Since the 1970s, I have been writing about my concern about the impact of public pension funds on the local, state and national economies. My original interest was provoked after I read Peter Drucker’s brilliant and prescient book “The Unseen Revolution: How Pension Fund Socialism Came to America” published in 1976, and later doing some math on the incremental growth of the public pension funds, and their impact on public spending and taxation.
Now, almost 40 years later, what some very visionary and smarter folks than I am saw coming, is now at out doorstep. Unfunded liabilities of public pension funds are now so large that the numbers are staggering and grim.
In many American cities, for example, the bulk of local taxation goes to pay for the costs of pension funds for public employees. Increasingly, the same is becoming true of costs and taxes at state and federal levels. The bottom line is that if some “drastic” reform is not effected, and soon, public employees simply will not receive their pension benefits. For some reason, there is amazingly little discussion of this explosive matter in the media, and by political figures of both parties.
I am not talking here about social security or private (corporate) pension funds which have, or soon will have, huge unfunded liabilities of their own.
This is not some small problem that can be easily fixed or wished away. It is also no longer a problem which lies in the distant future, and can be procrastinated to some future group of officials.
At some point, the stock market, other markets, and the corporate governance community will have to react and act. There is no solution to this whole issue that will be without considerable pain and difficulty. And now, the longer it is put off, the more painful and expensive it will become. The clocks of this issue are now all running out.