Jump to:Page Content
Edward L. Glaeser's Dec. 16 column in the Boston Globe, "How to fix the pension mess," speaks to the absolute need to address and resolve the ever increasing costs of public-service defined-benefit plans' unfunded liabilities by freezing these plans and converting to individual defined-contribution plans (401(k)s).
This column reads clearly and understandably about the major problem that public-service underfunded pension costs pose to our future unless they are addressed and resolved now.
The difficulty in getting this issue into the open, on the table for discussion and resolved, is the reluctance of the participants necessary to do it. Our elected representatives at all levels of government (city, state and federal) and the various beneficiaries and their agents (police, fire, teachers, city, state and federal employees, and their various unions) have no stake in the game.
By this, I mean they have no ownership interest in the problem — unlike the private sector, which must flex or suffer the consequences of what could eventually become insolvency and bankruptcy. The public sector operates on OPM (other people's money), namely the taxpayers.
It's not that the primary parties in these negotiations don't get it. They get it OK, but like their predecessors and eventually their successors, they become the beneficiaries, and it is easier to kick the can down the road, leaving it to future generations to deal with. They are leaving the largest gorilla in the room with a gigantic cancer growing in its system, nearly to the point where it has become inoperable.
Eventually (and this may be sooner than most people realize), unless a solution such as that posed in the column is adopted, the problem will be resolved in a more draconian way by replacing the current negotiators (elected legislators, unions, etc.) with court-appointed receivers in bankruptcy when insolvency occurs.
Let us hope we do not have to live to see this doomsday scenario before corrective action happens.