America’s Urban Distress: Why the Public Pension Problem Is Worse than You Think | Zero Hedge.
The linked article is typical of two things. Firstly why I had to smile when, on my recent tour of their country, American Conservatives told me their country was turning "socialist." And secondly why that's unlikely ever to happen.
As I understand it, the equivalent shortfall in the UK is near-total. There are no pension funds for most state employees (though the teachers do have one - massively underfunded, of course). No money has been invested to provide for the future pensions of most state employees, any more than it has for future state pensions for the rest of us. It's a pure Ponzi scheme. As Nye Bevan said in a rare burst of humour and honesty;
The great secret about the National Insurance fund is that there ain't no fund
Yes, America's pubic authorities have under-funded their employees' pensions, but ours have not funded them at all. They have simply expected from the outset to take the necessary money by force from future taxpayers. After all, what honest return in investment could possibly compete with the infinite return on money taken by violence at merely administrative cost? Our rulers have disregarded the Jeffersonian wisdom that has restrained American public spending for most of its history;
I place economy among the first and most important of republican virtues, and public debt as the greatest of the dangers to be feared.
Hence the last Labour government's panic-stricken importation of millions of immigrants to make up for the declining birth-rate of the underpaid and over-taxed locals who have economised in the face of rising overt taxation and the relentless covert taxation of inflation by cutting back on the size of their familes. Hence also, perhaps, the oddly perverse incentives to breed - regardless of ability to pay for the resulting childrens' upbringing. A Ponzi scheme backed by violent force can last longer than a private sector version, of course, but it can still be brought down prematurely by demographics.
So why does the story suggest it's unlikely that socialism will ever arrive in the US of A? Because of the writer's delightfully thoughtless assumption that future obligations should be funded. Of course there are economic idiots everywhere (and dishonest self-serving rascals too) but there are fewer people in the US prepared to dispute Adam Smith's truism that;
What is prudence in the conduct of every private family can scarce be folly in that of a great kingdom
America's free speech is constitutionally entrenched - as witness the delightful puzzlement of American tech companies such as Google and Twitter when European authoritarians demand they censor their services. The media (particularly local media) routinely use their freedom to challenge particular line items of public spending, even if lax in holding politicians to account for the overall ballooning of the American state and its various extortions.
Again, their failings pall into insignificance compared to ours. Here, a multi-billion pound hole in the Ministry of Defence's budget didn't even pass the Alistair Campbell "crisis management" test of remaining in the headlines for more than ten days. The public sector incompetents who lost billions down the backs of their ministry's sofas faced - as far as we know - no consequences at all. This, though whole cities of taxpayers will have to work for years to meet the shortfall.
I am optimistic enough to believe that America's good sense will one day benefit us too. The statist tide is turning there, as was clear from my conversations with many people on my tour. In recent press reports I have even read the words "libertarian populism" - a phrase as unexpected and delightful to me as was "the fall of communism" two decades ago. If the state can be scaled down in the United States and the resulting economic benefits compared and contrasted with the moribundity elsewhere, that will arm lovers of freedom everywhere.