Baltimore Sun – Baltimore pension dispute illuminates public/private divide:
Severe market downturns lay bare any number of Ponzi schemes, and under-funded defined benefits pensions, public and private, can be justly described as such schemes. The problem with private plans is large enough. The Pension Benefit Guaranty Corp., which insures the pensions of 44 million Americans, said in a report this week that its deficit has tripled in just six months to a record $33.5 billion. Chances are it will have to be added to the growing list of entities to be bailed out by Uncle Sam. But this is trivial compared to the under-funding in public plans, which cover about 22 million workers. The deficits in the latter systems are said to total more than a trillion dollars. And these are not insured.
The gap between the public sector and private business in wages and benefits continues to grow. Last month, USA Today reported federal figures showing that public employees earned benefits worth $13.38 per hour in December 2008, compared to $7.98 for private sector workers.
What would you say about a government whose employees make more money than non-government employees performing the same job? That doesn’t sound like a government that has the best interest of its people at heart.
There was a time when people took government jobs for the security they offered. The bargain was that they would sacrifice pay for that security. Over time, the bargain tilted totally in favor of the government workers as they got both job security and higher pay than their counterparts outside government. Can this system be sustained? I think not, but we shall see.
The nature of our current bailout mania is wealth redistribution in reverse. Ordinary people are bailing out banks, car makers, and unionized and public sector workers who make more than them and who have better benefits. If California gets bailed out it will be bailed out by all of the states that are smaller and poorer. The rich are becoming a burden on the middle class and the middle class is becoming a burden on the poor. This can’t last.
Hat tip to Instapundit.