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It's an excellent strategy (when executed correctly) in times of unparalleled stability and economic predictability like those of 1948 to ~1976 and ~1982-2008 b
by cc439 8y ago
It's an excellent strategy (when executed correctly) in times of unparalleled stability and economic predictability like those of 1948 to ~1976 and ~1982-2008 but it's a terrible strategy when returns on pension fund investments are virtually guaranteed. Even in those times it didn't make logical sense to assume everything over the next 30 years would play out exactly how everyone assumed it would. That and the "stickiness" problem of new pensions being based off the terms of old pensions (negotiated when retirees didn't live into their mid 80's on average) is what will doom most state governments over the next 10-15 years,
- rdl 8y agoYeah, in the case of pensions I agree having disproportionately high pension comp vs. current comp makes no sense -- particularly bad when a city declines in size. There are plenty of non-pension cases where debt is an effective tool, i.e. borrowing to make efficiency/productivity improvements which exceed the cost of servicing and repaying the debt. Imbalanced pensions are more like borrowing to pay for operational expenses.