A Generation of Sociopaths (1): The Brief Triumph of Long Retirement

Bruce Gibneys’ first book had a chapter (12) on the various pension crises that I kick off (what may be a series) with:

“When the end of the world comes, I want to be living in retirement.” Karl Kraus (page 215)

To be fair (and cruelly accurate), it’s unlikely that PBGC itself has any idea what the real range of its liabilities might be. Outside auditors concluded the Corporation has “material weaknesses” and “significant deficiencies” in its practices and internal controls, and this has been the case for some time. Neither political party has addressed the problem, and the only major reform of PBGC recently may have made matters worse, allowing for some dubious accounting while sweeping away important protections. (page 222)

The variable the actuaries cannot (and in some cases, are forbidden to) forecast are political changes. (page 223)

Since the period 1982-1984, health-care costs have more than quadrupled inn gross terms and have been rising faster than inflation overall. Medical inflation has slowed over the past few years  because of involuntary sequestration and Obamacare’s mandated prices, which over the long term will be roughly as effective as ordering the earth to stand still. The Medicare Trustees accordingly believe Obamacare’s price fiats “are uncertain,” will “probably not be viable indefinitely,” with their actuaries being blunter, saying the price limits have a “strong probability” of not be[ing] viable in the long range,” and the government’s overall auditor says the same thing. (page 224)

The assumed returns of many pensions, especially state pensions, are quite high – on the order of 7-8 percent annually, a combination of their higher inflation expectations (which is at least internally consistent, if factually unreasonable) and, more substantially, unadulterated fantasy. (page 224)

Recently, some public pension funds have reduced their expectations somewhat – by about 0.5 percent gross (i.e. to 7.5 percent or so) – which concedes the problem of lower returns without doing anything meaningful. Nor do they want to, as doing so would trigger immediate lawsuits, receiverships, and above all, inconvenient reform that the ostensible fiduciaries of these funds want to avoid. Nor is much political relief, in the form of sanctioned benefit cuts, likely. Just as Central State does, so other pensions will: They will pay Boomers until the money runs out. At that point, no return, however astronomical, will make a difference for younger pension members. (page 225)

Again, there’s no legal entitlement to entitlements. Interestingly, “entitlement” was formerly a term of abuse, a comparison to the psychological entitlement conservatives saw in young Boomers. Today, outside of the far Right, “entitlement” has been leached of negative connotations and the public has become confused, developing a sense of proprietorship over these benefits. As the Social Security Administration admits, “There has been a temptation throughout the program’s history for some people to suppose that their FICA payroll taxes entitle them to a benefit in a legal, contractual sense. That is collective (perhaps collectivist?) delusion, a fact the Supreme Court made abundantly clear way back in 1960, in Fleming v. Nestor, when it denied Social Security benefits to a deported communist. Still, even Congress gets muddled, sometimes saying that people do have a right to these funds, as it seems to have in a 2014 CRS report. The Social Security Act itself makes things perfectly clear, though. It permits Congress to “alter, amend or repeal any provision of this Act.” Entitlements can be modified at any time and have been – and this is important, because they will need to be again. (page 226)

It helps that many payers chose to believe that OAB contributions are not really “taxes” so much as a sort of deposit into a personal account to be refunded with interest. The government has reconciled itself to this misapprehension, as it usefully pacifies taxpayers into not asking too many questions about where FICA taxes are going or who is paying for what. (pages 226-7)

As I wrote this chapter, the 2015 book Get What’s Yours: The Secrets to Maxing Out Your Social Security had been a substantial best-seller. Imagine if the topic were not the sacred heifer of the senior set, but tips for maxing out food stamps or tax shelters. All three are welfare, but any best-seller treating the latter two would have seniors burning down the nearest public housing project before trundling downtown, on Medicare-funded scooters, to blow up Goldman Sachs. (page 231)

After the early 1970s, there were few comprehensive changes to Medicare coverage. However, in 2003, the first Right-leaning government since 1955 to concurrently control the Presidency, the House, and the Senate suddenly added prescription drug coverage to Medicare, just in time for the Boomers to benefit. Medicare Part D was the largest new program since Medicare’s establishment and came from a deeply unlikely source. This alone should raise suspicions about what was buying off whom. (page 233)

Whether we continue to provide Boomers with benefits depends on whether we believe they deserve them, and this is a far more urgent discussion than the usual parade of distractions offered during election seasons. (page 237)

 

12 responses to this post.

  1. Posted by skip3house on September 9, 2019 at 8:51 am

    Common sense to me.

    Reply

  2. Posted by stanley on September 9, 2019 at 9:47 am

    Gibney believes that he is the scholar, but is just another in a long list of intellectual gadflies. A real intellectual lowlife who missed out on any understanding of ideas. Sure, there is plenty to criticize in the Boomer group, just like halfwit Brokaw’s so-called “Greatest Generation” contingent. The greatest generation was Madison, Jefferson and the country’s founders. It’s been all down hill since then.

    A better book to understand where we are today would be “The Ominous Parallels” by Peikoff, IMO.

    Reply

    • Posted by Marine1 on September 9, 2019 at 4:25 pm

      Stanley- Do you really believe that politician’s like Madison and Jefferson rival the guys who stormed Normandy or Iwo Jima ?

      Reply

      • Posted by stanley on September 9, 2019 at 9:17 pm

        Yes. I believe that the Battle of the Bulge was much more difficult than either of those landings. But, rebelling against the English and establishing a strong case and legal support for individual rights–the right of a man to his own life–was far more important. And, the English were the predominant world power. The likelihood of winning independence was not substantial at all Madison and Jefferson weren’t soldiers but had the rebellion failed, they would have been hanged along with the rest of the leadership.

        And, America’s foreign policy in WWII was pathetic. Defeating Germany was good, but letting the Soviets continue in business was a terrible mistake. There wasn’t intellectual support for freedom then or now.

        Reply

      • Posted by stanley on September 9, 2019 at 9:58 pm

        Marine 1, when you call the pre WWII generation the greatest generation, you aren’t just speaking about the men and women who produced the material and fighting men who won WWII. There is also the calamity of the Roosevelt Admin. The New Deal, the regulatory agencies, extending the Great Depression and making it five times longer than it should have been (which was partly the fault of Hoover). “The Roosevelt Myth” by Flynn is a good book to read about this period.

        Reply

      • Posted by Marine1 on September 10, 2019 at 7:28 am

        Stanley- True

        Reply

        • Stanley. You bring up so many good points in your posts here. Is this the same person that says “how long before we abolish police and just help our neighbors out?” Lol.
          You have a working knowledge of history. I respect that.

          Reply

  3. Posted by geo8rge on September 9, 2019 at 12:06 pm

    The U.S. Is Spending More on Debt Even as Other Rich Countries Spend Less
    https://ritholtz.com/2019/09/10-monday-am-reads-228/

    Reply

  4. Posted by stanley on September 9, 2019 at 4:23 pm

    Gibney is critical of Dubya and Co for passing the Medicare Part 4, prescription drug plan which would be OK but how can a lefty (he hates Scalia and Roberts and likes RBG so I guess that makes him a lefty) be critical of that which lefties do? Gibney isn’t young. He was around when Dubya treated us to Part 4 and when it passed the lefties in Congress such as Kennedy hollered, “this is too chintzy, we can do better than this excuse for a drug plan.

    If my memory is correct, I believe that Dubya was willing to make badly needed reforms to Social Security and received zero support from the democrats. What choice did he have but to kick the can?

    I would strongly agree with Gibney if he blamed his Boomer teachers for not being more demanding of him in turning in well thought out paperwork. Right up there with AOC!
    Maybe he studied under a bunch of teaching assistants. LOL

    Reply

    • Posted by Marine1 on September 9, 2019 at 5:15 pm

      Stanley- Dubya had full control of Congress from 2001 until 2006. I’m sure the filibuster was in use,but the rules can be changed if the party in control wants something done bad enough. Obviously Social Security reform wasn’t high on the list for the GOP.

      Reply

      • Posted by stanley on September 9, 2019 at 9:28 pm

        Entitlement reform will negatively effect many older people who vote. If it is to be done, it needs the support of both parties. The democrats don’t want any reform. Their preference is for another crisis that they don’t let go to waste.

        Reply

  5. Pensions are inherently wrought with moral hazard and should not exist. the viable alternative is the 401k.

    The majority of boomers are, in fact, self-brainwashed individuals who take credit for good things (that they had nothing to do with) and who externalize all their bad habits onto others.

    Bad boomers are projectors. They are emotionally immature people who look like adults but they are emotionally very young, like 4 or 5. Spoiled children or the product of childhood trauma that they refuse to face. either way, their choice to not grow up.

    children at 4 or 5 constantly project because their boundaries have not fully developed. blaming, accusing, shifting responsibility are normal in children. however, when adults have these qualities they are called psychopaths or sociopaths.

    most boomers, i feel so sorry for them in a way, but its all their own fault. if they are poverty stricken, its because they spent all their money and a lot of other people’s money in their younger years and now its too bad, but they have to die poor – their biggest fear, looking bad when they die.

    these are totally shallow people.

    Reply

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