Today’s Sacramento Bee featured a viewpoint column entitled “Pension ‘Reformers’ distort facts on benefits.” The column was written by Martha Penry, “a special education teacher’s assistant in the Twin Rivers school district.” Not disclosed in the article was the fact that Ms. Penry is also a high ranking public employee union official, as evidenced by her membership on the CSEA Board of Directors.
In her column Ms. Penry accuses “pension busters” of overstating the cost of pensions and the amount of the average pension. She claims that “three quarters of CalPERS retirees collect yearly pensions of $36,000 or less.” What Ms. Penry does not do, however, is acknowledge that the average she is referring to includes retirees who didn’t work full time, or who didn’t work much more than five years (the minimum vesting period for a pension), or who retired decades ago when pay rates and pension formulas were still fairly reasonable.
A more honest assessment of the average pension has to examine rates for people who are retiring now, under today’s pay scales and pension formulas, who have worked their full careers in government service. Here is the most recent information, drawn directly from the annual reports of Cal STRS and CalPERS:
From the CalSTRS Annual Report, page 135: CalSTRS participants who retired during the 12 months ending June 30th, 2010 (the most recent data), earned pensions [...] Read More
At a recent political event I encountered a libertarian group who were passing out a test designed to determine one’s political ideology. Their model had two continua represented as sides of a checkered board with 100 squares. This square board was rotated 45 degrees, with one continuum (2 opposite sides) containing the degrees between the extremes of statist (big government) vs. libertarian. The 2nd continuum on the board contained the degrees between the extremes of social liberal and social conservative. They were measuring the political opinions of attendees with a 20 question test, 10 questions designed to measure one’s statist vs. libertarian leanings, and 10 questions designed to measure one’s social liberal vs. social conservative leanings.
As an attempt to quantify voter psychographics into terms of political ideologies, this model is helpful and probably has a great deal of practical value to politicians and their campaign organizations. The choice of two ideological continuums, a moral value system, and a fiscal value system, is an astute recognition that common political labels, left and right, liberal and conservative, are multidimensional. But for political paradigms that model and map the collective political psychology of voters to properly reflect political reality – the structure of government and governance – another dimension is required.
This third continuum would measure the degrees between the extremes where vested interests collectively command and control the economy and society, and an extreme where there is a continuous and nurtured upwelling of aspiring, emergent interests. Put another way, those who [...] Read More
A few months ago my wife and I noticed a pair of doves were building a nest in a nook above the front door of our home. Atop a piller, beneath an eve, inaccessible to any creature who couldn’t either fly or use a ladder, the location for this nest was thoughtfully chosen. Through the rainy days and nights of February, the birds completed their nest and sat on the eggs.
For nearly a month the birds were always there, until sometime in early March when they abandoned the nest. My wife checked the nest and verified the eggs were still there – apparently not destined to hatch, the Doves had left them to scavengers. Within a few weeks the eggs were gone, with the parents away another winged creature had broken them open and consumed them. But the doves weren’t through with us.
In April the birds returned, the female lay a new pair of eggs, and through the lengthening days they sat atop them. This time we were skeptical as to whether or not the eggs would hatch, but we were starting to get attached to this persistent, quiet pair. The neighborhood cats were also paying close attention.
On the morning of May 12th we left our homes to go to work and noticed the eggs had hatched. Within a few days we could see them, huddled next to their mother, always quiet, always still. Often the mother would perch on a rooftop nearby but away from the [...] Read More
Earlier this month the Wall Street Journal published an article entitled “Private Accounts Can Save Social Security,” authored by Martin Feldstein, former chairman of President Reagan’s Council of Economic Advisors and a member of the Wall Street Journal’s board of contributors.
In this article, Feldstein made the following assertion: “With a 3% payroll deduction, someone with $50,000 of real annual earnings during his working years could accumulate enough to fund an annual payout of about $22,000 after age 67, essentially doubling the current Social Security benefit. That assumes a real rate of return of 5.5%, less than the historic average return on a balanced portfolio of stock and bond mutual funds.”
As explored in dozens of posts already, it is pretty easy to paint rosy scenarios when you assume a real rate of return of 5.5%. But “the historic average return” Mr. Feldstein alludes to presumably includes the last 40 years or so, a period during which total credit market debt in the U.S. has doubled five times, and now stands at over 350% of GDP.
In the post “National Debt and Rates of Return,” I tried to get a handle on just what all this debt is doing to our prospects for economic growth and healthy returns on investment. As documented in that article, America’s credit market debt, which includes all consumer, commercial, and government debt, totals over $50 trillion dollars. And the [...] Read More
Back in July 2009, in a post “Industrialize the Solar System,” I laid out the economic “case for space:”
(1) Space development will catalyze economic development in general, which always enables higher environmental consciousness and greater resources to address environmental challenges.
(2) Living in space requires recycling technologies for water and air that are many times more demanding than on earth, and these technologies will have applications that will improve water and emission treatment technologies on earth.
(3) Zero gravity manufacturing and manufacturing off the planet can eventually allow us to do potentially hazardous work in space where there is no danger to the earth’s ecosystem.
(4) There are benefits in terms of earth observation and ecosystem management that we have only begun to realize through a presence in space.
(5) We may build satellite solar power stations and beam the energy they produce back to earth.
(6) We can access minerals on the Moon, Mars, other terrestrial moons, and the asteroids that eventually can take pressure off resources on earth.
To this sixth point, a fascinating comment recently surfaced on a post by Walter Russell Mead entitled “Top Green Admits ‘We are Lost‘,” where the writer quantified the amount of minerals likely to be recoverable in a relatively small (1 km diameter) asteroid. Here is an excerpt:
“A 1 km metallic asteroid (90th percentile iridium richness), mined at a rate of 1 million cubic meters per year, could [...] Read More