Mark Vorpahl, a union steward, social justice activist, and writer for Workers' Action, wrote an article for the Center of Research on Globalization, Pensions Under Attack in America.
Earlier this week, I covered the topic of why this new pension law is worrisome as it will only accelerate the inexorable trend toward pension poverty. Democrats and Republicans are united when it comes to bipartisan pandering toward their corporate masters. President Obama basically 'pulled a Mitt Romney' and not one major news channel reported on this bill.
But while I agree with Mark Vorpahl that pensions are under attack in America and elsewhere, I disagree with his solution which is basically to tax the rich to create jobs. There is no doubt in my mind that America's middle class has been decimated and that the real crisis is lack of good jobs, not debt, but taxing the rich to create jobs is not a long-term solution to this jobs crisis.
Look, serious economists have weighed in on the topic of tax fairness in the United States. I think it's fair to say that the uber rich (say, net wealth of $100 million and more) don't pay their fair share of taxes but this isn't the cause or solution to the jobs crisis. And unless you fix the jobs crisis, you will never repair the ongoing slaughter of public and private pensions.
Having said this, in order to address the pathetic state of state pension funds, America needs a wholesale pension reform which includes compromises at the state, federal and union level. Now more than ever, politicians need to sit down and bolster, not weaken, public pensions.
The first order of business is to radically change the governance underlying these public funds. They need to be supervised by an independent, qualified investment board and managed by well paid, competent money managers. In short, they need to be a lot more transparent and their managers and board must be held accountable for poor decisions leading to poor performance.
Cutting public pensions and shifting everyone to 'low-cost' defined-contribution plans isn't a solution to the pension crisis. It's actually stupid public policy because it will drastically raise social welfare costs, imposing a heavy tax bill on future generations.
But again, unless the jobs crisis in America, Europe and elsewhere is addressed in a meaningful way, all the discussion on fixing pensions is meaningless. Without good solid jobs, there will be no pensions to talk about, only the distant sound of tumbrils.
Let me end by stating that we're at an important inflection point in financial capitalism. My message to banksters, hedge fund/ private equity titans, and corporate cronies making obscene compensation, enjoy the moment because the good times are not here to last.
Importantly, if the power elite do not understand the Hegelian Dialect that is shaping perceptions out there, their fate is sealed.
On that somewhat Marxist note, will leave you with a couple of clips that highlight the crisis in America. CNN reported on how firelighters, police and other city workers have seen dramatic pay cuts in cash-strapped Scranton, Pennsylvania. Something is awfully wrong with a system that bails out banksters and corporate cronies while paying cops, firefighters and city workers minimum wage.
Dan Froomkin: Obama, Romney and the Low-Wage Future of America
http://www.statebudgetsolutions.org/blog/detail/public-pension-infinite-amortization-puts-taxpayers-in-debt-forever
In my state of IL, the pension promises made are not going to be met. That is largely due to irresponsible politicians who over spent and grew government far beyond any growth in revenue and far beyond the growth in the economy for decades. Union bosses are responsible too though. It is not as if the writing hasn't been on the wall for decades. They knew promises were being broken. Instead of focusing their efforts on making the legislators that they elected own up to promises made, they focused on sweetening deals and increasing membership. In short the unions did their members a huge disservice. Apparently they always just assumed that taxes would be raised.
Well now the hole is bigger than any increase in revenue can fill. Their members are not going to get the deals they had planned on and most don't have time to make up the difference with increased saving/investing.
When you put people in a position where they can earn themselves goodwill by making a promise to someone, they will try to generate as much goodwill as they can. And when they know that the process of actually making good on that promise will take 30 years and extend long after they have moved on, they are REALLY going to make a lot of promises because they don't have to worry about the consequences.
This is why so many pensions are underfunded. They don't work. Nobody cares about your money as much as you do. So why would you put your future in the hands of someone else?
http://www.statebudgetsolutions.org/blog/detail/commentary-gao-pension-survey-reveals-endemic-corruption-hiding-in-the-hedges
The "I've got mine and you can't have any" hypocrisy is a major turn-off, people.
workER rights, that is,.
But each of these things will require some work and some sacrifice to avoid a much worse mess down the road. Please, America, start thinking long term!