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A Dangerous Financial Product

Here’s a letter that I sent yesterday in response to an e-mail that I received:

22 June 2007

Ms. Clara Perez

Dear Ms. Perez:

Thanks for your e-mail alerting me to Presidential-hopeful John Edwards’s proposal to create “a regulatory commission to protect consumers from dangerous financial products.”

If such a commission does its job, I suggest that the first dangerous financial product that it attacks be Social Security.  Not only are Social Security’s returns lousy; not only are its “customers” never vested their “contributions”; not only does the institution providing it have no sound plan to keep it solvent; not only does this institution intentionally mislead its clients about its insolvency (witness its discussions of the illusory “trust fund”) – but its “customers” are forced to buy it.  That is a dangerous financial product!

Donald J. Boudreaux
George Mason University


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