Sheriff Bush put on his holster after Wall Street failed to heed Preacher Bush's sermonettes. The new disguise worked momentarily, and market indicators went up. Townsfolk cheered as three bad guys --- Adelphia Communications founder John Rigas and sons --- were arrested and booked for "one of the most extensive financial frauds ever to take place at a public company," as the SEC put it. Adelphia had already filed for bankruptcy, with $18 billion in debt.
The debacle is another insult to the Buffalo-Niagara region, and thus to Rochester and other communities at the whirlpool's edge. According to the Buffalo News, 200 Adelphia jobs are going down the drain, and 1500 more are threatened. The company may survive in some form by "making lemonade of the lemons the Rigases bequeathed," said the News editors.
One big lemon may finally be squeezed out. A planned Adelphia office tower in downtown Buffalo --- corporate welfare writ tall --- is now on hold. But the company's stock price has done great damage well outside the walls by helping sink 401(k)s in mutual funds. For example, a recent report from CNN/Money, drawing on Morningstar, names big player Vanguard Windsor. This fund, says the report, is now "struggling at the bottom of its category... because of stakes earlier this year in Adelphia Communications and WorldCom."
The occupant of the White House tries to sound tough. But he's stumbling through a script his elders wrote, one that will cause aging communities like Buffalo and Rochester infinitely more pain than the Rigas gang ever could.
Bush still is threatening the biggest and best --- and for some people, only --- pension plan we've got. In the face of a boom-bust episode vaguely reminiscent of the 1920s, he's still calling for partial privatization of Social Security. And forget the "partial" business; it's clear that some Bushites dream of wholesale privatization or even abolition. Last summer, treasury secretary Paul O'Neill told the Financial Times that "able-bodied adults should save enough on a regular basis so that they can provide for their own retirement, and, for that matter, health and medical needs." This should have caused, but didn't, a Rocky Mountain-size firestorm.
Such talk is a direct attack on places like Rochester. Look at the data. According to the 2000 US Census, in Monroe County there are 6,681 individuals 65 and over who are living in poverty. Many others in this age group are less than well off. Mean household retirement income in the county is just over $18,000; mean household Social Security income is $12,000 and change.
The Social Security Administration says an American with "steady, low earnings since age 22" who retires this year at age 65 will get $682 per month. Chances are this individual, the typical $6.50-per-hour worker, has little or nothing beyond the SS benefit. So he or she --- most often she --- must get by on $8,184 per year.
And many people are worse off, of course. A friend told me about an 80-something woman who lives in an urban high-rise on just over $500 a month in Social Security. The woman told my friend she hadn't bought a new bra in 20 years. Now, the middle class is accustomed to slumming for fun at local secondhand clothes outlets and garage sales. But you can bet they're not looking for used underwear.
All this argues not just for protecting Social Security against the Bush whackers. It implies (no, it screams) that we must increase the benefits and maintain the COLAs which literally keep so many retirees alive.
We need to shore up the private portion of retirement security, too.
Recent horror stories --- the incredible vanishing 401(k) at Enron and Global Crossing, et al. --- should make us turn back to defined-benefit plans.
But how to get there? Despite its corruptions or because of them, Big Business still rules the neighborhoods that count: Wall Street and Pennsylvania Avenue. Opposition is building in the wings --- thank the goddess for Ralph Nader and the Greens. But for the near term, we've got to save people from the ancien régime that never dies. To paraphrase a statement from the first Great Depression: Long-term solutions are necessary, but people retire every day.
I know that ethics and business mix about as well as carrying water for Harken Energy mixes with drilling for Bahrain oil. But a basic ethical question must be addressed; there will be no resolution to the retirement gamble until there's a philosophical shift. We need to acknowledge what we owe others, not just ourselves. And the more we think about "personal accounts" --- not just the Bushite carve-outs from Social Security but also the 401(k)s and their ilk --- the behinder we get.
First, let's get real about our relation with those who bequeathed an economy to us. As a class, retirees deserve the good life, not just a few crumbs.
Yes, many retirees do have it good. But half of all retirees get 90 percent of their income from Social Security, says economist Ellen Frank, a professor at Boston's Emmanuel College who specializes in the "macro" issues of investments and returns. All retirees, says Frank, must "have a claim" on the economy. That is, they must be treated not as inconveniences but as full participants in community life, which for good or ill runs on money. Indeed, where do those Social Security checks go but into the local supermarket and drugstore, not to mention the landlord's bank account?
But Frank wants us to think outside our freight containers of assumptions and social habits. For one thing, she points out that some countries give lots better entitlements. For example, she says the German government guarantees everyone 80 percent of pre-retirement income for life.
In the US, that sort of social contract will be a long time coming. But Frank sees lesser possibilities here that could do great good.
Citing the work of University of Notre Dame economist Teresa Ghilarducci, Frank suggests we look at some kind of "multi-employer plan." The idea is classic: spreading benefits and risk around, so individuals and households won't end up like post-Enronites. As Frank describes it, such a plan could be simple and close to the people it serves. Community organizations and credit unions, she says, could administer shared investment plans in safe vehicles for thousands or maybe tens of thousands of people. This, she adds, would take the burden off small businesses that can't afford good plans.
Check out Ghilarducci's idea at the Pension Rights Center (www.pensioncoverage.org). Ghilarducci's summary convincingly claims that an "alternative multi-employer plan" can solve many common problems associated with retirements. First, an AMP makes it easier for smaller employers to sign on, and it eases the burden of competition with similar employers. An AMP also "can take advantage of savings on large group annuities and professional management fees" --- savings that aren't available to the lone individual or business.
And for all you young folks out there: Plans like AMPs, says Ghilarducci, are suited to "new economy" jobs. That's because the plans solve portability problems for workers who go from job to job (voluntarily or not) or become self-employed.
Come to think of it, younger workers need to hear this message most of all --- because they're precisely the ones who've been enchanted by "fixed-contribution" plans, corporate wheeling-and-dealing, and the Big Lie that Social Security is broken.
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