Kat, K*88, et al,
It would be easy to lay the loss of pensions at the feet of a shortage of unionized workers, but I would encourage you to take a far bigger picture of the situation.
The core notion that has failed is the idea that people can be cared for my an organization bigger than themselves from cradle to grave – health care and pension in particular.
Up until World War II, the expectation was that workers, even in the west, LARGELY had to work hard, save and prepare for their retirement. Post WWII, some countries chose to socialize the retirement of its citizens, esp. in Europe. European government takes 40% or more of the total production of the economy in order to deliver social promises.
IN the US, we as a country decided that retirement for most working Americans was the responsibility of business and industry. The US economy post-WWII was enormously powerful and could meet the challenge. Pensions largely could be funded by business until 10 years ago, when speculative investments like the dot com bubble ended and a host of other countries around the world became economic competitors to the US on a large enough scale that US economic dominance began to erode– but US consumer spending continued at the same pace.
The US’ economy during WWII was fuel by war; post war, the economy shifted to global production and exports and when that was challenged by global competitors, the US economy has shifted to consumer spending.
The Japanese economy post WWII was driven by producing high quality consumer goods. The European economy post WWII was surpassed by the US economy.
The Japanese and European GOVERNMENTS in the past 20 years have had to start paying the tab for the enormous social benefits they promised post WWII. The US, Europe, and Japan all suffer from the same aging populations – which means fewer workers contributing to retirement plans while more people draw from them and stay alive longer and longer.
The US, with economic strength to carry it a little further down the road, has not had to deal with the same problems as soon, but it is BUSINESS AND INDUSTRY are the ones that are realizing they cannot pay for the benefits that were once promised.
American companies are increasingly shifting responsibility for pensions to the worker and the government because they know business CANNOT sustain the responsibility for the very same reason gov’t pensions in Europe and Japan are failing – not enough economic growth and too many “takers” compared to contributers. Government can print money but business cannot. The US CURRENTLY has an advantage over Europe and Japan in that the strength of the US economy makes the US dollar still the preferred global reserve currency. Thought not as easily as it once did, the US can still print money to pay for promises. Business has no choice but to send the bill somewhere, esp. in light of the fact that most countries around the world have far more government involvement in retirement systems than the US does.
The problem at its core is that western societies aren’t spending enough to fund the retirement promises they made, whether they be private sector promises such as pensions or public sector such as social security and its foreign counterparts. The only western countries that are economically strong enough to continue to fulfill their obligations are those that have thrown open their doors for immigrants, legally bringing in new workers who can keep the current system running. The difference in approach between the US and its neighbor to the north is a perfect example.
In other words, retirement benefits are increasingly becoming socialized in the US – just like they are in most of the rest of the world.
The next major cost item that is in the crosshairs for American business is health care. Most countries have socialized it, the population is aging, fewer people are contributing, and the US economy is not growing as fast as health care costs are rising.
The only solution to ensure retirement is for Americans to recognize that if they want to have a retirement, they will have to cut their personal spending, obtain financial security when they are working (savings, home ownership) sufficiently large to draw upon in retirement.
Health care will follow the same path but it is more difficult… the likely solution is that you will see more and more Americans seeking health care benefits in other countries where it is much cheaper and/or government sponsored.
There are people on this forum who understand that the government and business cannot be counted on to continue to provide the “cradle to grave” benefits that the western economies all promised post WWII.
Americans who economically survive will have to take responsibility for a great deal more of their own futures and divert money away from consumer spending today in order to save for what is needed tomorrow. And Americans will have to learn to shop for services such as health care and places to retire in the global marketplace where what Americans have saved can go further.
Government leaders won’t tell you western economies are no longer viable, business will not tell you to stop spending and save for your own future, and unions cannot solve problems which are far larger than even government can solve.
May those who understand what is at risk work secure their own futures even if it means accepting that a lot of promises have been broken and it will require great personal cost to fix a system which government leaders and business should have ensured could survive decades ago.
