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Culture War Roundup for the week of October 2, 2023

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Korea has a "National Pension System" much like Social Security, except that the fund is invested in the domestic stock market. This has a number of negative consequences:

  1. The fund has immense power over private businesses due to its size. Via its minority share, it has even vetoed restructurings of the Samsung group (remember that the Samsung group accounts for roughly 20% of Korea's GDP).

  2. The fund is not invested well. It gets put in places for political as well as economic reasons, and in theory a purely economic fund would perform better.

  3. The fund makes transparent financial decisions. This means everyone with assets who pay attention to the news has a chance at front-running the fund.

  4. There are going to be issues in liquidating the fund when it is needed. This to me is the biggest issue - that selling off the assets of an entire generation is going to devalue those assets, and I'm not sure that anyone realistically accounts for this when determining the present value of such a huge fund.

All that said, NPS is currently in surplus by an amount corresponding to 1~5% of Korean GDP, and is expected to remain solvent until 2055. So perhaps there really is an argument for "privatization" (at least until the end of this stock market bubble).

While I'm sure any American version of this would give the voting power to the same investment companies that get the voting power on the shares held by pensions and 401(k)s (e.g. Vangard, etc.), and not the government, it certainly would be amusing if the "free market" reworking of social security ended up being a very socialist policy.

Thanks for the context, interesting to see what the potential issues (and possible benefits) are.