4 ms·
The moral hazard is already in place: unions will push for more and more generous benefits, even when they know the employer cannot afford it, because they're p
by gotoeleven 2y ago
The moral hazard is already in place: unions will push for more and more generous benefits, even when they know the employer cannot afford it, because they're pretty sure the government will come and bail it out. Why does only the union get to benefit from this largess?
Debts held by favored and disfavored political groups have increasingly different values and this difference can only get so large before something has to break.
- nurtbo 2y agoIf the company has to pay out pensions before shareholders in bankruptcy, that would incentivize shareholders and debt holders to push company to reduce or manage pension obligations.
- PaulDavisThe1st 2y agothus, so the theory goes, nicely balancing the incentives on the part of an energized, enabled and active union. "and they all lived happily ever after"
- bryanlarsen 2y agoIf the company cannot afford the pensions, the company goes bankrupt and then the government covers the pensions. If the company is bankrupt the shareholders are screwed. Companies do not make plans that involve zeroing out shareholders so I don't see what moral hazard there is.