Roll It All into One

Tyler Cowan comes out in favor of Universal 401(k) Accounts for the Poor in this NYTimes article. Greg Mankiw asks if this is the best way to help the Poor, or if an increase in Earned Income Tax Credits is not the better answer. Felix Salmon states the plan would still leave the Poor without utilization of the Plan, and cut the Medical benefits they need. Arnold Kling says personal savings accounts will face enough trouble, without saddling the plan with the Poison Pill of cutting Benefits. Mark Thoma doubts We can incite the Poor, who lack funding for some basic necessities, to contribute much to personal savings accounts.

My Take:
Enrollment of the Poor seems predictably less than perfect in any type of matching funds program; this being the arena for massed Capital. Greg Mankiw possesses the correct attitude in advocating increased Earned Income Tax Credits in order to gain any increased enrollment of the Poor in Income-generating capacity. Felix Salmon suggests the only improvement would be in Wall Street bonuses, at which I agree. Arnold Kling proclaims that medical benefits will have to be cut, but no one considers working on the medical problem from the direction of cutting Costs; the Day will come when Doctors must supply Patients with a list of both State-of-the-Art patented Drugs and Generic drugs capable of the same result. Many other medical Cost cuts could be made. I would advocate a totally separate plan:

I would turn to Greg Mankiw for his advocacy of Pigouvian taxation, and call for an Energy tax equal to the Cost of the Energy; all Energy Costs to be accounted–Fuel, Electricity, Heating, etc., and apportioned to each Customer according to use, and collected by the Energy Providers. The Energy tax would not generate Government revenue, but be devoted to Savings accounts (automatically deposited by the Energy Provider in the bank specified by the Customer) held in the name of the Customers, who could withdraw any Funds paid in over 10 years previously. These Savings Accounts would be held in the form of Bank Savings deposits, the Federal Government pressuring Banks to grant these Accounts the highest rate of Interest currently available continuously. The Federal Government would grant poorer Incomes a yearly set matching contribution equal to a maximum consistent with efficient Energy use. Foreign Oil Producers would wind up paying a great percentage of the Tax in the form of reduced Energy pricing to maximize Production, there would be guaranteed Universal enrollment and funding, Energy consumption would be cut, and the Poor would have established Savings. lgl