The Economics and Politics of Private Pensions
- Honorable Mention, Business, Management & Accounting category, 1992 Professional/Scholarly Publishing Annual Awards Competition presented by the Association of American Publishers, Inc.
228 pp., 6 x 9 in,
- Published: January 1, 2003
- Published: June 3, 1992
This examination of the 120-year-old American system of privatized social insurance reveals that the system fails to provide adequate retirement income security, its most prominent goal, and, in fact, its greatest influence is in supplying funds to U.S. capital markets.
Why are pension funds so large and benefits so small? This examination of the 120-year-old American system of privatized social insurance - often called, at 1.7 trillion dollars, the biggest lump of money in the world - reveals that the system fails to provide adequate retirement income security, its most prominent goal, and, in fact, its greatest influence is in supplying funds to U.S. capital markets.Linking market forces, historical movements, and social norms in the evolution of pensions, Ghilarducci's study is the first to focus on all major aspects of the system. Its trenchant analysis of the many sides of pensions and pension policy addresses questions of whom the system benefits, its direct and social costs, and the possibilities of reforms that would take into account the related problems of capital formation and retirement income. Ghilarducci describes the history of pension funds and the involvement of unions in bargaining. She takes up the "moral hazard" involved in the conflicting interests of corporations and their employees, tackling issues of information availability and inequality of pension distribution based on sex, race, and job hierarchy. And in two chapters, each focusing on corporate and union uses of pension funds, she covers such topics as tax breaks, the effect of corporate takeovers, the use of pensions to pay back debt, and the kinds of skimming that can occur despite government regulation of pension activities. Ghilarducci concludes by presenting an ideal pension plan that would benefit both employer and employee and by offering predictions about pension plans of the future.
Labor's Capital is an interesting and sophisticated book about one of the most explosive issues facing the U.S in the 1990s. No work on pensions in the last twenty years has covered so well the labor market and financial aspects of pensions. The practitioner and policymaker, as well as the scholar, will now be able to understand how pensions are being used by fiinanciers to reshape the economy and how millions of workers are being cheated out of their hard-earned, promised pensions.
Professor Clair Brown, University of Californuia, Berkley
A path-breaking and simultaneously definitive study of an important aspect of the evolutionary development of American capitalism—of how private pension distribute both income and power.
Labor's Capital develops an institutional analysis of the U.S. private pension system which takes existing analysis beyond the market for individual exchanges. The aging of America does not allow us the luxery of a private pension system built on hidden interest, misguided priorities and gimmicks. The sharp, wide-angle focus of Labor's Capiral encompasses the historical, political and economic forces which have shaped the current union and cooperate pension plans and logged them within a larger system of economic growth and social insecurity. Ghilarducci is a must read for thosoe who want to know how we got into the pension mess and how me might get out of it.
Peter Phillips, Labor Economist and Economic Historian, University of Utah
Labor's Capital is an indictment of America's system of private pensions for workers. While some economists characterize pensions as 'optimal long-term contrats,' Teresa Ghilarducci shows that in practice many pension plans are discriminatory, regressive, poorly understood by their suppposed beneficiaries and wide open to manipulation, including termination, by their corporate sponsors. In describing this reality, Ghilarducci has illuminated a neglected, abused and indeed scandalous corner of American working life.
James K. Galbraith, Professor