PENSIONS AND THE AMERICAN DREAM

Pensions take money from government and put it in the hands of the people.

Maybe that’s why so many politicians are fighting so hard to slash public employee pensions: There is no more direct route of sending funding from the taxpayers back to the taxpayers. Every dollar the government puts in pensions is a dollar that doesn’t go to development projects that pad the pockets of big campaign contributors.

Take the City of Atlanta’s pensions, for example. The city’s firefighters, police and garbage workers have for years contributed as much as 9 percent of their earnings to their retirement. They don’t get Social Security—the City opted out in the 1970s—and so, in lieu of it, they have had the explicit reassurance of the City that it would match their contribution.

The pension funds were themselves put in the stock market and during the heady days of the 1980s and ‘90s they paid off handsomely, so well, in fact, that the dividends themselves hid the fact that the City wasn’t making its contribution. In the 1980s, a judge had to order the City to pay its part, rather than coasting on the market. This rosy investment market continued into the first term of Mayor Shirley Franklin. It wasn’t until the market tumbled about half a decade ago that so many unconcerned and unprepared governments like the City of Atlanta got caught being unconcerned and unprepared. They had ignored their responsibility. Now, to distract the public from their own lack of financial planning, they’ve accused employees of being greedy and sapping the taxpayers. But their accusations don’t hold up under closer inspection.

First, these governments have a responsibility to plan ahead and meet their obligations, and second, most of us are painfully aware that any savings they are likely to gain by cutting pensions are just as likely to be spent on something the taxpayers don’t even want, like Mayor Kasim Reed’s $70 million, mostly-taxpayer-financed trolley in downtown Atlanta.

Pensions, on the other hand, take taxpayer money and give it back to the employees who contributed to them; the retirees, in turn, disperse the money once again into the economy. Firefighters and police officers, for example, retire early enough to start second careers and many opt to start their own businesses. Those small businesses employ several other people, acting as miniature economic engines run by private citizens. If the retirees themselves don’t start their own businesses, they have money to lend to relatives who do. John may want to start a landscaping business, but maybe he doesn’t have enough credit background for the bank to give him a loan; Grandpa may see worthiness in John that the bank doesn’t and thanks to his pension will be able to loan John a few thousand to get his company started.

For most of us, the days of being able to help our children financially in our retirement are gone. America’s private sector has largely abolished pensions, reserving them only for executives who have no need to worry in retirement anyway, or they’ve whittled them down to little more than the value of a student’s allowance. Unfortunately, these betrayed private sector retirees are all too easily manipulated into opposing public sector pensions with the argument “You don’t have such a retirement, so why should they?” However, the question shouldn’t be “Why should we save public sector pensions?” but “Why aren’t we restoring private sector pensions?”

For those who have been brainwashed by the constant grumbling from all quarters regarding greedy retirees and those pampered baby boomers, the argument I’m about to make may be difficult to understand, but for those of us who grew up during a healthier American business era, it will make perfect sense (I’m about two years too young to be a boomer).

We believed in the American Dream because pension policies gave us no reason to doubt it. We could look at retirees and see for ourselves that if indeed we worked hard the companies and entities we took care of would, when the twilight of our lives set in, take care of us. The Golden Years were called that for a reason: They were a promised time of rest held up to every American who didn’t mind toiling to earn his bread.

You did not see people in their 70s bagging groceries back them.

But you do now, and yet we wonder why young people drop out of school in such astonishing numbers, refuse to work and turn to crime. What good do Mayor Kasim Reed’s Centers of Hope (which must be funded by millions from the taxpayers), or other politicians’ admonishments to get an education and a good job do, when these young people can see for themselves where that will land them? Their parents and grandparents are broke, some asking for public assistance to pay their heating bills or going on food stamps, even after giving most of their lives to work.

The emphasis on youth at the expense of the retired sends a clear message that your government is more than happy to use you now, when you are young, but you will be thrown on the trash heap when you are old no matter how hard you work. So what is the point in doing anything? Nihilism reins.

The elderly have to some extent always been resented and reviled, but public policy at least stood as a reminder that they had put in their time and sweat and deserved consideration; now politicians and their large campaign contributors want to do away with even that: Less money in pensions means more money for government to spend as it wants—probably on the next big development boondoggle in Atlanta. And, that will pay whom exactly?
It was pensions that provided a pool of private investment capital for the working class in this country’s boom in the decades after World War II, capital that could be put to use without government strings attached. Grandma’s nest egg from the woolen mill got a lot of dreams off the ground.

Of course, the woolen mills went away with NAFTA, like so much other industry. And, to be fair, the global market was bound to grow and couldn’t be ignored for long. Nonetheless, with those jobs went their pensions, and very few remain in the private sector.

But, as has always been the case in America, our public sector stands as an example of how we’d like things to be. That’s why we get so angry about poorly run schools, bumbling health clinics and lazy post office workers (though the post office isn’t really a public entity anymore); if they’re supposed to represent what’s best about America, we think, then this country has gone down hill.

And it has.

There is no question that the City of Atlanta is struggling financially, although Mayor Reed will crow about how well it’s doing on virtually every front except the pension front, but that is more the fault of systematic cronyism and an underperforming market than anything else. Even municipalities with skinnier pensions have felt the bite of the market. But the market condition is temporary, Atlanta’s penchant for irresponsible spending seems endless.

So don’t buy the hype about greedy, lazy employees—it’s the upper level employees like department heads who have the power to twist policy for their own means, and a casual glance at the City of Atlanta’s pensions shows that a few have benefitted lavishly at the expense of the many. Most employees will still have to work some side job in retirement to survive.

The reform that’s really needed is a lower ceiling on top-level retirements, and—here’s a hard meal for labor unions to swallow—an easier way to fire unethical or unproductive employees. The standard should be a solid retirement for a good worker, not a rich slush fund for someone who was crooked enough to game the system.

The public employee pensions are dusty souvenirs of a better time when we told our children that if they worked hard they could retire to a houseboat on the inter-coastal waterway if they so desired, and we could point to crazy old Uncle Bernie as proof. Fueled by that hope, they studied and went to work. Now, governments who want more money to do with as they please would divest public pensions, grinding to dust the last broken shards of the shining American dream. SR