Can ordinary workers invest wisely?
Many pundits argue that ordinary workers can’t manage their own money. But millions of ordinary workers have already begun investing successfully through individual retirement accounts and 401(k) plans. Nearly every federal worker invests privately through the Thrift Savings Program. In fact, personal accounts would likely be modeled after the federal Thrift Savings Plan-simple, cheap, and easy to use. What the opposition is really saying is, “Low-income workers are too stupid to invest.” That is patronizing, demeaning, and incorrect. Besides, no one is suggesting that workers will have to sit down with a copy of the Wall Street Journal and try to choose between stock in General Motors and stock in General Electric. Under the Cato plan- and most other personal account plans- workers would be investing in broad-based, highly diversified funds, not choosing individual stocks. People could choose from broad funds tailored to risk aversion. Someone who will rely on Social Security for the
