The Retirement Crisis

This interview, with Teresa Ghilarducci, who the Wall Street Journal called “the most dangerous woman in America,” discusses how and why pensions are under stress, and what can be done to fix them. While she agrees that the retirement crisis is real, she also argues that it is eminently fixable, particularly since there really is no free lunch. The alternative, of widespread poverty among the aged, also imposes costs on government and society.

Ghilarducci also points out that the biggest reason that pensions are coming up short is due to how much the managers are extracting in feed. Ghilarducci’s dangerous idea, which she discusses here, is that of lowering the Medicare age to 60. She contends that it will pull in older workers that are un or underinsured, but also generally healthier than the over 65 Medicare pool. The combination of intervening earlier for some long-term ailments, most important of all diabetes, plus getting a broader set of risks into the pool, will lower overall costs.

From the summary at INET:

The retirement crisis is anything but imaginary. According to research conducted by Professor Teresa Ghilarducci, head of the Department of Economics at the New School in New York City, only 44% of workers in the United States have access to a retirement plan at work. Except for workers with defined benefit plans, most middle class U.S. workers will not have adequate retirement income — 55% of near-retirees will only have Social Security income at age 65.

A labor economist, Ghilarducci’s work focuses on the need to restore the promise of retirement for every American worker. Her research documents the many problems people now face in planning for retirement: decreasing coverage and contributions, increasing investment risk, portability, leakage, high fees, and the drawdown of benefits in retirement. This body of work led her to put forth a bold reform idea – the creation of Guaranteed Retirement Accounts (GRAs) – to provide a secure retirement to an additional 63 million people. This of course goes against the prevailing trend in our government’s treatment of pensions, particularly public pensions, which governors have persistently raided to avoid the more politically unpalatable option of raising taxes to support the viability of these plans. As she discusses in the interview below, she issues a clarion call for policy makers and political leaders to find a way to save retirement, “a necessary- if now threatened – feature of civilized societies.” As Ghilarducci eloquently notes, all people – rich AND poor – deserve a decent retirement income after a long working life. Are our leaders up to the challenge?

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  1. washunate

    What’s a pension?

    But seriously, it’s good to hear conversation at this level. The basic question is whether an extended period of not working is a right of citizenship or a luxury determined by the roll of the dice.

    That requires addressing the broader principle of what minimum standard of living people ought to have. As a group, older Amerians are actually wealthier than younger Americans. And the problem in healthcare is not a lack of spending, but rather, an enormous amount of wasteful spending. The retirement crisis, in short, is a predictable consequence of wage inequality.

    1. Yves Smith Post author


      Older people are always richer than younger people, unless you’ve had a cataclysm that wipes out savings and other forms of wealth on a widespread basis. Young people typically have nothing when they start their working careers. They save, buy houses, cars, put some funds aside, etc.

      1. bob

        While that is true now, and has been true, I see major change. Older people now approaching or in retirement had, for most of their careers, increasing wages.

        The older people had the wealth, the younger people the earnings potential.

        Not true anymore.

        “A raise? You’re a spoiled brat, you’re fired now. See how much better off you were?”

        1. Yves Smith Post author

          Yes, agreed, that young people face a horrible job market. But so do older people who lose their jobs, and they are even less likely to be rehired. So I don’t see older people as a protected class in this market. It’s just that some older people are able to hang onto their jobs and do. By contrast, young people who are employed at a good job are likely to switch in a few years to one that looks better (this is not urban legend, I’ve seen data). So the behavior of the old v. young who are well situated does vary.

          1. bob

            My point was about “equality”. Lack of ANY earnings gains complete wrecks the “equation”. This of course screws both cohorts, but the young are the ones who feel it most, first. It just takes a few years for the insolvency to work it’s way up the bond chain into the “wealthy” balance sheets.

            ” By contrast, young people who are employed at a good job are likely to switch in a few years to one that looks better (this is not urban legend, I’ve seen data). So the behavior of the old v. young who are well situated does vary.”

            I’d like to see some numbers on the nominal amount of people under 45 who have had raises that beat inflation over the past 10-15 years.. Pulling a percentage out of my butt, I’d say less than 20% have been able to even keep what they started with. 10% may have gotten a raise, in real terms. 80% are worse off. well situated, indeed.

            1. sd

              I feel like I missed an opportunity. As one of the older workers you describe, my wages have been flat for years and in fact have deteriorated by 30% when adjusted for inflation. I am supporting an elderly parent who was essentially evicted by a greedy landlord (SF). And have only modest savings for retirement. I was never in a position to buy a house and now consider myself extremely,lucky to have avoided the house equity extraction game.

              Where is this gravy train of which you speak?

              1. bob

                So, for some of your life it was good? You back up my claim that in the past decade there has been no wage growth, and probably declines.

                Imagine yourself 20 years younger, seeing what you are seeing now. Starting off low, and getting lower. Minimum wage, in real terms, is half now what it was in the 70’s.

                I’m not trying to start the old vs young meme. Just pointing out the differences in the cohorts, and the differences between them over time.

                No gravy for anyone, apparently.

                1. cnchal

                  Gravy galore for some.

                  Banksters. Health insurance executives. Pension fund mismanagers. Walmart’s owners, Apple executives. Crooked politicians (Is there any other kind?). Tenured professors. Larry “pollute the third world” Summers. F35 “can’t fight fighter jet” builders. Military top brass. On and on it goes.

                  The more bullshitier the job, the more gravy there is.

                2. JTMcPhee

                  bob, it looks very much to me that “starting the old vs young meme” is exactly what your comments are doing.

                  Along with propagating a myth about who has the wealth (what’s an upside-down house, for those who have not already been de-housed and reduced to “living rough” or rental debt, or one that has lost a lot of “value,” that got there because Banksters got young Gentry or Chinese bid up the pricing and caused a crash, actually “worth,” and that and an old car and some household goods and maybe for a very few of us Olders a tiny 401k ravaged by the Casino’s guaranteed take and fee-rents is all that “wealth” that we have.)

                  I suggest you might be doing some very subtle, even devious violence, in your remarks here, whether intentional or not — but then those who speak for the “haves,” seeing that maybe there are some tears in the curtains and gaps in the smokescreens, are upping their game to sucker and divert the rest of us away from ideas and efforts that might actually, you know, fix something and restore a little justice and stability to reverse the current “sauve qui peut” meme?

                  Got any substance to under-gird your several assumptions and assertions? That wage curve has been essentially flat for a lot longer than the last 10 years, more than 40 actually,, and the Olders who have a sh_tload of Wealth have accumulated it not by WORKING HARD and all that but by riding the scams that are bleeding the rest of us to death.

                  Seems to me that the point that really needs making is that there really is enough (barring an unrecoverable planetary and/or financializationary collapse) to go around, to make at least a modest-competence provision for all of us. Maybe that means a few fewer estates and mega-yachts and private jets and those wonderful “compensation committee-approved” bonuses. Breaks my heart.

                  There are lots of other places to go and lay out these notions, I’m sure, and there are certainly other people who are doing the same. One hopes that not too many here, or elsewhere, will find them even fractionally credible.

                  1. bob

                    As Yves pointed out, generalizing that the elderly have more wealth is not up for debate- it’s a fact.

                    As for your position on what I may or may not be thinking, read my mind….

                    1. jonboinAR

                      The elder cohort as Yves pointed out, have always had more wealth and should, as they’re nearly out of time. There are some who appear to be using divide and conquer tactics against the productive class (those who actually work for a living) by presenting this fact as a problem of fairness that they’ve only just discovered.

                    2. hunkerdown

                      jonboinAR, I hope you mean “should” as expectation, not desert. See, wealth = opportunities for mischief. With a sound social safety net, aging workers don’t need to accumulate wealth to hedge against the fear of bad dice (see comparatively low savings in Scandinavia).

                  2. MyLessThanPrimeBeef

                    Total wage = your current monthly/weekly/yearly pay + pension.

                    Your current real (adjusted for inflation) pay may have been flat or declining, or even increasing, but if you lose your pension, all or part of it, your ‘total wage’ is less, by that amount.

                3. MC

                  One thing that people seem to forget about us “older” folks, it wasn’t always higher and higher wages…. the 70’s totally crashed with unemployment and gas shortages. Everyone goes through a few business cycles, the ups and downs of the market. And my dollar is worth a lot less than it was when I started working.

              2. craazyboy

                “Where is this gravy train of which you speak?”

                I think it done got et by the age group that’s gonna drop dead at any moment.

                1. LifelongLib

                  My siblings and I are in our 50s. Our parents concede that they were better off at that age than we are now. Of course since they grew up in the Depression and WW 2 they still think (rightly) that we had better childhoods…

      2. Moneta

        That is true but the problem today is the sheer size of the retiring cohort. The last time we had such a large retiring cohort relative to the 35-50 cohort was in Tue 30s.

        And this 35-50 cohort is full of debt and not even saving for its own retirement. … and they want to double ss contributions?

        Also, historically there has been a passing of the baton which is not happening today. For example, here in Canada, instead of paying down their mortgages, 50+ have been increasing their mortgage debt. This means they will not be able to retire and will keep coveted positions to keep on paying off their debts and expensive lifestyles. But let’s say policy was structured to force them into a funded retirement, logically that would mean taxing the young so the retirees can pay off their mortgages. Yes, the young would be working but the fruits of their labor would be used to fund their parents choices.

        Over the last 40 years, we made a huge popular bet on real estate and a lot of it is malinvestment that will derail retirements.

        1. diptherio

          And this 35-50 cohort is full of debt and not even saving for its own retirement. … and they want to double ss contributions?

          The banksters can get bailed out, but not the retirees? Puh-leez…enough with the moralizing–it’s a tad misplaced.

          1. bob

            moralizing moneta. Big numbers! Bad people! “You’ve angered the money gods, sacrificing gradma is now necessary. Shame on you.”

          2. jrs

            Shouldn’t not saving for your own retirement make you want to double SS contributions, in the hopes that better benefits will be there for you as well?

            1. Moneta

              My double contributions will fund the coming cash flow deficit and or benefit increases. I doubt they will fund my retirement.

      3. washunate

        Yves, this is a great post. It looks like it’s really hitting a sweet spot. There are over 100 comments on a topic that can be pretty dry.

        I’d offer three broad areas to consider.

        First, empirically, we know that the poverty rate among children growing up today is higher than the poverty rate among Baby Boomers.

        Second, empirically, we know that regular, stable, full time employment is being replaced – in aggregate – by temporary and part time work. The gig economy I think as a lot of people call it. Your view of things getting better over time is based upon the post war experiences of Baby Boomers, not the more recent experiences of Xers and Millennials.

        Third, qualitatively, standard of living pinches have been hitting younger people harder for quite some time now. It’s not that 35 year olds have less today than they will when they are 65. Rather, it is that 35 year olds today have less than 65 year olds today had three decades ago. Opportunities for those things you mention – careers, kids, houses, cars, etc. – have been decreasing. They have been getting incredibly expensive over the past couple decades.

        We should be celebrating how dramatically we have reduced poverty among the elderly over the past century. The problem is that wealth is now so concentrated – and one of those lines is age – that in order to seriously address retirement, we have to understand that millions of working Americans have a lower standard of living than many retired Baby Boomers.

        The moral case for specific ideas like lowering the Medicare age to 60 is extremely shaky. That kind of approach is entrenching our system, not changing it. Sixty year olds, as a group, have far more wealth and power than 20 or 30 or 40 year olds. Or to say it differently, the retirement crisis is not about people in their sixties. It is about low income people in their sixties. So if we are going to address that, we need to address low income people of all ages. Otherwise you simply have a system pitting younger workers against older ones, and that is not a stable situation over time.

        Indeed, in many ways we are where we are due to younger voices beng almost completely ignored in our society.

    2. Mel

      An extended period of not working is a necessity for civilization. Otherwise, inflation will kill us all in our beds. When all the young people are unemployed it will take an infinite number of them to fund even one retiree. And at that point, talk about funding is really a proxy for talking about production; people don’t actually live on money, they actually live on things they buy with money, things found somewhere, or perhaps produced somewhere. The conventional retirement debate is really just a rationalization for the neoliberal horror at the thought of paying anybody for anything.

      1. Morak

        “the neoliberal horror at the thought of paying anybody for anything.”

        I like that phrasing. It captures the sense in which neo-liberalism borders on neo-feudalism.

  2. financial matters

    I can see where Teresa Ghilarducci would be irritating to Wall Street by wanting better management of retirement funds and more people eligible for Medicare but I think she could go much further.

    I think she’s right that retirement security is much easier to deal with than health care. But I think she focuses too much on taxing labor and capital to achieve these goals. It would be easy to deal with retirement security by doubling social security. The key is not taxes but providing a vibrant work force to support this retirement which can be helped with a job guarantee and living wage. I don’t think cities, states, or corporations are the right groups to be in charge of pension funding.

    I think she is right in being for single payer and extended Medicare. Getting private insurance companies out of health care is I think a big step in starting to reform that sector.

      1. financial matters

        No doubt that the CBO is off base. I can see where Krugman could easily fall prey to this sort of analysis as in the end he believes in balanced budgets rather than a balanced economy.

      2. financial matters

        Also, I should mention that I think healthcare is more complicated not due to funding per se but that it has a lot to go through re getting rid of private insurance, fraud and abuse, appropriate compensation for level of training etc.

        1. hunkerdown

          How about student debt, while we’re at it? No debt = no amortization passed along to the patient, just when they have the least pricing power.

          1. financial matters

            Good point. “Amortization roughly matches an asset’s expense with the revenue it generates.”

            Universities seem to have become another rent extractor with fees going to administrators and banks. A common theme.

  3. Moneta

    There are 2 sides to retirement planning:

    Everyone seems to focus on income to sustain expected lifestyles.

    No one seems to question the sustainability of western lifestyles… when you have a large percentage of kids living in the basement until 35, graduating with huge debts or buying houses at high prices, who exactly will be paying those pensions? Everything is structured for the old to cash out at top prices to fund retirements with the young paying. The problem in our Western economies right now is that the younger generation can not pay for the promises made to retirees or those close to retirement.

    Everyone seems to focus on paper wealth solutions instead of looking at the real life demographic and physical bottlenecks that are staring us in the face.

    1. Lambert Strether

      What’s the average Social Security check? $12K? And the legacy parties want to beat another $1K or so out of that. It’s impossible for me to believe that level isn’t tenable when so many other things are tenable (like the F-35, to strike a blow at random). And if under present arrangements it turns out — and I don’t want to get into the Peterson stuff here — that it isn’t, unlikely as that seems to me, then there is nothing about this society that doesn’t need to be overthrown. A society that starves elders, hooks them up to machines, and lets them die in their own shit isn’t worth defending and isn’t worth allegiance. And where I worry about being, Moneta, you too shall as well. The promises that were made to me were all broken, and so shall the promises made to you, whatever they may be.

      1. Moneta

        The big difference between the young and the old is that the young never got promises. This has contributed to parents spoiling their offspring, thinking they were financially secure, and the young wanting everything now because that is what they know and how they get rewarded. Also, why wait if there is nothing left down the road?

        My husband and I are convinced at least 1/4 parents will be dependent on us sometime down the road. We don’t discuss this with them because they come from a generation that believes you can pick yourself up by your bootstraps and that everything turns out well if you work hard enough; a generation that has a different definition of positive thinking and independence altogether. We are just setting up our lives so as to be able to care for them when the time comes. In the mean time, they don’t understand why we are being so cheap. LOL!

        But chances are government will somehow find a way to take our savings and redistribute them to other families who did not plan anything. So maybe we should not be planning and just living high off the hog. Moral hazard destroys a society.

        1. bob

          Money= good Gov =bad

          “Moral hazard destroys a society.”

          Agreed. Moralizing monetarism doesn’t help either. But is sure gets the spite flowing.

        2. DJG

          Moneta: You have exposed yourself: “But chances are government will somehow find a way to take our savings and redistribute them to other families who did not plan anything.” Common Tea-Party talking point that the TP is trying to make a meme. I suggest that you rise from the realm of cliché and examine your principles.

          1. bob

            moneta’s been tea-bagging this blog for years. Anytime pensions come up, front and center, with moralizing monatarism and suggesting that appeasing the money gods with sacrifices of the elderly will somehow help.

            Help who?

        3. Jill


          You remind me of people who complain about prisoners getting a GED, food and medical care. As one prison educator said, when you get to that point, maybe the problem isn’t prisoners receiving these things. Maybe it’s time for everyone to have access to these things!

          How about a guaranteed national income for all? How about universal, single payer health care? These steps would immediately stop pitting young and old against each other. They would accomplish something any good society would do–provide for the common welfare of its people.

          I am always amazed at the hatred shown towards people who are poor in our society. Damn those crappy families who didn’t plan on their child getting cancer! They have some nerve sticking their hands out for retirement. And those jerks who worked 60 hours at minimum wage? Those people don’t deserve anything either. They are not like me, I deserve everything because I made more than minimum wage and no one in my family ever had a devastating illness!

          Honestly, do you really believe things like that? I just don’t understand why we shouldn’t want to have a good society with no one starving, everyone having access to housing, food, education and medical care. I would say if you want to find the undeserving you should look at those people amongst the wealthiest class, those who crashed the system and got a huge bailout along with bonuses and the ability to crash it again. This kind of thing never seems to count as a “moral hazard”. Would you tell me why not?

          1. Moneta

            First of all I am in Canada. We have universal healthcare and I will fight tooth and nail to keep it because I believe the most important asset in life is health and that everyone should be entitled to health.

            Why is everyone so ready to believe that I am an ogre who is annoyed that they will be taking my savings to redistribute them to the poor? My belief is that they will be taking my savings to fund promises to the lucky ones who actually had guaranteed pensions, albeit unfunded. Thus never fixing the problem.

            1. bob

              Yes, you are in Canada. Keep your opinions and broad generalizations up there. We have way too many judgementalists in the US already.

              Honestly, do you see Canada and the US as the same? You speak of “society”. Which one? Is there a difference?

              Or, is all humankind doomed because you saved some money up, and those poor people, via their huge lobbying campaign, are going to steal it from you?

              1. jrs

                I haven’t investigated it but the differences could actually be significant. Social Security is supposed to be very poor paying even compared to a the government retirement benefits in the UK which is hardly an extreme social welfare state. So most countries retirement benefits may be much better.

                1. bob

                  Canada and the US, in this context, are not at all similar.

                  20k in canada, with nationalized healthcare might be worth something.

                  20k in the US would probably leave 2-3k left after “health insurance” and health costs.

            2. Jill


              You write: “Why is everyone so ready to believe that I am an ogre who is annoyed that they will be taking my savings to redistribute them to the poor? My belief is that they will be taking my savings to fund promises to the lucky ones who actually had guaranteed pensions, albeit unfunded. Thus never fixing the problem.”

              The reason that we believe this is because this is what you said earlier:
              “But chances are government will somehow find a way to take our savings and redistribute them to other families who did not plan anything.”

              Those are two very different statements. Which one do you mean? Secondly, why are you upset about people who have guaranteed pensions? Everyone should have a guaranteed wage and universal, single payer health care. This will prevent pitting young and old against each other as well as providing for the common good. Why do you object? Why don’t you object to the trillions of dollars which are being stolen from the taxpayers of the US to pay off elite bankers? Where is your moral outrage against those people? They are part of the reason that lucky guaranteed pensioners become unlucky when their funds are stolen by such people. There is no consistency to your arguments or moral outrage.

              1. Moneta

                The poor can’t plan because they are making ends meet. So in my book they get a pass. My beef is with the top 20% that are living high off the hog thinking the gravy train is here to last.

                I don’t believe we can give what has been promised to the top 20% to everyone else because I believe the top 20% standard of living has been stolen from the lower 80%, emerging markets and the environment. I believe the top 20% North American lifestyle is unsustainable so how could I believe it could be equalized throughout all of society?

                I believe that all retirees should have a guaranteed retirement that provides food, shelter and health care. But that is very different from protecting the unfunded guaranteed pensions that have given many grandiose lifestyles that are totally our of proportion from that of my grandparents who themselves had modest guaranteed pensions.

                So I am not attacking those with pensions under 20K. I am attacking the unfunded ones of the top 20%. And those with the lush pensions are placing themselves in the same group as those with the minute pensions acting is if they are all equally getting eviscerated.

                1. bob

                  “I don’t believe we can give what has been promised to the top 20% to everyone else”

                  Who was suggesting that? That’s called a strawman. You do that a lot. You also completely contradict yourself, in some sort of half hearted attempt at “compassion”.

                  A “top 20% pension” is over 20k?

                  You can’t even make an argument with numbers you are inventing, out of thin air.

                  Just stop.

            3. JEHR

              Universal Health Care just means that all Canadians share the belief that everyone, rich and poor, deserves good health care. Part of that promise is that health care should be both preventative and there when you are sick. Why are you saying that someone is going to take your savings and use them for unfunded or guaranteed pensions? Health care and pensions do not come out of the same pot. Our health care is government provided; some pensions come from private corporations and their employees and others come from public sources and their employees. What is your belief based on?

            4. MyLessThanPrimeBeef

              Single payer and single pension.

              Why do we have all those different retirement plans?

            5. Beans

              Perhaps you have a bigger issue with the corruption, profiteering and fraud that will certainly accompany any transfer program that is facilitated through our government, than with the goal of ensuring a retirement income for older folks who don’t have have enough money on which to survive? A big part of the reason guaranteed pensions are un/underfunded is due to financial manager’s skimming of profits as well as unrealistic financial assumptions. Introducing a guaranteed income risks opening Pandora’s box – certainly Wall Street would work to worm its way into that pot full of Gov money – of course under the mantra of Free-Markets, Private-Public partnerships and the like. Look at how we just provided guaranteed health care to everyone with the ACA!
              The moral hazard risk a guaranteed income may introduce has much more to do with the lessons learned by the financial industry over the past 30 years than with any lesson to be learned by fiscally irresponsible individual citizens.

            6. jrs

              Ok this I understand. Retirement is better off funded by national retirement programs than pensions! Which in the U.S. is Social Security of course and increasing it. Not for the few – for the many, for everyone. If people want to supplement it with other retirement savings that’s great, but at least some above poverty for everyone.

            7. hunkerdown

              Then perhaps stocking up on numbers was a bad move on your part, no? Which is worse, moral hazard or moralist hazard?

              1. Moneta

                This is amazing. I set up my life to be able to support my boomer parents and I get clobbered for not spending enough.

        4. jrs

          What if you earned minimum wage or some other low salary? Would you be able to help your parents no matter how cheap you were? What if you had health problems yourself that made you unable to work or unable to earn much at any rate, would you be able to help your parents no matter how cheap you are? Frugality may be good for the environment and the soul, may be a principled resistance to consumerism, may to a degree lead to happiness, but it’s a really poor solution to social problems.

    2. AQ

      The problem in our Western economies right now is that the younger generation can not pay for the promises made to retirees or those close to retirement.

      I strongly disagree. I see the problem as we, the people who could be considered retirees and future retirees, allowed (like we had a real choice) the policy rules to change which allowed more wealth to be extracted from the system (as it had been prior to the new deal) while also allowing them to break pension contracts along the way.

      It’s all BS. If money is infinite (as they proved during and after the 2008 crash by bailing out the financial system and their continued —international, national, regional and community based—war machine), then it’s not that we don’t have the ability to keep our promises to retirees. It’s that those with the power to make policy, don’t believe that those retirees are “worthy” of said promises. It makes those people, however, they decide to define them, into “others.” Which is of course is what they’ve probably been all along but now they, the people with power over policy, no longer believe they have to pretend otherwise.

      1. Moneta

        The thing is that the contracts were based on a system that has been proven wrong. All our social structures need to be revamped. Maybe there is more than enough for everyone but changing systems is not something that happens overnight. It can take a decade, if not a generation. This means that a group gets shafted… just like a cohort can end up dying at war, some cohort can end up in the poor house.

        I still believe our lifestyles are out of whack, too energy dependent, and as long as we refuse to acknowledge this, the wealth discrepancy will get worse because energy will keep on going to the wrong places increasingly marginalizing segments of the population.

        Just think of California with its water problems… a lot of politicking will be happening to keep on getting the water there and suffocating other geographies environmentally and financially. And a lot of energy spent to maintain the system is energy not being spent in other states.

        A lot of those pensions in California depend on water flowing there…

        1. bob

          Just keep talking over him.

          “The thing is that the contracts were based on a system that has been proven wrong.”

          That’s a hairball if I’ve ever seen one. What’s wrong? Define it.

          And rather than engage in the very real demonstration of money out of thin air being used to help the banks, you turn the problem around to “lifestyle”.

          Victim blaming. You’ve got the book down right. Are you really Pete Peterson?

          1. susan the other

            Moneta is just saying that under our present “system” we don’t have the remedy for all the pensions that have gone bust. It is true. So… then what do we all propose to do?

            1. jrs

              Increase social security! Even young people without pensions could see the benefits of that when they get older.

            2. bob

              ” we don’t have the remedy for all the pensions that have gone bust”

              We also don’t have a remedy for the house that burned down last week. It’s still a pile of ashes.

              Burn all the houses?

  4. A Farmer

    Teresa Ghilarducci was my Intro to Economics teacher back in the olden days. We had multiple choice exams, and after a couple tests, she decided that the girls weren’t doing as well as the boys with the multiple choice format. The next test, she offered a section of the test with the option of 5 multiple choice questions or, I believe, 2 essay questions. Needless to say, I took the multiple choice option. I never found out if anybody took the essay option. She also required students to subscribe to The Wall Street Journal and do one presentation on a story from the paper. I got around that by borrowing the paper from another guy in my dorm in order to do my presentation, thus saving on the subscription.

    1. Beans

      I was also required to subscribe to the WSJ as a student. It was the single best requirement of my entire education, although I resented the heck out of it at the time. I subscribed for the next 25 years and credit the WSJ with providing an education that was flat out not available to me as a pre-med grad. But for the WSJ requirement, I would have remained blissfully ignorant about the world in which I lived. I bought the WSJ editorial page hook, line and sinker for 10 years, then started to question some things for the next 10 years. The final 5 years I finally started to understand how “it” worked, particularly when I saw pretty regular editorials defending usury (aka the payday loan industry). I still make a point to read some of the editors, but no longer subscribe as I find my time is better spent on blogs like NC – which I financially support with the money not going to pay for my WSJ subscription.

  5. Auburn Parks

    As usual, all the emphasis is on the wrong things. Retirement security aka purchasing power is literally the easiest thing to produce. The Govt could and should provide 2X the poverty level income for every single man and woman over the age of 65 (less for laborers????) no exceptions. The supply of money is infinite, the only question is can the productive economy handle the increased purchasing power by retirees so that the additional spending doesnt cause problematic levels of inflation? And with the entire world in the US supply chain, I cant imagine a scenario where purchasing power could outstrip supply in the USA. US dollars are the world’s most easily reproducible resource, but the mainstream still believes they are a scarce commodity. Our own ignorance is killing us.

    1. Moneta

      In the Weimar Republic, the population thought the government was not printing enough money. Plus ça change…

      1. Auburn Parks

        The old Weimar canard never dies even though its the last bastion of the ignorant and dishonesty. Lets us count the comparisons between post WWI germany and 2015 USA

        Lost a huge amount of our supply capacity due to bombing and war reparations? Check not
        Owed a large amount of gold and silver every year that we needed to print money to acquire? Check not
        Run 50% of GDP deficits every year until we stopped doing that and the hyperinflation stopped accordingly? Check not.

        So lets see what we’ve learned from Weimar, dont lose a world war, dont let your production annd supply sector be decimated, dont owe reparations in gold and silver, dont run 50% of GDP deficits, Got it, thanks for the history lesson. Now what the hell does that have to do with Social security and increasing benefits a few % of GDP each year? The answer…..nothing!!!

    2. Jim Haygood

      ‘US dollars are the world’s most easily reproducible resource.’

      They were, until all them new 3D security strips and UV-activated features were added.

      But the Colombians and North Koreans are working on the problem.

      ‘It’s not a crime when we do it.’

      1. JTMcPhee

        Can we suppose Mr. Parks was referring not to the paper currency but to the ease with which our central bank and treasury can add to the money supply via “fiat?” So “the system” can generate checks, or direct deposits for those with “banking relationships” (and thus positioned as civilian shields, along with all their other massive defenses, for the Bankster Hordes), to inject a little stimulus and a lot of comity and decency into our political economy?

        Gee, maybe a Postal Bank might serve to distribute and help manage such accounts? Better than, say, a Bank of America or that Amscot disease? Even efficaciously and efficiently?

      2. Auburn Parks

        I didnt mean reproducible by counterfeit Jim, I was talking about US currency being net issued by the only entity with the legal authority to do so…Congress. By the way, you cant counterfeit data entry on the computer spreadsheets of the Fed. The amount of paper money is minuscule relative to the amount of digital money. The Govt doesnt pay for things with cash, it writes checks or uses direct deposit, which means its all digital and its all at the Fed, ink and security strips are irrelevant.

      3. B. Examiner

        ‘It’s not a crime when we do it.’ via Jim Haywood

        Indeed it isn’t a crime. A monetarily sovereign government has an inherent right to issue as much fiat as it desires. And in theory, if the new issue were just equal to the real economic growth rate*, ignoring the government-backed banking cartel for a moment, we could have an endless boom with neither a bust nor price inflation*.

        But, of course, we can’t ignore the banking cartel since it will, when deficit spending by the monetary sovereign turns the economy around, blow yet another unsustainable bubble.

        Or should we have to, as Gary North suggests, buy gold to pay our taxes? But that’s favoring a special interest and is destructive to the environment (eg. mercury used for gold extraction in the wild). Or have a fixed money supply and reward risk-free money hoarding? But progress requires taking risks.

        *But measuring real growth/price inflation is fraught with subjectivity so another means of metering the amount of new fiat issued is needed, a political one without perverse incentives for one group to loot another via price inflation.

    3. MyLessThanPrimeBeef

      It takes many legions to make sure the entire world is our supply chain, as well as outsourcing our own domestic supply chain to other ‘more productive’ countries.

      1. Auburn Parks

        Be that as it may, global trade is and will continue to be the way of the world.

        I for one am not opposed to letting the Chinese and Bangladeshians work in the factories so I can buy cheap socks. Its only economic ignorance that prevents our society from re-deploying those factory workers to do other things, or at a minimum to ensure that there is enough aggregate spending to ensure full employment of people who want to work. Is America better or worse for decreasing our farming employment % from 50% in the 1800’s to 3% or whatever it is today? Better to have teachers, doctors, engineers etc than farmers and factory workers.

          1. Auburn Parks

            I also have no problem with the framework of the USA exchanging our military spending and thus protection to the world in exchange for other countries spending less on their military. Which I view as a reduction to the risk of war.

            Please dont misinterpret this view as me approving of our recent military disasters. Invading Iraq is not a necessary result of the US world police framework. Although I would agree that stupid military action is more likely with an enormous and incomparable military due to feelings of invincibility. Still better for us to have a large military and for many nations to have smaller ones than the other way around.

              1. Auburn Parks

                The nature of the human animal is to need social hierarchies, the level of nation states globally is no different. Someone has to be the alpha. Geography and fortune just so happen to have converged in such a way as to make us the alpha for the time being.

                1. hunkerdown

                  How many generations of selective breeding must occur before we call something “human nature”? Humans need hierarchies because they’re raised in an authoritarian culture. And permanent, vested hierarchies are unnecessary, as shown by the Pashtun and other acephalic cultures. So “common sense” (i.e. shared opinion) appeals to authority/tradition don’t really work for you in this case.

                  One wonders if that’s why autism is now a Problem: the bourgeois living dream has become so ludicrous, convoluted and at odds with facts on the ground that people who can’t believe in it are Threats who need to be Fixed.

            1. hunkerdown

              The rest of the world and no few inside New Rome disagree, and you’re outnumbered about 20:1.

        1. cnchal

          Better to have teachers, doctors, engineers etc than farmers and factory workers.

          Are you saying that teachers, doctors, engineers, are better than farmers and factory workers?

          I for one am not opposed to letting the Chinese and Bangladeshians work in the factories so I can buy cheap socks. Or cheap televisions, cheap Iphones, cheap food, etc.

          Farmers and factory workers create wealth. Factory workers here have lost their jobs to the Chinese and Bangladeshi workers because you can’t live on $5.00 per day pay here, or put another way, slavery. The wealth the Chinese create doesn’t go to the workers that created it, but to their slave owners, ie: Apple and Walmart. Globalization is a root cause of the financial distress many find themselves in.

          1. Auburn Parks

            “Are you saying that teachers, doctors, engineers, are better than farmers and factory workers?”

            “better” is a loaded word in this context but I’ll use it only in a macro sense as individual farmers and factory workers are just as good as any other human animal. But from a societal macro context, yes it is better to have more doctors, teachers, and engineers as the contribution to society as you need more of them to better accomplish our species’ goals. The logic goes like this:

            more teachers = more education
            more education = better society

            That logic chain doesnt work for food:

            more farmers = more food
            more food =/= better society

            We only need “enough” food, and we can produce “enough” food with only a few % of the population farming. But there is no such thing as “enough” education.

            “Farmers and factory workers create wealth.”

            So does everyone else

            “Factory workers here have lost their jobs to the Chinese and Bangladeshi workers because you can’t live on $5.00 per day pay here, or put another way, slavery.”

            $5 an hour may be a living wage in those locations, the value of nominal income is purely relative.

            “The wealth the Chinese create doesn’t go to the workers that created it, but to their slave owners, ie: Apple and Walmart.”

            While I deplore unfair labor conditions and treatment of my fellow humans anywhere, only the Chinese can fix their labor situation. China cant dictate our labor conditions and we cant dictate theirs. Apple and Walmart arent evil, they provide valuable services and goods that make our lives better, that income inequality is so bad in America is a political problem and has nothing to do with the nature of businesses. I dont get mad at lions for eating zebra, corporations are going to do what we allow them to do through the political process. There is no such thing as a free market, we have the society we choose to have.

            “Globalization is a root cause of the financial distress many find themselves in.”

            No, just ignorance of our monetary system. We could easily employ millions more people if we simply spent the money, but since people falsely believe that money is a scarce resource or that inflation is some dangerous runaway phenomenon, we wont allow the Govt to provide society with enough purchasing power.

            1. MyLessThanPrimeBeef

              From cnchal at 11:15 am today:

              Banksters. Health insurance executives. Pension fund mismanagers. Walmart’s owners, Apple executives. Crooked politicians (Is there any other kind?). Tenured professors. Larry “pollute the third world” Summers. F35 “can’t fight fighter jet” builders. Military top brass. On and on it goes

              All those, with the possible exception of Walmart’s owners, are ‘educated.’

              Some, very educated.

              Designers of the Hiroshma/Nagasaki atomic bombs – very educated.

              Builders of our surveillance state – very educated.

              Bank bailout decision makers – very educated.

              It seems, education alone is not sufficient…at least for some.

            2. jrs

              I think more farmer’s = better food, sustainable food, food that doesn’t destroy the ecosystem it grows out of. I’m sure it takes more farmer’s to raise food via permaculture than industrial agriculture. Industrial farming doesn’t necessarily increase yields (at least beyond a point – there’s probably an appropriate technology point) it does reduce labor, but it’s also destructive to people and the ecosystem. And that’s why young people are going into farming. They know it.

            3. cnchal

              The logic goes like this:

              more teachers = more education
              more education = better society

              When education is used to reenforce an obviously failing system, more education = better society isn’t logical anymore. Look at all the education economists must obtain, in a closed loop where ideas that threaten the system are in essence not allowed. Highly educated mathematicians are employed by the banksters to devise ways to mine money from the rest of society. Some of that mined money comes from pension funds, drastically reducing the amount available to pay the pension fund recipients.

              Highly educated people figured out a way, so that when the residents of Detroit pay their water bill, forty percent of it goes to the banksters, to pay a credit swap contract.

              More education doesn’t equal a better society. Better education would equal a better society, but then it depends on the definition of better and education.

              Apple and Walmart arent evil, they provide valuable services and goods that make our lives better, that income inequality is so bad in America is a political problem and has nothing to do with the nature of businesses.

              It is true that, despite the legal fiction of animal hood, corporations are not evil, in and of themselves. Corporations however are run by human beings, and some of them are animals. I call them psychopaths, sociopaths and narcissists. These animals use their corporations like ventriloquist’s dummies and animate the corporation. Corporate decisions are made by those human animals, and consequences flow from that.

              Apple has 44% of their suppliers located in China, and 80% of them are in Asia. It is so skewed due to the fact that, in China in particular, compared to an Apple executive, the cost of labor might as well be rounded to zero.

              Walmart successfully threatens suppliers, and forces them to move production to China. Their strategy has been very effective. Their products are made in China with slave labor, and the forced move of production to China has increased the supply of labor in North America to work at cheap wages in Walmart stores, and then they obtain millions in subsidies from municipalities to put their store in their locality, killing established businesses as a sideshow, and gets the federal government to pay for the food that Walmart “associates” eat. The wealth of the Walton heirs is rapidly approaching a tenth of trillion dollars.

              Animals. Some are more equal than others.

        2. Sierra7

          Auburn Parks:
          Are all those “…..teachers, doctors,engineers” going to have backyard victory gardens to feed themselves?
          (All in good humor”)

  6. Jim Haygood

    ‘[Ghilarducci] goes against the prevailing trend in our government’s treatment of pensions, particularly public pensions, which governors have persistently raided to avoid the more politically unpalatable option of raising taxes.’

    While public pensions are about 70% funded, the much larger Social Security system is around 20% funded. Its trustees plan to run its funded status down to zero (0) over the next couple of decades.

    Public pensions are exempt from Erisa, the code of good practice that private pensions are obliged to follow. Given bad incentives, such as excusing themselves from fiduciary obligation to beneficiaries, public plans behave badly.

    Unfunded pensions can accurately be described as Ponzi schemes. Charles Ponzi went to jail, and so should the trustees of public pension Ponzi schemes. This is fraud on a grand scale.

    1. Auburn Parks

      What does it mean for the SS to be unfunded? Can the defense dept be unfunded? SS is a Govt program, its has an unlimited source of funding, Congressional authority. All Congress has to do is change one small bit of the law from; as the 2009 trustees doom report states : “there is no provision in current law that would enable full payment of benefits, once the Trust Funds are exhausted”. To the medicare legislation model where the trustees reports: “Supplementary Medical Insurance (SMI) Trust Funds are “both projected to remain adequately financed into the indefinite future because current law automatically provides financing each year to meet next year’s expected costs.”

      Its not any more complicated than that, if Congress appropriates the spending, by law the spending must happen. IOW the Fed and TSY must follow the instructions of Congress, which means that funding is infinite barring only congressional appropriations law.

      1. neo-realist

        Legislatively, it would be a tough row to hoe considering that Congress is full of anti-safety net tea baggers and bought and paid for corporate shills who be very resistant to changing the law and allowing millions of Americans to “freeload” off the government.

    1. MyLessThanPrimeBeef

      Print and put money into one single pension plan.

      Lower the eligible age of that plan.

      Fortify Medicare.

      Many jobs will open up.

  7. Clive

    All pensions are a residual claim on future prosperity. There’s nothing magical about either the principles by which they (should, in theory) operate — as you accrue what really has to be contractual rights to receive a share of the benefit of future output, you can make as assumption that when you can’t or don’t want to work any longer, whatever portion of that future prosperity will be distributed to you.

    There is, has been and always will be a risk relating to how much, exactly, will there be of future prosperity to go round. If the world ends up a poorer place, pension entitlements will drop accordingly — but the drop should be in proportion to the claims established by workers before they became retirees.

    Since about 1990-ish, there has been a transferral of another risk (which again, is always going to be there) which is about which actor will take responsibility for enforcing the claims built up against future prosperity. This risk used to be owned by employers. But they decided (or were allowed to decide) that they didn’t want to own that risk any more and transferred it to employees by closing employer pension schemes. I, personally, don’t have any huge ideological problem with that — other than the message which the backsliding allowed by governments to business sends. But the problem is, we rely on The Rule of Law having its integrity safeguarded so that the claims we’re accruing can be enforced and effective regulation so that we won’t be subject to exiguous rent extraction by the parties we are using to log and manage our claims. I certainly don’t have as much confidence in those two as I used to.

    For workers who weren’t able to contribute to a pension scheme, or for whom their private provision won’t be sufficient to sustain a reasonable standard of living in retirement, there is also of course the state provided pension. This carries both types of ever-present risk, the risk that there won’t be much prosperity to go round when you retire, but there’s not much to be done about that one and, more importantly, governments might decide to be a bit more lax about honouring all expected claims (or anticipated claims) which retirees hoped would be made.

    I think every Naked Capitalism reader would probably acknowledge that this latter risk is higher than it was and arguably still increasing in both likelihood and potential impact. By which I mean, governments are seemingly now far more willing to throw citizens under a bus — they have decided and may continue to decide to not honour future the pension claims which were expected to be paid out.

    What narks me off is, given this environment, how we really have no good options apart from keeping cash savings (and thereby incurring a risk of lower than potentially available returns i.e. better / more claims on future prosperity).

    1. fresno dan

      Well stated and I agree.
      I won’t bother people with my well (over?) posted links about rising productivity, rising GDP, and RISING INEQUALITY. Prosperity MAY be slowing down, but objective measures of production show we’re growing and have surpassed where we were. There is more than enough to keep private and public pension promises – it pretty much the squillinaires want to be multi-squillinaires…..

    2. Jess

      “All pensions are a residual claim on future prosperity.”

      Then how come pensions are funded by taking money away from present earnings/wages and salting it away in retirement accounts known as pension funds? Is a private savings account a residual claim on future prosperity, or is it money earned and put aside? How is a pension plan any different? Isn’t it simply an aggregate bucket of money from current earnings put aside by the employee (often matched by the employer)?

      1. Clive

        There is no difference. Dollars in your pocket don’t somehow become some new sort of dollars with super powers just because they’re paid into a 401k.

        The only sort-a omnipotent entity is a government which can say, in effect, “we will not let retired people try to live on any income of less than x-% of the average income and will make a ‘pension’ payment to those people who require such a top up (or we’re going to make it a universal payment without any qualifiers or means testing) by distributing sufficient fiat currency as required” — but the omnipotence has a limit in that it can only redistribute a proportion of the real, actual prosperity (and then only if it chooses / has a mandate from the electorate to do so).

        Put another way, if chickens become extinct, no amount of dollars in a retirement account and no amount of governmental edicts is going to allow you to buy a portion of chicken wings for dinner.

  8. roadrider

    I am a little disturbed by the ageism in Ghilarducci’s advocacy for removing older workers from the workforce to make way for younger workers. This pitting of generations against each other is a divide-and conquer strategy of the elites to take the focus off their looting of the vast majority of societal wealth. I’m all for Ghilarducci’s public pensions and lowering of the Medicare age but she fails to recognize that many of us in the 50-60 age group are being forced into retirement as it is while we’re still very able to work and earn money to contribute to our retirement savings. Medicare, as it exists, is not free and those costs along with Medigap insurance (which seems to be necessary) and out-of-pocket medical costs will really erode our savings, even for those of us who have accumulated significant amounts in our 401Ks and IRAs. Something like HR-676, which would eliminate premiums co-pays and deductibles would be a different story. Expanded Social Security and lowering the Medicare eligibility age are not, in and of themselves, an adequate solution to the disemployment of older workers and the failure to support a full employment economy that serves the needs of all generations of workers.

    1. MyLessThanPrimeBeef

      Sounds like you think if her idea of lowering Medicare age, if improved upon with something like HR676, is worth considering.

      Of course, the government should just print money and put it in SS (with everyone in one single pension) and Medicare.

  9. fresno dan

    I know many don’t like McArdle, but I have to give her credit for this one line (bear with me, I’m making a larger point):
    “Moreover, the high price of rent and college is not some sort of natural law; it is the product of decisions we have made about things such as zoning, accreditation and occupational licensing that we could start changing right now without creating a single new manufacturing job.”

    “the high price of rent and college is not some sort of natural law…” BINGO – I would add the high price of health care, and internet – and housing! ….and too many to list

    It is a funny thing – in most countries, doctors make considerably less than in the US

    It is one of those things that drive me nuts – we act as if we’re in a free market (medical care??? don’t be ridiculous) and that everybody who is well off is well off because ONLY of their own effort, meritocracy, and the vaunted “free market”. Yet we have this bizarre way of doing reform that says the government has to pay whatever colleges or doctors charge = we always pay off the concentrated interests. We spend so much money paying money to concentrated interests that we eventually run out of money for anyone else…

    1. MyLessThanPrimeBeef

      They concentrate knowing concentration works.

      Look at the Wehrmacht in the late 1930’s.

    2. spooz

      Your thinking is very simplistic regarding compensation for doctors in the US versus other countries. It does not factor in things like cost of education and malpractice premiums that are much higher in the US. The comments section of your link shows a different story than what you picked up from the article.

      Here is one doctor’s look at the issue, comparing pay and costs for US doctors to their heavily subsidized counterparts in France:

      1. hunkerdown

        Medical school is also cheaper to deliver when you cut the debtmasters out of the deal. (Medical care is also cheaper to deliver when you cut pharmaceutical companies out of medical school.) Newly certified medical professionals won’t need to ask for so much to cover their debts, and nor will we be paying for *their* upside.

  10. Louis

    The fact that many people don’t have enough to retire on is only the beginning. Studies show that about 70% of people will need long-term care (e.g. nursing homes, assisted living, home aide, etc) at some point in their lives. Long-term care doesn’t come cheap, especially when we’re talking about assisted living or nursing homes; if people can’t afford to retire, there is now way they’re going to be able to afford long-term care, other than probably “spending down” and becoming eligible for Medicaid coverage.

    1. craazyboy

      I think jail will be the nursing home option available for the majority of retired boomers. However, most retired bankers will avoid jail once again.

      1. MyLessThanPrimeBeef

        You think the maternity motel American citizen babies will come home to help those retired baby boomers in about 20 years?

        1. craazyboy

          Not after escaping communist China and the half billion poor, decrepit, aged Chinese communists!

          Nay, they will consult their UofC core curriculum Ayn Rand textbooks seeking wisdom and answers. Over a nice California Pinot Noir, or even a Merlot if pairing with a filet. Some important Tea Party tweets may show up on the iPhone 26 indicating that our Private Jail System is indeed funded by GOVERNMENT!

          Holy Mao!, they exclaim. We must empty the jails to save our prison system!

          They then form a pact that 10% of all their trust fund proceeds be used for charitable political donations to support our politicians whom are supportive of reforming the Private Jail System.

        2. craazyboy

          The Devoureror doesn’t like my Future Shocked Chinese posts. Must wait for it to be disgourged.

      2. JTMcPhee

        Let’s not forget about this option: Yah, “death with dignity,” and a twist of the knife in the glimpses presented to the dying of what used to be and could have been.

        And even this could be a source of rents. Look at the developing scope and structure of “right to die with dignity” as a business model. (check the comment). It would be silly to think that UNsurance companies and other rent collectors have not looked at this future revenue stream and cost avoidance trick very carefully…

  11. Lambert Strether

    One could think of combining (1) Social Security reforms like turning into the pension scheme, lowering eligibility, and raising the benefits with (2) Free Public Education K-16 as generational log-rolling, giving the (putative) Boomers and the (putative) millennials concrete material benefits. But it seems clear to me that such a policy would also make society more productive (at least if we purge the agnotologists) and that would make claims on future prosperity easier to satisfy.

    1. Auburn Parks

      Exactly, you create additional productive capacity in the future by spending and investing today. Not enough doctors? Offer free Medical school in exchange for some # of years worth of General Practioner practice in various places that need them as just one example. It costs money up front, but the returns of having a healthier population far outweigh the costs. Same thing with higher education in general, why is a history degree frowned upon generally? Because its hard to make the requisite amount of income to justify the $50K or so it cost to get the degree. But if the degree is free, all of the cost-benefit calculus changes for social sciences, as another interesting and important component to rational Govt policy.

  12. shinola

    I’ve held onto the idea of “I hope I die before I get old” ever since I first heard that song by the Who.
    Trouble is, my definition of “old” keeps moving.
    But seriously folks…

    It really comes down to the Corporate Elite’s attitude of “What’s mine is mine and what’s yours should be mine too.” They really believe that although they might not actually come out & say it that way.

  13. kevinearick

    Making Pi

    So, you go into the interview, prepared to talk about work, and it’s all about least-common-denominator, how-do-you-get-along-in-the-sandbox, corporate crap. That’s empire.

    Children are like strangers from Mars. If you train them to repeat your mistakes, feudal games and rebellion against, real estate inflation at the cost of poverty among children, you aren’t going to get very far.

    The effective answer is to bring more resources to bear, so the critters don’t have to fight in the sandbox, but you can’t say that, because it challenges the participants’ irrational market assumption, of a closed system.

    The Fed has been printing RE inflation since Congress gave it the mandate to control the labor market, systematically undermining the earning power of replacements, with machines, with which the make-workers are to compete. Republican or Democrat, the only difference is the subset getting temporary affirmative action, in the noise of equal rights arguments.

    Silicon Valley is not the problem. The problem is replicating it as a best business practice. DC is an important, but tiny part, of a much large AC world, which is a tiny part of a much, much larger universe. The assumption that financial capital, natural resource control, is the beginning of the economic process is obviously false, but, after years of public education, you would be hard pressed to find any who recognizes the error and acts on it.

    If you do not borrow, expect the empire to arbitrarily assign you debt, with increasing penalties and interest, because it gives itself no other choice. Wages aren’t going up at 5% unemployment, in the empire, because labor walked out, a long time ago, and issuing a few more make-work jobs on the margin, with debt for compliance, and an increase in the minimum wage, which is really a pay cut relative to RE inflation, isn’t going to suddenly ignite economic growth.

    The critters aren’t killing each other in a growing global killing field by accident. All DC best business practice has done is make the inverted credit pyramid global, which is why it is collapsing without replacement. Labor doesn’t require cars that drive themselves, over a cliff, but the political majority is welcome to them. An i-phone doesn’t make you smarter.

    A million dollar rat hole in Silicon Valley, occupied by temporary H1B1 engineers, is still a rat hole. Just because the critters chose dc over ac is no reason for you to follow them over the cliff. Build your bridge across the wave, beyond the empire.

    Contrary to popular mythology, knowledge is not power; it is a derivative of labor, which has long since moved forward. When the State told me that I had to have a license to continue operating a crane, I chose another occupation. Now that the State licenses all occupations, the critters think they have an advantage.

    America, like every other nation/state, is contained by its own contempt for work, which is why all trade agreements produce economic slavery, and why hard work, in the empire, is rewarded with falling living standards and replacement with technology. The Saudis roll out their antiquated war machine and the price of oil goes up, surprise.

    Build your own sandbox, and let the critters steal it, when you have outgrown it. Wall Street is welcome to believe it is the beginning, middle and end of life, based upon its accepted standard accounting procedures, pretending that recurring and accelerating losses are non-recurring, that money, in whatever form it chooses to peddle, is King.

    Go ahead; fly by wire, and expect a different outcome, measuring monetary inflation as productivity. Funny, how resistors behave like inductors and capacitors, depending upon the environment, and the critters like to hide them, from themselves. Fighting for a disability check, to feed the doctors, and give up your children in the process, is a poor decision.

    Because a distribution of women, cut off from nature, feels better off cutting out their reproductive organs and taking other people’s children, impoverished for the purpose, doesn’t mean that you should go down that road. Poverty is a function of human stupidity, not Act of God. Only you can exclude yourself from the economy. Labor doesn’t care about your credit report, the licenses you hold, or the numbers in your bank account.

    Just because you see something in the media or read it in a book doesn’t make it so.

  14. casino implosion

    The debate about retirement is just a special-case miniature version of the debate about the epochal change in work-ethics happening right now. Once we’ve admitted that those who haven’t saved enough for retirement out of their own income (in other words, most people) have some claim on society, the door is open to consider the true fact that before long, most workers, of any age, will be superfluous—and what to do then?

    Agrarian “he who does not work shall not eat” work ethic meets cybernetics, robotics and technology.

  15. Jay

    “All people deserve a decent retirement income after a long working life”.

    Even if a person spends all their income and saves nothing (granted FICA is forced purchase of retirement income insurance equal to roughly 12% of labor wages)? What is the incentive for marginal savings for the first additional dollar beyond forced retirement savings if you are going to subsidize anyone that uses a discount rate of 100% when determining whether to spend today or save for tomorrow.

    1. Yves Smith Post author

      That hyperbolic discounting is middle class people projecting stability on to the lives of the poor, who do not have any stable framework. This is just “hate the poor” dressed up in economese. Read this post:

      By the same token, someone can wind up broke at retirement age because Shit Happened: their company got acquired when they were in their late 40s, and they were fired and drained their savings while enduring long periods of unemployment and McJobs, family member got cancer and they were hit with medical bills, their successful business was killed when their municipality gave all sorts of incentives to build a WalMart a mere two blocks away.

      I’m disgusted by people who are unable to recognize how much good fortune, including being born to the right parents, plays into their current state.

      1. Jay

        Life isn’t equal. Have you heard of this theory called evolution?

        *I do plenty of charitable work. But there is a huge difference between voluntary transactions and coercion.

        1. hunkerdown

          What, then, when nice people decide to go door to door and change libertards’ minds with a crowbar? In which case your evolutionary theory works out not necessarily to your advantage.

          Point being, there are more people than myself who would happily intern the global .01% and let Lynndie England loose on them, pour decorager les autres. Remember: you are 100% expendable, just like everyone else. Don’t be a dick and the mob *might* pass you by.

        2. B. Examiner

          In ancient Israel, voluntary charity was encouraged but the poor also had RIGHTS such as farmland that could not be permanently lost (see Leviticus 25.)

          So screw your voluntary charity if you deny the poor have rights.

  16. jonboinAR

    You’d establish you’re bonafides to your goodwill a little more securely if you’d grant the old-folks a permanent pension, that is a legal and permanent claim on whatever production is current, you know, the way yours and my anscestors had things successfully arranged to everybody’s satisfaction, instead of pretending that this arrangement is some kind of parasitism that the crafty boomers invented and trying to make us dependent on your self-styled generosity.

    1. Jay

      “You’d establish you’re bonafides to your goodwill a little more securely if you’d grant the old-folks a permanent pension” paid for with taxes on the 1%. I’m not quite in the group yet so seeing as I would not be financially supporting the program I don’t see the goodwill, besides cheering for said policy which is at best symbolic.

Comments are closed.