Listen now | What if we bought the fossil fuel industry?
Ian and Rachel -
There's a problem. If, as Ian says, his proposed approach would also require that 6% annual 'return' on the money held in pensions, this system would be coupled to a growth economy -- to perpetual economic growth. That would not be such a problem if the economy could continue to grow indefinitely, or even over the next decade or two. But the economy cannot continue to grow indefinitely, nor is it likely to be able to grow over the next decade and two, as we phase out fossil fuels -- which are approximately presently 84% of world energy consumption. (My analysis has it that economic growth -- GDP/GNP -- necessarily ends with any rapid and dramatic decline in fossil fuels consumption.)
Tie this observation to something Nate Hagens recently said quite publicly, and which many others others generally understand, if these others understand the economy in biophysical terms. What Hagens said was (to paraphrase) "No industry on Earth could be profitable if negative economic externalities were to be internalized." The point of my mentioning this is to point out that economic growth in today's world can ONLY occur through a process of continuing and perpetuating a mode of economy which utterly depends upon negative economic externalities of myriad kinds, social and ecologica/environmental.
That 6% annual 'return' on investment, then, is inevitably tied to ecological destruction. There is no other way. It's all one great big accounting trick.
I think we all hear Nate Hagens. In short, this is "energy blind."
The 6% growth commitment, the details of which are left to "people smarter than [him]," requires more oil and gas, contradicting his premise.
If we're extending fiduciary responsibility to the conditions of the next couple centuries, which would be great, we can't do it at the expense of right now. The first step outlined after acquiring Big Oil- "what we would do, in that theoretical situation, is... allow him the space to go off and become an integrated oil company- however that is met- ... and he stops oil production, he stops drilling..."
Again, we're waving hands at some pretty significant details with "however that is met." But, larger, step one is stop oil production? So we make a better future by crashing gIobal civilization now?
The predicament distilled.
The idea of buying out FF companies to shut them down does not consider, that fossil fuels are a necessary requirement for a modern military and that the US military alone, would it be a country, would be the largest carbon hydrated using country on the planet. In other terms, when a country ever dared to sell it's oil and gas in different than US currency, it has been invaded by the US military or it's government has been overthrown by US foreign agencies. If we the people would by out the military and fossil-fuel industries, we would have the US military against us.
Generating 6% annual cash flow is only possible in a natural environment that supports life (I. e. stable climate conditions) and with plenty of free (that's fossil fuels) energy.
We need to combine the research of Simon Michaux, Steve Keen, William Mitchell and yes, Alan Greenspan. He said correctly: "funding the money to pay the pensions is never a problem (in a fiat currency system). The problem is to create the real resources at the time the pensioners need them."
On fiduciary duty and pension fund advisors: see Steve Keen's research published on Carbontracker:
It's about "how economists have destroyed our pensions by downplaying climate breakdown. "
Until today, I really didn't know a lot about pension plans -- partly because I'm not on any such plan.
While ChatGPT is of only limited accuracy and utility, I sometimes ask it questions as part of my research process on various topics.
Are modern pensions partly maintained through stock market investments of pension funds?
Yes, modern pensions are often maintained and funded in part through stock market investments made by pension funds. Pension funds are large pools of money that are set up to provide retirement income for employees or individuals when they retire. These funds typically invest in a diversified portfolio of assets, including stocks, bonds, real estate, and other financial instruments, with the goal of generating returns over time.
Stock market investments are a common component of pension fund portfolios because they have the potential to offer significant long-term returns. By investing in stocks, pension funds aim to grow their assets over the years, which can help ensure there are enough funds available to meet the pension obligations to retirees. The returns generated from stock market investments can help offset the costs of providing pension benefits, especially in a low-interest-rate environment where traditional fixed-income investments may not provide sufficient returns to meet pension obligations.
However, it's important to note that pension funds typically have investment strategies tailored to their specific goals and risk tolerance. The allocation to stocks versus other asset classes can vary from one pension fund to another based on factors such as the fund's funding status, the age and risk tolerance of the plan participants, and the fund's long-term financial objectives.
While investing in the stock market can potentially yield higher returns, it also comes with risks, including market volatility. Pension fund managers must carefully manage these risks to ensure that there are sufficient assets to pay retirement benefits to plan participants. As a result, pension funds often employ professional investment managers who make decisions on asset allocation and portfolio management to balance risk and return.
In summary, stock market investments are indeed a significant component of many modern pension funds' portfolios, helping to grow and maintain the funds needed to meet retirement benefit obligations. However, the specific investment strategies and allocations can vary among pension funds based on their unique circumstances and objectives.
Do those who expect to have a pension have the option of opting out of risking their pension funds on the stock market?
Whether individuals have the option to opt out of risking their pension funds on the stock market depends on the type of pension plan they have and the choices provided by their employer or pension plan administrator. There are typically two main types of pension plans:
Defined Benefit (DB) Plans:
In a defined benefit plan, retirement benefits are usually based on a predetermined formula that takes into account factors like years of service, salary history, and other factors.
Investment decisions and risks are typically managed by the pension plan itself. The plan sponsor (usually the employer) is responsible for funding the plan to ensure it can meet its benefit obligations.
Plan participants (employees or retirees) do not usually have direct control over the plan's investments or the option to opt out of stock market investments. They receive a promised benefit based on the plan's formula.
Defined Contribution (DC) Plans:
In a defined contribution plan, such as a 401(k) in the United States or a similar plan in other countries, individuals typically contribute a portion of their salary to their retirement account, and in some cases, employers may also contribute.
In DC plans, participants have more control over their investments and can often choose from a range of investment options, including stock market investments, bonds, and other asset classes.
Participants can typically decide how they want to allocate their contributions among these investment options, allowing them to have some influence over their exposure to stock market risk.
Some DC plans may also offer a default investment option, such as a target-date fund, for individuals who do not want to make specific investment choices.
It's important for individuals to understand the type of pension plan they have and the options available to them. If someone has a defined contribution plan, they may have the flexibility to adjust their investment allocations to reduce their exposure to the stock market if they wish. However, in a defined benefit plan, where the retirement benefit is predetermined and not tied to specific investment choices, participants generally do not have the option to opt out of stock market risk because the investment decisions are made by the plan sponsor.
Individuals should consult with their plan administrator or financial advisor to better understand their specific pension plan and the options available to them for managing investment risk within the plan.
"Unlike other funds, pensions have a fiduciary duty to their beneficiaries, a guarantee to act in the best interest of those who depend on these funds for their retirement."
Were I in line to receive a pension, I'd want my pension fund to be 100% free of speculative risk. Period, full stop. And I would consider it immoral, if not illegal (I honestly don't know if it is illegal!) to put my pension fund at risk in a speculative market approach to such funds. Pensions are in the contract with employers, are they not? So what right does anyone have to risk these funds (whatever the scale of risk may be)?
I'm no expert in jurisprudence, but from a jurisprudential standpoint, it makes no sense for folks to have their pensions put at risk by financial wizards who want to bet on the stock market, or anything of the sort.
When I click on Watch On YouTube it brings me to a page which says "Video unavailable
This video is private". This makes me sad, as I prefer to watch rather than to listen only.