>I can accept that there might be undesirable consequences from pouring
>billions into the stock market, and that there would be no boon to real
>investment, but I don't see why there would be commissions (presumably
>the trust fund would hire its own managers) and I think it's a little
>dogmatic to oppose it because it's "giving something up." As long as
>Wall Street doesn't get its mitts on the loot, isn't that better than
>raising the most regressive tax? (Of course, doing nothing would be best
>of all).
[and]
>Do I gather that Doug and some others see equity purchases by the trust
>fund as unacceptable? True, there's no urgent need for reform. But isn't
>that a more palatable one than tax increases/benefit cuts?
I oppose stock purchases for several reasons. One, it'd be a vast subsidy to Wall Street. Sure the fund would hire its own managers, but even index fund managers don't come cheap, and you can't buy stocks for free. Two, what stocks would the fund buy? Index the S&P 500? But what about the small stocks, whose neglect issuers and holders would whine endlessly about. Every stock? Would they manage the portfolio actively? What about social screening criteria? Arms-makers yes, tobacco no? Three, how would they vote the stock? With management? With the Council of Institutional Investors? Four, why should public money go into the stock market? On the basis of historical returns, which economic theory still can't explain? To promote "capital formation," which the stock market has nothing to do with? And five, it would further the ideological legitimation of the stock market, and make supporting prices a matter of national policy. The government's material interests would fall even further in line with those of big capital than they already are.
The only reason to buy stock with public funds would be to socialize the enterprises, but that didn't work in Sweden.
Doug