Will,
Interesting article here, partly on recents trends in union-busting, but also on public employee pensions. Proposes, in the final paragraphs, that perhaps pensions should be put to a vote, just like bonds.
I’m not certain this would work well, because the public tends to have anti-Keynesian impulses (“I’m cutting back, so should the government!”) that might lead to bad decisions, and because it appears that though the estimated rate of return is a little optimistic, it’s only a little optimistic, not a lot optimistic (I’m basing this assertion on the claims of Famous Economists, who have had a better track record of correct predictions than other Famous Economists, especially in recent years). But if the general public is convinced that the “correct” estimated rate of return is too low, that could be wrong, too. (There’s reasons for the public to think this — no individual has the ability to diversify their investment across time that pensions funds do. Unlike mutual funds, pension funds don’t even need to worry about their customers all turning chicken in a downturn and withdrawing their investments. So they really are different.)
Thanks, David. There is a lot I agree with in this article: Most fundamentally, I agree with the statement that “nothing could be more toxic for the Democrats than insisting that ordinary taxpayers fund pensions that are far more generous than what most can ever expect to receive themselves.” That is why I am a strong advocate for pension reform (see the link in the left sidebar).
I think that having popular votes on pension issues has some appeal, but to make it binding, one would have to change the constitution, which is a four year process that requires a lot of consensus. I think I’m more interested in reforming pensions than in reforming the process around them. Both are difficult, but the former feels more promising at this stage.