On Mar 30, 2010, at 10:45 AM, Max Sawicky wrote:
> Pension benefits are future obligations, no less than bonds. My pet
> peeve about this is that indebtedness is counted as the present value,
> or maybe just the total amount of future payments in one big scary
> number, whereas the proper perspective is commitments, year by year,
> compared to a state's ability to meet them, say its yearly GDP or tax
> revenue.
The whole strategy of doing a present value analysis of pension obligations makes no sense to me, except as a scaremongering tactic. Governments are for these purposes immortal, and have tremendous power to tax, and all that matters is their ability to cover next year's obligations with next year's revenues, ad infinitum. Is there any rational economic reason for this sort of analysis except to promote an austerity program?
Doug