8 ms·

I have a new phrase du jour: "Let governments be governments". This is pretty much the exact situation. A mistake (corrupt or incompetent) was made. Admit it.

I have a new phrase du jour: "Let governments be governments". This is pretty much the exact situation. A mistake (corrupt or incompetent) was made. Admit it. Then end the contract. Now governments should honour contracts negotiated earlier in good faith, but there has to be a level of "oh come on" about that honouring. Here everyone's reputations would be enhanced if a meeting occurred where the CEO of Goldman? / Abu Dabi and the Mayor plus maybe a federal rep (pretty high up maybe White House Chief staff) sit down and basically threaten the investors with no more deals in USA unless they hand back the meters. Everyone gets to look like winners - the government looks like real government and the investors get a profit and look like the kind of big shots only white house can deal with. And then we learn to actually scrutinise these deals that happen every day across towns across the west and ask - why? Don't sell the family silver, build strong towns, tax sensible levels, and trust in your city.

behringer 3y ago
Agreed. And next in Chicago we need to cancel or renegotiate pensions with all government employees in the county over the age of 60 for having been personally responsible for putting the county in a deficit to begin with.
- derekp7 3y ago
  Pensions are a tricky subject. In cases where a pension job paid less than prevailing wages, that pension is in reality deferred payment for time already worked. So taking away the pension is wage theft. It would be similar to if an organization decided to take back a large portion of your 401K because they retroactively deleted the company matching benefit. In reality, that deferred pay should have been properly invested / managed from the beginning, but that would mean higher taxes or lower spending on other programs at the time the wages were earned.
  - lotsofpulp 3y ago
    Defined benefit pensions have a simple fix. They should be illegal (along with all other deferred compensation schemes) for taxpayer funded entities. The moral hazard of letting today’s voters and today’s politicians and today’s senior government employees (the union leaders) steal from taxpayers 30 years in the future is obvious. Not to mention it is all going into the same SP500 anyway, so just cut out the middleman and moral hazard, and give everyone a Fidelity/Vanguard/Schwab 401k and let them buy the SP500/target date retirement fund they want. Having a lien on future taxpayers is literally the only difference between taxpayer funded defined benefit pension funds and 401K/IRA.
    - ghaff 3y ago
      Defined benefit pensions are also largely a product of a more paternalistic time when there was an implicit deal of spend your career (or at least a big chunk of it) working for us and we'll help take care of you in retirement. It doesn't really work for private company employees these days given you often don't get much of anything if you leave in less than 5 years. And the public sector has even more moral hazard as you say; there is at least regulatory oversight of private pensions.
      - dragonwriter 3y ago
        > Defined benefit pensions are also largely a product of a more paternalistic time when there was an implicit deal of spend your career (or at least a big chunk of it) working for us and we'll help take care of you in retirement. There's no reason you can't have portable DB pensions (you'd need standards for employers set by the plan, and a common DB plan, but in a way that's how many non-federal public DB plans already work—they serve multiple different public sector employers.) Its a policy choice not to do that in a way which provides universally portable plans covering private as well as public sector employers.
        ghaff 3y ago
        At that point, why not just increase the level of social security? It sounds like you're mostly creating an additional universal system to layer on top. And, if it's not universal (including small businesses that now have an additional administrative cost) you have now created a retirement plan that basically favors public sector and big companies (which admittedly 401k already does to an extent).
  - PopAlongKid 3y ago
    >n cases where a pension job paid less than prevailing wages, How often is that actually the case? I think it was the ideal and expected result at one time (civil service job + pension = private market job) but the connection was broken long ago.
    - ghaff 3y ago
      It's probably a pretty tenuous connection given a lot of large private sector companies used to have defined benefit pensions too. It was one of a bucket of benefits that was sort of expected. At some level, modulo tax effects, a dollar in benefits is theoretically a dollar not paid in salary but that's not really how things work--certainly not on a 1:1 basis. If I weren't going to start collecting a pension soon from some ago company that by now has gone through a couple generations of acquisitions would I have been paid more at the time? Maybe I guess. But it's very indirect.
      - bluGill 3y ago
        The problem was a few companies went bankrupt and then the workers discovered not only did they lose their job, but it turns out the pension they had been in for decades was invested in company stock and thus worthless. We have a lot of laws around pensions these days to prevent that. However they were written when the investing environment was different (higher interest rates made AAA bonds a great investment, so investing in risky stocks didn't make sense). The result is pensions are generally have a terrible return on investment. You are much better off with a well managed 401k in modern funds (at least as I write this and the 30 years before, while I can only guess what the future will hold I think that trend will hold for the next 10 years at least). 401k has one other advantage: it is clear where the money is and who controls it. Pensions often are setup as a great deal if you work for the same company for 40+ years (25-65), but if you switch jobs you don't get nearly as much, even if all the other companies have a pension plan your total is much worse.
        ghaff 3y ago
        >401k has one other advantage: it is clear where the money is and who controls it. I'll add another one: the investor can tailor their risk to where they are in life. At some point, it probably makes sense to put even most of my savings in very low risk, low yield bonds. But that point is probably not when I'm in my twenties. I actually understand the appeal of a (presumably) low risk "guaranteed" annuity payout at retirement that may have been a long ago benefit you never really thought about. But it probably wasn't really free and probably doesn't represent a better investment than if you were given the actuarial share of the money paid into the pension on your behalf instead.
  - behringer 3y ago
    maybe those employees shouldn't have screwed up the county then.
- Izkata 3y ago
  The Illinois constitution prevents any change to existing pensions, so they're stuck there. The state constitution has to change first. As I understand it they could do something like not offer pensions to new employees, but that probably wouldn't work out well.
  - cozzyd 3y ago
    well, there's now a two-tier pension system, with newer pensions being much less generous. e.g. https://ctpf.org/member-resources/new-members/tier-1-vs-tier-2-pensions https://ctpf.org/member-resources/new-members/tier-1-vs-tier... But the tier-1 pensions can't be retroactively changed per the state constitution.
- polski-g 3y ago
  You cannot renegotiate or cancel pensions. But you can simply tax their receipts as income.
  - cozzyd 3y ago
    yes, Illinois doesn't tax pension income, though maybe it could. (Maybe it even could with a residency exemption; perversely many Illinois pensions are being taxed by other states...)
  - behringer 3y ago
    That's perfect. Tax anything over poverty level at 80 percent until we're balanced.
derekp7 3y ago
A softer way of renegotiating the contract is to pay the parking enforcement officers out of the parking meter revenue. The less revenue submitted back to the city would mean less enforcement, and therefore less meter compliance, which is less revenue back to the outsourcing company.
- ajdude 3y ago
  One potential issue may be the clause that the city must pay the outsourcing company to make up for lost revenue under their expected amount in the contract. For instance when they raised the rates and less people started parking, the city had to pick up the tab.
- gabereiser 3y ago
  You missed the part where Chicago is on the hook for "lost" revenue. Arguably determined by clever accounting on CPM's part.
hodgesrm 3y ago
How exactly do you "end" the contract? Part of the deal with contracts is you don't just get to back out whenever you feel like it. Seems as though Chicago would be better off tying pensions for politicions to city financial stability so that they have some motivation to ensure money is wisely spent.
- godzillabrennus 3y ago
  Never forget that the Covid relief bill from DC bailed out government pensions more so than small family run restaurants.
  - toomuchtodo 3y ago
    Good. Pensions are more important than small family run restaurants [1] [2]. There was enough PPP money ($800 billion in low-interest uncollateralized loans) to go around. [1] https://www.gao.gov/financial-security-older-americans https://www.gao.gov/financial-security-older-americans [2] https://www.ncoa.org/article/latest-census-bureau-data-shows-americans-65-only-group-to-experience-increase-in-poverty https://www.ncoa.org/article/latest-census-bureau-data-shows...
    - jollyllama 3y ago
      "Old people are more important than young people." - t. Gerontocracy.
      - toomuchtodo 3y ago
        Old people are more important than wealthy/high income people. Top 40% of US taxpayers pay into the general fund (bottom 60% don't have a federal income tax liability), and most young folks don't earn enough income to hit the highest marginal rates, let alone have any material assets to speak of (real estate, securities, businesses). There is enough wealth (not fiat, wealth, they are distinct) for this, just gotta get it. Bezos doesn't need to go to the Moon, and Ellison doesn't need yet another carbon fiber sailing yacht, very roughly speaking. There is a balance to be found, but pitting all old people against all young people when its really the wealthy who soaked up most of the wealth over the last 40 years (pensions shed for 401ks, globalization, a reduction in labor power) is sort of disingenuous [1] [2] [3] [4]. [1] https://www.cnbc.com/2021/10/18/the-wealthiest-10percent-of-americans-own-a-record-89percent-of-all-us-stocks.html https://www.cnbc.com/2021/10/18/the-wealthiest-10percent-of-... (The wealthiest 10% of Americans own a record 89% of all U.S. stocks) [2] https://www.madisontrust.com/information-center/who-owns-most-land/ https://www.madisontrust.com/information-center/who-owns-mos... (Who Owns the Most Land in the United States?) [3] https://slate.com/business/2021/06/blackrock-invitation-houses-investment-firms-real-estate.html https://slate.com/business/2021/06/blackrock-invitation-hous... (Investment Firms Aren’t Buying All the Houses. But They Are Buying the Most Important Ones.) [4] https://ustrustaem.fs.ml.com/content/dam/ust/articles/pdf/2022-BofaA-Private-Bank-Study-of-Wealthy-Americans.pdf https://ustrustaem.fs.ml.com/content/dam/ust/articles/pdf/20... (2022 Bank of America Private Bank Study of Wealthy Americans: The impact of shifting generational attitudes amid an historic wealth transfer) [Only 27% of the ultra wealthy are self made; 70% of Americans who hold more than $3 million are over 56 years old.] (i am self aware enough, and sufficiently familiar with statistics and survivorship bias, to realize that I am not a temporarily embarrassed ultra wealthy person, ymmv; i don't fault lucky people of course, just don't try to lie to the rest of us that it wasn't luck)
deleted 3y ago
[deleted]
some_random 3y ago
The problem is that the government of Chicago is incredibly corrupt, and even if Mayor Johnson successfully clawed back some of the worst deals the damage is already done and now there's a precedent for the government reneging that will allow Daley number 3 to come in and loot the city again.
xgl5k 3y ago
This will set a bad precedent and harm other potential public/private partnerships. Public/private partnerships can be useful like what Brightline is doing.

behringer 3y ago

Agreed. And next in Chicago we need to cancel or renegotiate pensions with all government employees in the county over the age of 60 for having been personally responsible for putting the county in a deficit to begin with.

derekp7 3y ago
Pensions are a tricky subject. In cases where a pension job paid less than prevailing wages, that pension is in reality deferred payment for time already worked. So taking away the pension is wage theft. It would be similar to if an organization decided to take back a large portion of your 401K because they retroactively deleted the company matching benefit. In reality, that deferred pay should have been properly invested / managed from the beginning, but that would mean higher taxes or lower spending on other programs at the time the wages were earned.
- lotsofpulp 3y ago
  Defined benefit pensions have a simple fix. They should be illegal (along with all other deferred compensation schemes) for taxpayer funded entities. The moral hazard of letting today’s voters and today’s politicians and today’s senior government employees (the union leaders) steal from taxpayers 30 years in the future is obvious. Not to mention it is all going into the same SP500 anyway, so just cut out the middleman and moral hazard, and give everyone a Fidelity/Vanguard/Schwab 401k and let them buy the SP500/target date retirement fund they want. Having a lien on future taxpayers is literally the only difference between taxpayer funded defined benefit pension funds and 401K/IRA.
  - ghaff 3y ago
    Defined benefit pensions are also largely a product of a more paternalistic time when there was an implicit deal of spend your career (or at least a big chunk of it) working for us and we'll help take care of you in retirement. It doesn't really work for private company employees these days given you often don't get much of anything if you leave in less than 5 years. And the public sector has even more moral hazard as you say; there is at least regulatory oversight of private pensions.
    - dragonwriter 3y ago
      > Defined benefit pensions are also largely a product of a more paternalistic time when there was an implicit deal of spend your career (or at least a big chunk of it) working for us and we'll help take care of you in retirement. There's no reason you can't have portable DB pensions (you'd need standards for employers set by the plan, and a common DB plan, but in a way that's how many non-federal public DB plans already work—they serve multiple different public sector employers.) Its a policy choice not to do that in a way which provides universally portable plans covering private as well as public sector employers.
      - ghaff 3y ago
        At that point, why not just increase the level of social security? It sounds like you're mostly creating an additional universal system to layer on top. And, if it's not universal (including small businesses that now have an additional administrative cost) you have now created a retirement plan that basically favors public sector and big companies (which admittedly 401k already does to an extent).
- PopAlongKid 3y ago
  >n cases where a pension job paid less than prevailing wages, How often is that actually the case? I think it was the ideal and expected result at one time (civil service job + pension = private market job) but the connection was broken long ago.
  - ghaff 3y ago
    It's probably a pretty tenuous connection given a lot of large private sector companies used to have defined benefit pensions too. It was one of a bucket of benefits that was sort of expected. At some level, modulo tax effects, a dollar in benefits is theoretically a dollar not paid in salary but that's not really how things work--certainly not on a 1:1 basis. If I weren't going to start collecting a pension soon from some ago company that by now has gone through a couple generations of acquisitions would I have been paid more at the time? Maybe I guess. But it's very indirect.
    - bluGill 3y ago
      The problem was a few companies went bankrupt and then the workers discovered not only did they lose their job, but it turns out the pension they had been in for decades was invested in company stock and thus worthless. We have a lot of laws around pensions these days to prevent that. However they were written when the investing environment was different (higher interest rates made AAA bonds a great investment, so investing in risky stocks didn't make sense). The result is pensions are generally have a terrible return on investment. You are much better off with a well managed 401k in modern funds (at least as I write this and the 30 years before, while I can only guess what the future will hold I think that trend will hold for the next 10 years at least). 401k has one other advantage: it is clear where the money is and who controls it. Pensions often are setup as a great deal if you work for the same company for 40+ years (25-65), but if you switch jobs you don't get nearly as much, even if all the other companies have a pension plan your total is much worse.
      - ghaff 3y ago
        >401k has one other advantage: it is clear where the money is and who controls it. I'll add another one: the investor can tailor their risk to where they are in life. At some point, it probably makes sense to put even most of my savings in very low risk, low yield bonds. But that point is probably not when I'm in my twenties. I actually understand the appeal of a (presumably) low risk "guaranteed" annuity payout at retirement that may have been a long ago benefit you never really thought about. But it probably wasn't really free and probably doesn't represent a better investment than if you were given the actuarial share of the money paid into the pension on your behalf instead.
- behringer 3y ago
  maybe those employees shouldn't have screwed up the county then.
Izkata 3y ago
The Illinois constitution prevents any change to existing pensions, so they're stuck there. The state constitution has to change first. As I understand it they could do something like not offer pensions to new employees, but that probably wouldn't work out well.
- cozzyd 3y ago
  well, there's now a two-tier pension system, with newer pensions being much less generous. e.g. https://ctpf.org/member-resources/new-members/tier-1-vs-tier-2-pensions https://ctpf.org/member-resources/new-members/tier-1-vs-tier... But the tier-1 pensions can't be retroactively changed per the state constitution.
polski-g 3y ago
You cannot renegotiate or cancel pensions. But you can simply tax their receipts as income.
- cozzyd 3y ago
  yes, Illinois doesn't tax pension income, though maybe it could. (Maybe it even could with a residency exemption; perversely many Illinois pensions are being taxed by other states...)
- behringer 3y ago
  That's perfect. Tax anything over poverty level at 80 percent until we're balanced.

derekp7 3y ago

A softer way of renegotiating the contract is to pay the parking enforcement officers out of the parking meter revenue. The less revenue submitted back to the city would mean less enforcement, and therefore less meter compliance, which is less revenue back to the outsourcing company.

ajdude 3y ago
One potential issue may be the clause that the city must pay the outsourcing company to make up for lost revenue under their expected amount in the contract. For instance when they raised the rates and less people started parking, the city had to pick up the tab.
gabereiser 3y ago
You missed the part where Chicago is on the hook for "lost" revenue. Arguably determined by clever accounting on CPM's part.

hodgesrm 3y ago

How exactly do you "end" the contract? Part of the deal with contracts is you don't just get to back out whenever you feel like it. Seems as though Chicago would be better off tying pensions for politicions to city financial stability so that they have some motivation to ensure money is wisely spent.

godzillabrennus 3y ago
Never forget that the Covid relief bill from DC bailed out government pensions more so than small family run restaurants.
- toomuchtodo 3y ago
  Good. Pensions are more important than small family run restaurants [1] [2]. There was enough PPP money ($800 billion in low-interest uncollateralized loans) to go around. [1] https://www.gao.gov/financial-security-older-americans https://www.gao.gov/financial-security-older-americans [2] https://www.ncoa.org/article/latest-census-bureau-data-shows-americans-65-only-group-to-experience-increase-in-poverty https://www.ncoa.org/article/latest-census-bureau-data-shows...
  - jollyllama 3y ago
    "Old people are more important than young people." - t. Gerontocracy.
    - toomuchtodo 3y ago
      Old people are more important than wealthy/high income people. Top 40% of US taxpayers pay into the general fund (bottom 60% don't have a federal income tax liability), and most young folks don't earn enough income to hit the highest marginal rates, let alone have any material assets to speak of (real estate, securities, businesses). There is enough wealth (not fiat, wealth, they are distinct) for this, just gotta get it. Bezos doesn't need to go to the Moon, and Ellison doesn't need yet another carbon fiber sailing yacht, very roughly speaking. There is a balance to be found, but pitting all old people against all young people when its really the wealthy who soaked up most of the wealth over the last 40 years (pensions shed for 401ks, globalization, a reduction in labor power) is sort of disingenuous [1] [2] [3] [4]. [1] https://www.cnbc.com/2021/10/18/the-wealthiest-10percent-of-americans-own-a-record-89percent-of-all-us-stocks.html https://www.cnbc.com/2021/10/18/the-wealthiest-10percent-of-... (The wealthiest 10% of Americans own a record 89% of all U.S. stocks) [2] https://www.madisontrust.com/information-center/who-owns-most-land/ https://www.madisontrust.com/information-center/who-owns-mos... (Who Owns the Most Land in the United States?) [3] https://slate.com/business/2021/06/blackrock-invitation-houses-investment-firms-real-estate.html https://slate.com/business/2021/06/blackrock-invitation-hous... (Investment Firms Aren’t Buying All the Houses. But They Are Buying the Most Important Ones.) [4] https://ustrustaem.fs.ml.com/content/dam/ust/articles/pdf/2022-BofaA-Private-Bank-Study-of-Wealthy-Americans.pdf https://ustrustaem.fs.ml.com/content/dam/ust/articles/pdf/20... (2022 Bank of America Private Bank Study of Wealthy Americans: The impact of shifting generational attitudes amid an historic wealth transfer) [Only 27% of the ultra wealthy are self made; 70% of Americans who hold more than $3 million are over 56 years old.] (i am self aware enough, and sufficiently familiar with statistics and survivorship bias, to realize that I am not a temporarily embarrassed ultra wealthy person, ymmv; i don't fault lucky people of course, just don't try to lie to the rest of us that it wasn't luck)

deleted 3y ago

[deleted]

some_random 3y ago

The problem is that the government of Chicago is incredibly corrupt, and even if Mayor Johnson successfully clawed back some of the worst deals the damage is already done and now there's a precedent for the government reneging that will allow Daley number 3 to come in and loot the city again.

xgl5k 3y ago

This will set a bad precedent and harm other potential public/private partnerships. Public/private partnerships can be useful like what Brightline is doing.