Coerce On Our Behalf, Says Professor

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Australian
Law Professor Mirko Bagaric says forcing people to pay money into
tumbling markets is cruel. Superannuation
is coercive
, he says, and the superannuation industry is the
main winner from forced saving, earning hundreds of millions dollars
revenue from fees and charges.

He also decries
the use of compulsory superannuation to reduce the take-home pay
of young families. We can coerce them later, he says, when their
kiddies are a bit older.

The Professor
concludes that superannuation is flawed because we don't have enough
of a say in it. The solution, he says, is to guarantee that superannuation
returns do not fall. In other words, pass a law that bans bear markets.

Excuse me?

Yes, you read
correctly. The Professor wants a guarantee that super funds will
never lose money. Coercion is wrong, but Government should use coercion
to act in our best interests to guarantee gently ascendant prosperity.
Nirvana, here we come!

Retiring doesn't
come cheaply. Fewer workers will have to support all those retirees
claiming government-guaranteed pensions and benefits. What to do?
Government-sponsored geniuses dreamt up a compulsory
superannuation system
. Money taken from you is given to someone
else to "invest." We needed to do this, apparently, because
people knew they could get a pension and weren't saving "enough."

So take some
populist policy, use force to implement it and hey presto! Government
intervention created an entire
industry
.

Government
has always been about using coercion to force people to do stuff.
We are told that saving money in superannuation is good for us,
because it's an easy path to wealth. Just hand your cheque-book
over to the professionals,
and nobody will get hurt … much.

Those pesky
baby boomers intent on claiming pensions, cheap prescription drugs
and medical benefits might have to keep working. Thankfully, the
Professor knows we all like
our jobs
and want
to keep them
.

But there's
a problem. Apparently the stock market is not encouraging "compliance
with fundamental moral norms that affect the wellbeing of others."
How dare it. Seems that the stock market, supposed to always go
up, is currently going down. Well, we're from the Government and
we're here to help! We can pass a few laws, and bingo! Your problems
will be solved.

Except that
using coercion simply hides the first problem by creating new ones.
Government use of coercion removes choice and substitutes dependency.
And of course, coercion is a bit like lying: one little lie invariably
leads to another. 

The Professor
is wrong in calling for Government to use coercion in a war on bear
markets. Injecting liquidity will not "fix" insolvent
banks; buying their toxic assets will share the problem around.
And cost us all, big-time.

Government
intervention will inevitably create more problems. But then, some
people thrive on hope. Expecting a different outcome from more government
meddling certainly suggests that.

Thanks to
Greg Pauling for editing this article.

October
6, 2008

Darren
Tulk [send him mail]
currently schlepps for Leviathan.

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