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While America Aged: How Pension Debts Ruined General Motors, Stopped the NYC Subways, Bankrupted San Diego, and Loom as the Next Financial Crisis |  | Author: Roger Lowenstein
Publisher: Penguin Press HC, The
Category: Book
List Price: $25.95
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Seller: Savannah Goodwill
Rating:  26 reviews
Sales Rank: 242840
Media: Hardcover
Pages: 288
Number Of Items: 1
Shipping Weight (lbs): 1.1
Dimensions (in): 9.3 x 6.1 x 1.1
ISBN: 1594201676
Dewey Decimal Number: 331.25240973
EAN: 9781594201677
ASIN: 1594201676
Publication Date: May 1, 2008
Availability: Usually ships in 1-2 business days
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| • | ISBN13: 9781594201677 | | • | Condition: NEW | | • | Notes: Brand New from Publisher. No Remainder Mark. |
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Product Description
From the bestselling author of Buffett, When Genius Failed, and Origins of the Crash, a wake-up call to the pension and retirement crisis facing America and the road map for a way out
In While America Aged, bestselling author Roger Lowenstein explains how corporations and governments ran up ruinous pension and health-care promises to workerspromises that are now coming due and that will hit America like a tsunami if nothing is done.
Negotiating high benefits means gambling with future financesand when the farm gets sold out from underneath major corporations or public institutions, it affects all of us, and in ways we might not imagine. With his trademark narrative panache, Lowenstein unravels the truth about how pensions work in America and illuminates the impending crisis. While America Aged is comprised of three fascinating case studies each an object lesson and a compelling historical saga. The first goes back to the early days of the United Auto Workers and its crusading leader, Walter Reuther, to tell the story of how pensions and health-care obligations destroyed the American auto industry, in particular General Motors.
Lowenstein then shifts the scene to New York City to tell the story of the rise of public pensions and public sector unions through the vehicle of the Communist-led Transport Workers Union. Once again, justifiable benefits were followed by outrageous ones, such as the right to retire at age fifty. The saga reached a dramatic climax in 2005, when workers responded to proposed pension cutbacks with a massive strike that brought New Yorks subways and buses to a screeching halt days before Christmas.
In the concluding episode, Lowenstein visits a metropolis even more reckless in doling out benefitsSan Diego. Desperate not to impose higher taxes, city officials in this highly conservative enclave cut a series of deals with unions to short-change the retirement system and use pension funds to run the city. A massive scandal ensuedtwo mayors resigned, officials were indicted, and San Diego lost its bond rating. Lowenstein warns that the pension wars that erupted in Detroit, New York City, and San Diego are only the first. But he also recognizes that workers are entitled to decent security in their retirementa critical problem as the country ages. While America Aged explains how we came to this crisis, and it also proposes a way out. Arming readers with knowledge of the consequences of doing nothing, While America Aged, first and foremost, a call to action.
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| Customer Reviews:
Showing reviews 1-5 of 26
 Book Review from the Aleph Blog January 23, 2010
David Merkel (Ellicott City, MD United States)
Where were you while America aged? ;) I've been following the issues in this book written by Roger Lowenstein for over 20 years. As an actuary (but not a pension actuary) and a financial analyst, I have written about the issues involved since 1992.
Roger Lowenstein motivates the issues surrounding pensions by telling three stories, those of General Motors, the New York City Subway, and the City of San Diego. He captures the essence of why we have pension problems in a way that anyone can appreciate. I sum it up this way: promises today, payments far in the future. Get through the present difficulty, at the price of mortgaging the future.
If you repeat that recipe often enough, you get into a tough spot, as GM is in today. Give GM credit though, a lesser firm would have declared bankruptcy long before now, and shed its pension liabilities to the Pension Benefit Guaranty Corporation [PBGC].
Given the softness of funding requirements for pension liabilities, the easy road for corporations and municipalities has been to skimp on funding pensions, leaving a bigger problem for others to solve 10+ years later. As for municipalities, review my recent post here.
Now, why didn't the US Government insist on stricter funding standards for pension plans? Because of pushback from corporations and municipalities. The US Government hoped that their funding methods for corporations would encourage the creation of pension plans, and that corporations would be good corporate citizens, and not play it to the edge.
As for municipalities, which are not subject to ERISA, as corporations are, the government assumed that they would act in their best long-term interests. Alas, but governments are run by men, not angels.
I found each of the three stories in the book to be interesting and instructive. They are tales of people aiming at short-term results, while letting the future suffer. In the case of the NYC Subways, the plan sponsors finally fought back. With GM, they accomodated until they were nearly dead. With San Diego, they compromised until it cost them their bond rating, and many people involved got sent to jail.
As any good author would, the book offers a few solutions at the end, but it recognizes as I do, that we are pretty late in this game -- there are no "good" solutions. There are solutions that may aid future generations. An example is making municipalities subject to the funding requirements of ERISA. I agree, and add that we should apply that to Federal DB [defined benefit] plans, and Social Security too. This could be our own Sovereign wealth fund, investing overseas for the good of US retirees. (What, there is no money available to do that? What a shock.)
I would also add that the funding requirements specified in ERISA are weak. The standards for life insurance reserving are stronger. The weak standards were there to encourage the creation of DB plans. Well, you can encourage creation, but maintenance is another thing.
A certain level of overfunding is need in good times, hopefully, with discipline not to increase benefits. That overfunding is hard to achieve, because the IRS discouraged overfunding above a certain level, because it did not want companies to shelter income from taxation by contributing to the DB pension plans.
Now, I have also reviewed the book Pension Dumping. Which one is better? For the average reader, While America Aged motivates the topic better, but if you want to dig into some of the deeper issues, Pension Dumping does more.
 Good history, thin conclusions January 11, 2010
Robert L. Kennedy (NH, United States)
Lowenstein has done good job of telling the history of pensions & other retirement benefits at these 3 institutions. Very readable and (mostly) very credible research. He falls flat, in my opinion, in the final chapters when he attempts to recommend solutions. He more or less suggests that little can be done to change the current dynamics. While I don't trust him to necessarily offer any practical solutions, I think the book would have been better if he had not even tried to offer any solutions.
A good primer on our next financial crises (if it's not already here) September 23, 2009
Elizabeth Lemesevski
I enjoyed this thought provoking book very much and agree with the author that pensions loom as the next financial crisis. In particular the promises made to government employees are not going to be easily fulfilled. Just from this paragraph on page 85 I understood the crux of the issue -"As early as 1939, pension benefits had been guaranteed by the New York State Constitution - which was interprested to mean that any benefit granted to an employee at any time during his employ was forever guaranteed. Other states subsequently matched this provision."
I live in San Diego which is the focus of the last two major chapters of the book. Mr. Lowenstein helped me fit the pieces of the puzzles together that I had not been aware of before. Now I know why our city is broke.
The writer really does have a gift for making a complex financial situation fairly easy to understand and for that I highly recommend this book. I only wish that he spent more than 11 pages on "The Way Out". But, I guess that's up to us to figure out.
This is going to be another shoe to drop August 14, 2009
Mariusz Skonieczny (ClassicValueInvestors . com)
Social Security is in trouble, and now even pensions present a huge problem for the country, corporations and retirees. It is so upsetting. People relied on the government and employers to provide security, but these entrusted entities are failing miserably. I am not sure when people will finally realize that no one cares about their financial future. When will they learn that they need to take care of it on their own? Maybe never.
In this book, the author presents the problems that pensions are facing. Pensions are like credit cards - let's accrue the labor expense and pay for it 20 years later. Governments and corporations promised to provide retirement income and health care for employees. Unfortunately, they did not set aside enough money to meet this obligation. No surprise here.
Now that people are living longer, and corporations are not as competitive in the global economy, the pension promises are a huge problem because we will have to face it in the future, and this might be the cause of the next financial crisis. Pensions are future wages that have to be paid to current employees. But if companies such as GM cannot even make a profit, how are they going to pay for it?
This is an important subject, and I believe that people should get educated about it.
- Mariusz Skonieczny, author of Why Are We So Clueless about the Stock Market? Learn how to invest your money, how to pick stocks, and how to make money in the stock market
Well Written, but "The Way Out" remains unclear June 2, 2009
libertarian reader (Tucson, AZ)
a well written book like his previous offerings. however Mr Lowenstein's politics of
entitlement for the American worker seem out of step with the economic realities
he discussed in the previous chapters prior to conclusion.
I concluded from reading this book that pensions are not bona fide guarantees
in a free market capitalist society.
Showing reviews 1-5 of 26
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