About the coming crisis in public pensions

Nicely said, by Nick Gillespie in article #2 below:

‘There is a looming showdown in American society between public-sector employees and the rest of us, in terms of job security and, especially, unsustainable gold-plated retirement and health benefits that are working hard to bankrupt whole states.”

The massive underfunding of  public pension systems results — like so many of our problems — from powerful groups exploiting weaknesses in our  information systems that show future results expected from current actions.  AKA accounting.  Politicians give obligations to pay money and benefits to powerful civil service unions — in exchange for support.  Since government accounting runs from primitive to bacterial, often insufficient (or no) funds are committed now to pay those benefits.  But they are our obligations, and they’re beginning to come due now.

It’s a serious problem, part of the larger problem of adapting to an aging society — serious because we’ve prepared by covering our eyes and ears and singing “la la la.”  The key fact we must realize:  it’s too late to prepare.  Except in the sense of “fasten your seat belts”.   We must plan how to distribute the shock of the now-inevitable impact:  too many retirees, too little saved.

After years of expert warnings, now the public becomes aware.  Some posts about the looming crisis …

  1. It’s a wonderful life working for the government“, Michael Barone, Washington Examiner, 30 December 2009
  2. Public Sector Drives Deep Into The Night“, Nick Gillespie, Reason magazine, 30 December 2009
  3. Employee Compensation in State and Local Governments“, Chris Edwards, Cato Institute, January 2010 — Still more evidence that government officials are often paid better than their private sector equivalents (with far greater job security).
  4. Public workers under fire for cost of pensions“, Cincinnati Enquirer, 3 January 2010
  5. More on The Coming War Over Public-Sector Pensions“, Nick Gillespie, Reason magazine, 4 January 2010
  6. US public pensions face $2,000bn deficit“, Financial Times, 4 January 2010
  7. Society cannot walk away from the problem, but individuals can — see this post at the Volokh Conspiracy, 5 January 2010

Afterword

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One thought on “About the coming crisis in public pensions

  1. It’s a Wonderful Life…

    Anyone who says this has spent little time as a real worker in a real business. “When businesses must cut, they do so with an eye to profits — which is to say, with an eye to providing consumers with goods and services they need enough to be willing to pay for. They tend to lay off unproductive employees while striving to retain productive ones.”

    Businesses that are sucking wind usually lop off a percentage of workers across the board that allow their bean-counters to report numbers that forestall investors from bailing out on the company, and assure that the gravy train of bonuses to executives is not shut off. Layoffs rarely do enough to increase profits – what they do is portray losses at one-time expenses rather than poor management performance.

    I have more often heard of layoffs where business-critical workers and functions were carved out of the business only to be re-hired when it became obvious that the wrong people had been severed. It should have been the dolts flying the plane, who had caused the ‘controlled flight into terrain’ that was the company’s balance sheet.

    I am not saying that public sector unions are modern saints, but they are vilified by the right primarily on ideological lines, used as a whipping boy to try to get rust-belt workers to blame democrats and unions for their jobless conditions, when in reality it was the republican establishment that helped businesses off-shore American jobs. That is not to absolve the Dems. The American predicament is that workers have the right picking their left pocket and the left picking their right pocket.
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    FM reply: This makes no sense to me, conflating a number of totally distinct and almost unrelated issues.

    “public sector unions are modern saints, but they are vilified by the right primarily on ideological lines, used as a whipping boy to try to get rust-belt workers to blame democrats and unions for their jobless conditions, when in reality it was the republican establishment that helped businesses off-shore American jobs.”

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