Ok - it's been forever since I last blogged, but I have been very busy as of late. Working in Lower Manhattan takes much of the energy out of me, and by the time I get home, all I want to do is veg out and do something mindless. And with this being said, I feel that it is close to a miracle that I may finally be completing my Masters degree program....
No matter how long I stay with my firm, I'll always feel that the Sword of Damocles is hanging over my head. Ten years ago, I was in a situation where my career almost ended prematurely. After dealing with that situation, we sold off a line of business which resulted in a good number of my coworkers being laid off. Surviving that round of layoffs, we were then told that we were merging with another firm - and the risk of layoffs opened again. About a year and a half later, my whole area was told it was being laid off. And I was one of six survivors of that purge - due to a little bit of luck, and the general need of the business. So now, when there is a vendor looking to obsolete the system I maintain (with two others), I start saying - "Not Again! I'm tired of living with this threat...."
Somewhere, I read that the ratio of working Americans to the overall population is at an all time low. I wonder how long this trend can last before society collapses. Businesses will survive by moving jobs to new markets and then by serving new markets. But what happens to those left behind? If seeing the abandoned factory sites in much of America is any indication, we'll likely have quite a few people unable to pull themselves up by the bootstraps, and have many former middle class people on breadlines....
How can we stop this decline? First, we as individuals, as communities, and as a nation must figure out how to live within our diminished means very quickly - or there will be nothing left for our children and grandchildren. The big question is - are we ready to deal honestly with this reality?
Sunday, May 29, 2011
Sunday, January 23, 2011
The new year and a resumption of blogging
I've been very busy as of late. In September, I moved to a new work location and had less time to do the things I enjoy. So, it's back to blogging - and I hope I find the time for this while dealing with both a long commute and the resumption of classes....
Lately, I've been thinking of the perceived tension between social cohesion and economic efficiency. Most people have seen this as an issue of distribution of wealth - 10% of the population has 90% of its wealth. They look at this issue and ask - how do we more rationally distribute wealth in society -or- how do we maximize the creation of wealth? I look at this issue differently. I see situations where we can have complete economic equality but no economic growth, and situations where we've maximized growth but have few people holding an extreme amount of wealth - recreating the feudal system of the middle ages. No one is talking about a "Sweet Spot" where the balance between economic efficiency and social cohesion maximizes the common wealth in society.
After WW2, America had 50% of the world's manufacturing capacity - a state which was not able to be maintained for the long term. But we had a flawed economic view - we expected businesses to take care of social welfare, while government did little to regulate the economy. As the economy became global, businesses had less incentive to invest in the American worker, yet our laws and regulations assumed that business could continue to follow the implied social contract of 1950. This was a recipe for disaster.
In the early 1960's, the failure of the Studebaker corporation showed us how risky company pensions were when companies went bankrupt. So we changed our laws to make sure that pensions were guaranteed by the federal government. However, we didn't change who held the investment risk for those pensions. As a result, more companies either disbanded the pension plans, or changed them into 401k plans with corporate contributions. Sadly, these realities never were reflected in the plans offered to public workers. These plans still gave their participants defined benefits for a given number of service years - leaving communities to shoulder investment risks. And when yields are low, as they are now, this forces many communities to make a hard choice - pay retirees, or pay for new employees to keep services running.
So, where does this leave us? Recently, I've been advocating that states go into prepackaged bankruptcies, so that they can renegotiate all of their union contracts and pay off all of their bonds 100 cents on the dollar. Pension liabilities would go to the federal government's Pension Fund Guarantee Board, where a maximum of $43k/year could be paid to any recipient. Yes, many retirees who get exorbitant retirement benefits would get hurt - but it might just save the states' ability to provide needed services (such as education, police, fire, etc.)for current and future generations. However, if this is done, we need to repeal the 11th amendment to the US constitution, so that people can sue the states in federal court - as we need some federal oversight in the process for when states break their contracts with the unions, and when the states break federal laws that are means to protect the rights of US citizens....
In short, to solve an important problem, we need to eliminate the idea of State Sovereignty. No longer can the sovereign be immune from court action. This is a major change in legal principle - but it is one which is long over due.
Lately, I've been thinking of the perceived tension between social cohesion and economic efficiency. Most people have seen this as an issue of distribution of wealth - 10% of the population has 90% of its wealth. They look at this issue and ask - how do we more rationally distribute wealth in society -or- how do we maximize the creation of wealth? I look at this issue differently. I see situations where we can have complete economic equality but no economic growth, and situations where we've maximized growth but have few people holding an extreme amount of wealth - recreating the feudal system of the middle ages. No one is talking about a "Sweet Spot" where the balance between economic efficiency and social cohesion maximizes the common wealth in society.
After WW2, America had 50% of the world's manufacturing capacity - a state which was not able to be maintained for the long term. But we had a flawed economic view - we expected businesses to take care of social welfare, while government did little to regulate the economy. As the economy became global, businesses had less incentive to invest in the American worker, yet our laws and regulations assumed that business could continue to follow the implied social contract of 1950. This was a recipe for disaster.
In the early 1960's, the failure of the Studebaker corporation showed us how risky company pensions were when companies went bankrupt. So we changed our laws to make sure that pensions were guaranteed by the federal government. However, we didn't change who held the investment risk for those pensions. As a result, more companies either disbanded the pension plans, or changed them into 401k plans with corporate contributions. Sadly, these realities never were reflected in the plans offered to public workers. These plans still gave their participants defined benefits for a given number of service years - leaving communities to shoulder investment risks. And when yields are low, as they are now, this forces many communities to make a hard choice - pay retirees, or pay for new employees to keep services running.
So, where does this leave us? Recently, I've been advocating that states go into prepackaged bankruptcies, so that they can renegotiate all of their union contracts and pay off all of their bonds 100 cents on the dollar. Pension liabilities would go to the federal government's Pension Fund Guarantee Board, where a maximum of $43k/year could be paid to any recipient. Yes, many retirees who get exorbitant retirement benefits would get hurt - but it might just save the states' ability to provide needed services (such as education, police, fire, etc.)for current and future generations. However, if this is done, we need to repeal the 11th amendment to the US constitution, so that people can sue the states in federal court - as we need some federal oversight in the process for when states break their contracts with the unions, and when the states break federal laws that are means to protect the rights of US citizens....
In short, to solve an important problem, we need to eliminate the idea of State Sovereignty. No longer can the sovereign be immune from court action. This is a major change in legal principle - but it is one which is long over due.
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