Pyramid, Ponzi, Pension

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A December 16 headline on MSNBC: “GM to stop paying into some workers’ 401(k)s: Auto giant tells white-collar workers it will suspend matching contributions.” The article continues, “The company . . . said that white-collar severance packages will limit payments to one month’s base salary for each year of work up to 15 months.” GM seems to be preparing the ground for massive but less expensive layoffs in the near future. Meanwhile, the Pension Reform Bill has been passed by the House and is wending its way toward enactment. Bush clearly wants to be seen as bolstering pension security for the approximately 44ยท million American workers and retirees who are hooked into that system.

I’ve tried to read the Reform Bill and – in its current incarnation – it seems to be a combination of getting tough (with car makers), cutting favors (with airlines), and making taxpayers liable (with the Pension Benefit Guaranty Corporation, the Fed’s insurance fund, still picking up pensions upon a company’s bankruptcy). But I can’t work up enough enthusiasm to sift all the way through the bill and its implications. For one thing, key provisions are still under debate. Also, I don’t think a law is going to prevent the coming pension collapse, which will be led by the auto companies; economic factors, including world trade, will play out and that will be that.

Meanwhile, pensions have become a scam: people without them are forced to pay for those who have them through the imposition of taxes and tariffs that make goods far more expensive than necessary. Thug-like unions still grip key industries which negotiated away their futures for short-term gains in the ’60s and ’70s; they entered labor and pension deals that are virtually impossible to honor. And even though I feel sorry for the little guy and gal caught up in the expanding pension bubble, I don’t feel so sorry as to shift responsibility for their own economic well-being and choices onto the shoulders of a new generation … or onto anyone else.

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