Wednesday, July 20, 2011
Dear Mr. Plamondon
I just read with interest, your editorial on iPolitics, regarding public sector pensions and I need to clarify some things with you. Is it your contention that the best way to bring seniors out of poverty is by reducing the pensions of public sector workers? You seem to suggest that this is a matter of fairness. Is it fairer to lower the pensions of public sector workers rather than fight for better pensions for private sector workers? The central thesis of your piece seems to be that since private sector workers have had their wages and benefits stripped by their employers, the best way to remedy the situation is by stripping the wages and benefits of the public sector. Am I incorrect in that reading and if so, how? Nowhere in your piece is any mention of the rise in CEO pay packages during this period and a rise in income disparity between the rich and the poor. If you are really advocating a solution to disparities of income, I should have thought this might be an area to explore. I am curious as to why you left this out? I don't want to cast doubt about your motives, but one might conclude that you are trying to foment intraclass hatred between private and public sector workers as a means of distributing more wealth to those who do not need the help. Surely I am mistaken?. Surely conservatives would never think to do that? All the best, Greg.
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Here's why: defined benefit pensions sank private sector firms.
ReplyDeleteRealistically, if you did succeed in getting private firms to extend those benefits, this is what would happen.
1. Firm A extends defined-benefit pensions.
2. Thirty years pass. Firm A goes bankrupt, is replaced by Firm B, which does not have the pensions overhead to account for in their new budget.
3. Thirty years pass. Firm C replaces Firm B, same reason.
Actual effect: the pensions don't get paid, as they don't survive the bankruptcies.
You make it sound like a divinely inspired truth. But, 2 is only valid if B is allowed to buy A without having to take on the obligation of pensions given through A. That is a government decision and can be changed through legislation.
ReplyDeleteAlso, bankruptcy laws can be changed so that pensions go to the head of the line rather than the end. These are human decisions, not fiat from the flying spaghetti monster in the sky.
B doesn't buy A -- B drives A out of business entirely.
ReplyDeleteAnd if bankruptcy laws put pensions ahead of secured creditors -- an insane position, which would make it significantly harder for businesses to raise capital -- that too would be deadweight on the growth of businesses.