Here is an email that I sent to Elizabeth Warren.
It is time to take up this proposal from Franco Modigliani, Maria Luisa Ceprini and Arun Muralidhar that I have been touting since about 1999. This plan will have as profound an effect on our society as FDR’s original plan had in his day and since. I would love to discuss this with you.
It has been so long that some of my references to the plan have almost disappeared, but this 1999 working paper is still available.
http://dspace.mit.edu/bitstream/handle/1721.1/2740/SWP-4051-42747675.pdf?sequence=1
Senator Kennedy was going to arrange for Professor Modigliani to present this to the Senate. That presentation never happened as far as I know. Now both of them are gone. However, I know that Arun Muralidhar is still available and a well respected advisor on pension plans.
If this email gives me room, I will quote just a couple of paragraphs from the MIT working paper.
“The centerpiece of our plan is the creation of a new public fund (NF), which like Social Security (SS) is financed by mandated contributions, and will offer defined benefits, but which will be fully funded, and establish individual accounts. The defined benefit will be ensured by a guaranteed return on contributions.
“Each participant’s contributions will be credited to an individual account, together with the accrued returns. However, for investment purposes, all the funds will be pooled and invested in a single, highly diversified “indexed” portfolio consisting of an appropriate share of the market portfolio of publicly traded financial assets. Despite its diversification, the return of this portfolio would be somewhat risky and variable. But a defined benefit system requires a rate fixed in advanced. To achieve this result, we stipulate that the Government should stand ready to “swap” the return of the NF portfolio against a guaranteed real rate of return.”
There is also a book: Rethinking Pension Reform, Franco Modigliani, Arun Muralidhar.
This is the idea that President Obama should be pushing when he talks to the Republicans. Yes, it will blow their minds, but it is a serious proposal that I think could be the foundation of some profound changes to the way our society works.