Yale, via Nathan Newman:
>Hmm...the Teamsters fought a strike with UPS partially over the issue of
>controlling capital with the possibility of expanding payments beyond
>defined benefits. UPS argued that since the stock market was doing well and
>could deliver the defined benefits promised, they had no need to keep
>contributing beyond that point.
The pension issue at UPS was that the company wanted to withdraw from the 20 or so Teamsters-sponsored multiemployer plans it contributes to and bring its union employees into its own plan . Both the Teamsters plans and the UPS plan are defined benefit, so that wasn't an issue. Nor was halting contributions on account of stock market gains (though that's come up at other companies more recently). Rather, UPS claimed that because of the younger average age of its workforce, it was subsidizing retirees from other companies in the Teamsters plans. This may in fact have been the case--and one of the heartening things about the UPS strike was the union's staunch opposition to UPS leaving the multiemployer plans, even though the main losers would probably have been Teamsters at other, smaller companies.
>Now, a Teamster-controlled pension fund does spread the risk and there are
>definite progressive advantages to risk spreading, but don't confuse that
>with defined benefits.
Sure, but don't confuse defined contribution with stock market gains going to workers. Union-sponsored defined-benefit plans raise benefits if their investments perform better than expected. Until recently, the same was true of corporate plans (it still is of some)--and then you had the cognate problem of beneficiaries bearing the investment risk, as with all those underfunded plans in the steel industry.
I think the knee-jerk response that defined contribution plans are better for working people than defined benefit plans is usually the right one.
These aren't just quibbles. It seems that what's at stake here--as in our last exchange--is the prospects for financial democracy in the absence of the genuine article. You think they're promising (I'm also thinking of your suggestion that Milton Friedman's nightmare of Social Security socialism might come true). I don't.
Josh