This country is not in a good place. Pessimism is warranted on that basis alone, but I think this phenomenon of “Obama as the answer” explains the centrist-right-leaning people on this blog who are looking into the abyss.

You’re right about defined benefit plans. They are, in a very real way, a small window into what it will be like if we don’t do something about SocSec. The managers and unions that perverted DBPs are no different than the politicians and interest groups who have perverted SocSec.

Wailing and gnashing of teeth await if we don’t address the problem. And if the government goes bankrupt, who will bail it out?

L3

Not many people cared at the time – maybe not even now – because the “messy” jobs were going to be replaced by so-called high tech jobs where wages were replaced by stock options and the argument was to expense or not to expense – the marginal value of that next million. Movin’ On Up, we were, to the Big Time.

Look how well that turned out.

Folks are starting to talk again about the business value of actually producing a product.

One point of leakage in moving from income tax to consumption tax would be the illegal aliens who send money back to their home countries. They would escape US income and SS taxes but consume the bulk of the money back in their low tax villages. In fact, this would create incentives to work in countries wil consumptive taxes but live (or invest) in income taxes. Probably a small point overall.

I would also point out that the “Nuclear Waste Trust Fund” works like the Social Security analog. We’re collecting excess cash for the Treasury now but when construction starts, the current taxpayers will need to pony up some cash.

**omitted from official TV transcript.

That’s the problem. No matter what ingenuous system you and Leo come up with.

No matter how hip/cool the labor force is.

Not the issue. The issue was *contract*.

I was just speaking with one of the old-timers in question who was confused – about everything – and started to reminisce about the old days – that would be the ’30′s and 40′s – call it pre-WWII – when deals were made on a handshake.

The issue is personal integrity – the kind that translates into business management and government.

It’s one thing to assume that you are too hip/cool to fall for that line. It is quite another to look back 30 years in time when you were but a tree in the forest.

I think this a bit of revisionist history. Back in the day – ’60′s through ’80′s (before NAFTA and globalization sucked out the industrial manufacturing base in this country – and along with it, their pension plans) that was the way things were done. Believe it or not, it was also called “responsible.” Sign a contract. Go to Work. Be responsible. Retire. It was actually considered the “conservative” option over the riskiness of markets which were openly regarded as gambling “back then”. Quelle Horreur! Easy now to look back into history and sneer at the stupidity of Labor especially now that the unions have been corrupted from their original objectives of acting as counterweight to managerial power – labor and safety laws. Too Easy.

But I rant. 20-20 hindsight does not negate the Ways Things Were.

Any more than 20-20 hindsight will in any way diminish my personal stupidity for not seeing Sept/Oct 2008 coming. I should have known better. But I was busy working.

And Dave, don’t bother going after me on the pensions vis a vis stupid Labor – been there done that about three years ago with another oh so au-courant blogger.

Better to just wait for the next GSE wave to crash.

Then if an employer can be persuaded to add to it or provide another account, fine.
But the thought that employers would, or could, provide adequate retirement for anybody but senior management was and remains wishful thinking.

Ditto for medical coverage. Probably a few other things as well. I am not a hairshirt, sackcloth and ashes kind of guy, but there are too damned many people who believe that somebody else can take care of their needs for them. ‘Taint so.

Stay tuned fellers. I will try to do some elaboration this PM Meantime, another work day.

…unless they’re in steel, airlines, or the multiple utility companies that went through the Wall Street sausage maker producing nothing but trnasaction profits and retirement mansions by the lake. The defined pension plans all insured by PBGC – another GSE not yet to hit the fan but it’s making noises – lost %50B in stock market this year. Wait until they formally get in line for a bailout. Where will public sentiment be then? Who is really being bailed out – the industry that never funded them or the labor that stupidly believed in the contract?

Of course that’s after the state and local pension funds recover.

The short point is that defined pension plans were just part of the scam. Never expected to produce. Underfunded? By some amount? They were never anything but a cover story – a wink and a nod.

One more thing:

It is critical to distinguish between progressive taxation that is economically efficient (i.e. mildly progressive) vs. progressive taxation that is redistributive. The first is a good capitalist notion; the latter, a bad socialist one.

The goal should be to grow the pie, and provide sufficient revenues for the government to operate at an appropriate level. Steeply progressive, redistributive tax systems do neither.

L3