Debate Forum Right 01/12/11

Paying People to Not Work Is Stupid

By Mark Luedtke

Mark Luedtke

Coercion is always destructive. Pensions are a perfect example. Nobody would voluntarily pay another to not work. Obviously, it makes no sense for an employer. It makes products more expensive and reduces sales and profits. Higher prices make the entire country poorer too. Less obviously, it makes no sense for an employee because the employer is responsible first to shareholders, not retirees. Workers should count on their own savings for retirement and negotiate wages with that goal in mind, not surrender control to an organization with different priorities. But because government granted unions the power of coercion, union bosses negotiated unsustainable promises of something for nothing to union members, and the human weakness to take something for nothing is almost impossible to overcome.

Some say the pension system worked well for decades. Those people are wrong. The pension system was doomed to collapse the moment it was created. Pensions loot working people and transfer the wealth to non-working people. They’re parasitic. Like Social Security and Medicare. Sure, many people managed to retire, grow old and die before the collapse, but that doesn’t mean the system worked. That’s like saying because some cars crossed a bridge before it collapsed and killed others, the bridge wasn’t faulty.

The big winners in the pension system are the politicians and the union bosses. The politicians win by buying union votes with stockholder and consumer money. The union bosses get fat and happy by looting union workers through compulsory dues. The workers who retired and died before the collapse also won. But everybody else loses: workers, consumers and especially retired workers who are dependent on pensions that are about to disappear. They will lose worst of all.

We’ve already seen how pensions destroyed GM and Chrysler. Ford has been seriously wounded. Many other companies have collapsed under the weight of pensions over the decades. But in the private sector, the damage from pensions is localized. A company and its suppliers may collapse, but during the bankruptcy process the valuable assets of those companies are gobbled up by more efficient businesses. Often, the bankrupt companies are in union states and the buying companies from right to work states. This enables the buyers to jettison the unions and their pensions. Without those unsustainable burdens, they produce higher quality products at lower prices, winning market share and making the entire country wealthier. This is the mechanism that has nearly wiped out private sector unions in the U.S., and it’s why jobs are flowing from union states to the south and west.

But union bosses saw this writing on the wall decades ago, and since they weren’t about to give up looting their workers, they infiltrated government. Since union bosses and politicians had been in bed together for decades, it was easy, and once in place, they began looting taxpayers too. Salaries and pensions exploded.

Champion of unions and the most socialist president in history before President Obama, Franklin D. Roosevelt opposed public sector unions, but for the wrong reasons. Roosevelt wrote, “[a] strike of public employees manifests nothing less than an intent on their part to obstruct the operations of government until their demands are satisfied. Such action looking toward the paralysis of government by those who have sworn to support it is unthinkable and intolerable.” Government worship was more important than unions to Roosevelt. What hypocrisy. As if the operation of businesses, which produce the food, water, shelter and all other wealth that makes up civilization, is less important than the operation of government, which destroys wealth and is the enemy of civilization.

The public sector pension problem infects the entire country. The New York Times estimates that public sector pensions are underfunded by between $1 and $3 trillion. Because the New York Times is the primary ruling class propaganda organ, these estimates are way too low. Over the last decade, cities and states have increased their debt by 800 percent to pay for these exploding pensions.

According to the Guardian, “Meredith Whitney, the U.S. research analyst who correctly predicted the global credit crunch, described local and state debt as the biggest problem facing the U.S. economy.” We should listen to economists who predicted the last crisis, not the ones who didn’t. Whitney predicts 100 cities and states will default. This pension crisis is bigger than the housing crisis, and the worst of that crisis is still to come.

Many people expect a bailout. By whom? The U.S. has no money. Federal, state and local governments are broke. After a century of ever-increasing government looting, America’s middle class is poor. Excepting the plutocrats, America’s rich are poor. Most just don’t know it yet. We’re in the middle of the housing crisis, and the beginning of the commercial real estate crisis, the pension crisis and a sovereign debt crisis. Fed Chairman Bernanke is hell bent on destroying the dollar – the most insidious form of looting – in response. If we don’t stop the looting, our crash will make the collapse of the Soviet Union look like the corner store closed.

Mark Luedtke is an electrical engineer with a degree from the University of Cincinnati and currently works for a Dayton attorney.  He can be reached at contactus@daytoncitypaper.com


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