My repeated posts (here, here, and here for a sampling) plus one of my published articles, Municipal Bankruptcy: When Doing Less Is Doing Best, (download here) about the looming crisis in state public employee pensions may have worn out their welcome. Yet, lest you think the problem is limited to California or rust-belt cities like Detroit, go here to read a clear and comprehensible piece about the situation in Texas.
The villain in this story, like so many about public pensions, is an unrealistic discount rate. Rather than increase government or employee contributions, pension boards and legislative bodies bet on a far higher rate of return than can be justified. In plain English, they are kicking the can down the road.
Avoiding unpleasant solutions to latent problems is endemic in democracies. Why do the hard thing that will get you un-elected? Better in the service of self-interest to let the problem fester until it can no longer be ignored but someone else in is office.
Oh well. It's not my problem. After all, I won't have to count on drawing a public pension. Or will I?
The villain in this story, like so many about public pensions, is an unrealistic discount rate. Rather than increase government or employee contributions, pension boards and legislative bodies bet on a far higher rate of return than can be justified. In plain English, they are kicking the can down the road.
Avoiding unpleasant solutions to latent problems is endemic in democracies. Why do the hard thing that will get you un-elected? Better in the service of self-interest to let the problem fester until it can no longer be ignored but someone else in is office.
Oh well. It's not my problem. After all, I won't have to count on drawing a public pension. Or will I?
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