While America Aged: How Pension Debts Ruined General Motors, Stopped the NYC Subways, Bankrupted San Diego, and Loom as the Next Financial Crisis is a relatively short book with a long title. At first, it felt boring, and I wondered why I am reading it in the world, but it ended up being very enlightening.
One thing that puzzles me is the difference in the pension systems between the US and the rest of the first world. I knew that many big American corporations had pensions in the past, but by the time I entered the US workforce, they were eliminated everywhere except the governments. I learned how pensions in big corporations, like GM, were first established and how they played their role in attracting workers in the absence of Social Security. Later, the pension design flaws led to the financial crisis.
When the US car manufacturers were in a severe crisis ten years ago, people would say that American cars cost more than Japanese cars because American workers “cost more.” What never occurred to me was a notion that it’s not that American workers were paid more, but that American car manufacturers had to invest huge sums of money in the workers’ pensions. At the same time, Japanese companies do not need to do so because they have government retirement programs.
Some parts of the book made me think about the Russian pension system. In Russia, the retirement age for women is fifty-five, and for men – sixty, which is so early that I can’t even wrap my head around it.
When a couple of years ago, the Russian government announced that they would increase the retirement age, everybody started screaming. What is worth noting, though, is the fact that in Russia, people file for retirement when they reach the age of fifty-five or sixty respectively, and they continue working, receiving both the salary and the retirement benefits. And when I try to explain that that’s wrong, they say that “pensions are so small, you can’t survive on a pension alone, you need to work. I do not understand how it does not occur to anybody that pensions can’t be bigger if people only work for half of their lives.
When I express my opinion that pensions are designed to provide income for those who can’t work any longer, that it is something like insurance, people are telling me: no, we are entitled to receive a pension after we reached a certain age.
I just gave up on understanding :). But the funny thing is that in this book, when some municipal employees were receiving both their salaries and pensions, it is described as something outrageous, like the lowest possible morale :). When the workers were given extra shifts or better positions during their last year before retirement, the schemas were described as fraudulent, but that precisely what everybody was doing back in the USSR.
Very interesting reading, I am telling you 🙂