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

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

wsj.com

Post reply on HN
Print view View original

51–60 of 253 posts

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

#51

Post by agumonkey »

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…

is ayn rand a real influence ? i've seen one interview of her and I can't read her name without being filled with negative emotions. such a free-market fanatic.

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

#52

Post by tomjakubowski »

DuskStar wrote: post #37
aurailious wrote: post #30

Earlier quoted context omitted.

Laws were changed to intentionally weaken pension funds and then articles like this are funded to further destabilize trust in them. Another way of saying it: rich people were unhappy they have to pay taxes.

Wow, I didn't know that the anti-pensioners had so much influence in California! Another way of saying it: I don't think your summary is particularly fair or accurate.

The anti-pensioners' historical influence is enshrined in the California constitution, Article XIII A.

https://ballotpedia.org/Article_XIII_A,_California_Constitut...

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

#53

Post by gok »

> 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.

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

#54

Post by dv_dt »

abledon wrote: post #31

How much money does one need to live in retirement? If they are doing daily exercise(1-2hr), cut out most processed foods and sugar , no alcohol , cook all their food from scratch using cheap staple ingredients , entertain themselves with books , community , local events and cut out expensive vacation plane trips (only an invention of the past century). An ‘uncomfortable’ lifestyle shift but doable for a human. [edit…

How much money does the low-taxed wealthy need that so many others need to live a paupers life style. Is there not productivity enough in our society to provide better?

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

#55

Post by Spooky23 »

safgasCVS wrote: post #12

If I paid for WSJ and this is the low quality journalism I got I'd be peeved. This article barely touches on how it got to be so bad. Excuse me but no - a single paragraph stating the obvious 'benefits promised were too rich' doesn't cover it. How is it possible that a solvency ratio can drop from 100% to 75% in 18 years? This doesn't just happen because eh seemingly every pension administrator just decided. How much…

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 workers start in their 30s and 40s, and only get the rich benefits if they work until their late 60s. That neutralizes the problem, as they will be dead sooner.

Personally, I think the WSJ and other anti-pension people overplay the liability. The drivers of pension expenses are police and firefighters, and these (mostly) guys tend to die young.

They also tend to report on the problem in masse, while it varies from outright disaster (Illinois) to Oregon, which is overfunded.

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

#56

Post by repsilat »

torstenvl wrote: post #14
pzone wrote: post #6

Comparing stock variables (Pension liability shortfall) vs. flow variables (GDP, a rate of annual output) is a mistake that peeves me to no end. That said, the pension shortfall is a disaster playing out in slow motion. We're just waiting for the hard cash constraints to bite - when they do it's not going to be pretty.

But it's not a real comparison. It's just contextualizing. If I say that a brachiosaurus was the size of a house, I'm not saying that your current dwelling is comparable to a 65-million-year-old pile of death and dust. Huge numbers are essentially meaningless to the human mind. But "all economic output of Japan in a year" is something that most people can wrap their heads around a little more easily. We know it's a f…

> all economic output of Japan in a year

We all know they meant "in a year", but the article isn't explicit about it -- it just says

>> the output of the world’s third-largest economy

Not "annual", not even "GDP". I bet a lot of readers came away thinking "a shortfall as big as Japan".

And maybe not just lay readers -- a "smart but not knowledgeable" reader might try to convert the stock into a flow or vice versa by assuming some interest rate and doing a back-of-the-envelope net present calculation and be off from the real numbers by an order of magnitude.

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

#57

Post by sp332 »

jimjimjim wrote: post #40

you know that research test they do where the subject can have $5 now or $50 at the end if they don't take the $5 and a disappointing amount of times they go for the $5. The problem is everyone cheers on the politician that says you can have the $5 AND the $50.

Doesn't this show that the people who took $5 up front were right? The ones who waited for $50 at the end are getting screwed.

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

#58

Post by mi100hael »

safgasCVS wrote: post #12

If I paid for WSJ and this is the low quality journalism I got I'd be peeved. This article barely touches on how it got to be so bad. Excuse me but no - a single paragraph stating the obvious 'benefits promised were too rich' doesn't cover it. How is it possible that a solvency ratio can drop from 100% to 75% in 18 years? This doesn't just happen because eh seemingly every pension administrator just decided. How much…

I see no fewer than four paragraphs indicating it was a combination of over-promising benefits, longer lifespans, higher medical costs, boomers retiring at the same time, and poor portfolio performance.

I'm quite satisfied with my subscription.

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

#59

Post by Spooky23 »

rayiner wrote: post #34
safgasCVS wrote: post #12

If I paid for WSJ and this is the low quality journalism I got I'd be peeved. This article barely touches on how it got to be so bad. Excuse me but no - a single paragraph stating the obvious 'benefits promised were too rich' doesn't cover it. How is it possible that a solvency ratio can drop from 100% to 75% in 18 years? This doesn't just happen because eh seemingly every pension administrator just decided. How much…

Three major reasons are: 1) deferred/missed contributions; 2) expenses growing faster than originally expected, due to benefit increases and rising healthcare costs; and 3) unrealistic projections of future return that are being revised downward over time to be more realistic.

2 isn’t in scope of pension obligations.

3 is arguable. They usually look for 7%

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

#60

Post by sp332 »

agumonkey wrote: post #51
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…

is ayn rand a real influence ? i've seen one interview of her and I can't read her name without being filled with negative emotions. such a free-market fanatic.

https://en.wikipedia.org/wiki/Ayn_Rand#Political_influence

https://en.wikipedia.org/wiki/Atlas_Shrugged#Influence_and_l...

Edit: She did flee a terrible situation in Russia, which I think probably explains (but does not excuse) her positions on socialism vs. capitalism.

Post reply on HN