It’s my son’s birthday today, and while we tend to get good middle-class people’s presents (lego, books, etc) we’re not immune to the lure of cheap plastic/die-cast crap. So he’s currently playing with a battleship complete with ‘realistic’ jet aircraft (not that any of them could realistically land on a battleship, but he doesn’t seem concerned with that).

Whenever I see tat like this, particularly on those unhappy occasions when we buy happy meals with their uber-crap, I wonder about the people who make them. I’ve only worked for three manufacturing companies, and two of those were beer and steel, which are practically staples. But the third was clothing, where taste was involved, and I often speculated on exactly what taste was being exercised as a tacky shell-suit or size 24 skimpy nightie passed through my hands.

Imagine, then, how much more puzzling it must be for someone who is working slave-like hours for negligible pay to attach a flimsy plastic rotor to a badly cast toy helicopter that a child somewhere will play with for 11 seconds before losing it in the car on the way back from McDoughBoys. Imagine how much more disconcerting it must be when the worker is a child who can see the fun inherent in that toy, even as they lack the imagination or experience to see the crushing desperateness of their situation.

There is no conclusion to this little rant. Not buying these gee-gaws might take that child out of the factory, but it’s more likely they’ll end up combing trash piles than attending school, so trying to make a little difference may be worse than meaningless without making a big difference too. I guess you get to decide.

Every country shares a problem with pensions, which is simply how to ensure that they are provided at the required levels. Whether that’s a state pension or a social contract that makes people understand that they’re on their own, each government needs to find a way to keep a large majority of its populace fed and housed sufficiently in their retirement that they won’t cause problems (and, we hope, with more altruistic motives than that).

It’s interesting, then, that the US and UK have decided upon different solutions to this problem (primarily individual based in the US, state based in the UK), yet have both run in to similar operational issues. Both countries have decided that the best way to encourage retirement saving is to have lots of options, be they employer-based schemes, self employed pension plans, 401k plans, IRAs, personal pensions, stakeholder pensions, and the list goes on. Admittedly I’m an oddity, having lived in 2 countries, but right now my wife and I have 10 pension plans between us, not including any government provision. And that’s not because we’ve been working the system; almost all of this has come about because of job moves.

I understand why all these things have developed (politics is a game, and a handy way of winning the game is to introduce new cards), but in the mess of options the point of such plans has been missed. That point isn’t for people to have a pension plan, it’s for them to have savings. To do that I need a place to put my money – let’s call that a ‘pension plan’. I need to be able to pay money into my plan, I need surety that it will be safe (not a guarantee of return, necessarily, but a promise that I won’t suffer due to the managing company’s bankruptcy, for example), and I need transparency around the fund’s balance and performance.

And that’s it. I’d like favourable tax treatment, and contributions from my employer, and low fees, and a bunch of other things. I’d accept limits on how much I can withdraw, and when, and some element of compulsion. But none of these things are necessary. What I don’t need at any point is more than one plan.

Update: Forgot to mention that this was sparked by this article on the flaws in 401k legislation.

Here’s an interesting twist on the sub-prime mortgage scandal (TM) in the US. Back in the day you would take a mortgage out with a lender, and they would hold that lien on your home until you paid off the mortgage. But as mortgages were turned into commodities they were sold off to institutions all over the world. That in itself would be a minor complication. The problem comes when you bundle together many loans, and then sell a share of that bundle to several different buyers.

Financially that’s fine, until it comes time to foreclose on the house. To get your money back on a property you have to show your ownership of the mortgage for that property. And if you bought a fraction of the commodity as a security then you don’t have full ownership, and in all likelihood neither do you have a piece of paper (technically required) to show your ownership.

This could be good news, surprisingly; up to now only real people have been suffering, while banks write off theoretical profits. But now the banks are at risk of losing actual money, and that requires action.