Full text: Capital Gains, Pension Funds and the Low Savings Ratio in the United States

was particularly undesirable in the seventies, when the growth 
rate had slowed down. 
A second effect occurred in the financial sphere. The funds gained 
an enormous importance there. Since they moved great amounts of 
assets the managers frequently engaged in block trading off the 
floor of the stock exchange. They also contributed very much to 
the introduction of options and index trading. On account of their 
extensive experience and knowledge the managers of the funds 
gained a great influence also on the take overs. The funds thus 
played an important role in the establishment of the modern 
"casino society". 
Furthermore, the kind of insurance associated with the funds 
contributed to the large differentiation in the labour market 
between the large corporate sector and the rest due to the fringe 
benefits. Most people would agree that this is a regrettable 
development. But in fact the origin of the whole system is 
plausibly to be found in the wish of the major corporations to 
have a well paid and satisfied work force tied to the firm by 
fringe benefits such as pensions. The government and the social 
security at the same time were passive, paying attention only to 
the unpopularity of new taxes, although it might have been 
possible to extend the social security system so as to adapt it to 
the needs of the growing prosperity and differentiation of 
What may be the advantages of the pension funds which justify the 
large social cost enumerated in three points above? The individual 
person wants to get what he has paid for, even though this may be 
an illusion. He distrusts the stability of the public security 
system even though the pension funds do not necessarily offer more 
security. One may have great sympathy for the modern trend of

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