It's been sad to watch the recent UAW-GM talks and strike; apparently, what kicked off the strike was the UAW's refusal to discuss the possibility of reducing medical benefits for retirees. Now, for starters, I think the UAW would have done well to talk to retired steelworkers about what happens when their former employers go bankrupt; that medical plan, and a lot of their pension, is gone after Chapter 13 reorganization. The choice is not "if" they will get reduced benefits, but rather "when" they will. Honda, Toyota, and others will see to that.
At a deeper level, this debacle speaks to the inherent insolvency of any pension plan. Yes, insolvency, and here's why; actuaries are hard pressed to predict future trends at all, and pension plans face a further difficulty because the very existence of any pension changes behavior.
In other words, the very existence of a retiree pension or medical plan invalidates the assumptions that were used to create it. If you want a reason to end Social Security, Medicare, and pensions, this is it. That, and the fact that the Bible tells us not to presume upon the future.
How to Fight Multiple Assailants - Editor’s note: This is a guest post from Dylan Edmiston. So you’ve been training to be a better fighter. Maybe you take classes or maybe you’ve read AoM’s ...
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