I’m starting to hear policymakers complaining again about the exploding cost of pensions, and looking for ways to screw their older workers out of the pay they were promised for doing their jobs.
Let me make one thing clear: there is no soaring cost associated with pensions. Pensions are no more expensive, and no more valuable, than they ever were. It is not their price that has gone up. It is our willingness to pay that has gone down. Pension costs are only exploding exponentially in comparison to what we currently like to pay working people. Or in comparison to our willingness to raise tax revenue from investors and corporations.
The only reason we don’t realize how much less we’re all paid is because we can still afford all the insanely cheap consumer products we import from China, which don’t even make a profit for their manufacturers in many cases, and in a fairly real sense are probably paid for more by the federal reserve’s export of dollars for use by overseas capitalists as an international trading currency, than by the retail prices we pay in the big-box stores.
The anti-pension propagandists would have us believe that it was runaway pension costs that sunk the municipal government of Detroit. Not true. What ruined Detroit financially — besides the obvious problems of massive cutbacks in manufacturing employment throughout the region — was an “interest rate swap” scheme sold to them and other cities by Wall Street banks Merrill Lynch and UBS. Sold, in some cases, by directly giving campaign contributions to the politicians who agreed to the plans. Under this scheme, surprise: the banks got rich and the cities got poor. Because this scheme was applied to the pension funds, suddenly the big budget hole was a “pension cost”.