A TSP-like program available to every American would certainly help close the wealth gap, but it could also have a series of unintended consequences. While the whitepaper’s authors argue that capitalism has provided little value to the lower half or quarter of Americans, the beneficiaries of capitalism could have a lot of opposition.
Government control over a large amount of capital—even larger than the $723 billion existing TSP program—could create a range of issues. In addition to wiping out much of the wealth held at private investment firms, the move would provide the government—which is inherently political—with a lot of influence over the stock and bond markets.
Any drop in the value of the TSP-like program could also spark unrest and accusations of mismanagement. These dynamics could lead the program to invest in more G Fund securities, which may even out return, but also lower earning potential. The high returns that current TSP participants enjoy could become much more mundane.
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