Friday, January 25, 2008

Retirement Planning and the Social Science of C.W. Mills

Discussing C. Wright Mills is often controversial, always enlightening and somehow necessary. Including a quote from this distinguished social scientist was a risk worth taking. Even discussing social science with retirement planning can be a stroll through a minefield.

Mills, who was born in Texas (1916-1962), delved into topics that many in his field of thought considered out-of-bounds. He was gifted at separating smaller personal troubles from the much larger and more prominent public issues of his day.

Consider this: “When, in a city of 100,000, only one man is unemployed, that is his personal trouble, and for its relief we properly look to the character of the man, his skills, and his immediate opportunities. But when in a nation of 50 million employees, 15 million men are unemployed, that is an issue, and we may not hope to find its solution within the range of opportunities open to any one individual. (Mills 1959: 9)”

He was a radical. He interviewed Castro. He denounced American Imperialism. He attacked intellectuals for knowing enough to change the course of history but refusing to do so. He believed that knowledge could change the course of society and much of what he wrote (beautifully), read with great passion and has been accused of criticizing the same traits he exhibited. According to the Encyclopedia for Informal Education, “He was said to disguise his faults by admitting to even worse faults.”

He was, as his biographer Irving Louis Horowitz wrote in his profile of Mills titled American Utopian, “However much those who knew him firsthand differed about the quality of his work, they were unanimous about his personality.”

Mills did not address the topic of retirement planning specifically but instead sought to have a more open, well-discussed opportunity to choose. That is not present in our current retirement system.

Pension were, at there founding, a way of keeping workers with skill when their human capital, the cost of what they had to offer a fledgling enterprise by rewarding them in their later years with a degree of financial satisfaction. Focus on growing the business and we will focus on taking care of you in you golden years.

While that did not present choice, at least as we often define it, it did allow us to develop relationships with our families, grow intellectually if we so chose to do and give back to society when we had the opportunity. With the advent of self-directed retirements, we were given choices – that few understood and many still do not – and told that by doing so, our participation in the defined contribution plans would allow us to have much richer lives.

But that is not the way it worked out. Mills, who lived far in advance of this change in retirement thinking and worker contribution, would have been appalled. His many confrontations with the power of stratification in American society over the life of the individual would have gained new strength. His focus on the distinct levels of difference between who runs the country and who provides the labor would have risen to a boil. He was confrontational and by examining the stress of workers within the labor movement, in the situation of the middle class, in the elite strata of society, within the discipline or sociology or in his own personal life--there was a search for some path to achieve "the all-around growth of every member of society."

The following four notes come from Mills’ book “The Power Elite” published by Oxford Press in 1956. Keep in mind several things as you read them. One, even though you are permitted to choose, there are boundaries already placed around you retirement choices and they were not open for discussion. Secondly, the cost of those choices was not democratically considered with the input of the largest group – the actual investor – who is almost completely ignored in the process of picking which plan administrator, is best for the whole. You have to accept the plans offered by your employer – if they offer any at all, limit your contributions based on legislation and exercise the so-called portability of many plans that often comes without good instruction on how to best create an alternative plan when the worker leaves her or his current employer.

Mills writes:

“I. In the democratic society of publics it was assumed, with John Locke, that the individual conscience was the ultimate seat of judgment and hence the final court of appeal. But this principle was challenged-as E. H. Carr has put it-when Rousseau 'for the first time thought in terms of the sovereignty of the whole people, and faced the issue of mass democracy.'

“II. In the democratic society of publics it was assumed that among the individuals who composed it there was a natural and peaceful harmony of interests. But this essentially conservative doctrine gave way to the Utilitarian doctrine that such a harmony of interests had first to be created by reform before it could work, and later to the Marxian doctrine of class struggle, which surely was then, and certainly is now, closer to reality than any assumed harmony of interests.

“III. In the democratic society of publics it was assumed that before public action would be taken, there would be rational discussion between individuals which would determine the action and that, accordingly, the public opinion that resulted would be the infallible voice of reason. But this has been challenged not only (1) by the assumed need for experts to decide delicate and intricate issues, but (2) by the discovery-as by Freud-of the irrationality of the man in the street, and (3) by the discovery- as by Marx-of the socially conditioned nature of what was once assumed to be autonomous reason.

“IV. In the democratic society of publics it was assumed that after determining what is true and right and just, the public would act accordingly or see that its representatives did so. In the long run, public opinion will not only be right, but public opinion will prevail. This assumption has been upset by the great gap now existing between the underlying population and those who make decisions in its name, decisions of enormous consequence which the public often does not even know are being made until well after the fact.”

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