A few thoughts on my piece in this week's New Yorker on pensions, "The Risk Pool"-- a piece which I note, to my great amusement, has already been dubbed by one blogger ""the worst Gladwell piece ever.""
If you haven't read it, it's an argument against the peculiarly American notion of tying retiree benefits to individual companies, which, as the current plight of General Motors shows us, is a recipe for disaster. I think that all insurance and pensions systems, to maximize effeciency and security, should be based on the largest risk pool possible--preferably the whole country.
One of the predictable responses to this is that this is the idea behind Social Security is--and look at the problem that program is in. I have to say, though, that what reading I have done into the Social Security issue hasn't convinced me that the program is in all that much trouble--that is, with a number of not entirely painless (but not debilitating) adjustments now, we can avoid a lot of the trouble down the line. Put it this way: would you rather, as a retiree, put your faith in the federal government or General Motors?
I was on a NRP talk show today with Olivia Mitchell of the Wharton School who, it's safe to say, has forgotten more about the pension issue than I will ever know, and she pointed out that its not pensions we should we worried about so much as retiree health care. But even there. General Motors is currently $40 billion behind in funding its retiree medical obligations. The federal govermment is behind as well. But I'd still rather take my chances with the feds than with GM.
A couple of other, small points. One of the drawbacks of the New Yorker, as I think I've said before, is that we don't get to provide footnotes. So here, in lieu of that, are a couple of notes from The Risk Pool piece.
I learned an enormous amount from Jennifer Klein's "For All These Rights: Business, Labor, and the Shaping of America's Public-Private Welfare." If you're interested in reading more about the origins of our crazy quilt pension system, I recommend it highly. I was also heavily influenced by Jacob Hacker's work, in particular "The Divided Welfare State." I didn't actually get a chance to mention Hacker in the piece, and I'm sorry about that. But he has a wonderful new book coming out, and I'm hoping to write about it sometime this fall.