The Pension Hole for U.S. Cities and States Is the Size of Japan’s Economy • Hacker News Board

Re: The Pension Hole for U.S. Cities and States Is the Size of Japan’s Economy

#221

Post by freeflight » Tue, Jul 31, 2018, 9:20 AM UTC

fbonetti wrote: post #210

freeflight wrote: post #86

Earlier quoted context omitted.

Just cutting benefits misses the point, how is austerity a long-term solution? The US has a massive problem with the perception of "government usefulness", heck you've got whole political wings solely trying to appeal to "the only good government is no government" mentalities. As a result, barely anybody wants to pay taxes for anything, in their extremely egotistical and narrow-sighted definition of "freedom".

Cutting existing benefits is the only way to avoid bankruptcy in many states and cities. The long term solution is to switch to a defined contribution plan instead of defined benefits. The reason why many on the right are wary of government programs is because they’ve watched the government horribly mismanage their tax money over and over and over again. It’s not necessarily because politicians and bureaucrats are ne…

> the government is generally not incentivized to do a good job, since they don’t face competitive pressure like businesses in the private market.

Isn't that exactly the kind of mindset that facilitated this whole situation in the very first place? "Government can't handle money, that's why we gotta privatize everything".

And if that would be true, how come it wasn't a private business that took us the moon, with all the resulting auxiliary inventions, but the combined effort of a whole nation in education and research [0]?

"A better job" isn't always the one that "makes more money", some ventures don't need to be directly financially profitable, in some fields introducing a profit-incentive can have rather negative consequences (Education, Healthcare) and in others, it's just perverse (for-profit prisons).

Would any private company have taken the risk, of flying to the moon, back then? Hell no, because there was literally no money in it back then, it was all just a big venture of "wasting money".

That's why I don't think literally everything needs to be "profitable", we can't eat money and money doesn't make anybody a better person.

It's also friggin weird how on issues like this there's never "enough money", but when it's about tax-cuts for massive corporations, which is, in essence, nothing but handing out free money to private businesses, then there seems to be always plenty of enough money to justify it.

[0] https://en.wikipedia.org/wiki/Sputnik_crisis

Re: The Pension Hole for U.S. Cities and States Is the Size of Japan’s Economy

#222

Post by ThomPete » Tue, Jul 31, 2018, 9:27 AM UTC

ThomPete wrote: post #95

sykhic wrote: post #33

Overal taxation in the U.S. is low compared to other OECD countries [1]. We, as a nation, decided that low taxes was the goal. As a result infrastructure is poor, toll roads are increasing, privatization of prisons, intelligence gathering, war, etc. are rising too. Yet Americans falsely believe they are overtaxed. The situation is easy to fix in economic terms but not in political terms. The road to an Ayn Randian pa…

Taxes are pretty high in the US for the upper middle class especially. IMO corporations should be taxed in a way that the more they make with fewer people the more they get taxed relative to other companies who make the same but have more people. Productivity in the age of digitalization is not what it used to be and I don't think it's a good way to measure anymore as we have way more supply than we have demand. Toda…

Would love to hear why some disagree with this. (two downvotes) what am I missing?

Re: The Pension Hole for U.S. Cities and States Is the Size of Japan’s Economy

#223

Post by alexgmcm » Tue, Jul 31, 2018, 11:45 AM UTC

landryraccoon wrote: post #158

analog31 wrote: post #128

Earlier quoted context omitted.

In my view, yes, for at least a couple of reasons. First, because people survive whether you want them to or not, and driving old people into poverty will end up burdening you in some other way, probably worse. We pay a lot for not having a decent safety net. Second, old people vote. If you drive a political wedge between the young and old, I can't say what will happen, but it won't involve the young ending up on top…

> First, because people survive whether you want them to or not, and driving old people into poverty will end up burdening you in some other way, probably worse. We pay a lot for not having a decent safety net. You're falsely trying to paint the choice as only between driving retirees into poverty and paying the full pension. I certainly won't be receiving 60-100% of my maximum salary forever after I retire, and I wo…

Also young people can just leave if the economy is just feeding on them.

I left the UK partly because between insane housing prices and paying for the triple-locked pensions of the elderly - the economy has little to offer young people and there are better opportunities elsewhere.

Re: The Pension Hole for U.S. Cities and States Is the Size of Japan’s Economy

#224

Post by rdlecler1 » Tue, Jul 31, 2018, 11:53 AM UTC

gok wrote: post #53

> It is increasingly likely that retirees, as well as new workers, will be forced to take deeper benefit cuts. Boohoo. Public service union members should have thought about that before pursuing a pyramid scheme retirement plan instead of a defined contribution pension like the rest of us.

And all that money they saved increased demand for real estate, so not only does the younger generation get stuck with the bill for everyone who found a free lunch, but the younger generation now has to pay more for real estate because there’s less supply.

Re: The Pension Hole for U.S. Cities and States Is the Size of Japan’s Economy

#225

Post by kartan » Tue, Jul 31, 2018, 12:09 PM UTC

hn_throwaway_99 wrote: post #186

kartan wrote: post #80

Earlier quoted context omitted.

> Let's not pretend like this was ever seriously going to be sustainable. Why not? Each year machines become more efficient, and productivity has gone up. The main problem has not been to create wealth, it has been on how to share it. Politicians also say that health care for everyone is impossible, but there is a lot of countries that do just that. This is about setting expectations. If you convince your citizens th…

> Each year machines become more efficient, and productivity has gone up. That actually highlights a lot of problems with defined-benefit plans: sometimes economic circumstances change so drastically based on social or technological change that the promises of the past are no longer viable. How could places like Detroit or Puerto Rico continue to pay their promised pensions when their economic base has evaporated?

> How could places like Detroit or Puerto Rico continue to pay their promised pensions when their economic base has evaporated?

As a manager of a small team, I had this problem. My team was composed of very senior people and I had a big bag of money to share for salary increases. Another manager had a very junior but very brilliant team and his bag was quite small.

We joined efforts, and we joined the bags. Now we had the flexibility to give the correct salary increase to everybody.

The way to solve this problem is to share the burden. That is the base for insurances.

Governments should offer an insurance against local changes. As the economy goes global, it should be a global effort. This is easier said than done. But it is the real solution.

Re: The Pension Hole for U.S. Cities and States Is the Size of Japan’s Economy

#226

Post by candiodari » Tue, Jul 31, 2018, 12:27 PM UTC

landryraccoon wrote: post #197

candiodari wrote: post #179

Earlier quoted context omitted.

> Well, we are the ones paying those people's pensions, in the form of taxes, so we're the ones fucking ourselves over if they got too sweet of a deal right? And how does this square with this being a democracy ? Or to put it another way: you're also (indirectly, but ...) the ones promising sweet pensions to these people if they would just work. And they worked. Now you want to revoke your part of the bargain ? Furth…

> And how does this square with this being a democracy ? Or to put it another way: you're also (indirectly, but ...) the ones promising sweet pensions to these people if they would just work. And they worked. Now you want to revoke your part of the bargain ? So I think this argument actually works against you. First, nothing can bind future generations. They can always change whatever they want to. In the United Stat…

> So if you want your pensions to be secured, the benefits cannot be guaranteed by faith in future governments!

It's funny how you see this as a positive ? If people have this attitude, of course the result will be mercantilism, or worse : the hoarding of jobs/companies/markets and the only way to get into a specific jobs is to do whatever "the guild" wants, which I guarantee will include paying pensions.

And if you "go around" the guild, they will either regulate you out of existence or outright physically attack you. Before you say that can't work I'd like to point out that they did this in almost all of Europe for ~1200 years.

And under these conditions, I would understand that way of working.

Such things are the alternative. So, I would very much want people to have faith in government, and that very much means you have to pay up the promises made before.

> Consider the alternative - are you saying that future generations are always bound to the decisions of past generations, even though they may not even have been alive or of voting age? If a law is fair and benefits society, that future generation will respect it because it benefits society.

You mean, paying people for their work what they were promised when they started that work, for example ? Like pensions ?

> How as a socialist could you justify a pensioner earning more than a productive active worker?

I don't understand why this would be a problem for a socialist ?

> Consider the alternative - are you saying that future generations are always bound to the decisions of past generations,

What I don't understand is that as a supposed capitalist alternative you're actually advocating making promises (like pensions), then reneging on them. Your alternative is to lie. Make promises, and exploit people who believe them ...

I guarantee if there is one thing that kills markets faster than anything else it's a loss of trust. You're advocating, unless I'm mistaking, exploiting trust. This is just not going to work.

There's a reason most historical capitalist societies had extreme versions of holding people to their promises. Slavery, debtors' prisons, forced labor, indentured servitude, ... were "solutions" used by past societies to avoid this problem. There was presumably a reason they did this ... do you really want to go back ?

Re: The Pension Hole for U.S. Cities and States Is the Size of Japan’s Economy

#227

Post by jdhn » Tue, Jul 31, 2018, 1:48 PM UTC

randysavage wrote: post #194

Spooky23 wrote: post #55

Earlier quoted context omitted.

One reason is that many places changed the actuarial tables. Average life expectancy is higher than it was, driven by improvements in outcomes and more women at work. Another is that monetary policy has made fixed income securities a low yield investment. Funds need to diversify and add risk. Another reason is that folks writing these things assume workers work a full career. The reality today is that many government…

Many also retire young. My firefighter buddy will retire well before his 50th birthday and collect >$100k/yr in a relatively low COL state. He's in good shape, physically and mentally. He could easily live to 90, no problem. Good for him, but not great for taxpayers.

>My firefighter buddy will retire well before his 50th birthday and collect >$100k/yr

How is this possible? The state that he lives in hasn't changed the rules for vesting/collection? That seems like an absurd amount of money for what I'm assuming is a career that's lasted less than 30 years.

Re: The Pension Hole for U.S. Cities and States Is the Size of Japan’s Economy

#228

Post by betterunix2 » Tue, Jul 31, 2018, 2:10 PM UTC

cobookman wrote: post #215

betterunix2 wrote: post #177

Earlier quoted context omitted.

Well, let's just say that somehow what you are saying is correct. How comfortable would you be investing in a long-term muni bond after that? If you were a contractor, how would you feel about working on a long-term project for a state or local government? Who would want to work for the government when there is no way to trust that any of the benefits will materialized (other than the salary; then again, who knows?)…

Happened in the private sector. Most millennials don't trust pensions and prefer 401k. As you are in control of the money and there isn't much that could be changed unfavorably in 50 years.

I am not sure millennials don't trust pensions; I think we never had the choice. It is also wrong to assume you are in control of your 401k, since for most people a 401k will be invested in mutual funds managed by the same businesses that manage pension funds. Some of those funds have absurd expense ratios that erode retirement savings.

Re: The Pension Hole for U.S. Cities and States Is the Size of Japan’s Economy

#229

Post by landryraccoon » Tue, Jul 31, 2018, 3:07 PM UTC

aisengard wrote: post #207

landryraccoon wrote: post #197

Earlier quoted context omitted.

> And how does this square with this being a democracy ? Or to put it another way: you're also (indirectly, but ...) the ones promising sweet pensions to these people if they would just work. And they worked. Now you want to revoke your part of the bargain ? So I think this argument actually works against you. First, nothing can bind future generations. They can always change whatever they want to. In the United Stat…

So think of it this way, how would you feel if a socialist government took over and decided that your 401k is fair game for extra taxation? But it's _your_ money, capitalism promised you! "Boohoo", you should have thought of that before entering into a clearly unsustainable pyramid scheme. Not so useful or interesting in terms of commentary, is it?

The standard shouldn't be that government decisions are set in stone forever, period. The standard should be good policy, in both directions. If a previous government sets a bad policy, a future government should not be bound to it. If it sets a good policy, a future government should uphold it. If a future government decides to be "bad" and tear up everything, no piece of paper will stop them.

Re: The Pension Hole for U.S. Cities and States Is the Size of Japan’s Economy

#230

Post by landryraccoon » Tue, Jul 31, 2018, 3:08 PM UTC

candiodari wrote: post #226

landryraccoon wrote: post #197

Earlier quoted context omitted.

> And how does this square with this being a democracy ? Or to put it another way: you're also (indirectly, but ...) the ones promising sweet pensions to these people if they would just work. And they worked. Now you want to revoke your part of the bargain ? So I think this argument actually works against you. First, nothing can bind future generations. They can always change whatever they want to. In the United Stat…

> So if you want your pensions to be secured, the benefits cannot be guaranteed by faith in future governments! It's funny how you see this as a positive ? If people have this attitude, of course the result will be mercantilism, or worse : the hoarding of jobs/companies/markets and the only way to get into a specific jobs is to do whatever "the guild" wants, which I guarantee will include paying pensions. And if you…

If you are a socialist, you ignored my most important argument :

> If the median income in a nation is $40K, but the median pension given by the state exceeds that income, then who is suffering unfairly if the pension is reduced to be more in line with what the average worker earns?

If government pensions pay out more at retirement than the median worker makes while working, would you agree that under socialism this would be considered unfair to the worker, and overly exploitative for the pensioner?