It’s occurred to me that there’s a connection between two of my posts from this week. In this post I mused on elitism. And in this post I speculated about the low personal savings rate. Now for the connection.
In his own commentary on Andrew Samwick’s post (the inspiration for my thoughts on the national savings rate), Brad DeLong observes:
If households are myopic and are saving too little, the government should offset this and save for them–i.e., we should raise taxes to fund big budget surpluses.
Emphasizing that I agree with the underlying reasoning behind Brad’s thoughts, if the people aren’t interested in saving, how will the politicians muster the will to save for them? IMO there are two proper approaches: education and incentive. Educate the people on why they should be saving and give them incentives for doing so—those aren’t hard to come up with. Brad’s suggestion is a good example of the “we know what’s good for you” school of thought complained about in the article that inspired my post on elitism.
