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Public pensions. And people still argue that we should have those over 401ks.

lotsofpulp 9y ago
Because investing in education and enacting policies to support raising families and future generations isn't popular for some reason, so we'd rather entrust our retirement funds in the hands of some politicians and fund managers, and if they end up making corrupt and stupid decisions, we can still raise taxes in the future, or divert funds from education and other social welfare to pay for the pensions.
- snarf21 9y ago
  Don't you think that the people who run the pensions invest that money with those same "fund managers"?
  - lotsofpulp 9y ago
    They're not, they have different risk profiles. There might be some overlap, but by and large, pension funds (especially taxpayer funded) take many more risks than the usual 401k index and bond funds.
    - AnimalMuppet 9y ago
      If I understand correctly, this is because (at least often) the pension funds are underfunded, and have to take risks because they have to have higher rates of return, because with realistic rates of return the contributions aren't enough to reach the specified level of benefits.
- underdown 9y ago
  the argument is between defined benefit vs defined contribution plans. The former are unsustainable as evidenced by illinois’ ballooning deficit, while the latter are somewhat variable in return.
  - maxerickson 9y ago
    It's clear enough that many pensions are poorly funded. I don't think it is clear at all that this is inevitable. (It certainly seems likely that they will be underfunded; why not pay for services with promises that someone else has to fulfill)
    - lotsofpulp 9y ago
      Usually, when you're spending someone else's money, there is a moral hazard that you don't quite care about the return. Add to that fact that in the US, taxpayer funded pensions have NO rules (they're specifically exempt from laws regarding defined benefit pension funding), it's quite easy to see politicians giving away deferred benefits to government worker unions in exchange for votes today. The only person this affects (future taxpayers in 20 to 30 years), are mostly not at the table. And not enough people pay attention to local elections or understand the numbers enough to stop this.
- adventured 9y ago
  > Because investing in education ... isn't popular for some reason That's contradicted by the spending facts of the last several decades. The US invests more per pupil when it comes to primary and secondary education, than any other nations except for Switzerland, Luxembourg, Norway, and Austria. So there's the US - 330 million people - competing with hyper rich, tiny, Luxembourg - 600k people - on education spending per pupil. Our teachers are also among the best paid in the world. We've dramatically over-invested into classical education. Far too many people have run up immense student loan debts, when they should have acquired a trade skill instead at a small fraction of the cost. Germany is the model that the US should be following, rather than just blindly spending more on a traditional education path (which is not working out well). https://www.theatlantic.com/business/archive/2014/10/why-germany-is-so-much-better-at-training-its-workers/381550/ https://www.theatlantic.com/business/archive/2014/10/why-ger... http://blogs.edweek.org/edweek/global_learning/2017/05/the_us_education_system_meets_the_german_dual_education_model.html http://blogs.edweek.org/edweek/global_learning/2017/05/the_u...
  - lotsofpulp 9y ago
    I should have written investing in education to teach students about their finances. You can go all the way through high school in America and never learn how to calculate interest or amortize or understand how investment returns should be calculated.
  - AnimalMuppet 9y ago
    Our teachers are, in many cases, very poorly paid. (Administrators, on the other hand...) If US teachers are paid better than in other countries, that's pretty appalling.
    - Godel_unicode 9y ago
      The US bureau of labor statistics says that the average teacher salary is $58k/year (with over 2 months of time off) while the average non-teacher salary is $61k/year (average PTO less than two weeks) with at least a bachelor degree.
deleted 9y ago
[deleted]

Because investing in education and enacting policies to support raising families and future generations isn't popular for some reason, so we'd rather entrust our retirement funds in the hands of some politicians and fund managers, and if they end up making corrupt and stupid decisions, we can still raise taxes in the future, or divert funds from education and other social welfare to pay for the pensions.

snarf21 9y ago
Don't you think that the people who run the pensions invest that money with those same "fund managers"?
- lotsofpulp 9y ago
  They're not, they have different risk profiles. There might be some overlap, but by and large, pension funds (especially taxpayer funded) take many more risks than the usual 401k index and bond funds.
  - AnimalMuppet 9y ago
    If I understand correctly, this is because (at least often) the pension funds are underfunded, and have to take risks because they have to have higher rates of return, because with realistic rates of return the contributions aren't enough to reach the specified level of benefits.
underdown 9y ago
the argument is between defined benefit vs defined contribution plans. The former are unsustainable as evidenced by illinois’ ballooning deficit, while the latter are somewhat variable in return.
- maxerickson 9y ago
  It's clear enough that many pensions are poorly funded. I don't think it is clear at all that this is inevitable. (It certainly seems likely that they will be underfunded; why not pay for services with promises that someone else has to fulfill)
  - lotsofpulp 9y ago
    Usually, when you're spending someone else's money, there is a moral hazard that you don't quite care about the return. Add to that fact that in the US, taxpayer funded pensions have NO rules (they're specifically exempt from laws regarding defined benefit pension funding), it's quite easy to see politicians giving away deferred benefits to government worker unions in exchange for votes today. The only person this affects (future taxpayers in 20 to 30 years), are mostly not at the table. And not enough people pay attention to local elections or understand the numbers enough to stop this.
adventured 9y ago
> Because investing in education ... isn't popular for some reason That's contradicted by the spending facts of the last several decades. The US invests more per pupil when it comes to primary and secondary education, than any other nations except for Switzerland, Luxembourg, Norway, and Austria. So there's the US - 330 million people - competing with hyper rich, tiny, Luxembourg - 600k people - on education spending per pupil. Our teachers are also among the best paid in the world. We've dramatically over-invested into classical education. Far too many people have run up immense student loan debts, when they should have acquired a trade skill instead at a small fraction of the cost. Germany is the model that the US should be following, rather than just blindly spending more on a traditional education path (which is not working out well). https://www.theatlantic.com/business/archive/2014/10/why-germany-is-so-much-better-at-training-its-workers/381550/ https://www.theatlantic.com/business/archive/2014/10/why-ger... http://blogs.edweek.org/edweek/global_learning/2017/05/the_us_education_system_meets_the_german_dual_education_model.html http://blogs.edweek.org/edweek/global_learning/2017/05/the_u...
- lotsofpulp 9y ago
  I should have written investing in education to teach students about their finances. You can go all the way through high school in America and never learn how to calculate interest or amortize or understand how investment returns should be calculated.
- AnimalMuppet 9y ago
  Our teachers are, in many cases, very poorly paid. (Administrators, on the other hand...) If US teachers are paid better than in other countries, that's pretty appalling.
  - Godel_unicode 9y ago
    The US bureau of labor statistics says that the average teacher salary is $58k/year (with over 2 months of time off) while the average non-teacher salary is $61k/year (average PTO less than two weeks) with at least a bachelor degree.

deleted 9y ago

[deleted]