Economics: It's Already Happening

TORONTO, ONTARIO - In general, I try to not to make points on this blog that appear elsewhere, usually with more supporting data and better writing. After all, this blog is called "Way Out In The Margin," not "The Main Story," and while I style myself as a generalist, I could never claim to be in the mainstream in any way.

Yet, occasionally, I think that not only the mainstream media, but even the blogosphere misses some really obvious points. Today, the left-wing-pretending-to-be-centrist NPR talk show On Point, produced at WBUR-Boston, ran an hour on pension envy. This phenomenon, not limited to the United States, has caused private-sector workers to become resentful of public-sector workers that may have a relatively-secure retirement because they will have a pension, whereas the private-sector workers have to rely on their own contributions to tax-advantaged accounts to get them through.

This show, as well as a number of commentaries I've seen on the same topic, seems to miss the most important point. They point out that public-sector compensation hasn't significantly changed in real-dollar terms (in fact, including benefits it has declined by some measures). It's private-sector compensation, in real-dollar terms, that has declined to the point that it has fallen well behind the public sector. In other words, the standard of living in the United States is already falling.

For years, we've been hearing that the standard of living in the United States was going to decline if citizens didn't personally save more money and the Federal government didn't get its deficit under control. Sorry folks, but it's already happening. It's become so normalized that people just accept that it is a given, and get upset at those it's not happening to--a subset of public-sector workers.

Of course, technically speaking, I am incorrect. Because the cost of living has declined, most actual measures of standard of living have not actually declined yet. Furthermore, the real difference will not be seen until the Baby Boomers--many of whom no longer have pensions--actually retire and have significantly less income than the generation before them. Then, it's going to be really obvious that a lot of elderly people will not be able to maintain the standard of living that they had while working.

Interestingly, in today's On Point show, the social security system was barely mentioned the entire hour. It says something about how far the debate has moved that not only is it accepted that private-sector jobs don't provide for retirement, but it's completely off the table to suggest using social security to do anything about the issue--instead, people assume that social security will decline or even go bankrupt. Social security was intended to be the main retirement pillar for everyone, or at least one leg of a three-legged stool with pensions and personal retirement accounts. Nobody talks about that stool structure anymore, either.

While I don't like writing about obvious things, I also don't like writing about things without offering a solution. In the case of retirement, I don't see any--all the potential solutions to this issue, like changing social security, are political suicide. The capitalists have already won, the workers have lost, and the workers have only themselves to blame for accepting the new reality.