Pension funds can be an answer to Occupy’s call
By Emma Mann-Meginniss, The Daily Californian
One of the central criticisms to the Occupy movement — both from supporters and dissenters — has been its lack of a plan, a focus — of something other than occupying. People have come out in droves all over the country, from Wall Street in New York City to Huntington, W. Va., to University of California campuses across the state. Sometimes they’ve been organized — creating libraries of over 5,000 books, for example, or winterizing their tents in Boston. Other times they’ve come together in some organic way without as much long-term planning — more-fly-by-the-seat-of-their-pants, so to speak.
But even in the most organized movements, the plan is simple and macro-level: speak. Be heard. Tell the country, the world, that the status quo is not acceptable — that the 1 percent cannot continue to live the way they do at the expense of the 99 percent.
There is nothing wrong with this plan. In fact, free speech, and collective free speech, are hallmarks of American society. Yet the lack of detailed, step-by-step strategies, long- and short-term goals and concrete plans of action threaten the longevity of the movement and the power of the message. Without new ideas, how do we know when we’re on the right track? Without a change, how do we know that we’ve achieved anything at all?
Occupy raises questions but, perhaps intentionally, doesn’t provide all the answers. One phenomenon that could provide an answer, or part of an answer, to Occupy’s call is the one raised in New York state.
According to recent reports in the New York Times and San Francisco Chronicle, New York Governor Andrew Cuomo, among others, is considering using public employee and union pension funds to invest in infrastructure projects, such as rebuilding New York’s Tappan Zee Bridge. In essence, Governor Cuomo’s plan calls for pension funds to invest in infrastructure, like roads and bridges, in exchange for certain incentives, like a percentage of future tolls, to make the investment worth the funds’ while.
The advantages of this investment strategy are many. First and foremost, building infrastructure creates jobs. And it creates them now. A new bridge project like the one Governor Cuomo has proposed would create thousands of new construction jobs, from creating the pieces to build the bridge to putting the bridge together to managing the construction project as a whole. These “nontradable” jobs won’t go overseas and won’t benefit foreign governments.
Instead, they will create opportunities for Americans who have been out of work for months or years, they will jump-start the U.S. economy and they will provide much-needed infrastructure across the country without tapping into the Wall Street model that has been ruining our economy for the last three years.
And this job creation would have a geometric impact: Creating more jobs means more money, and more money means more consumption. Consumption puts money in the pockets of store and restaurant owners and employees and their families. They, in turn, consume goods and services in the economy. And voila — other businesses create jobs.
Second, this proposal has the added benefit of redirecting financing, and the accompanying profits, from big banks to public employees — in other words, members of the 99 percent rather than the 1 percent. The recent 18.8-mile intercounty connector highway built in Maryland cost the state $2.56 billion in debt financing. Instead of issuing bonds to finance these kinds of projects, states and municipalities could look to pension funds for financing. With budget crises ongoing in states across the country and municipalities and state capitals like Harrisburg, Pa., threatening or declaring bankruptcy, the solution is not to cut back on infrastructure financing but to find a new, alternative source of funding.
Now, public employees’ pensions are demonized by many as costing taxpayers precious dollars while creating plush retirement benefits for only a few — the roughly 13 million public employees who participate in these plans. Though historically fixed-benefit pension funds existed in both the public and private sectors, they have all but disappeared in the private sector.
For public employees, the pension fund is a benefit now virtually unmatched by any other: It guarantees a fixed-sum payout upon retirement until the person dies.
However, this benefit comes with high administration costs that threaten states’ budgets. In 2010, California estimated that its pension fund liabilities would outweigh its state tax revenues fivefold within two years.
Yet the answer to these state budget problems, and to concerns about saving taxpayer dollars, is not to cut benefits — taking money out of the economy won’t make it grow. Instead, we should use these funds to create more jobs, more benefits for our workers and a stronger economy. We should use these funds to change our financial system in a way that benefits us all. We should use these funds to wean ourselves, and our economy, off the 1 percent.