Mornings with Meep: Two Pension Stories and Skin in the Game
by meep
Here’s this week’s morning with meep:
Enjoy! Sorry about the seconds where it cuts out— this is my hobby, so when my software bobbles, I’m not going to spend time re-shooting, editing video, etc.
If the above doesn’t work for you, here’s a direct link to the video on Youtube.
LINKS MENTIONED IN THE VIDEO
First, the New York Times piece: A $76,000 Monthly Pension:Why States and Cities Are Short on Cash
I’ll give you the beginning:
A public university president in Oregon gives new meaning to the idea of a pensioner.
Joseph Robertson, an eye surgeon who retired as head of the Oregon Health & Science University last fall, receives the state’s largest government pension.
It is $76,111.
Per month.
That is considerably more than the average Oregon family earns in a year.
Oregon — like many other states and cities, including New Jersey, Kentucky and Connecticut — is caught in a fiscal squeeze of its own making. Its economy is growing, but the cost of its state-run pension system is growing faster. More government workers are retiring, including more than 2,000, like Dr. Robertson, who get pensions exceeding $100,000 a year.
The state is not the most profligate pension payer in America, but its spiraling costs are notable in part because Oregon enjoys a reputation for fiscal discipline. Its experience shows how faulty financial decisions by states can eventually swamp local communities.
Oregon’s costs are inflated by the way in which it calculates pension benefits for public employees. Some of the pensions include income that employees earned on the side. Other retirees benefit from long-ago stock market rallies that inflated the current value of their payouts.
…..The first way was similar to what most states do, basing pensions on each worker’s final salary and years of service. But Oregon’s lawmakers included a golden touch, redefining “salary” to include remuneration from any source.
That was how Mr. Bellotti, the former football coach, came to be the state’s third-highest-paid pensioner, at roughly $559,000 a year.
Read the whole thing.
A short excerpt:
You’d be mistaken to think Harvey, Illinois has a unique pension crisis. It may be the first, and its problems may be the most severe, but the reality is the mess is everywhere, from East St. Louis to Rockford and from Quincy to Danville. A review of Illinois Department of Insurance pension data shows that Harvey could be just the start of a flood of garnishments across the state (click here to see the list).
Harvey made the news last year when an Illinois court ordered the municipality to hike its property taxes to properly fund the Harvey firefighter pension fund, which is just 22 percent funded.
Now, the state has stepped in on behalf of Harvey’s police pension fund. The state comptroller has begun garnishing the city’s tax revenues to make up what the municipality failed to contribute. In response, the city has announced that 40 public safety employees will be laid off.
….
Two-thirds of Illinois’ 355 police pension funds failed to receive their full required contribution in 2016. And 60 percent of Illinois’ 296 firefighter pension funds suffered the same fate.
And one table:
Finally, Taleb’s book: Skin in the Game: Hidden Asymmetries in Daily Life
Some bits I highlighted from “Book 1: Introduction”:
[page 9] …complex systems do not have obvious one-dimensional cause-and-effect mechanisms, and that under opacity, you do not mess with such a system.
[page 10] The principle of intervention, like that of healers, is first do no harm (primum non nocere); even more, we will argue, those who don’t take risks should never be involved in making decisions.
[page 13] …government interference in general tends to remove skin in the game.
[page 14] The same mechanism of transferring risk also impedes learning.
[page 14] You will never fully convince someone that he is wrong; only reality can.
[page 20] …the gravest threat is the slippery slope in the attempts to limit speech on grounds that some of it may hurt some people’s feelings.
[page 23]: Avoid taking advice from someone who gives advice for a living, unless there is a penalty for their advice.
[page 23] …fools of randomness are purged by reality so they stop harming others.
[page 25] … time removes the fragile and keeps the robust
[page 27] Using mathematics when it’s not needed is not science by scientism.
[page 31] Many kids would learn to love mathematics if they had some investment in it, and, more crucially, they would build an instinct to spot its misapplications.
[page 32] Common law is about the spirit while regulation, owing to its rigidity, is all about the letter.
[page 38] For studying courage in textbooks doesn’t make you any more courageous than eating cow meat makes you bovine.
As I said, he’s very quotable.
LAST WEEK’S POSTS
Last week’s posts:
- Memory Monday: Flu Season Ain’t Over Yet and First Week of April 1918
- Taxing Tuesday: New York Tries Its “Fix”, Married Couple Base Scenario for Tax Calculator
- Divestment and Activist Investing Follies: Hey, No Fair! Climate Change, Guns, Knives, and Consequences
- Illinois Pension Round-Up: Trouble in Harvey, Small Proposal That Won’t Fix Anything, and No Details from a Politician
- Around the Pension-o-Sphere: Mostly Kentucky, Some California, and Pew Rains on the Parade
See y’all next week!
Related Posts
Public Pensions Watch: Choices Have Consequences
Divestment and Activist Investing Follies: Shooting Yourself in the Foot?
Which Public Pension Funds Have the Highest Holdings of Alternative Assets? Has It Paid Off?
