He was a master of fear mongering and intimidation, skills that enabled him to silence those who knew him to be wrong but who were afraid of ending up on the wrong side of the infamous Joe McCarthy. Finally, at a publicly televised hearing in 1954, a soft spoken attorney by the name of Joseph Welch said, “Senator, you’ve done enough. Have you no sense of decency, sir? At long last, have you left no sense of decency?” That was the beginning of the end of McCarthyism in that era.
Now fast forward 50- plus years and we find ourselves facing another version of McCarthyism. This time the targets are public employee retirement systems, public employee unions and anyone who speaks up in defense of either. Outrageous examples are cited as if they are typical. The fact is that they are not typical but they have been repeated with such regularity that it is understandable that the masses would think them to be commonplace. Are there problems? Absolutely! Are the problems exceptions to the rule? Absolutely! Are the problems that exist being addressed? Absolutely! Is it likely that you will hear or read about either of the last two points? Absolutely not! (Grade school geography students who get their information from media reports on public pensions will soon be drawing maps of the United States consisting only of California, Illinois, and New Jersey.)
So what is the motivation behind public pension McCarthyism? Actually there are a number of factors at play, some of which are interconnected and some of which are independent of each other. Regardless, by creating false impressions, it has been a very effective blame deflector. In the movie “Charlie Wilson’s War,” the fact that the congressman was accused of scandalous behavior was not seen as a problem but rather as an effective diversion – a CIA operative observed that, “As long as the press sees sex and drugs behind the left hand, you can park a battle carrier behind the right hand and no one’s gonna notice.” Public pensions and unions have become the media sex and drugs du jour and the battle carrier is the fact that we have no national retirement income security policy. (At least not having a national energy policy gets lip service but the silence on a realistic long-term retirement income security policy is deafening.)
Short-termism and greed seem to be key drivers behind the reluctance to address the important long-term policy considerations. If you can cut personnel costs today, you can increase the next quarterly earnings report – getting rid of public sector defined benefit plans will take pressure off of corporations to think longer term. In the public sector, policy maker term-limits are also taking a toll on long-term planning. On both the private and public sides, interests are aligned with short term achievements.
The greed factor should not be discounted either – the simple hint that a defined contribution approach may be considered will result in an onslaught of service providers who are more than willing to help pave the way. Could that be because there are fortunes to be made in transitions from defined benefit plans to defined contribution plans? In the extreme short term, it seems that parties who are interested in decimating public sector defined benefit plans are more than willing to pay for so-called independent academic studies that, for the most part, reach the same shortsighted and flawed conclusion regarding public sector defined benefit plans. The current full-court press against defined benefit plans is seemingly, at least in part, attributable to the fear of the defined benefit plan opponents that if they don’t kill defined benefit plans soon they will recover from the “great recession” making it just that much more difficult to do them in.
Surveys across a broad range of generations of participants in individual account defined contribution plans are, for the most part, reaching similar conclusions. Participants in those plans do not believe they will have adequate financial resources to sustain them during their post-retirement lives. Moreover, if history is any indicator, they probably are underestimating their needs. If the trends continue, the predictable outcome from the course we are on will be a welfare state of unprecedented proportions. Of course, those responsible for leading us in that direction will probably not be around to be faced with cleaning up the mess.
It has been suggested that one way to downsize government is to make it sufficiently unattractive to workers that they will not be inclined to pursue a public service occupation. The irony in this is that the best way to downsize while sustaining or improving productivity is to attract and RETAIN a highly skilled and motivated workforce. Why are we not pursuing personnel and compensation policies that will facilitate that rather than move in lock-step with corporations in a race to the bottom? (The term “corporations” is used here to reference rank and file employees – executives typically have additional perks to prop up any shortfalls that might result from a market calamity that would reduce their defined contribution plan account balances.)
If Mr. Welch were alive today, I suspect he might again question the decency of what is happening.
- Gary Findlay, Executive Director, Missouri State Employees’ Retirement System (MOSERS).
Mr. Findlay is executive director of the Missouri State Employees' Retirement System (MOSERS), a position he has held since 1994. Prior to that, he spent 16 years as an administration and benefit consultant with Gabriel, Roeder, Smith & Company, a national actuarial and benefits consulting firm that specializes in serving the needs of public employee benefit plans. He was CEO of that firm from 1986 until he joined MOSERS.
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