The following is adapted from the author's forthcoming paper on the public pensions crisis.
Since the beginning of the Great Recession, policymakers and reporters have spoken of a growing crisis in public pensions. Many state and local governments are struggling to meet their obligations to retirees, and the easiest explanation is that government workers are overpaid and their pensions are unaffordable. But the evidence suggests that the pensions crisis is both less pervasive and more complex than that. Beyond the economic crisis, which put enormous pressure on state and municipal budgets, a range of factors including poor decision-making and the influence of big money interests has led to the underfunding of some state and city public pensions. With a clearer understanding of the problem, we can begin to take steps to solve it and keep our promises to public workers.
Contrary to public perception, pension underfunding is not a widespread issue. There is wide variation in pension performance across states, and underfunding is concentrated in particular states (for example, Illinois and Kentucky) and cities (Chicago and Providence). Where underfunding does occur, it seems to stem largely from the internal problems of those governments, which existed well before the recent economic crisis put additional pressure on their budgets.
There is also little basis for the conclusion that state and local employees are significantly overcompensated. On the contrary, pay is comparable at lower skill levels, and private-sector employees are significantly better paid at higher skill levels. According to Alicia Munnell, Director of the Center for Retirement Research, "Pension and retiree health benefits for state and local workers roughly offset the wage penalty, so that total compensation in the two sectors is roughly comparable." There are surely examples of extreme individual pension obligations that warrant scrutiny, but they do not appear to contribute significantly to the total level of underfunding reported by analysts.
The evidence suggests that pension underfunding is at times associated with choosing an unreasonably high discount rate. The discount rate is the expected rate of return on invested pension funds. A lower discount rate means governments must provision more now in order to meet future liabilities. Politicians tend to prefer a higher discount rate, which reflects a better "expected" yield on assets in the pension fund, since it allows them to justify provisioning less for pensions now. Unfortunately, a higher yield also means more investment risk. If the pension fund loses money, the pension liability does not go away; instead, taxpayers are forced to make up the difference or the government defaults on its obligations. This approach may help to mask the true cost of providing public services, but it is the public financial equivalent of the Hail Mary pass in football: you score a touchdown or you lose.
This may explain why governments are increasingly attracted to investment alternatives that have a record of substantial returns and are not closely correlated with the stock indices. Alternative asset investments (primarily hedge funds, venture capital funds, and private equity) averaged just below a combined 5 percent share of U.S. public pension funds' portfolios between 1984 and 1994, but they averaged nearly a 20 percent share from 2008 to 2011. These more volatile assets may provide substantial benefit, but in times of stress, it is unclear if "reaching for yield" is a prudent strategy or simply reflects desperation. It also raises ethical concerns due to a lack of transparency and the potential for "pay to play" schemes, in which placement agents offer financial incentives, such as campaign contributions, to the people responsible for making decisions about pension fund allocations. This appears to be a system prone to abuse, and significant reforms must be enacted to realign the incentives of pension officials with the incentives of taxpayers and pensioners. This could include immunizing some pension investment boards with financial compensation, requiring disclosure of all outside income, and prohibiting individuals and firms that manage assets for a particular government from making campaign contributions to local representatives.
Even when there is no direct corruption, big money can have a powerful influence over pension funding decisions. It becomes very difficult for the political process to defend the common interest when ambitious politicians are under pressure from concentrated interests. Policymakers may be reluctant to adequately provision for pensions if doing so requires them to raise tax rates on high-income individuals, cut corporate subsidies, or otherwise drive away capital. Just look at the case of Detroit, where restructuring pension obligations is on the table at the same time the state is approving money to build a new hockey arena. This is not antiseptic technocracy at work; this is politics.
Relief could come from reforms in the political systems to lessen big money's influence and empower small donors. To accomplish this, states could establish systems of public campaign financing. Maine, Arizona, and Connecticut already have such systems, as does New York City, and New York State is on the cusp. Though the mechanics differ, all of these systems would change incentives to make candidates responsive to average people, not just big donors. As a result, policy is more likely to be oriented to the public interest.
The pensions crisis has far-reaching implications for the future of the U.S. economy: the state and local government sector is about 14 percent of the American workforce. Failure to uphold the promises we've made to current workers and retirees would create a brain drain in the public sector, drive down private-sector wages, exacerbate inequality, and lead to more economic volatility. The good news appears to be that there are a large number of pension plans that are solvent thanks to prudent management. The real problem rests with the governments of a few states that have historically failed to provision adequately for their pension obligations and are increasingly turning to riskier investment assets. These problems can be solved, but it will require substantial reform and swift and collective action.
Originally published on Next New Deal
iI missed all the fun at State HQ today as the left wing witches and hags protested and got arrested. They look so old and ugly...#wagop— Kirby Wilbur (@KirbyWilbur) November 8, 2013
The hunt for new physics may have to continue for a while longer.
Scientists have found traces of an ultra-rare process to form top quarks, the particles that make up protons and neutrons. And that process seems to operate just as predicted by the Standard Model, the long-standing, yet incomplete, model that describes the subatomic particles that make up the universe.
Though the new results don't rule out other physics theories to explain the existence of dark matter and energy, they do suggest scientists have to look elsewhere for any hint of as-yet unknown physics. [Beyond Higgs: 5 Elusive Particles That May Lurk in the Universe]
Protons and neutrons are made up of tiny particles known as quarks, which come in several "flavors" (up, down, top, bottom, strange and charm). These quarks are bound together by other particles, known as gluons.
In 1995, scientists at the Fermi National Accelerator Laboratory in Batavia, Ill., discovered the top quark, the heaviest subatomic particle known. At 170 times the mass of a proton, it dwarfs even the Higgs boson, which is thought to explain how other particles get their mass, said Gregorio Bernardi, a research director at the University of Paris, and a spokesman for the new experiments.
The Standard Model, in turn, predicts several ways that one of these hefty top quarks could be produced. Scientists had found evidence for all of these processes, but one remained.
The one that remained was a "quite rare process, which at the same time you have this annihilation of a quark and an anti-quark," Bernardi told Live Science, referring to the annihilation that occurs whenever matter and antimatter come into contact.
For just the briefest flicker of time, this annihilation creates a w-boson, the particle that mediates the so-called weak interaction force. The w-boson rapidly decays, creating a top and bottom quark. Those two then decay into a shower of particles, as well as an electron or a muon and a neutrino, a ghostly particle that rarely interacts with matter, said Luciano Ristori, a physicist at the Istituto Nazionale di Fisica Nucleare in Italy, and a spokeman for one of the experiments. [Wacky Physics: The 6 Coolest Little Particles in Nature]
But the w-boson is much lighter than the top quark, so in order to get the w-boson to decay into a much heavier particle, the process required an incredible amount of energy, making it quite rare.
To find traces of this process, researchers combed through 500 trillion proton-antiproton collisions from two experiments conducted at the Tevatron at Fermilab from 2001 to 2011. (The Tevatron closed in 2011.) From this, they found evidence for 40 interactions where a top quark was formed from the weak interaction force.
The two experiments smashed a beam of protons and anti-protons into one another, producing a soup of other particles. Because top quarks vanish so quickly, scientists detected their presence based on a shower of other particles as they traveled through heavy iron, lead or uranium detectors, as well as changes in an electromagnetic field as the electron or muons travel through a charged gas. Though neutrinos weren't detected directly, they can be traced by the missing energy in the interaction, Ristori said.
Based on the frequency at which these events were detected, the new analysis confirms the Standard Model's prediction about how top quarks should behave, Ristori said.
"The chance is less than one in a million that what we saw was just a lucky combination of some coincidences," Ristori told Live Science.
Though it was hardly unexpected, the findings are yet another reminder that scientists are still in the dark when it comes to physics beyond the Standard Model. The Standard model cannot account for astronomical dark matter and energy observations.
"The big mystery at this point in physics is dark matter and dark energy and we have to find a way to explain that. And we have nothing yet," Ristori said.
Throughout the history of time and space,
There's been just one species that can't be replaced.
Yes, we are talking about our hooved bros,
The billies, the bucks, the nannies and does.
Those furry, horned wonders
That get into of blunders,
The gallant buck-aneers that we love so dear.
That bovinae family's all grazing right here!
Our favorite animals have gathered en masse,
And if you don't like them, go chew on some grass.
So come on kids, let's ruminate on goats, goats and more goats, because... well, you deserve it. Okay, deep breath. Here we goat!
They are human... We swear...
See for yourself.
And for good measure, a chicken dressed up as a goat sounding like a chicken. Just kid-ing. It's a goat.
Goats on a metal sheet won an Internet gold medal.
Caprine on swine.
On a tortoise.
On a tree.
On a trampoline.
On grass. So doe-p.
On a guy doing this.
Taylor Swift knows it.
This bleatboxing goat knows it too.
And when a goat wins an Oscar, they thank God in their acceptance speech.
Last but not least is the Internet's greatest gift to man -- The goat simulator, developed by Coffee Stain Studios. That's right, you can pre-order the game for just $9.99. And trust us, it will be worth every cent. Here is the trailer:
Now go close your creepy horizontal eyes, and dream about goats...
Please do not mind that my eyebrows look different (ones falling out more than the other) but hello !!! SELFIE :)) pic.twitter.com/mScE0NV3kU— emma (@thebasedjew) February 13, 2014
my mom has her 4th and FINAL chemo treatment on monday. lets pray that the cancer will be all gone. pic.twitter.com/ZhhsJvUcGl— josh.⛄️ (@joshfrankstein) January 19, 2014
Heyooo selfie bc I'm basic and pretty much done with my first round of chemo. HOLLAA pic.twitter.com/YTqgCe0SBc— Abby Frye ☮☯ (@ayfrye) February 5, 2014