This blog is basically for myself to help me remember what I’ve read and what I got out of it.
While America Aged by Roger Lowenstein –
The book is broken into three sections describing General Motors’ pension debts, the pension system of the NYC subways and the city of San Diego’s abuse of its government pensions. On a whole it outlines the difficulty in keeping pension and health care costs down in an evolving population.
In the case of GM Lowenstein shows how unions used the threat of strikes to get GM to promise pension and health care benefits. He explicitly faults the leadership of all of the big three for not seeing that by acceding to union demands the companies were mortgaging their future. The upshot of this story is that a universal health care system is a requirement for keeping US corporations competitive in the global market.
The story of the NYC subways was the weakest of the three and while an interesting history of the system didn’t add a lot to the book.
Finally, Lowenstein described the city of San Diego – a tale of woe. Most interesting from this is that the city was held up by Republicans as a model of low taxes and fiscal discipline, before the abuse of its pension obligations brought the city to the edge of bankruptcy.
In his conclusion there are several interesting points:
- Pensions while probably an inappropriate national retirement solution for the private sector are an important benefit for public-sector workers because it encourages a stable workforce.
- He supports the idea of an enhanced 401(k) federal system and promotes annuities as a solid retirement plan in conjunction with these savings accounts.
Financial debacles are as old as the sun. Virtually all involve some form of borrowing, and borrowing is essentially an arrangement between the present and the future. This is why pensions are so vulnerable.
