshit, who will then explain just why it is bullshit. I figure the Mustache of Understanding would learn to keep his sore-ridden gob closed or bleed out within a week, and either would be a boon for humankind.
thalarctos
Disaggregation is what it’s all about. You, on your own, vs. Wal-Mart. A population atomized and prostrate, turned from humanity into meat.
Not a jackboot, but a Gucci loafer stepping on a human face, forever.
cleek
@Petorado:
this, this, this.
i didn’t give a crap about the DJIA until i had a 401k. now i watch it as anxiously as if i was watching the approach of a storm. which, i kindof am.
liberal
@catclub:
OK, I know. But if every f*cking 401k sponsor out there used a firm with expense ratios in the neighborhood of the Vanguard ones, we’d be much better off.
My plan sponsor just switched from one jerk-off outfit to another. The fund expenses aren’t super high by 401k standards, but why the f*ck can’t they just use Vanguard or some other similar outfit?
liberal
@cleek:
If it’s like that, you’re not investing right. Though given crappy fund choices, that might not be your fault.
RaflW
@thalarctos:
Which is why the Scott Walkers of the world are so evil. He’s putting the penultimate nail in the union coffin. Any police or firefighter who doesn’t think the GOP will eviscerate their unions next is a fool as well as a public servant.
Long term, the thing that might, might! save us will be if the Bangladeshi and Indian labor start to organize. Their working class is growing, and things like the the horrible building collapse last week may start to lead to labor organizing, a bit like the shirtwaist fire here.
If developing world labor can organize, some of the impetus to offshore every damn job better than a Subway sandwich ‘artist’ will wane. Wishful thinking, I suspect. But I gotta try and find some hope.
The Crooks and Brooks and Friedmans of this world are making it all seem so bleak.
kc
Shorter Friedman: “Workers: Suck. On. This.”
schrodinger's cat
AnneLaurie@top
Thanks! for the FP mention. WoW (whiskers of wisdom) kitteh appreciates it
pajaro
@schrodinger’s cat:
I know you think you have had about enough Tom Friedman, but you haven’t if you have not read thomasfriedmanopedgenerator.com
mclaren
@? Martin:
You’re an ignorant liar. It depends entirely on when you invest. People who invested in the S&P 500 back 2001 made a killing if they sold by 2008. If you invested in the S&P in 2008, you didn’t make jack if you held onto your stocks until 2013.
Long-term averages are bullshit when you talk about the stock market. Almost all the profit in stocks is confined to tiny 3- and 4-year periods where the market skyrockets. And you get completely wiped out if you hold the stocks and get caught in a crash like the dot-com collapse in 2001 or the massive crash in late 2008/early 2009.
To get the real skinny on investing, check out this article from the arxiv:
WARNING: Physics Envy May Be Hazardous To Your Wealth! by Andrew W. Lo, Mark T. Mueller
The bogus garbage math and junk science purveyed by ignorant fools like Martin suggests that the stock market is a linear system, profits accumulate steadily, therefore “buy and hold” is foolproof investment strategy, etc. Bullshit. The stock market is a nonlinear system, profits skyrocket and collapse, and buy and hold can be a disaster if you buy at the wrong time.
Mike G
It’s the elites’ same old con game exploiting American “individualism” culture and the fallacy of overflowing opportunity and meritocracy for all.
You don’t need to be part of a mediocre pension fund — with your personal awesomeness, you’ll get WAY richer as a self-reliant individual investor with your 401k! (Just ignore the disparity of skills, information, fees and severely restricted range of investments).
You don’t need to be part of a mediocre union — with your personal awesomeness, you’ll get WAY richer as a self-reliant individual employee in corporate America! (Just ignore the lack of opportunity and recognition, and the talentless douchebags who end up most of the promotions and bonuses).
You don’t need a stable job at a corporation — with your personal awesomeness, you’ll get WAY richer as a self-reliant contractor! (Just ignore the lack of benefits, or job stability, and that most end up earning less in the long run).
They never mention how far the game is rigged against the individual by these massive institutions; there’s always another sucker with Galtian daydreams of his own brilliance.