03.21
This Sounds Pretty Familiar Doesn’t It
I bookmarked a UK Telegraph story a week or so ago and just got around to skimming it today. It was pretty standard fair – crying foul over bonuses to employees of now government owned banks. Yawn. But then, later in the article I came across this section:
As the recession deepens, so does the divide between those who are paid by private companies, and those who are paid by the state, and nowhere is the division starker than in the matter of pensions. A decade or so ago, before Gordon Brown began his reshaping of the economy, people went to work in the public sector on the understanding that they would probably be paid less than their counterparts in the private sector. But they were fortified by the knowledge that they were serving their country or their community, and that their jobs and pensions were more secure.
After 10 years of Labour, those assumptions, and that essential symmetry, have been abolished. Not only has the public sector been so massively swollen that some parts of the North East are run on more or less Soviet lines, with well over 60 per cent of the workforce employed by the state. There has been a complete transformation in the relationship between private and public sector reward.
The Prime Minister’s great pensions raid made it all but impossible for private sector companies to keep up their final salary pension schemes, so that most private sector employees are finding their retirement looking ever leaner, while the state sector has been miraculously insulated.
Wow. That is exactly what I was talking about in this post back in February. It seems that the U.S. isn’t the only country on the fast track to socialism. Once the tipping point is reached where it’s more beneficial and lucrative to get a state job than a private one, that’s when all kinds of bad economic laws kick in. And when I say laws, I mean it. You just can’t run afoul of basic economics and expect a favorable result. It’s like taking all the antivirus software and security patches off your computer and sticking it out there on the internet. Bad things are inevitable.
But it gets better:
It is incredible but true that the average public sector wage is now higher than the average private sector wage; and public sector pensioners can still generally expect a final salary pension scheme – and these can be very generous indeed. In local government, for instance, you can expect to be awarded one sixtieth of your final salary for every year of service. So if you are a chief executive or other senior official, on a salary of more than £200,000, and you have worked for 30 years – well, you do the maths.
Again, it’s the same thing. I just didn’t realize that we had elected the Labour party here in the U.S. Evidently, it doesn’t matter whether you speak with a Liverpool accent or a southern drawl. Money is money and economics are concrete. It’s a funny thing about math. When you give away more than you take in, guess what happens? The phrase, this isn’t rocket science comes to mind right now. But, since the politicians in charge at the moment are complete morons I guess that rings hollow. But, ol’ Boris ends on the right note:
That’s why the public pension funds have their great yawning deficits, and we can either cover those deficits with massive tax increases, or else we can reform.
It is time for a grown-up national conversation about the way out of this mess, and I suggest we begin by looking at the way we treat older workers. It is mad and vindictive to tell 65 year olds that they are suddenly surplus to national requirements, that they have no more to contribute. We all know talented men and women who have been pensioned off, protesting bitterly, when their continued employment – perhaps part-time – could have been good for them and for the economy.
We need to think much more flexibly about older workers, and their vast and growing productive power; we need to junk the idea that your career comes to a juddering halt at 65; and we need to recognise that age discrimination is not only insane – it is also unaffordable.
GASP!! You mean we aren’t guaranteed by The Almighty to never work again from age 66 to death?!! It’s funny how thousands of years of human history provided no idea of “retirement”. But F.D.R. changed all that. Suddenly everyone was supposed to hit 65 and drop out of the workforce. Well, the lie has been put to that silently in the last two decades. Not only is it darn near impossible to reliably save that much for retirement. The constantly flowering inflation rate insures that your nest egg becomes less valuable every single day. If you retired in 1989 with a 500,000 in the bank you thought you were in heaven. No more work for you, right? But, how’s that looking today when the gallon of milk that was $2.00 then is now almost $6.00. Welcome to the stark reality that most everyone has known for a long time already. Retirement is a pipe dream. Unless your boss is Uncle Sam that is.
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