Public Pensions and Public Unions Are Public Corruption (And Financial Poison)

King DamoclesAmerican government pension funds are short what they owe government workers by some $2 trillion. That does not show up in the national debt, of which every taxpayer recently owed some $150,000 and counting, plus interest. Either retiring government workers will be stiffed or taxpayers will make up the deficit when it comes due or some combination of those will be imposed. Wanna bet?

This deplorable but readily predicted condition is a direct result of unethical, corrupt government, assented to by citizens who, were they not mostly public school products, likely would have known better. However, maybe they would have ignored what they knew, our species is good at that.

Let’s parse the inescapable corruption in both government pensions and government employee unions. It’s at this point, a bit lick picking at a scab, but we do that, too.

Pensions for government workers are corrupt these days because any financial type knows that they cannot be paid and it is therefore unethical to promise them. You must, if you pay any attention at all, know that private industry abandoned pensions in favor of 401(k) plans decades back. Along about the time, by no coincidence, that the Federal Reserve started holding interest rates too low for investors in ‘safe’ investments such as bonds, to return normal earnings for the use of other people’s money. Pension plans since then, have too often been unable to earn enough to cover their pension obligations. (Government helping us …) Meanwhile, the government repaid its own debts at lower interest than the market would have assigned, so it profited while the pension funds suffered. Corrupt misuse of power, right?

There’s more. Government knew it would be unable to pay the pensions over time, but instead of following private industry with their abandonment, it buckled to union pressure and retained them. When you allow unions in a two-party system, you have set up an auction for the union; it sells its services and members to the highest bidder, usually in the U.S, Democrats. From there, the union owns those politicians and the citizens drop to a distant third place. More corruption, right?

By now of course, the spreading corruption, without a strong public presence of religious principles anymore to restrain it, has led to our ‘crony capitalism’ that has merged politicians, business leaders and union bosses into one unprincipled and greedy if not happy family of mutual back-scratchers. Only the citizens are excluded.

We should note that this hangs over state and local government most heavily. A few places have gone bankrupt, mostly from pension obligations; Detroit is the most notable to date. The politics swirling around that procedure can only be imagined but the obviously faux bankruptcy conjured over the GM bankruptcy proceedings by the Feds (to protect UAW pensions) may prescribe a pattern. Or not; we’ll see. Presidents Bush and Obama could still conjure up bailout money in those days. Now? Wanna bet, again?

Remember King Damocles with the sword hanging over his head? Now it’s the cities and state and the sword is labeled: “Pensions.” While the suspending thread (called ‘the bond market’) is thinning. Just, you note, as zillions of baby boomers are starting to mob the retirement scene. Gonna be a great retirement party coming up … We’ll just have to see to whom the waiter brings the bill …


About Jack Curtis

Suspicious of government, doubtful of economics, fond of figure skating (but the off-ice part, not so much)
This entry was posted in Corruption, Government, Politics, Unions and tagged , , . Bookmark the permalink.

4 Responses to Public Pensions and Public Unions Are Public Corruption (And Financial Poison)

  1. In the UK as a direct result of govt actions, private employee pensions were trashed, alongwith various scandals where private company pensions were robbed, with limp-wristed govt response. The govt bail out of the banks has destroyed interest rates, with the impact you describe on pensions, and is shrinking savings, as without compensating interest (which is taxed even though the money is devaluing at a greater rate) money in the bank while not earning any income is steadily falling in value. The state pension in UK is insufficient for support. Those with no savings and no other pensions are bailed out with welfare supplements. Those with small pensions and savings find they are entitled to nothing and eke out an existence trying to conserve their resources while their money falls in value while cost of living soars.
    You could argue that the govt is inept apart from the complete coincidence that none of their actions or inactions have impacted THEIR pensions.

    • Jack Curtis says:

      I have a suspicion that you describe conditions in most of the Western welfare states; saving is a mug’s game and the rulers make their private, elite world insulated from what they construct for the rest of us..

      As our species appears to have been doing since before it began recording its history …

  2. Michael says:

    I think the answer to the whole problem comes from North Korea, just print the leading currency, now it is looking like it will be Chinese Yuan. The Feds should be able to print about anything shouldn’t they?

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