Money managers could be the beneficiaries of 63 million more people saving for retirement if governments change tax policies to address income equality and labor productivity, said New School economics professor Teresa Ghilarducci at a session titled “The Great Economist Debate on Global Policy” during Pensions & Investments’ Global Future of Retirement conference in New York.
“Use your power as investors to make sure we have national retirement security policy,” urged Ms. Ghilarducci, who is director of the Schwartz Center for Economic Policy Analysis.
“Huge debt overhangs” will make it hard for most governments to stimulate demand, said Megan Greene, chief economist and managing director of Manulife Asset Management. Living in “an age of oversupply of everything means low growth for many more years,” Ms. Greene said.
Economist Stephen Moore, a visiting fellow at the Heritage Foundation, said government intervention doesn’t work as a job stimulus. Arthur Laffer, chairman of Laffer Associates, agreed, saying that although redistribution problems do exist, “whenever you try to redistribute income, you always reduce total income.” Mr. Laffer called instead for a lower broad-based flat tax, restrained government spending and regulation and free trade, “and let the markets solve the problem.”
Ms. Greene and Ms. Ghilarducci said they expect the Federal Reserve to raise interest rates by December. Mr. Moore said if there is too large of a rate increase, “I think we’re very vulnerable to an interest rate shock.”
On an optimistic note, Mr. Moore said he expects “the biggest boom in the United States you’ve ever seen” on the horizon, with the recent energy boom benefiting U.S. manufacturing in particular. Mr. Laffer predicted “housing is going to be spectacular over the next 10 years.”