Filed under: Capitalism, Economy, Freedom, History, Intelligence, Law, The United States | Tags: Public Pensions Failure, Things You Need to Know, We Do Respond to Change
As long as we’re talking about Puerto Rico, I should include a link to this informative article about a conversation with Walter Russell Mead on public pensions, a problem coming close in Puerto Rico, all over California, in Detroit.
People say: ‘A defined benefit pension from my employer, there’s no risk.’ A big risk is that your employer will go broke.
Adam Shapiro: Well, in the case of public pensions, we’re seeing that happen. And yet, there’s a resistance to reform the process by which we fund these pensions, by which we set the actuarial standards for these pensions, and to have an honest discussion with taxpayers about these pensions, why?
Walter Mead: It is interesting, normally you think of liberals and Democrats as being people who really want to regulate, and particularly they want to regulate the financial markets, in order, as they say, to protect the “little guy.” Well here’s a case in which cities and states are not held to the same standards for their pension funds that any private employer is held to. If in fact, employers did what routinely a lot of cities and states do, they would go to jail.
Shapiro: So why is there no public outcry over this?
Mead: There’s some public outcry. But, unfortunately there’s a kind of a conspiracy between government officials, politicians, and union leaders often. The deal is this: Union leader wants to show the union members, hey belonging to the union is a good thing, I get you benefits. You get more with me than you’d get on your own. So I go into the negotiations with management of the city or the state government and I come back so you’ll say, “wow he’s a great union leader, I don’t begrudge him a penny of his salary because this union is working for me.” Well here’s the problem: If you’re asking for a big raise for members this year, the politicians have to pay it this year. And that means they have to tax the voters, voters don’t like to be taxed to pay for your raise, or they got to cut spending on something else to get the money, well voters don’t like it when politicians cut spending on their favorite programs.
It’s a very interesting conversation, and a video. Walter Russell Mead is a most interesting man of the left. Do Read or watch the whole thing, or both. There’s a lot more to the video, you may be surprised.