Forbes on FOX: "Help All American Workers: Scrap All Pensions!"
Reported by Marie Therese - January 17, 2006
On January 14th's edition of Forbes on FOX, the usual gang of Forbes magazine know-it-alls debated the future demise of the American pension system. While FOX News splashed the words "HELP ALL AMERICAN WORKERS: SCRAP ALL PENSIONS!" across the bottom third of its screen, not everyone on the panel was convinced of this. However, by the end of the segment it was clear that ALL of them believe the pension system as we know it is on its last legs.
ASMAN: Scrap all pensions. That's the best thing you can do for all American workers. Here with that flip side Victoria Barret, Dennis Kneale and Steve Forbes, but do Lea Goldman, Quentin Hardy and Neil Weinberg agree? We'll soon find out. Victoria, first to you. Make your case!
BARRET: Well, IBM last week said that it would stop funding its pensions in two years. This is hugely significant. The IBM is a bellwether company. IBM gave us the computer revolution. IBM cut back management in the early 90's. Other companies followed suit. We're gonna see lots of other companies doing this. And I think it's a great thing for workers ...
ANSMAN: Why?
BARRET: ... because it gives workers a lot more control over their retirement. Companies aren't gonna fund retirements anymore, so 401K's are the answer.
ASMAN: Alright, so Neil if it's good enough for IBM it's good enough for all of us. huh?
WEINBERG: It's a horrible idea! You don't fix your own car, do you, David? You don't self-medicate.
ASMAN: I don't own a car, but that's another point.
WEINBERG: Those are complicated things. We don't ask people to do those things, so why should we ask them to do something as complicated as managing money for the next 30 years for their retirement? It doesn't make any sense. It also - if you look at the returns you get on money - the money that people manage in their 401K gets about 2 percentage points less a year than does professionally managed money in pension funds. You figure that out over a career and that is a huge difference.
ASMAN: Steve.
FORBES: There's no point having a pension system where the promises are going to be broken. That's what's happening more and more in corporate America. 401K's - the worker owns the plan. You don't have to be a plumber or a carpenter to own a house. You don't have to be a mechanic to own a car. You hire people like fund managers. The federal thrift plan - covering millions of government workers - has worked very well, giving the people a handful of choices, good diversified funds. It works.
ASMAN: But, Lea, does that mean we scrap all pension plans?
GOLDMAN: No. I disagree entirely. There's a big difference between GM and United Airlines versus an IBM. IBM's doing it, not to save the company. IBM's doing it to raise the bottom line. So when we're talking about "Is this good for American workers?," what we really mean is "This is great for American investors." That's the difference. For an American worker, you'd have to win the lottery to get the kind of comfort and security you would have gotten from a pension plan.
ASMAN: Well, Dennis, you're in the land of pensions. You're in Detroit today. What to you think from (sic) it out there?
KNEALE: I'll tell you, though. Pensions are exactly what threatens to derail the US auto makers. They're a scary thing. And furthermore as for Neil Weinberg, that guy is so financially smart, there is no way he would ever leave it to some fund manager to manage his retirement. Neil is deeply involved in his own planning. A couple figures for you, David. Twenty years ago, men over age 55, half of them were at their company longer than 20 years. Today it's less than ten years that you're at your company. With a 401K when you leave your company you take it with you. With a pension plan, if you leave too early, you get nothin'.
ASMAN: Quentin, what do you think?
HARDY: Well, last time I looked, Neil Weinberg was one of the top financial journalists in the country. He's supposed to know about this kind of stuff. I don't think several hundred million Americans really have that job and they don't know about this kind of stuff. But look. Saying it's great ...
MALE VOICE (off camera): Of course they do.
HARDY: Saying it's great - that's like saying global warming is great because it means there's less snow in New York City. The fact is it's the weather. Ya' gotta live with it. These pension systems will just not last. The thing ya' hafta to do is scare the American worker into figuring out that they better just stuff all the money they can into every savings plan they can get their hands on, 'cause the corporation will not be there for them. It's just a reality.
ASMAN: Victoria, I saw you raising you hand. Go ahead!
BARRET: Well, Neil, if pensions are so great, why do we have $218 billion in unfunded private pensions? Why do we have $700 billion in public pensions that are unfunded? The fact is this isn't a great - it's a broken system and Americans have to figure out a way to pay for their retirement and 401K's are a great way to do that.
ASMAN (overtalks the last 7 words): Hold on a second! You asked Neil a couple of questions. Go ahead.
WEINBERG: Well, first of all, I'd say that this whole system, the accounting for pensions and the way that companies and public pensions provision is broken.
BARRET: It's, it's crooked....
WEINBERG: But the question I think we're talking about here, Victoria, is really the question of "Is this good or bad for workers and are they gonna benefit?" Absolutely they're not going to benefit from this.
ASMAN: Steve.
FORBES: Well, since the pensions can't be funded the way they're promised and other than dumpin' on taxpayers, why not have 401K's, properly funded, where the worker owns it, the worker leaves a job, the worker keeps it? Dennis is exactly right. If you want to have a real retirement, real pensions, leave the workers in charge of the money instead of corporations, which can lose it.
ASMAN (overtalks last 4 words): And, Lea, we have all have become a lot more savvy about how to invest our funds. Most Americans now have some kind of stocks, either in ...
HARDY, OFF-SCREEN: David, we have not gotten more savvy.
ASMAN: Hold on a second, Quentin. This is for Lea. Go ahead, Lea.
GOLDMAN: No. I'm going to have to part ways with you here. I myself I work for a business magazine, a great business magazine. I consult other people before I make moves to any of my plans. You know, it's not true that most Americans are savvy. Maybe a million of them tune into a program like this and get help on their, you know, on their financial management but it's not true across the board. We're talking about a nation of debtors, people who can't balance their checkbook. Now you're asking them to (indecipherable) their 401K's.
ASMAN (interrupts Goldman, overtalks the last part of her sentence, she does not look pleased): Alright. Quentin, what were you dyin' to get in on.
HARDY: It's just not true that we've become a lot smarter, David. People have thirty, forty thousand dollars saved up and they think they're made for life.
GOLDMAN: Um-hmm.
HARDY: They're not. This is gonna cost us way beyond anything New Orleans ever did.
FORBES: On the federal government level - on the federal government level we have people who know about investments, people who know nothing about investments, give people a handful of choices, well diversified funds, they'll do fine. Let the others do the work.
ASMAN: Dennis, last word. Go ahead.
KNEALE: You know, we can debate whether it's a good or bad thing but there's really no sense in it. Pensions are disappearing. Get ready for your 401K. The IBM move shows it.
ASMAN: Alright.
COMMENT
Did it ever cross the minds of these financial geniuses that people don't have massive amounts of savings because people don't make enough money to get through the month with any discretionary income left over?
There are many American like me out there, working six or seven days a week, with nothing saved up not because we're stupid, but because we lack the discretionary income to do so. Try saving when your health insurance premium goes up 10-15% a year, your energy costs skyrocket, the costs of food, clothing, shelter and education (if you have children) mount. The 38% of this country that rents is the 38% that doesn't have savings accounts, carries high balances on its credit cards and has no savings to speak of. And, as we all know, all it takes is one major medical emergency and hundreds of thousands in savings can evaporate overnight.
In an economy where real wages haven't risen in years and most of the new jobs created are at the low end of the pay scale, will someone please enlighten me as to where exactly people like me are going to get enough money to put into not just one but a variety of "diversified" investments?
This particular Forbes on FOX segment was just another way for the Republicans to argue, through its media mouthpiece, that whatever is good for the corporations is good for America's workers.
The not-so-hidden agenda of corporate America is to reduce wages and benefits here in the United States to the point where an American worker's pay, when adjusted for inflation, is on a par with that of his/her counterpart in China, India, Thailand, East Timor, etc. This global economic model assumes that as lower-wage jobs increase here in the good old U. S. of A., higher wage jobs will increase in the other countries. Instead of wealth being concentrated in the United States, it will disperse throughout the world, resulting in a global upper class, a global middle class and a global lower class.
The sad thing is that the very workers who stand to suffer the most in this global transformation are the same poor saps who think FOX News - owned by a massive multi-national corporation with investments on every continent (maybe even Antarctica) - is really, truly looking out for their interests.
