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

271–280 of 349 posts

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

#271

Post by bee_rider »

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…

What does it mean for something to be broken from first principles? I would expect some that just cannot work on a fundamental level, like faster-than-light travel or a lightbulb that powers it’s own via solar panel.

3% vs 7% doesn’t seem broken on principle, just, a tuning parameter is off.

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

#272

Post by LorenPechtel »

rootusrootus wrote: post #204
horsawlarway wrote: post #169

Earlier quoted context omitted.

Not really sure why this is getting downvoted. I don't really think we need to forgive student loans - I think they should absolutely be dischargeable through bankruptcy, though. Bankruptcy isn't a "get out of jail free" card - it puts a huge burden on a student relatively soon after graduating that makes it harder to start a family or buy a home. So it incentives are still aligned for the students taking the loans.…

Yeah it's pretty amazing that we have loans which you can never escape and yet have high interest rates in spite of that. If I cannot declare bankruptcy, then at the least the interest rate should be 0%, appropriately reflecting the risk.

No.

1) Zero risk does not mean 0% interest. True zero risk should have the same yield as treasuries.

2) No bankruptcy does not equal guaranteed payment. Some will die without having repaid.

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

#273

Post by groundzeros2015 »

epistasis wrote: post #193
triceratops wrote: post #55

Earlier quoted context omitted.

> so what does it even mean to say ETF crash ? Isn't that just the tracked stocks crashing? Yes. I've learned to differentiate between the words people use and what they actually mean, rather than being literal. Since index ETFs make up a large portion of people's investments they fear the value of those ETFs tanking. Obviously this is due to the underlying stocks' prices dropping This has happened many times in the…

Well that's the crux of it, isn't it? How do you know what they really mean, if not through the words? You have to impose a mental model on the speaker, which we of course do anyways. Saying ETF crash specifically sounds like there is an idea there, and lots of people talk about thinking that ETFs specifically have problems that owning stocks directly would not have, so in my mind the model is that the speaker has an…

If you own an ETF and the underlying assets crash the ETF value has gone down. Additional failure modes exist due to the mechanics of the ETF, but from context we can tell the original comment was about risks to the large amount of money invested in ETFs

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

#274

Post by BobaFloutist »

Spivak wrote: post #134
p_j_w wrote: post #117

Earlier quoted context omitted.

Your solution means that only the wealthy can attend university, someone who grew up poor wouldn’t stand a chance.

Your argument is basically that current university costs are intrinsic and can't possibly be reduced but we know that isn't true. We have not two generations ago people paying for their college tuition with money from their part time jobs. My grandpa paid his way to a PhD as a line cook. Got no financial support from family who were only slightly above dirt poor. Like I don't want to be completely reductive but a goo…

>My grandpa paid his way to a PhD as a line cook. Got no financial support from family who were only slightly above dirt poor.

That can still be easily done.

In California, most families earning under $100k get their tuition costs to UCs covered. CSUs are probably even easier.

Then, PhDs largely get paid for by undergrad tuition and research grants, it's pretty unusual for PhDs to pay their own way.

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

#275

Post by AnimalMuppet »

LorenPechtel wrote: post #272
rootusrootus wrote: post #204

Earlier quoted context omitted.

Yeah it's pretty amazing that we have loans which you can never escape and yet have high interest rates in spite of that. If I cannot declare bankruptcy, then at the least the interest rate should be 0%, appropriately reflecting the risk.

No. 1) Zero risk does not mean 0% interest. True zero risk should have the same yield as treasuries. 2) No bankruptcy does not equal guaranteed payment. Some will die without having repaid.

Only if treasuries are truly zero risk. That may not be a valid assumption anymore.

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

#276

Post by BobaFloutist »

zeroonetwothree wrote: post #184
Spivak wrote: post #134

Earlier quoted context omitted.

Your argument is basically that current university costs are intrinsic and can't possibly be reduced but we know that isn't true. We have not two generations ago people paying for their college tuition with money from their part time jobs. My grandpa paid his way to a PhD as a line cook. Got no financial support from family who were only slightly above dirt poor. Like I don't want to be completely reductive but a goo…

I’m guessing those were at subsidized public universities. I don't think anyone was paying full fare Harvard tuition entirely with part time work.

Most top private schools will give a full ride to anyone that's not from a wealthy family (or I guess wealthy themselves) anyway, no?

According to this page https://college.harvard.edu/admissions/why-harvard/affordabi..., Harvard covers your costs if you have <$100k family income. So in ways it's better than covering tuition with part time work.

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

#277

Post by shermantanktop »

jahsome wrote: post #235
shermantanktop wrote: post #140

Earlier quoted context omitted.

The unfortunate reality is that your kindness and empathy is a resource that is being exploited by unseen actors. You are being taken for a ride and you feel good about it. I absolutely support maximizing access to education and I'm willing to pay for it. I'm not willing to prop up a giant unsecured-loan grift that transfers financial risk onto those least able to bear it, while universities jack up their tuition to…

You are correct and I am making a conscious choice. I'm not being taken for a ride, I'm willingly offering one, even to those who would rob me blind given the chance. Of course there are those who would exploit. But I'm not going to punish the well-deserving masses because of the unscrupulous few. It's a very small sacrifice I can make each year, which has the potential to positively impact the lives of thousands of…

We don't have the option to "refuse participation," so that's not really the point. We can feel better or worse about it, and you feel good about it, and that's great. I feel good for the individual students who benefit but do not feel good about the institutional corruption that this system represents.

If we were to finally reform the student loan process without any protections for the students themselves, it'd be a painful correction for everyone. But the current system has massive pain in the form of students taking on massive debt to go to places like the University of Phoenix, and they often don't even end up with a degree. Some of them do, of course, so maybe under the current system we end up better off as a whole. It's hard for me to know one way or the other.

But it is painfully obvious who the winners and losers are. The winners are the universities, debt collectors and loan servicing companies. The losers are some percentage of low-income students who get screwed and saddled with debt, the well-meaning taxpayers who fund the loan scheme, and the middle-class parents who pay ever-rising tuition that is fueled by loan money that they don't even qualify for.

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

#278

Post by DangitBobby »

angmarsbane wrote: post #248
BobaFloutist wrote: post #213

Earlier quoted context omitted.

The reason that you can't (default) discharge student loan debt in bankruptcy is that your degree can't be seized and sold off, so there's a pretty weak incentive to not declare bankruptcy as soon as you're handed your degree.

What if a degree could be seized? For example, what if bankruptcy courts could require a debtor to stop "representing themselves" as having a degree as a condition for discharging debt. If a court revoked a degree, it would effectively reset the graduate to the status of a dropout removing a significant amount of the degree's value (I know knowledge has its own value, but credentialism is a big part of a degree's val…

When student debt becomes dischargeable, market forces will finally price degrees according to their actual economic value relative to the risk of poor returns. Currently, that price discovery is broken; the cost of a degree bears almost no relationship to its real-world payoff. No need for degree seizure to correct it. Lenders can decide for themselves which degrees lead to returns, which in turn provides degree seekers with actual financial signals instead of vibes-based "go into programming" propaganda from FAANG.

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

#279

Post by LorenPechtel »

cj wrote: post #207
AnthonyMouse wrote: post #158

Earlier quoted context omitted.

Bankruptcy affects your credit score for 7-10 years. Someone who graduates from college in their early 20s with six figures in debt could file for bankruptcy immediately and have it be off their credit history by the time they've saved up a down payment and want to get a mortgage. There is also the obvious drawback that if more people can discharge the debt, the interest rate goes up, and then everyone else has to pa…

Imagine a world where lenders charged different interest rates depending on the risk profile of each school. Lower interest rates for schools where graduates repay their debt, higher interest for schools where many people default. Assuming it wouldn’t disproportionately affect disadvantaged populations, that could be an interesting way to incentivize schools to get their shit together and prepare students for startin…

I've suggested a very different approach:

Don't have a dollar amount that you repay. Rather, your student loan payment is x% of (your income minus the average rate for those with a high school diploma) for y years. Forgiveness programs for certain fields go away--instead, the tab gets picked up perhaps with a multiplier. Disability, death? Irrelevant--a dead person generally makes nothing, the amount owed is $0. (Generally makes nothing because there can be ongoing income from something they produced. That would be subject to the loan repayment.)

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

#280

Post by Galanwe »

thelastgallon wrote: post #75

Pension funds should have a rule -- invest in technologies, industries and companies that create a deflation (by technology, scale, efficiency, etc). This will create better outcomes for pensioners. If they invested in cheaper housing, healthcare, pensioners can live without the constant fear of running out of money. The absolute first thing to invest in is clean energy which can be super cheap to zero to actually ma…

I don't know where you are from, but that is the case for most european countries. I would be surprised if it were not also the case in the US?

Usually it's not implemented as a rule though, but rather by creating tax cuts for certain kind of investments.

E. G. In France you get tax cuts if you invest in green energy, housing in poor neighborhood, and a trillion other subcategories.

Post reply on HN