The government should simply be a neutral referee that enforces contracts and upholds the rule of law.
Similarly, I also don’t have any philosophical objection to employers and employees agreeing to “defined benefit” pension plans, which basically promise workers a pre-determined amount of money after they retire based on factors such as average pay and years in the workforce.
After all, my money and property aren’t involved, so it’s not my business.
That being said, these so-called “DB plans” have a bad habit of going bankrupt. And that means the rest of us may get stuck with the bill if there’s a taxpayer bailout.
I discuss these issues in an interview with Fox Business News.
My main point is that there’s a deep hole in many of these plans, so someone is going to feel some pain.
I don’t want taxpayers to be hit, and I also don’t think well-managed pensions should be gouged with ever-rising premiums simply because other plans are faltering.
But I bet both will suffer, as will workers and retirees in the under-funded plans.
As part of the interview, I also warned that other “DB plans” are ticking time bombs. More specifically, most pensions for state and local bureaucrats involve (overly generous) pre-determined commitments and very rarely have governments set aside the amount of money needed to fund those promises.
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