BlackRock good; public employee pensions bad
What about the real questions?
The inadequacies of the article are especially dispiriting because there are supremely important questions that cry out to be discussed.
We are told that pension costs are growing quickly, and are becoming a “major drag” on the finances of local governments, but are not provided with any context as to other contributing factors. We are informed that all, across the country, people are “taxed-out,” but we are not given any supporting evidence for the contention, let alone any sense that the financial health of public pension systems varies considerably from jurisdiction to jurisdiction.
The fact that the current situation looks particularly grim in the aftermath of the Great Recession, and that revenues will increase as the economy begins to turn around is not mentioned, even though pension health is obviously something to be measured for the long term.
Most fundamentally, it seems to me, there are moral and structural questions that should never be avoided when treating this topic. When someone goes to work for any entity, including a public entity, there really is an agreement entered into. The employer induces the employee to set to work with this promise: if you agree to work for us, we will give you some of your pay now (your salary) and some of your pay later (your pension). Workers fulfill their end of the bargain. Why aren’t municipalities who seek to weasel out of the end of their deal being asked, “Whatever happened to sanctity of contract?”
If it were the case that pensions obligations had become too costly for municipalities, why not ask about options other than having workers pay the cost? Should the federal government not play a bigger role in supporting pensions, or, perhaps, are there other costs currently being borne on the local level that make more sense to be spread out nationally?
And if one is serious about talking about the consequences of “excessive” pensions, how can one avoid talking about the costs of inadequate pensions both for an individual worker and his family, and for the city or town that will be home to a retiree with a reduced ability to pump money into the local economy?
This story, like the BlackRock story, needs a do-over.