From Publishers Weekly
Starred Review. America's impending pension problem is brutally simple: private companies and governments have pledged to provide retirement income and health care for workers, but have not set aside the money to make good on their promises. Typical accounts of the crisis tend to obfuscate the issue and fixate on laying blame, but Lowenstein (Origins of the Crash
) has a refreshing perspective—he tells three fascinating stories in American economic history and situates the current pension problems in the struggle for dignity for workers. Lowenstein regards fixing pensions as a worthy culmination to a century's struggle for justice rather than a painful chore unfairly foisted on the present by the past. Unfortunately, after this incisive and inspiring history lesson, the 10 pages at the end devoted to solutions are too abstract and unoriginal. The book gives the reader lively stories and historical insight, but may disappoint those looking for policy recommendations. (May 5)
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Lowenstein has previously written best-sellers on Warren Buffet, the 2000 stock market crash, and the demise of bond-trading firm Long-Term Capital Management. Here he tackles what could be the next looming crisis: the severe underfunding of pensions in both the private and public sectors. Although the implications are far-reaching for cities, states, and corporations across America, Lowenstein narrowed his focus on three massive pension failures: General Motors, the New York transit system, and the city of San Diego. In each case, underfunding, underestimation of promises made to retired workers, borrowing from the pension, and reliance on all-too-rosy predictions of stock-market gains were the causes of massive failure of the system. Lowenstein goes into great detail establishing the history and politics that went into the creation of these pension systems and further expounds on how their mismanagement brought down the whole system. Many businesses and governments will soon need to face up to the facts of their pension obligations and make some tough choices. --David Siegfried