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on April 6, 2014
Lowenstein does an excellent job in highlighting three cases which showcase the disastrous results that can occur when pension obligations go unfunded, and highlights the fundamental problem with organizations (public and private) which make long-term promises that are otherwise unpaid for.

A great read.
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on November 9, 2008
For progressives who know nothing about the author, they might take the three descriptions of pension debacles in this book as an indictment of things the left generally supports such as strong unions and pensions for workers. However, if one examines his solutions at the end of the book, it is clear Lowenstein is center-left and progressives would be wise to heed his advice.

In short, the book describes what happened to retirement systems for employees of General Motors, New York City's Metropolitan Transit Authority and the city of San Diego. His exquisite detail shows how time and time again unions piled demand on top of demand and a GM management flush with cash or weak-kneed elected officials agreed to pension enhancements that later hobbled their entities.

At least in GM's case, one could argue that the deals were cut before real problems began to occur and the problem was not so much with the initial agreements as with the inability to alter them once they became unaffordable. In the case of San Diego, the train went off the rails well before the public discovered how bad things had become because elected officials tried to hide the problem while they made decisions that compounded it.

Lowenstein suggests solutions that many progressives would endorse, such as universal health care coverage and stronger regulation and support for pension systems. However, progressives should also heed the message that union demands can become excessive and when they do, they should be resisted.
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on December 6, 2008
The author and the publisher both, by inclination, yield a product that resembles: word word word number word number [more words] number and number word word... ad infinitum.

The book has NO tables, charts, graphs, summaries (Have I made my point clear?!) or even chapter subheadings. Dealing with the text is like working on a factory production line, instead of surveying the factory, which is the sense that a better-produced work can give you.

If that format suits you, fine.

If not, for instance, if you would like to give the book an hour's skim instead of -- well, depends on how fast you deal with the WORD WORD WORD number WORD format -- pass it by. They lose an audience. Big deal. You'd have thought they were still dealing with -- limited by -- hot metal typesetting.
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on April 10, 2011
The title of this book says it all; 3 case studies that examine the creation, evolution and encroaching dissolution of a large and infamous pension plan in the USA. Taken from 3 different geographical regions; NYC, San Diego, and the Midwest Rust Belt, they also encompass 3 different sectors of the economy; from high volume manufacturing to blue-collar service industry, to the government sector. Hence they provide breadth to the author's argument; which is that the pension system as evolved in the USA is headed towards doom, and will take the entire US economy along with it. Each case study is explored like an investigative article, but embedded with good historical context and economic analysis. The meat of the book is its focus on the politics that went into creating the pension systems. And politics it is, with lawsuits, strikes, bribery, and the occasional acts of sabotage and physical violence. The author also alludes to the pension systems in other countries; however it ends there. At the price of maybe 1 or 2 extra pages per chapter, the author could have explained the pension system found in other countries. For example, in the chapters on GM, the author could have spent 1 page each exploring the pension system of German and Japanese car workers; the two primary high-cost competitors to the American car industry. Overall, a good book; and quite compact in its length, making it easy to digest and understand.
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on November 20, 2008
I really hope that our government officials don't fall for the double-talk from the automobile manufacturers begging for a a handout, with the ongoing financial crises ripping across America.

This book gives you one good reason the government shouldn't bail out GM, or any of the other automakers. The [retired] and working union members of the UAW have nothing to fear (yet) since they're the ones sucking these companies dry with their greed, laziness and apathy for the dire economic events happening as I comment on this book.

Get rid of the Unions! They are one of the biggest reasons for the downhill economic slide our country is taking.
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on March 2, 2013
Lowenstein has written a great book about a very complicated issue that people need to understand. I highly recommend this for anyone who is trying to understand the politics and history of pensions in America.
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on July 21, 2012
Roger Lowenstein has a terrific ability to present facts and history in a well written fashion, yet at the same time provide observations that are insightful, sometimes humorous and yet still very objective. I have read dozens of books on economics and economic history and Roger is definitely one of my favorite authors (I would call him a more fastidious Michael Lewis and I am a huge fan of Michael Lewis as well). I highly recommend this book, Lowenstein possess great skill as a writer along with great discipline.
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on January 15, 2011
I first posted this review on [...]

Who would have thought that pensions could be interesting? That accouting and actuarial science could take on the character of creative writing? Well they can and do.

Pensions first started to appear in the late 19th century for workers in especially dangerous professions, and slightly later as a perk for white collar and civil service workers. They really took off after Walter Reuther, the head of the United Auto Workers in the middle of the 20th century, got them into the union's contracts with American auto makers. They got more and more generous in the UAW contracts and in other unionized industries. Unfortunately, management, while more willing to grant pensions than wage increases because the costs don't kick in right away, almost always was tempted to underfund them. This is a problem, because pension benefits are generally legally binding debts that don't go away unless bankrupcy occurrs. Because pensions are legal debts, unions were willing to accept underfunding in return for ever greater pension benefits that came do after fewer years of work. That this would make funding pensions harder had no effect on people with a short time horizon.

Pension problems are even worse in government, where employees are also voters, unions also campaign contributors, and where pension benefits are even harder to avoid paying. The case of San Diego is illuminating Predicatably, more recently founded businesses avoid offering pensions, preferring 401(k) plans which don't have the same obligations on the employer's part. Unfortunately the assets in these plans are variable, depending on the state of the financial markets; and many people don't contribute enough to the plans anyway (half of the accounts have $30,000 or less invested in them).
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on October 24, 2008
I bought this book after reading an excerpt from it in Smart Money Magazine. It was easy to read, interesting, and educational. I felt that it was unbiased since it showed how everyone has some blame for the pension crisis.
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on September 22, 2009
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.
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