Right Thinking From The Left Coast
The price of anything is the amount of life you exchange for it - Henry David Thoreau

Sunday, August 15, 2010

The Leviathan Craps Out
by

From poster “Meep” at Piece of Work in Progress comes this link to another one of John Cole’s “Exercises In Deflection,” this time on the pension timebombs that even the New York Times has finally acknowledged.  Hilariously, Cole contradicts himself in the same sentence:

I’m sympathetic to the budgetary issues, and I agree that there need to be changes to the pension guarantees for new and current employees, but I simply do not understand how you go back and change the contract you made with someone decades ago.

Cole’s remark here is the rhetorical equivalent of St. Augustine’s plea to “Grant me chastity and continence, but not yet Lord, oh not yet!” If he feels the contracts of current employees--some of whom have been in the system for 10-20 years--can be changed to meet fiscal realities, then logically speaking there’s no reason retirees should be exempt from those realities either. 

Cole’s methodogical retardation aside, his arguments and those in the comments are fascinating for the tone of fear and desperation that pervades the thread.  Some choice ones:

And do the taxpayers realize that those pensions and health insurance benefits actually replace Social Security and Medicare, so if you yank them away, the people who were getting them are left without any income or medical care? It’s not like they’ll have Social Security to fall back on if their 401(k) goes bad—the pension is their Social Security

It definitely bothers me at times when I hear about people basically getting their salary or a big chunk of their salary for life, and I am busting my ass and saving just to get to a point where I’m not the working poor when I am old.  But at the same time, you have to honor your commitments. You can’t just give these people the finger and turn their lives upside down.

But two agents have stepped in to fuck with the system – the anti-tax crusaders that have wrecked the ability to invest in infrastructure and to recoup the tax revenues that come from that economic growth, and the Wall Street wizards that have made it increasingly easy for those investment dollars to go into the pockets of the wealthy rather than for the common good. The old model is having enough value siphoned off of it that CalPERS is permanently reducing their forward rate of return by 25%.

Commenter “EthylEster” seem to be the only one that gets it:

I have a friend who works for the City of Portland which has a VERY generous retirement plan. When she described her benefits to me 10 years ago, I remember thinking “How can the city afford that?” The answer: they can’t and could never have but, hey, who’s checking up on them?...Every time I hear someone say “It’s guaranteed” I wince.

What is evident in the comments above, and in the thread overall, is that Cole and his commenters are truly flabbergasted that The Almighty Government won’t be able to pay out those “promised, guranteed!” pensions.  This is the sort of thing that happens when you put your complete faith in the state beyond what you as an individual should be able to accomplish--you put yourself in a position to be left vulnerable when you can least afford it.

The whole history of the idea of “pensions"--whether at the private level or national level with Social Security and state pensions--is the poisonous idea that someone else would take care of your retirement income and standard of living after you were no longer a viable contributor to the workforce.  The Baby Boomers on down are now getting a real hard lesson in why you should NOT depend on the state to provide for you and cultivate a better sense of self-reliance, but clearly Cole and his Hand-Wringing Brigade havne’t gotten that message yet.

Cole’s premise also shows that he doesn’t understand basic math.  The system of pensions he supports relies on exponential growth in inflation and population, and near full national employment, just to keep it barely sustainable.  Well, that’s not going to happen in real life--eventually, pullbacks are going to take place.  Compounding the problem of budgets in the red, by refusing to cut back in places where those cuts will have an actual impact on lowering the deficit, is ultimately suicide for any government system.  As Karl Denninger points out, in relation to the Social Security problem:

It is not about “mean people”, it’s not about “tax cuts for the rich”, it’s not about “sacred defense programs.” It’s about mathematics.  You need to find $1.5 trillion in budget savings and there is no way to get there without digging deeply into promises that were made by the left but cannot be kept, because they were unfunded when made and worse, the very same government STOLE all the temporary surpluses the programs generated and spent them!

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