Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

America's pensions can't beat Vanguard but they can close a hospital

governance.fyi

Post reply on HN
Print view View original

141–150 of 349 posts

Re: America's pensions can't beat Vanguard but they can close a hospital

#141

Post by jltsiren »

aresant wrote: post #51

From first principles public pension funds are broken. The "Safe Withdrawal Rate" assumed by many private individuals planning for their own retirement assumes a withdrawal rate in the 3 - 4% range based on the "trinity study" - https://en.wikipedia.org/wiki/Trinity_study Meanwhile, American public pensions are structurally engineered around a 7%+ SWR - this was recently confirmed again by the median goal by the Nati…

Individuals saving for retirement must deal with the risk that they live to an old age and their savings must last for decades. Pension plans have a higher safe withdrawal rate, because people on the average have average lifespans. When a plan member dies early, their remaining contributions can be used (partially or in full) to fund other members' pensions.

Re: America's pensions can't beat Vanguard but they can close a hospital

#142

Post by a_better_world »

jazz9k wrote: post #45
epistasis wrote: post #24

> Larry Summers warned against “moral hazard lectures” and demanded SVB depositors be made whole immediately in 2023, months after calling student loan relief inflationary and unfair. Moral hazard for borrowers, bailouts for banks. Not lost on the public. I can't believe I'm about to say something that could be construed as a defense of Larry Summers, but here goes: bank depositors are not engaging in risky behavior,…

I disagree about student loans. The entire system needs to be dismantled. Universities don't care if their majors will result in a job and the student loans are a source of risk-free money. They need to start taking on the risk of all student loan, not me, the tax payer.

if college education produces a public good (a more competent workforce), then it should be funded through public funds-- government should pay for education.

If it does in fact lead to better outcomes, then the higher tax will cover the cost.

running it through the private system builds in too many perverse incentives.

Re: America's pensions can't beat Vanguard but they can close a hospital

#143

Post by mschuster91 »

codexb wrote: post #68
jazz9k wrote: post #45

Earlier quoted context omitted.

I disagree about student loans. The entire system needs to be dismantled. Universities don't care if their majors will result in a job and the student loans are a source of risk-free money. They need to start taking on the risk of all student loan, not me, the tax payer.

Ok, but forgiving student loans doesn't do that. It signals to borrowers that they don't have to repay high loans if their career can't support it. It tells borrowers that they can make risky loans without a chance of default. It tells universities that they can keep charging exorbitant tuitions because kids can still get loans to pay them. The solution is to allow judges the discretion to default them in bankruptcy…

That's not a solution at all, because it will price out way too many students.

The solution is to do what Germany and most of the EU does - pay universities with tax money and do not charge students anything at all (or maybe a few hundred to thousand euros).

Re: America's pensions can't beat Vanguard but they can close a hospital

#144

Post by bee_rider »

sejje wrote: post #87
etchalon wrote: post #70

Earlier quoted context omitted.

So you believe universities have taken advantage of students by crafting, encouraging and financing education programs with an understanding that those programs would not result in jobs which would be sufficient to repay the debt needed to complete them, but you think the 18 year olds who were taken advantage of should be forced to suffer for their failure to make perfect decisions at 18. Cool. Cool.

So you believe uninvolved taxpayers should be on the hook when the 18 year olds make bad decisions. Cool cool.

The decision to invent a new special type of debt for student loans was a political decision made by our representatives. To the extent that the voters/taxpayers are responsible for anything: this is our shared mess.

I mean, the whole premise of representative democracy is that we’re responsible for the messes we send representatives to make. If we don’t want that responsibility, I guess we’d have to look at alternatives to representative democracy, but that’s a pretty big topic.

Re: America's pensions can't beat Vanguard but they can close a hospital

#145

Post by AlexandrB »

jahsome wrote: post #106
sejje wrote: post #87

Earlier quoted context omitted.

So you believe uninvolved taxpayers should be on the hook when the 18 year olds make bad decisions. Cool cool.

Do I believe in community, empathy, kindness toward my fellow human beings? Why, yes. Yes I do. Am I willing to pay a few bucks to put my money where my mouth yes. Why yes, yes I am.

What if someone else thinks that there are better (more kind, empathetic) uses of that money than funding someone's college? Why is "free college" the most kind and empathetic thing we can do with this money?

Re: America's pensions can't beat Vanguard but they can close a hospital

#146

Post by justin66 »

sidewndr46 wrote: post #6
tempest_ wrote: post #3

I do wonder when some unforeseen 2008 like crash someone crashes ETFs. I can't really see how it would happen and that I suppose is part of the fun.

Unless we're just talking about regular embezzlement of funds, how do you crash an ETF? I'm talking about broad index funds. Not stuff like ARKK

> how do you crash an ETF? I'm talking about broad index funds. Not stuff like ARKK

Any ETF's share value can "crash" if there are not enough buyers to purchase shares when they are trading below NAV (net asset value). It's worth a quick google to see what "market makers" or "authorized participants" do, but the thing to keep in mind is: if the market is kind of exploding in some major ways (think 2008) an ETF might not have a lot of buyers, even if its market price is well below its net asset value.

Re: America's pensions can't beat Vanguard but they can close a hospital

#147

Post by Braxton1980 »

LanceH wrote: post #115
Starman_Jones wrote: post #80

Earlier quoted context omitted.

I agree with you about student loan forgiveness, but disagree with your assessment of universities as a system. The humanities (which are highly profitable for the university) are suffering an existential crisis because their funding keeps getting cut, while STEM programs (which have low or even negative ROI after lab/equipment/resource costs) keep getting expanded. There's obviously more nuance to that, but at a hig…

How about clawbacks from the universities.

For all loans? What if a person takes a loan to get into a medical program but can't find a job after and defaults the loan.

Is the university responsible? The arguments seem to be based on majors that have a poor job market.

Re: America's pensions can't beat Vanguard but they can close a hospital

#148

Post by TimorousBestie »

Aurornis wrote: post #123
codexb wrote: post #68

Earlier quoted context omitted.

Ok, but forgiving student loans doesn't do that. It signals to borrowers that they don't have to repay high loans if their career can't support it. It tells borrowers that they can make risky loans without a chance of default. It tells universities that they can keep charging exorbitant tuitions because kids can still get loans to pay them. The solution is to allow judges the discretion to default them in bankruptcy…

I’m always surprised that student loan forgiveness appeals to anyone who should otherwise be able to think about all of the bad second order effects. The more we inject money into the education system, the higher prices go. Setting a precedent that the government will just pay off your loans if you don’t pay them off only encourages more people to take out loans without thinking about paying them back. There are so m…

What are the second-order effects of a subclass of citizens permanently encumbered by debt that (with rare exceptions) cannot be discharged through bankruptcy?

Perhaps your analysis of second-order effects is not thorough and complete? Have you really considered all of them?

Re: America's pensions can't beat Vanguard but they can close a hospital

#149

Post by lotsofpulp »

jltsiren wrote: post #141
aresant wrote: post #51

From first principles public pension funds are broken. The "Safe Withdrawal Rate" assumed by many private individuals planning for their own retirement assumes a withdrawal rate in the 3 - 4% range based on the "trinity study" - https://en.wikipedia.org/wiki/Trinity_study Meanwhile, American public pensions are structurally engineered around a 7%+ SWR - this was recently confirmed again by the median goal by the Nati…

Individuals saving for retirement must deal with the risk that they live to an old age and their savings must last for decades. Pension plans have a higher safe withdrawal rate, because people on the average have average lifespans. When a plan member dies early, their remaining contributions can be used (partially or in full) to fund other members' pensions.

Only taxpayer funded defined benefit pension plans get to use 7%+. Because they have the power to use future taxpayers’ money to pay for underfunding/underperformance/corruption from the past. And obviously, politicians that would choose to increase taxes today for something that could but punted to the future would lose elections.

The Pension Protection Act of 2006 mandates that non taxpayer funded defined benefit pension plans use discount rates from high grade corporate bond yield curves, which are much lower.

https://www.irs.gov/retirement-plans/pension-plan-funding-se...

Re: America's pensions can't beat Vanguard but they can close a hospital

#150

Post by Starman_Jones »

PlatoIsADisease wrote: post #105
Starman_Jones wrote: post #80

Earlier quoted context omitted.

I agree with you about student loan forgiveness, but disagree with your assessment of universities as a system. The humanities (which are highly profitable for the university) are suffering an existential crisis because their funding keeps getting cut, while STEM programs (which have low or even negative ROI after lab/equipment/resource costs) keep getting expanded. There's obviously more nuance to that, but at a hig…

Is this actually true? I think about my lab classes and typically these were separate credit hours. More money to the university. Outside chemistry, we were using outdated equipment that wasn't getting refreshed/bought new. If what you are saying is true, Humanities needs to cut costs of their credit hours or double down. For entertainment degrees (art, music), its prohibitively expensive to casually obtain the educa…

"Labs" as in the physical facilities, not the class credits. Computer labs are one example - my school had a Linux lab that, uh, wasn't much used outside of CS/IT/maybe EE. There's also lab equipment for research professors - a nice oscilloscope can cost more than a new car, and students won't ever actually get to use that. Not saying it's wrong - I really appreciated that Linux lab - but it's definitely not equality between departments.

For your second point, I've never heard of a university that charges different credit rates for different majors (outside of special stuff like paying for certain PE classes), but that seems like it would be a university policy, not a department policy.

Post reply on HN