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Pensions Under Attack in America?

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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.