Public pension systems in advanced and emerging economies alike were already under stress before the Great Recession. The past few years’ destruction of wealth and the likelihood of slower growth in the future have weakened them further and will put some under intolerable pressure.
Reforms that have already been proposed will subtract about two and a half percentage points from that four percentage point increase in cost over the next two decades, mainly by raising the retirement age and by making pensions less generous. There are two concerns about this approach. The smaller one is that such measures only partly solve the fiscal problem. The real worry is that they won’t be allowed to happen — and with good reason.
With life expectancy increasing, a rise in the retirement age does make sense — but it’s a terrible idea to make public pensions less generous than they already are. Even if you disagree, ask yourself how plausible a decrease is.
It doesn’t matter whether you believe that such a change should happen or not. We are left with only two options — making that change, irrespective of the amount of screaming it engenders, or suffering a collapse.
This is not about political expediency.
The author of the piece goes on to talk about things he claims are essentially intractable problems. Rising health care costs, claiming that they’re related to longevity (only partly true) and the “collapse in home values” (which was neither an accident nor was it something that to-be-retirees did not both participate in and exploit to spend today!)
The simple fact of the matter is that my decision to be a glutton and pull the value out of my house and blow it on exotic cruises, a pool, a boat and a new Hummer does not obligate society to replace the money that I could have otherwise saved. I made a choice when I took those actions. The candle that burns twice as bright also burns half as long.
Not only should the government not rescue me it can’t, as the government did the same damn thing in spending money it didn’t have during the same time! Vote-buying programs of various sorts have created a fiscal hole that we cannot fill except by stepping back and saying “so sorry, the money is not there.”
Yes, I recognize the political problem and its severity. But Mr. Crook (gee, you think?) attempts to make the point that because the FSA screaming will be extreme we should therefore not do it.
What is Crook’s alternative? If we don’t fix the pension system for public employees it will go broke instead and drag the rest of government into the ditch. If the option is between severe political upheaval and economic and government collapse, which do you choose?
This is not some “pie in the sky” thing folks — these risks are real, they are emergent, they are “here and now” in the context of today. We are staring down the barrel of a loaded gun and if we do not take action in the present tense to put a cork in the rising expense profile of these unfunded programs they will take down our way of life — not just for retirees but for everyone.
In addition if you think the younger generation is going to tolerate the fact that these lies were told and then the beneficiaries of the lies went out and blew the money, basically figuring they could stick up the younger generation and rob them, you got another think coming. The fact of the matter is that serious resistance to wrongs is the province of the young and restless, and the under-30 crowd is exactly the wrong one to piss off in a serious form. There’s a reason that when we have a draft we send the under-30s men out to fight — channel that testosterone and you have a force to be reckoned with. God forbid that testosterone is channeled inward within our nation.
This sort of article, which looks to me like recognition of the fact that the writer is soon to be calling a refrigerator box “home”, is becoming more frequent. The more-strident the plea the more obvious it will become to everyone, especially young people, that what Crook is calling for is nothing more than blatant theft and slavery.
We are merely counting off hours while standing in a pool of gasoline, praying the entire time that nobody comes through the door and flicks a lit cigarette in our direction.
Our luck on that score will inevitably run out.