Someone tell me what is going on. I only want to perceive this through you guys.
Well, we're looking at the screen of an iPad which is showing an unfogged thread with one comment, from you.
I had already started drinking before the debate last time, I'm not sure I can handle this without alcohol.
Oh shit their talking about youtube.
Still waiting for "Osama dead, General Motors alive."
Biden called Ryan full of malarkey.
The moderator has successfully cut them off more than once.
11: I laughed when she said that.
Biden has some great bemused/concerned expressions on tap.
The best sanctions in the history of sanctions!
Our sanctions are the sanctimostest.
They're both doing fine, but Biden will be crowned the winner because he's doing so much better than Obama.
How many ayatollahs does Iran have?
Why did Raddatz begin with "this was a massive intelligence failure, was it not?" No, not really. You don't need any intelligence to figure out "Libya is dangerous."
and which one is the Ayatollah of Rock and Rollah?
We just got to the malarky line. You guys are ahead of us!
I don"t think Joe"s grin serves him well.
All I can point to is the results: they're four years closer to a weapon. Under OUR administration we will stop time!
I think Biden is doing objectively better - Ryan focuses on minutiae by comparison.
"Facts matter!"
He has also said "malarkey" three times.
I don't know how it plays to undecideds, but Biden is clearly communicating, "This kid is full of.. stuff"
The debate isn't on in this bar. Just the Steelers.
The captioner is spelling "Bebe" as "BB".
That said, 25 is almost certainly wrong in the big picture however right it may be for debates.
47%! (Yeah, I know, Minivet took my marshmallow.)
"Let me tell you about the Mitt Romney that I know...". If only everyone could share his church, he'd pay for their college!
Wow, Ryan said the unemployment rate in Scranton has gone up since 2009, and then that the same thing happened across the nation. I never thought I could rage again.
Ryan is going off on some story that I have no idea how it relates to anything.
Whee! Today I'm successfully drunk before I begin watching. How are things going?
Wow. I actually can't make myself watch this thing, and yet also am having trouble getting other productive work done.
Biden just blamed the Great Recession on reckless Republican spending, and not on Wall Street deregulation.
Picking numbers is great... we can make it grow at 4%. Who will say 5?
IMO Joe is doing quite well so far.
Never bring up car accidents around Biden, dummy.
I can't watch more than 5 seconds at a time. Torture. Ryan's not coming off well with the sound off.
41: Fair point, I withdraw the adjective.
"I wish he would just tell the tr-- be a little more candid."
Yeah, I thought 42 was weird too.
47: He's not coming off well with the sound on, either.
The way Joe is going, if Ryan brings up the $700B Medicare cut lie, Joe is going to rip off his head and shit down his neck.
I love it when Biden starts writing while smirking.
If 54 happens everybody do shots!
I love it when Biden starts writing while smirking.
Ugh I am so sick of hearing about this $716 billion. Is there really no effective Democratic response to this?
We're going to have a 25% SS cut, so we need to have a 40% cut to stop it!
I'm biased, and more than a little relieved after the last debate, but it seems like Ryan keeps trying to do his wonk impression but just keeps getting blown out of the water by Biden.
Yeah, as an official old fart I'm with Biden re Medicare.
Shorter Joe: Romney & Ryan are lying liars who lie.
||
Apparently this is the difference between random midwestern cities and northeastern ones: when one orders an after-dinner drink from the dessert menu at the former, the waiter says "you know that's a drink, right?"
|>
Biden does need to stop interrupting him, even if he is full of horseshit.
Resisting urge to snark on FB at a hapless student who supports Ryan.
These guys are both better debaters than the top of their tickets.
Ryan has two speeds, earnest doom and earnest scorn.
I have beef stew. This is not topical but it makes me happy.
75 to 71 but it was a joke anyway.
One of my faculty colleagues is writing on FB about how awesome it would be if affirmative action is ended for good. One of my postdoc colleagues gave me a long lecture today on how Elizabeth Warren is a lying liar, and talked over dinner about how stupid anyone who a voter ID law would prevent from voting must be. I'm kind of full of RAGE right now. But also alcohol.
Essear, I'm totally bewildered and appalled that your circuit is so conservative. It goes against so much of what I want to believe about the world.
Biden doesn't have a record to run on?!
I wonder to what degree Joe Biden is well served by the Onion depiction of him as everyone's favorite Trans Am-driving Journey fan. Does he come off better in the debate if everyone expects him to start arguing about whether Syd or Roger was a better Pink Floyd frontman?
78: Neither of them are American, which probably has something to do with it.
The moderator might be better at moving things along, but she's not asking good followup questions, so it's degenerating into repetitive contradiction.
The guy next to me just put down his copy of "The Jungle" to eat his hamburger.
He went to 3 significant figures to make it sound more wonkish.
The Onion portrayal helps him. It plays into the working class image he has been referencing constantly in this debate.
I'd like to think that my political assessments are disinterestedly principled,* but that Paul Ryan guy seems the kind of asshole that I have been known to leave a party/restaurant/dining hall to escape.
In unrelated news, I didn't participate in a lot of organizations in college.
* This is a joke.
79: Don't the little people out there in the dark get all weird about people interrupting? Isn't it perceived as insufficiently nice or something?
69 Biden does need to stop interrupting him, even if he is full of horseshit.
No, interrupt the fuck out of the fucker. Interrupt his mother. Interrupt him up his ass with a two-by-four.
In other words, 79 is right.
78: Neither of them are American, which probably has something to do with it.
What are they, Austrian?
Joe s getting stronger as the debate goes on and 69 is incorrect.
88: Fuck the little people. How many division do they have?
Did Paul Ryan really claim that nobody on either side is proposing voucherizing Medicare? Jesus Christ.
Give us specifics.
We'll be like Reagan!
Oh, run up the deficit?
90: Chinese and Israeli, respectively.
1: Someone tell me what is going on. I only want to perceive this through you guys.
Same here. And you guys perceived for shit last time. So far this seems better. Keep it up.
Yes, waving your hands a lot will make your tax plan more interesting. By the way, are you familiar with the career of Jack Kemp? Foundered on the rocks of being a tax crank.
The income tax system only raises 100 billion dollars net? that can't be right.
But I do like her "So no specifics?" and "You guarantee your math will add up?", even though Ryan never responded to those.
"Not mathematically possible.... Ha!"
I like this guy.
Biden got the Romney 14% tax rate in. I enjoy how they are talking at the same time.
I love when Biden gives the moderator the "you and I both can't believe this yahoo!" look.
The only TV on this house tonight is Project Runway with Steelers on the commercial break. Make Biden make Ryan break down and cry, folks. I know you can do it.
I doubt it was intentional, but I think the Onion thing was really good political marketing for Biden. It gave him an extra layer of ironic coolness with the younger, Internet-using demographic without reinforcing any of his actual negatives.
(On preview, maybe 86 is right, too -- could be both.)
Notwithstanding their reiterated courtesies, I'm beginning to wonder whether these two are really friends.
69 and 88 were originally anonymous by accident and now continue to be anonymous because everyone thinks I'm wrong!
I'm watching old episodes of Archer, which are of course full of eerie parallels to the debate.
I mean, I assume. I'm not watching, how would I know?
The "smallest Navy" line is bullshit. That's counting the number of actual vessels, equating a PT boat with a supercarrier.
111: a PT boat is a supercarrier if you have small enough planes.
And, I guess, tiny little sailors.
The talking over each other is fucking annoying.
I'm loving Biden today. Just terrific.
The Navy shit--can they just say "How stupid do you think people are?"
Maybe I should turn this on... but what if I jinx it?
And of course there is probably nothing less inconsequential in the world than a VP debate.
110: I was impressed that Biden managed to work "Just the tip?" in.
120: he had that candy wrapper...
Dems should just owe up to the fact they don't think the defense cuts are a very big deal.
On CNN, the independent voters seem unreasonably fond of Ryan.
Biden managed to work just the tip in to who?
122: You'd like that, wouldn't you, hippie?
Oh god Afghanistan is boring. They are barely distinguishing themselves.
But aren't independents usually closet republicans?
122: I think they're a big deal, and warranted.
Awesome. Everyone loves when you go "Here's how it works...." That never gets an irritated, teeth-grinding glare.
WE WILL LEAVE IN 2014!
Ryan memorized the names of a couple Pakistan tribes.
Tweet from bill maher: hello, 9-1-1? There's an old man beating up a child on my television.
Truly lame Ryan. Gonna keep bleeding us in Afghanistan Congressman?
Libya stuff seems to have been the worst of the stuff for Dems tonight. And the moderator was an ass on it. Says the man watching selected clips on delay...
I like angry Joe better than smirking Joe.
136: Right, especially since his boss does not seem to be of the skull-fucking persuasion.
Ryan losing composure. I'm thinking.
The season premiere of The League is on after the debate, right? I sure hope Biden and Ruxin's brother-in-law Rafi don't get into one of their scrapes.
I don't know; I like Biden and think he's doing well, but (ignoring facts) Ryan seems confident and snappy too.
Gee, you guys aren't commenting enough. It's almost like VP debates don't really matter.
Paul Ryan looks like King Joffrey in Game of Thrones. Pass it on.
Did Raddatz just ask them an essay question on abortion?
Ugh. Let's have a Catholic-off!
Ryan on abortion could not be more nauseating. Could not. Be. More. Nauseating.
We never wanted to abort our oldest daughter Liza! Abortion is easy-peasy.
Agreed w/ 147. Fuck you Ryan, and fuck catholic charities.
Protestantism has been an available option for [looks guiltily at half-read paperback of The Thirty Years' War] a lot of years, politicians.
145: Worst question ever? Really, I am actually somewhat offended.
Oh you believe en-soulment happens at conception for reasons of Science and Reason. Thank God! It could of been anything.
147- Obviously not a problem for you, you didn't miss any periods.
That one child thing was Biden not Obama you spass.
Bork attack! And Biden more-or-less slams Scalia.
152: I realize that I have no attending to be offended by anything, but there's already too many acolytes of the Church of the Holy Hierarchy of Corruption, Misogyny and Hatred with an out-sized on abortion to listen to throw that kind of shit out there.
I would say to this young American "Grow the fuck up."
What a stupid final question. Raddaz dropped the ball in the last two.
I'd say to him that America and it's government basically sucks.
I miss Jim Lehrer, whom I've always liked.
Maybe if you want to move somewhere nice consider Sweden?
I'm still outraged by the moderator saying "Let's talk about Medicare and entitlements. Both Medicare and Social Security are going broke..."
165 - If you see Pete Peterson on the street, it is your duty as a red-blooded patriot to throw a shoe at him. He's an infection of the body politic.
I missed him most during the first debate.
The Defense Department is going broke.
165: yeah, that was another black mark. But she did a pretty good job.
Okay, another really stupid question.
The extra apostrophe in 162 has of course ruined everything forever.
152, 158: But it apparently gave Biden an opportunity to make a nice contrast with the depraved, nakedly-ambitious boy on the stage with him.
Ryan is inconsistently Palining dropping his "g's."
Ryan looks like a kid who whined his way into a seat at the grownups' table and now can't follow the conversation.
172 bIt's exactly what the American education system delievers
CCarp retweets best tweet of night from someone named Don Pgreeba: The winners tonight? Dan Quayle and Sarah Palin. Second and third least credible GOP candidates for VP.
I'm honestly not sure that I've ever despised a politician more than Ryan.
Really? I hate lots of Republicans as much as Ryan.
I also hate the closing statements in general.
I know a few folx close politically to Ryan's positions, and thy have the grace of doubt. Can't do that I guess if you run for high office.
So, that girl I hooked up with at Chaco just texted me saying that Ryan's coloring and eyes remind her of me.
That really is a hard and interesting* question? What Republican since 1980 do you hate the most? You can count their lackeys like the Supremos and Ken Starr (who is close to the top for me).
*OK, it's actually lame and stupid, but work with me here.
184: time I met you you didn't have his scary Wisconsin pallor-undertones. Maybe after a while in Alaska.
97
Chinese ...
You expect a Chinese guy to support affirmative action when even on this blog there are people citing the way it excludes Asians from elite schools as one of its virtues?
In a follow-up text she clarifies that she actually likes me.
Maybe Newt? But he's descended so far into parody I may have to search more. Probably Cheney should be up there maybe.
Top ten in some order:
Tom Delay
Newt Gingrich
Ken Starr
Dick Cheney
Ed Meese
Scalia
Alito
Roberts
Boehner
G W
188: I am admittedly pretty pale most of the time.
187 - I'm going to throw out Giuliani as a dark-horse contender.
187
... What Republican since 1980 do you hate the most? ...
Hate is the wrong word but I am no big fan of GWB.
187: there's a lot of good choices, I'll grant you, but I'm pretty sure that this guy is the most hateful, smug, self-satisfied piece of shit that I've ever seen. It could be that I went to the University of Wisconsin, and he reminds me of the worst fratboys I knew there. They were very dumb people who mistook their own ignorance for important insight. Gross.
183 gets it absolutely right. Doubt is so much sexxxier than certitude.
Wolf BLitzer: "It "It looks like -- looks like at least to me, pretty much of a draw as far as this debate is concerned." So, I guess it was.
In my Twitter feed the TPM item on that came rigth behind Kotsko's: "So given that the media has an incentive to portray the race as close, what do you think the chances are they'll call this debate a draw?"
192
Scalia
Alito
Roberts
So why does Thomas get a pass? More liberal racism?
193: You might be right; the worm hasn't quite bored its way into the depths of my soul like the other guys yet.
And speaking viscerally, I think I hate more media figures than politicians. May not be logical, but that is what I feel.
201: Maybe go out back and fuck yourself in the ass with a meathook and howl at the moon for a bit and then come back in and we'll have a discussion on that point.
178 et seq.: no love hate for Scott Walker?
No, actually 201.
But Abrams, definitely. He needs to bump someone off. Studying on Helms... if I were in North Carolina he'd probably make it.
205: Nah, too pathetic. I hate McCain a bit more than Palin, actually.
I am old enough to remember when Lawrence O'Donnell was made of skin and bone rather than silly putty stretched over a titanium skeleton.
Oh lord, the NPR people have reignited their Ryan crush. So calm, and so young!
189: Yes, I'm sure he feels strongly personally mistreated both by (a) (imaginary?) comments on a blog that (I hope) he doesn't know exists and (b) his tragic experience of spending the last decade at Har/vard as opposed to all the schools he could have been at without affirmative action working against him.
212: Dude, not cool. Some of us may want to sleep sometime.
Paul Waldman: "What really matters is how this debate was perceived by people so goddamn stupid they can't figure out whom to vote for."
214: poor guy coulda gone to caltech.
Speaking of, has jbs got that meathook out of his ass yet?
It took me a while to figure out what was going on in 212.
Onion Biden is truly one of the great literary characters of our time.
[Wipes teary eye.] He's rough-hewn, but he's got a big heart, you know?
What 224 said.
So the CBS snap poll gave it to Biden by 19 points; HuffPo's 300-person survey (conducted by a third party) gave the first hour to Biden 65-35. Wolf Blitzer said it looked like a tie to him. Paul Ryan, the last honest man in Washington, cannot fail; we can only fail Paul Ryan.
I hate Wolf Blitzer about equal to, say, Eric Cantor or Mitch McConnell. Not Top 10, but Top 50 (but it's crowded with the whole mainstream political media).
226.2: What if Paul Ryan were your little brother? Huh? What then, smart guy?
Sorry about 212. It's the sort of shit that pops up in your FB feed from friends of one's former college students these days.
214
189: Yes, I'm sure he feels strongly personally mistreated both by (a) (imaginary?) comments on a blog that (I hope) he doesn't know exists and (b) his tragic experience of spending the last decade at Har/vard as opposed to all the schools he could have been at without affirmative action working against him.
Not necessarily personally but on behalf of his fellow Asians. You think his opposition to affirmative action has nothing to do with his being Chinese?
This picture will become a classic.
James, did I miss your evidence that people on this blog have cited exclusion of Asians as a virtue of affirmative action?
What Republican since 1980 do you hate the most?
Dick Cheney.
(Also-rans/runners-up: Samuel Alito. Antonin Scalia.)
Top 1o most despised: GWB, Cheney, Gringrich, Jesse Helms, Alan Greenspan (?), Gov. Walker, Alberto Gozalez & legal cronies, Scalia, Palin, and Bachman
233
James, did I miss your evidence that people on this blog have cited exclusion of Asians as a virtue of affirmative action?
I was referring to comment 67 in the other thread which said in part:
I am curious if ending AA will mean that a bunch of mediocre white guys who thought they would benefit will discover to their chagrin that their preferred university now is offering "their" spot to the vastly more qualified Asian-American student who hadn't been let in to keep the numbers balanced.
Perhaps "effect" would have been a better choice of words than "virtue" although I think there is implied approval.
Ugh I am so sick of hearing about this $716 billion. Is there really no effective Democratic response to this?
I think it's definitely possible. Something along the lines of "smart shopping", maybe.
If I go to buy a car for $30000 but I negotiate the price down to $25000, you don't say I cut $5000 from my car budget, you say I got a bargain and saved money.
Obviously, all good responses are banned.
Jesse Helms
Oh, is he allowed? The question specified "since 1980," and wasn't Helms born on the eve of Reconstruction, or something like that? I guess I thought he was too old, too gone with the wind, to merit our 'contemporary politics in America' opprobrium. But if Helms is allowed, I'd like to include him in my list, sure. After Cheney, but before the wingnut Supremes, if I had to rank them.
Helms was my senator from 1973 to 2003, so I certainly got plenty of him after 1980, anyhow.
But Robert Byrd was a member of the KKK!
I'd like to add Norquist, Rove, and Luntz. I'm sure I could come up with more, but I'm note feeling very hateful right now. Biden cheered me up, and I have Eye of the Sparrow ringing in my ears.
Yeah, Rove.
So to my list in 192 add Rove and Abrams and knock off Meese and .... I don't know, Boehner? But St. Ronnie belongs on there as well.
241
But Robert Byrd was a member of the KKK!
Byrd was a Democrat and is therefore ineligible. As is for example Ralph Nader.
I can't really work up any sort of hate for John Boehner. He's pretty generic. Now John Bolton, on the other hand, that guy I can't stand.
Yeah, I find the few distinctive things about Boehner (his name, orangeness, and tendency to cry all the time) more hilarious/bizarre than hatable.
242: I second the nomination of Norquist.
So why'd they have this thing in Kentucky, anyway?
Because the previous debate made it a horse race.
245: John Bolton is bad but Ramsay Bolton is much worse.
245: John Bolton is bad but Ramsay Bolton is much worse.
And fuck overly-sensitive trackpads to hell and gone with a barbed wire dildo.
hey, hey bio; save that thing for anyone who's lost sensitivity after meathook damage and maybe needs something a little more extreme for stimulation. I'd have to say cheney, GWB, scalia, maybe I'd rock some bolton or some eliot abrams in there. justice thomas doesn't get quite the hate because he's actually principled--insane, but principled. where previous interpretations of the commerce clause logically require drug legalization votes, he has gone for it, while scalia is a partisan hack, a veritable windsock. I hated jesse fucking helms. and fuck robert byrd too; he done good by voting for the civil rights act and not breaking republican like the other white-supremacist democrats, but he was a blot on the escutcheon of our fair nation, and he should have had the shame and good sense to withdraw from public life and resign back when a fellow dem could easily be elected in his place. and strom thurmond, damn; south carolina was represented by a zombie white supremacist for like 4 terms. to be fair, what do you expect, it was s.c.! but come on, that got egregious. we have some pride. we're not florida.
I am still worried that Joe Biden looks like a white-haired version of Mayor Richard Wilkins.
I am still worried that Joe Biden would have made a better POTUS than either Barack Obama or Hillary Clinton.
The consensus that Biden is ridiculous has baffled me for some time. He was right on GM, right on needing more stimulus, right on picking Jared Bernstein as his economic advisor, and right on the so-called "counterterrorism plus" option in Afghanistan. He's like the anti-Dick Cheney - right on everything but no bugger listens, whereas Cheney got everything he wanted and all of it was shit.
I'm 45 minutes early to a doctor's appointment. How annoying.
Like, sitting in the parking lot in the dark for 45 minutes. Good thing I brought my iPad!
The UK commentators: shall we caper about monkey-like, to entertain while you wait?
Yes please! Or make me scones.
Ohhhhhh, my oooowwwwullld mahn's a dusssmann, he weahs a dusssmann's cap ...
I'm surprised to see Reagan get no mentions in the 'worst' conversation. I'm too young to remember much, but can't, like, so much republican harm be traced back to him?
She is? Right. The next act consists of ttaM kicking a succession of people in the head, at double speed, accompanied by Yakety Sax.
267: If only we could somehow combine that with the most-hated Republicans lists.
Lined up from right to left in order of Tory sympathies. I'm starting at the right hand end ....
[boot]
[boot]
[boot]
What? I seem to be being interrupted by a succession of glamorous ladies chasing a small baldy man.
[boot]
We have amused her! Excellent. Bring on the war owls!
my favorite part of the debate was when Ryan tried to take a shot at Biden for being gaffe prone, and Biden unapologetically replied, "And I always mean what I say."
It's only fair that we let you at your own most hated politicians first. Anyway, then you'll be fully warmed up for Cheney.
I'd have put the shortest politicians first. You could strain a muscle trying to kick a tall one in the head if you hadn't warmed up first.
re: 277
That's true, yeah. Maybe start with a few pensioners, or wheel-chair bound right-wing war veteran types [US only].
I have the best interests of your groin at heart, ttaM.
Congratulations on the prize, Europeans and associated British people. Everybody in Europe gets $.002, I guess.
I read this as the Nobel Committee basically saying, "OK, we give up."
Good point, Moby. ttaM, stop kicking people, you'll make us look bad.
I have a democratic mandate! It's the settled will of the Unfogged community that I boot people in the head.
I like to think that JP Stormcrow shouted "Fuck the little people. How many division do they have?" while drunk in a bar.
I like to think there's some alternate world where Onion Joe Biden hangs out with Twitter Rahm Emmanuel. They could fight crime.
I still don't know who Michael Gove is, but commenters have convinced me to hate him.
re: 287
Bastard short-arsed fuckhole Education Secretary. Rising star of the Tory hard-right,* and former newspaper columnist.
* more inside-baseball UK commentators to correct me if this impression is wrong.
It would make a lot of sense for Obama to compare R/R's Medicare, Medicaid, and Social Security plans to companies changing from pensions to 401ks. It's not only accurate - the great risk shift, phase II - it also drives home that Romney embodies all the hated qualities of CEOs, and none of the good ones. But I bet he'd worry about "demonizing" his own campaign contributors.
(Most people in the private sector over 40 know what company pensions used to be like, right? Not that they had them necessarily.)
I'm not really a hater. It's pretty hard to find 10 Republicans (past or present) I respect.
Most people in the private sector over 40 know what company pensions used to be like, right?
Companies used to have pensions, but not in a way that we can understand.
290
(Most people in the private sector over 40 know what company pensions used to be like, right? Not that they had them necessarily.)
Given equal cost to the company 401Ks seem much better for the employee. The main "virtue" of traditional pensions seems to be that it is easy to underestimate how costly they actually are.
Or, conversely, the main virtue of 401Ks is that the workers don't realize how much of a pay cut they took in the conversion from defined benefit pensions.
Why would the company change from one to the other if there was equal cost to the company?
295: Even if they did offer something equally costly to them, which I think my employer does, it transfers risk away from them.
289. Looks about right. Also:
* drove three quarters of his senior permanent officials to quit within a year of his appointment by being full time obnoxious;
* plans to send special edition of KJV bible, with foreword by HIMSELF to every school in the country at taxpayers' expense;
* bears uncanny resemblance to a well known ventriloquist's dummy which was ionic in Brit popular culture for anybody much over 50.
Given equal cost to the company 401Ks seem much better for the employee.
That explains why the unions were out there campaigning for all their members' pensions to be turned into 401ks, right?
The big advantage of a 401k over a pension is that the latter cannot be pillaged when Bain Capital or the like takes over the company.
with foreword by HIMSELF
I hate that kind of stuff. The trash schedule has the mayor's smiling face and I have to keep it on the fridge otherwise I'll never remember which week is recycling. I can't even write "Dog Fucker" on it because my son can read now.
Sheesh dammit.
I should just give up.
295
Why would the company change from one to the other if there was equal cost to the company?
Because employees would prefer the 401K. In practice of course they tended to switch to 401Ks plans of less cost to the company which employees valued as highly as traditional pensions.
302: My mayor:
http://www.mndaily.com/2012/10/11/msa-bsu-host-voter-registration-event
294
Or, conversely, the main virtue of 401Ks is that the workers don't realize how much of a pay cut they took in the conversion from defined benefit pensions.
401Ks are pretty transparent in terms of what you are getting. Traditional pensions definitely are not. This is not a virtue if employees don't value them at anyway near what they are costing the company.
which employees valued as highly as traditional pensions
You know how highly the employees valued them because they didn't quit en masse? Or by some other means?
It seems equally possible that employees knew they were getting screwed and didn't feel as if they had any power to protest.
294 307
Also it isn't really a pay cut if an employer finds a way to provide the same benefit to an employee at less cost to them.
306: I have mixed feelings. He often seems sincere about a lot of important things, but in the crunch, he always sides with the corporations and the cops. So yeah. Given the choice though, I'd rather have a mayor beholden to the big developers who uses that capital to push for advances on social issues than the reverse.
309: It's really a pay cut. The reasons employees liked the 401K (shorter vesting periods, fraudulent underfunding) were things the employers controlled and the employees didn't.
401Ks are pretty transparent in terms of what you are getting. Traditional pensions definitely are not.
THAT ISN'T CORRECT YOU SILLY MAN. If you've got a traditional pension it lays out, pretty clearly, how much you will get a year when you retire. If you've got a 401k, it doesn't.
And also the cost of risk. If you don't understand that risk is something you should be paid to take (or alternatively something that it is worth paying someone else to take for you) then...
I'm having a hard time imagining a 401(k) that would cost an employer as much as a pension,over a whole workforce. Certainly none in any place I've ever worked, or anyone I know has worked.
A lot of employees misunderstand how 401(k)s work. Or did before 2008. And this is because of the way they were pitched by employers and fund managers.
308
You know how highly the employees valued them because they didn't quit en masse? Or by some other means?
This has come up before. When I worked at IBM they switched to 401K type plans from traditional pensions. IBM told us at the time that one reason they were doing this is that employees had no idea how costly traditional pensions were to the company and did not value them highly. So if for example a potential employee was comparing job offers from IBM and other tech companies which didn't offer traditional pensions they gave IBM no credit whatsoever for offering traditional pensions. I found this entirely plausible as I had no idea what my traditional pension was costing the company and I didn't value it highly (ignoring it for example when computing my net worth).
Let's see what the American worker wants by staring into their hearts.
(ignoring it for example when computing my net worth)
You have a spreadsheet, don't you?
315: So, you're relying on an anecdote from when 401Ks were pretty new and no one knew people facing retirement on the basis of their 401K accounts? I think most people now have a pretty good sense of the difference.
313
THAT ISN'T CORRECT YOU SILLY MAN. If you've got a traditional pension it lays out, pretty clearly, how much you will get a year when you retire. If you've got a 401k, it doesn't.
People don't care about that (or at least I didn't). They care about current value. For a 401K this obvious, for a traditional pension it isn't.
or at least I didn't
I think this makes ajay's epithet even more appropriate.
317
You have a spreadsheet, don't you?
Computing the present value of a traditional pension is a non-trivial exercise to say the least. With a 401K you get the number on every statement.
320
I think this makes ajay's epithet even more appropriate.
I believe you are in a traditional pension plan. Do you have any idea what it is costing the state or what its current value to you is?
People don't care about that (or at least I didn't). They care about current value.
Evidently you are not a normal person. People don't care about "current value". They care about what will be there in retirement. To a normal person it is a good thing that they do not have the opportunity to spend down their pension 35 years before they retire.
Admittedly the 401k is slightly better in the scenario of catastrophic hyperinflation.
313
And also the cost of risk. If you don't understand that risk is something you should be paid to take (or alternatively something that it is worth paying someone else to take for you) then...
Letting someone else take a risk for you gets you involved in counterparty risk. Something most people aren't very well qualified to assess.
Computing the present value of a traditional pension is a non-trivial exercise to say the least.
And, equally, calculating what sort of retirement income you'll get from a 401k of a certain size is an even more non-trivial exercise. I have no idea why it's more important to you to know present value than it is to know "how much money will I have to live on when I am old". This is really baffling me.
325 is right and especially obvious because of what happened to everybody who tried to retire in 2008.
"I AM EVERYMAN!" roared the SILLY MAN.
Letting someone else take a risk for you gets you involved in counterparty risk.
Shearer, you have a 401k. You are already involved in counterparty risk. Can't you see that?
325: This is really baffling me.
It's the kind of thing that only a non-Affirmative Action admit to Cal Tech can understand.
Fuck that kind of counterparty risk. The big issue is everybody in the whole world in stuck with counterparty risk from a few dozen large banks that obviously allow any employee with a nice suit and a very short run of above average returns to have uncontrolled access to enough capital to wipe out a lifetime of savings and not be face any negative consequences.
If it weren't for Ad Hominems there'd be no hominems at all.
I guess we've established that people taking jobs at IBM in the 80s (?) shouldn't have been entrusted with their financial futures. Nor should nearly anyone in their 20s or 30s. Nor, even, apparently in their 50s, if caring about the present value is any guide. Yes I care a whole lot about what's in my IRAs, but only ONLY as a means to create an income stream of sufficient size.
322: Its current value to me is $0 -- I don't vest until next March.
"See my vest, see my vest. Made of real gorilla chest."
See my loafers
Former gophers
It was that or skin my chauffeurs!
323
Evidently you are not a normal person. People don't care about "current value". They care about what will be there in retirement. To a normal person it is a good thing that they do not have the opportunity to spend down their pension 35 years before they retire.
This is delusional. Lots of low income workers prefer to work off the books to avoid paying social security tax although it is a good deal for them.
Also recall the tech industry is filled with libertarian types with some freedom to choose their employer. If tech employees wanted traditional pension plans tech employers would offer them.
Because all the other industries who aren't filled with libertarian types still offer defined benefit plans.
I can't even write "Dog Fucker" on it because my son can read now.
Heart this.
I'm inclined to be somewhat suspicious of any assertion that takes the form of "If employees wanted X employers would offer it."
Lots of low income workers prefer to work off the books to avoid paying social security tax although it is a good deal for them.
Net present value, high discount rates, etc.
I think it's a lot easier to assume that people working at IBM in the 1980s just weren't very good at financial planning than to assume that almost everyone else in the country is delusional. Certainly what happened to IBM in that period would bear that out.
I can't even write "Dog Fucker" on it because my son can read now.
Learn to write it in kanji?
The big issue is everybody in the whole world in stuck with counterparty risk from a few dozen large banks that obviously allow any employee with a nice suit and a very short run of above average returns to have uncontrolled access to enough capital to wipe out a lifetime of savings and not be face any negative consequences.
Heart this, too. Wish I had heard someone in the debates say it.
I mean, seriously. "This must be the right thing to do! It's what IBM did in the 1980s!" reads like an excerpt from "Child Care Secrets of Myra Hindley and Other Insanely Wrong-Headed Ideas about Which People to Use as Role Models".
Certainly what happened to IBM in that period would bear that out.
Anybody else remember the System 6 word processor? It was portable, if you had a van.
328
Shearer, you have a 401k. You are already involved in counterparty risk. Can't you see that?
Make that additional counterparty risk. If you have a traditional pension you are trusting your employer to put aside enough money to fund it. Experience shows they almost never do. So you are relying on them staying in business and not finding some way of evading their obligations. This can be a big risk. If I were say a Chicago teacher I would worry about not being paid but it would be difficult to evaluate exactly how big the risk is.
If you have a 401K you are trusting that the statements you get are accurate. I don't think the odds that Fidelity (or Vanguard) is sending me fraudulent statements are worth worrying about.
361.last is comically beside the point.
Right, they either don't understand that it's a good deal, or can't afford the luxury of understanding that it's a good deal. That doesn't mean that people deciding how to structure a policy environment ought to be swayed by their (apparently) revealed preferences.
If you have a traditional pension you are trusting your employer to put aside enough money to fund it. Experience shows they almost never do. So you are relying on them staying in business and not finding some way of evading their obligations. This can be a big risk.
PBGC? That kind of caps the risk. There's nothing like that for a 401k.
I was recently deciding between job offers where one had a pension plan and the others were 501Ks, and I found the whole situation very difficult to work out. It's quite possible that I undervalued the pension (the salary number from that job was lower than the others), but it was really hard to know. First it was hard to get estimates of what the actuarial values of the plans were, second even aside from the minor wait for the pension to vest, the lock-in effect is really strong. You really really want to stay at the same job forever, and if you ever move you're losing a lot. Also it seemed that the pension plan involved a bet that professors at that school would still be considered state employees for several decades, which didn't seem obvious.
I like the idea of a pension, but if employers want to use it effectively in negotiations then they really should have some independent actuarial comparisons at their fingertips in negotiation. Was IBM telling people "according to an independent estimate our pension is worth roughly the same as a 501K which contributes x% of your income"?
341
I think it's a lot easier to assume that people working at IBM in the 1980s just weren't very good at financial planning than to assume that almost everyone else in the country is delusional. Certainly what happened to IBM in that period would bear that out.
IBM offerred traditional pensions throughout the 1980s. They switched to 401Ks around 2000 (over a period of time I don't recall all the details). So you could argue that traditional pensions were another sign of the failure to keep up with the industry that almost ran IBM aground.
(Not actually sure the others were technically 501Ks, but defined contribution.)
It's better because the number go to 501.
348
Right, they either don't understand that it's a good deal, or can't afford the luxury of understanding that it's a good deal. That doesn't mean that people deciding how to structure a policy environment ought to be swayed by their (apparently) revealed preferences.
But it is something IBM executives have to account for when structuring their benefit plans.
353: Oops, just noticed that. I'm also not sure they're 401k's either.
I was sort of hoping that Upetgi's entire retirement plan consisted of a warehouse full of trousers.
Probably 403b. I think it's the same from the point of the employee.
333
322: Its current value to me is $0 -- I don't vest until next March.
This is wrong of course and an example of the type of thinking IBM was talking about.
The transparency point for a 401k seems really weak for a job applicant. 'We match your contribution up to X, God alone knows what it'll be worth when you retire, and what sort of income you'll have' seems to me to compare very unfavorably with 'we'll pay you half the average of your highest 3 years' as to giving an idea what the thing is actually about. I know there's a fancy term for the logical fallacy brought on by excessive certainty, but the notion that one could meaningfully compare these two kinds of approaches with some sort of arithmetic is breathtaking.
And also the cost of risk. If you don't understand that risk is something you should be paid to take (or alternatively something that it is worth paying someone else to take for you) then...
That's precisely why I wouldn't work for a tech company with a pension plan.
It's hard to imagine getting any benefit out of a pension from a place like IBM. Who's actually going to stick around long enough for it to vest? And, even if you plan to stick around that long, it's only due to Gerstner + a miracle that IBM still exists at all.
If you look at IBM's competitors in the era when Shearer was hired, you're looking at companies that have gone bankrupt, like DEC, Data General, Wang, Apollo, SGI, Cray*, etc., companies that have been acquired (which often seems to be a good excuse to slash existing pension benefits), like Sun, and companies that are still around, like umm, perhaps Intel (although they weren't really competing with IBM at the time). If you pick one particular industry that IBM was in (say, microprocessors), you could list almost a hundred companies in competition with IBM, and perhaps three of them still exist today. Of those companies, MIPS has gone from being a world leader to a washed up has-been. If they had pension obligations that would probably bankrupt them. AMD has only managed to stay solvent by selling off profitable parts of the company to fund the microprocessor business, so they would likely also be bankrupt if they had a pension plan (or, more likely, they'd restructure their pensions, making them nearly worthless). ARM is doing well.
I would consider a pension to be worth approximately zero at any tech company. It's not just that little startups go bankrupt. Companies that are leaders in the field (like DEC) often don't even exist a decade later. I'm not going to put my retirement into a bet that has a 2% chance of paying off.
* this name still exists in the computing industry because someone bought their assets and started using their name, after they went bankrupt.
356 -- I was going to make a seat of the pants calculation joke, but couldn't get it quite right.
349
PBGC? That kind of caps the risk. There's nothing like that for a 401k.
PBGC is only for private companies. I believe most traditional pensions today (in the US) are offered by public entities which have been known to go broke leaving their workers with nothing.
And the PBGC rules are pretty complicated, only part of my IBM pension is covered.
$0 is the current value to me if I quit today. The current value if I continue to work for the state depends on how long I work for the state, which is difficult to calculate. Predictions are hard, especially when they're about the future.
PBGC is only for private companies. I believe most traditional pensions today (in the US) are offered by public entities which have been known to go broke leaving their workers with nothing.
Yes, because most private companies have got rid of theirs! Good grief.
347
.last is comically beside the point.
So what is the point? That the TIPs in my 403b depend on the US government not permanently defaulting?
363
$0 is the current value to me if I quit today. The current value if I continue to work for the state depends on how long I work for the state, which is difficult to calculate. Predictions are hard, especially when they're about the future.
It probably also depends on your future salary, future inflation and how long you live. But with a 401K you don't have to worry about any of that, you know the value with every statement. Which is my point.
Oh, I didn't know about this PBGC thing. But the benefit is capped at $54k a year, which seems very low for retirement from a tech company. Just looking at my 401k and other retirement funds, I could retire and expect to draw an income of approximately half that right now, and I've been working for less than a decade at a not particularly successful tech company. I guess that cap is better than nothing, but I'd rather stick with my 401k + other savings.
And ARM is a very different company, compared with its 1980s self. Bring back the Archimedes series, say I!
362: There have been something like 700 municipal bankruptcies since 1937. If you calculate the annualized risk over the tens of thousands of government pensions plans, that's a fraction of a percentage point. Most of the really, recent ones have been due to financial chicanery (Orange County CA, Jefferson County Alabama).
360
It's hard to imagine getting any benefit out of a pension from a place like IBM. ...
Well I am collecting one. I could even live on it if I had to. I just didn't value it a lot until I started getting the checks (electronic deposits if you want to be picky).
366: The fact that it's harder to calculate with precision doesn't make it a worse deal. At any point it's trivial to calculate the lower bound of what my pension is worth (right now, $0, but it goes positive next March) and coming up with numbers for different possible scenarios (over which I have a great deal of control) is also trivially easy. I mean, trivial means fifteen minutes with a spreadsheet, but not more than that.
369 was supposed to have "big" in between "really" and "recent".
Why, it's almost as if there are certain calculations and decisions employees have difficulty making rationally on an individual basis! If only they could form some sort of collective body...
Just looking at my 401k and other retirement funds, I could retire and expect to draw an income of approximately [$27K] right now, and I've been working for less than a decade at a not particularly successful tech company.
I don't have anything clever to say, I'm just boggling at that a little bit.
More of 371: And of course the thing about a defined benefit plan that's harder to calculate, the present value, is completely unimportant because it's a retirement plan and you aren't spending it in the present, you're spending it in the future. A 401K is easy to precisely value in the present, when you're not spending it, and hard to precisely value in the future, when you are. A pension is the reverse. I think the comparison favors the pension.
369
There have been something like 700 municipal bankruptcies since 1937. If you calculate the annualized risk over the tens of thousands of government pensions plans, that's a fraction of a percentage point. Most of the really, recent ones have been due to financial chicanery (Orange County CA, Jefferson County Alabama).
I would not bet the risk will be that low going forward. The underfunding in many cases is enormous and you can't expect the same amount of growth to alleviate problems.
365: No. The point, which has been made repeatedly by myself and others, is that the risk of not having enough income in retirement is far greater with a 401K. You have to estimate 40 years of market returns plus the market timing risk of based on your retirement date.
376: Let me guess. I should take the market performance from 1960 to 2007 ask a safe assumption for my stocks in a 401k but I can't use the pension plan failure rate from municipal governments for the same period for some reason that isn't at all special pleading.
Well I am collecting one.
For one thing, I think you're lucky that IBM didn't go under. But, the main thing is that the industry has changed a lot. I know a lot of people who started their careers at IBM 20+ years ago, who are now DEs, Fellows, or VPs there. But, I can't think of anyone who started there since I started my job who hasn't already left or isn't at least trying to leave.
Part of that is the industry I'm in; I mostly know IBM microprocessor folks, and it seems that STG is losing money by IBM's internal accounting measures (even though a large part of their profitable consulting business would evaporate if they shut down their POWER line). As a result, funding is poor and people are stressed. But the bigger issue is that people rarely stay in jobs as long now.
371 375
More of 371: And of course the thing about a defined benefit plan that's harder to calculate, the present value, is completely unimportant because it's a retirement plan and you aren't spending it in the present, you're spending it in the future. ...
Completely unimportant unless you are comparing job offers in which case it is the number that matters (more precisely how much it is increasing each year). It seems to me you are just confirming IBMs claim, you have no idea what your pension plan is worth on an annual basis.
I have to say that, the last time we had this argument, I was convinced that James is correct -- that I expect most people undervalue defined benefit pension plans and that this is a political problem in fighting for them.
I also think that 373 is correct that there is a collective action problem going on. I like the idea that MY has floated of raising SS taxes and benefits so that SS can cover a majority of people's retirement needs, but I don't think that's going to happen anytime soon.
I look at this discussion and kind of think I am/we are fucked. I am sympathetic to the point that pensions have often been screwed with in the past and that contributions by employers have often been smaller than necessary (sometimes because of over-optimistic predictions about the performance of the pension's investments), so I don't think James is entirely wrong to point out that there's a substantial, likely increased, but hard-to-measure risk of a big pension failure. Similarly, however, I don't think a 401(k) investor can reasonably expect the 1960-2007 stock growth to be repeated going forward; safe assumptions are much lower and don't provide very much total growth over the lifetime of the investment. My personal current plan is just to shovel as much money as possible into the vehicles I have (401(k), Roth IRA) and desperately hope that I stay reasonably high-income and can keep shoveling at a rate that means I only need a little bit of growth. But that's clearly not a plan that works well for anyone who doesn't make a decent pile of money.
(My wife has a public-sector, defined-benefit pension, that by all reports is actually reasonably funded, but it ties her to the job for more than 20 years before it vests at all, which sucks.)
It seems to me that's you've never looked at a chart of the Dow Jones averages of the past 15 years. How much the numbers are increasing is often negative and highly variable.
You know, there's really no reason to doubt that people earning incomes in the upper 10% of society can, with some discipline, make a fine retirement for themselves, without looking for huge luck. As you go down the income scale, the amount of discipline and luck required to come out well go up pretty steeply, to the point where we're going to be looking at a much poorer elderly in the not too distant future. I don't know what the net worth figures on people now 60 look like, but this is a group that has way fewer pensions than people now 80, and that's going to make a big difference.
380: Why would you say that? If I want a number for that in any year, it's fifteen minutes with a spreadsheet. (Well, fifteen minutes once to set it up, thirty seconds to input the numbers from my latest statement each time.) It'd take a certain amount of thought to determine an appropriate rate of return for an investment as low risk as a state defined benefit pension, but it's not going to be prohibitively difficult. (This number could be calculated by the plan for me on my statement, and actually might be someplace -- I don't have a statement here to look at.)
If what you mean to say is that most people find that fifteen minutes of work prohibitively difficult, so they systematically undervalue defined benefit plans, that (a) could be fixed by having the plan do that calculation for you and (b) has nothing to do with what the value of the pension actually is.
it ties her to the job for more than 20 years before it vests at all
That's bizarre and is illegal for private pension plans. They have to have, at a minimum, 100% vesting after 3 years (cliff vesting) or graduated vesting over 6 years (partial vesting).
386: It occurs to me now how easy it is to get that number. When I had a job with a state pension, I left before working long enough to collect (or vest). They had no trouble at all giving me the cash equivalent for my plan.
Why, it's almost as if there are certain calculations and decisions employees have difficulty making rationally on an individual basis! If only they could form some sort of collective body...
And if only the actions of such collective bodies revealed the preferences of employees for DB versus DC plans, even to the extent that the employees would take lower wage increases to protect or improve DB plans.
it ties her to the job for more than 20 years before it vests at all
Because the laws governing defined benefit retirement plans suck. If pension plans were universal or close to it, you could just require that they be transferable. Someone who has worked at workplace A for five years, moves to workplace B for ten years, and then switches to workplace C will start off with fifteen years credit in the pension plan at workplace C. Workplace C will be able to afford it because they'll have all the pension plan contributions for workplace A and B plus interest transferred to their pension fund. This is the way it works in Switzerland or at least did up to the point my mom retired several years ago, having switched jobs on several occasions.
I disagree that the calculation in 386 takes 15 minutes. If it took 15 minutes I would have done it. It wasn't even clear to me what the right calculation to make was. Plus what I want is not just the expected value but the full probability distribution, which makes it an even harder calculation.
I think James is secretly right here, though not making the argument very clearly. 360 makes a really good point. I honestly only want a pension from someone with the ability to print dollars (or *maybe* another solid currency).
377
No. The point, which has been made repeatedly by myself and others, is that the risk of not having enough income in retirement is far greater with a 401K. You have to estimate 40 years of market returns plus the market timing risk of based on your retirement date.
This is a risk but it isn't counterparty risk which is the risk that someone with which you have a contract will fail to fulfill (by for example failing to pay you a promised pension). The risk of not having enough income in retirement mainly depends on how generous your plan is not what form it takes.
390 also gets it right. One of the places I interviewed (but didn't get an offer at) was in Canada. The defined benefit plan there was very generous and had much better terms for what happened if you switched jobs. (Much much better if you switched jobs within Canada, but still not totally sucky if you switched out entirely.)
The calculation I'm thinking of is "If I quit today, starting on [Date] I get paid [Amount]/month until I die on [Actuarily Determined Date]." I'd have to mess around a bit to get the formula straight, but with that and a rate of return, that gives me a present value, no problem, and I can pull all of those numbers off my statement (or from my age, sex, and an actuarial table). I do the calculation again a year from now, and the change the present value is how much the value of my pension has increased.
What am I missing? I'd believe it's something fundamental, but walk me through it.
378
Let me guess. I should take the market performance from 1960 to 2007 ask a safe assumption for my stocks in a 401k but I can't use the pension plan failure rate from municipal governments for the same period for some reason that isn't at all special pleading.
Of course not. It's questionable that you should even have your retirement money in stocks at all, you certainly shouldn't be assuming a return based on a very favorable past period.
The 23-year cliff vesting is bizarre, but I think is the result of repeated rounds of negotiation where the (dominant) union decided to protect its long-time members at the expense of newer ones. It used to be considered a scandalously generous pension, because one could start working at the agency (driving a bus) at age 18, retire with the pension at age 41, and start an entire second career backstopped by the pension income. Now in addition to the 23-year cliff you have to be over 55 to start collecting.
395: If you have nothing in stocks, you have expected returns below inflation. This may be "safe" but it also means that nobody who isn't making something like twice the median wage can even hope to retire.
A defined benefit plan, assuming you work for a government or some other entity that has a guaranteed existence for several decades, is great except in periods of high inflation. A defined contribution plan is great except in periods of low investment returns. Fortunately, I know which of these conditions will apply in the next 20 years and which will not, so I have made the appropriate choice.
Personal anecdata: my grandfather got thorougbly screwed out of the real value of his defined benefit union-based plan because he retired in 1970, and kept getting defined value checks that were wroth less and less.
389: It's a mystery! Teach us, O Shearer.
sral: The point is that a fair share of risk should be borne at the collective level, and not let individuals wash up on the rocks. 401ks might be more convenient, but they put 100% of the risk on the individuals. Employees with any leverage ought to demand better.
If this principle were more widely shared by politicians, I feel sure some kind of portable, convenient defined-benefit system could be arranged: maybe companies pay into a government-managed fund based on your salary and expected needs on retirement, with reinsurance, so the guarantee sticks around after the company disappears. But instead the ideals of the system are "oh no, corporations are experiencing risk, let's help them offload it ASAP."
My mother has an extremely comfortably retirement from the TIAA-CREF defined contribution due to retiring in 2007, and accumulating stock in the entire period from Dow 700 to Dow 11,000. She also got a fixed-rate mortgage in 1971 that had a negative real interest rate over part of the time period.
BTW, a defined benefit plan sucks if you die before you get to collect. Happily for my mother, my father was also in a defined contribution plan that she now benefits from.
My mother has an extremely comfortably retirement from the TIAA-CREF defined contribution due to retiring in 2007, and accumulating stock in the entire period from Dow 700 to Dow 11,000. She also got a fixed-rate mortgage in 1971 that had a negative real interest rate over part of the time period.
BTW, a defined benefit plan sucks if you die before you get to collect. Happily for my mother, my father was also in a defined contribution plan that she now benefits from.
If you have a defined contribution plan, you have no reason not to die.
More seriously, I thought that you have to actually get your spouse to sign a form saying "I want to fuck myself over" if they aren't going to be on your defined benefit plan.
I think I know the kind of thing that Shearer is talking about, though it's not a good argument for 401ks. Everywhere I've worked has made a big show of explaining that my compensation is my salary, my healthcare, and the annual 401k contributions to make a big round total number. So then they can say "well, our salary is lower, but if you take into account all your compensation you're really making X!" This is a little fudgy, esp. w.r.t. health care, but I can see why companies prefer that, marketing wise.
One of the guys I office share with is the son of a judge. The judge outlived two wives, before dying himself last year at 98. Not before designating my colleague as co-beneficiary, so he'll collect until he dies.
406: wait, what? I'm pretty sure a defined benefit plan covers at most a spouse and minor children until they reach 19 or so. A defined benefit plan that covered the lifespans of children of the deceased would be acutarially absurd. If it's a 401k, then children get the remainder.
404: Probably true, so you're screwed only if you die unmarried. My grandfather survived his wife.
More seriously, I thought that you have to actually get your spouse to sign a form saying "I want to fuck myself over" if they aren't going to be on your defined benefit plan.
Yeah, once I've hit 20 even if I haven't retired yet and get shot in the face or something they treat the pension like I'd already retired and she gets the benefit.
409: So, not the shooter. Possibly.
What if your wife is the one to shoot you in the face?
410: Possibly. She has her own pension and the teachers also pay into SS. She might just decide I'm too big a pain in the ass and take her chances.
Just making 410.last extremely explicit.
you have to actually get your spouse to sign a form saying "I want to fuck myself over"
The marriage license implicitly covers this.
I've never actually seen anything in the regs about circumstances under which the benefit would be forfeited. If she was caught maybe she just gets the checks deposited on her prison account or something.
415: Ask your union rep then disappear for a few weeks.
Don't most states have a general "no profiting from a crime" law? I believe this from mystery novels rather than from professional experience, but it does make sense.
I assume you have Westlaw and could look it up for us.
This implies that the "slayer's rule" can be applied generally in common law whether or not there's explicit legal or contractual language on the subject. Example.
God, do I ever love SLAYER laws.
slayer's rule
I didn't think slayers had a benefits package.
399.sral is a fair point, but, with the actual system in existence as it is now in the U.S., I don't think there's anything wrong with using Shearer's algorithm for valuing your pension, if you work at a tech company.
Of the companies I'm thinking of moving to right now, one is a startup that I'd say has a 50% chance of being solvent in a year, and perhaps a 1% chance of being solvent in a decade. Another is a startup that has enough funding to keep going for at a year, but, considering the record of startups in the area, I'd give them a 30% chance of being around in 5 years. The third is a successful established big company. Considering the track record of leading companies in the area over the past four decades, I'd say there's an 80% chance they'll still be successful in five years, and perhaps an 80% chance that they'll be solvent in a decade. So, I might value a pension at company #3 at slightly more than zero, but I wouldn't expect to stick around long enough for the pension to vest anyway.
388
It occurs to me now how easy it is to get that number. When I had a job with a state pension, I left before working long enough to collect (or vest). They had no trouble at all giving me the cash equivalent for my plan.
If you weren't vested they didn't have to give you anything. Did they require you to take the cash equivalent or could you have chosen $x a month starting at age 65 (or whatever)?
423: They had to give me my contributions and the returns from that. They didn't give me what they contributed to my retirement. It was exactly the same in my current job for the 401k, operationally. There was no option to take any payments on retirement. I got a lump sum which would have been taxed into nothing if I didn't roll it over into an IRA or something related.
397
If you have nothing in stocks, you have expected returns below inflation. This may be "safe" but it also means that nobody who isn't making something like twice the median wage can even hope to retire.
This is true at present I think but historically bonds have yielded a bit above inflation (especially in a tax free account). Anyway just because you want high returns doesn't mean there is a safe way of getting them. One of the major problems with defined benefit pension plans is underfunding due to return assumptions based primarily on wistful thinking.
424
They had to give me my contributions and the returns from that. They didn't give me what they contributed to my retirement. It was exactly the same in my current job for the 401k, operationally. There was no option to take any payments on retirement. I got a lump sum which would have been taxed into nothing if I didn't roll it over into an IRA or something related.
Well then they weren't valuing the defined benefit part of the plan at all. They were valuing the defined contribution part which is easy.
I'd actually like people to pick apart 324. I'm really not all that financially sophisticated, so I could be missing something pathetically obvious, but with a rate of return and a defined income stream starting and ending on knowable dates (well, estimateable dates for death), isn't arriving at a present value trivial? If it's not, what's the problem?
Knowing what you will have earned by the time you retire is a problem, but that's the same for a 401K.
And when I say 324, i mean 394.
And when I say 'i', I mean 'I'.
After the Apple singularity we'll all be 'iI's.
Knowing what you will have earned by the time you retire is a problem, but that's the same for a 401K.
I have no personal experience with DB pensions, but I think part of what JBS and sral is saying is that if the changes in the value of the pension are discontinuous (e.g., because of the vesting processes), it's hard to judge how much participating in the pension plan is worth in any given year.
It doesn't make sense to say that the participation is worth 0 in years 1 and 2 and then a lot in year 3, but it also doesn't make sense to just take the value at year 3 and divide it equally between years 1,2, & 3 -- because one might leave before vesting.
394
The calculation I'm thinking of is "If I quit today, starting on [Date] I get paid [Amount]/month until I die on [Actuarily Determined Date]." I'd have to mess around a bit to get the formula straight, but with that and a rate of return, that gives me a present value, no problem, and I can pull all of those numbers off my statement (or from my age, sex, and an actuarial table). I do the calculation again a year from now, and the change the present value is how much the value of my pension has increased.
What am I missing? I'd believe it's something fundamental, but walk me through it.
You are missing the fact that you probably aren't going to quit today and your benefit is likely worth materially more if you don't. Defined benefit pension plans are traditionally backloaded, you earn most of the benefit in your last few years of employment. This means as has been pointed out above they are a bad deal for people who change jobs.
Suppose you had a plan that vested all at once after 25 years. Then you could value it at nothing for the first 24 years and at some large sum in the 25th year. However I believe the correct way of looking at it is that each year the probablity you will make it to 25 years and collect the benefit increases and that this accounts for some increased value of the benefit (as does the fact that you are closer in time to receiving it) each year. But this is obviously a complicated calculation. Backloading is generally not this extreme but the issues are the same (another of which is the plan may be changed before you reach the high earning years which happened to me to some extent). In my case my benefit is about 25% higher because I was laid off after my 54th birthday (by a few months) instead of before. If you only look at what you are guaranteed then the benefit will appear small to young (or new) employees which is what IBM was saying.
Anyway while you claim the calculation is easy you apparently haven't actually done it and it is doubtful you would do it when weighing competing job offers.
It doesn't make sense to say that the participation is worth 0 in years 1 and 2 and then a lot in year 3,
Why not? If you had a contract that said "No bonus in year one or year two, if you're still working here at the end of year three you get a $[Amount] bonus", I'd think it would be perfectly coherent to attribute that income to year three. When considering the job, a provision like that would make it make sense to do your comparison over the first three years of this job and possible alternatives rather than on the first year's income only, but you still aren't earning the bonus until the third year.
432: You're comparing the difficulty of figuring out what your pension payments will be when you retire with the ease of figuring out how much cash went into your 401K this year. That's not a level comparison.
It is easy to figure out how much pension compensation you have 'earned' in any given year, just like it is easy to figure out how much money went into your 401K that year. It is hard to know what your 401K balance will be when you retire (given all the uncertainties about future income, contributions, and investment returns), just like it is hard to know what your pension will be when you retire (given uncertainties about future salaries and how long you will be at any given job.)
I have, in fact, calculated the present value of the pension I've earned to date -- I gave it above. You're right that I probably won't calculate the present value of my pension once it kicks in, because I never do anything like that; I'm a complete financial slob. Doesn't mean it's not easy.
Suppose you had a plan that vested all at once after 25 years.
Can we limit our supposing to things that might be even vaugely legal under current U.S. law?
435.1 is supposed to be in italics.
And supposed to say "vaguely legal".
431
I have no personal experience with DB pensions, but I think part of what JBS and sral is saying is that if the changes in the value of the pension are discontinuous (e.g., because of the vesting processes), it's hard to judge how much participating in the pension plan is worth in any given year.
It's not just the vesting process, the benefits formula for a defined benefit plan is generally backloaded so that your guaranteed benefit is increasing at a much faster annual rate near retirement than when you start work. But of course you don't get the opportunity to earn the benefit at the highest rates if you don't work for many years while earning the benefit at the lower rates. So there is some value to the earlier years in that they are providing you an opportunity to eventually raise your benefit rapidly. But as you say it is very unclear how to apportion the value.
The pensions that I'm familiar with depend on your final salary when you retire and on the number of years that you'll live, and both of those are bits of information that's it's hard for me as a non-actuary to get my hands on.
433
Why not? If you had a contract that said "No bonus in year one or year two, if you're still working here at the end of year three you get a $[Amount] bonus", I'd think it would be perfectly coherent to attribute that income to year three. When considering the job, a provision like that would make it make sense to do your comparison over the first three years of this job and possible alternatives rather than on the first year's income only, but you still aren't earning the bonus until the third year.
If you compute the value of defined benefit plans in this way then they are generally worth very little in their early years compared to 401K plans and companies offering them will suffer when competing for employees with companies offering 401Ks.
The latter isn't -- you can get a reasonable estimate without all that much information. The former problem, as I said in 434, isn't really different from the parallel problem with a 401K -- you don't know how much you're putting in in a given year until you know how much you're going to make in that year. It's a problem, but it's the same problem on both ends.
439:
$124,356.35 and 87 if you stop playing chicken on the railroad tracks.
the benefits formula for a defined benefit plan is generally backloaded so that your guaranteed benefit is increasing at a much faster annual rate near retirement than when you start work.
That happens with 401Ks also, assuming you don't happen to near retirement at the wrong point of an economic long cycle. It's a natural result of compounding returns as I'm sure anybody with knowledge of math would figure out in an instant.
For the pension it doesn't matter what you're paid in a given year, only what your final salary is at retirement. That means way more uncertainty, relative to a 401k where it's the average salary that matters.
A 401k if anything is weighted towards your early salary mattering more, since that's the part that will get invested. And it's your early salary that you actually know.
394 sounds about right to me as far as it goes.
The biggest difference with defined benefit plans is the risk that a local government fails. Hard to quantify. IMO, most discussion of this is pretty hysterical. Here's a readable document about these:
http://www.scribd.com/doc/109505856/Gurtin-Fixed-Income-Presentation-TBP-Conference-10-4-12
The other risks are that there are constraints on what you can do with the present value. Nobody likes to think about disability, currency failure, or other unpleasant life changes that create a preference for money right now, but these longshot risks are the other advantage of 401(k) plans. Maybe if you get sued or otherwise incur debt there are differences also. I don't lose sleep over any of these.
I expect that my kid will inherit a lot of my IRA, and I speculate that the risk of currency collapse before the end of his life is above 30%, but this is different from a retirement calculation. There are tax differences in treatment of inherited IRA vs Roth also.
No, 394 is right. It would be basically easy.
The 401k is easy to value because we indulge in magical thinking. "Present value" means the discounted value of future cash flows. We assume that this equals "stock price", because that's less work, but the evidence for this is in thin on the ground, since stock prices are much more volatile than the cash flows turn out to be. Hopefully, they'll give Shiller the econ Nobel on Monday so that this comment seems extra prescient, since this this observation is Shiller's claim to fame.
Right, 401k's are uncertain too, because investment is super uncertain. I think they're both very hard to value. What you want is a good federal social insurance program.
Is it really way more uncertainty? First, pensions usually depend on the highest earning year (or average of the three highest earning years), not the final year. It's usually going to be the same, of course.
So in any year, you've got a lower bound on what your pension will be if you hold out to retirement (as well as a number for what you're entitled to if you quit that day), just do the math assuming you never get another raise. I guess there's more uncertainty on the upside -- a big late raise would jack a pension way up, but wouldn't do much for a 401K -- but I don't see where more downside uncertainty comes in.
Life expectancy calculator from U Penn. I am apparently going to live for-freaking ever (well, 50-50 shot of hitting 95, 25% chance of getting past 103).
444
That happens with 401Ks also, assuming you don't happen to near retirement at the wrong point of an economic long cycle. It's a natural result of compounding returns as I'm sure anybody with knowledge of math would figure out in an instant.
This is nonsense. With a 401K your early contributions have more time to compound than your later contributions.
With a 401K there are 2 separate issues. How much money you are adding each year and how much investment increase (or decrease) you are getting on previously contributed amounts. The amount contributed each year is a component of that year's compensation. Investment returns are not.
It also isn't that hard to guess what you'll make in your last three years. The salary ranges are all posted, along with raises for years of service. You can know pretty squarely where you'll be even if you don't promote and make a guess at what positions you might promote to and know what the salary range is there.
With a couple realistic assumptions, you can get a range for end of career salary.
We don't have that kind of info -- it's more like working in the private sector.
452: You are once again beside the point. With a 401k, your benefits (more exactly, the amount you have to draw upon to retire) are going to go up more rapidly the closer you are to retirment because the earlier contributions are compounding. Keeping in mind the caveat about the stock market, of course.
You don't? Huh. Naw, there's no mystery for us. Every position has a range, rate of increase per year until you get to top of range. You could maybe wonder whether the union will negotiate new cost of living increases, but that and the question of how high you'll promote are the only sources of uncertainty.
Which is interesting to me because the first level of management gets paid only 4% more than the top of the grunt range. But they do vastly more yucky work, like managing money and schedules and people and contracts. Maybe two levels of managers does better work, but the first level of management looks entirely unrewarding to me.
450
So in any year, you've got a lower bound on what your pension will be if you hold out to retirement (as well as a number for what you're entitled to if you quit that day), just do the math assuming you never get another raise. I guess there's more uncertainty on the upside -- a big late raise would jack a pension way up, but wouldn't do much for a 401K -- but I don't see where more downside uncertainty comes in.
There are several forms of downside uncertainly. You may leave your job before you retire whether voluntarily or not in which case backloaded formulas work against you. The plan may change before you get a chance to earn benefits at the higher rates (IBM did this to some extent while switching to 401Ks, existing employees were protected to some extent but still suffered losses compared to the previous status quo). You may die before retirement age (or more generally soon after retirement) in which case your heirs (at least if you are unmarried and without children) get nothing. If your employer is a public entity it may go broke like Pritchard Alabama leaving you with nothing.
Civil service jobs might have that, but I'm not civil service, I'm management/confidential (and was even when I wasn't managing anyone. I suppose I was confidential at that point.)
I'm managing people, but I'm not management. So far, nobody has noticed.
It's sort of like a civil service job, but we don't get raises for cost of living increase or raises for years of service.
451
Life expectancy calculator from U Penn. I am apparently going to live for-freaking ever (well, 50-50 shot of hitting 95, 25% chance of getting past 103).
Suppose you were a guy?
Among the numerous reasons to expect us to differ on this issue is the fact that lower life expectancies for men makes 401Ks look better (compared to defined benefit plans) for us than for women.
Note in 394 you say you will take your sex into account when computing the value of your defined benefit. This means by your calculation (and by my more complicated methods as well) it will be worth more for you than it would be for me.
455
You are once again beside the point. With a 401k, your benefits (more exactly, the amount you have to draw upon to retire) are going to go up more rapidly the closer you are to retirment because the earlier contributions are compounding. Keeping in mind the caveat about the stock market, of course.
Your expected retirement income doesn't go up as you near retirement (although the amount of uncertainty decreases). A certain investment return is expected (and can be pretty close to guaranteed if you are invested in US government bonds) and taken into account.
450
... just do the math assuming you never get another raise...
Once again this will result in a lowball estimate which understates what defined benefit pensions actually cost your employer.
I'm done. You have shifted once again.
Suppose you were a guy?
I'd be getting paid more. (Try the veal, I'll be here all night.)
Certainly, life expectancy figures into it. The fact that I'm likely to live longer than you are means that a defined benefit pension is a better deal for me than the same one is for you, but it doesn't mean that a given 401K program would be better than a pension for you.
There's going to be a crossover point where someone's life expectancy is low enough to make the 401K a better deal for any two retirement plans, but you'd need to do the math to find it.
466
I'd be getting paid more. (Try the veal, I'll be here all night.)
Really? You should sue.
Certainly, life expectancy figures into it. The fact that I'm likely to live longer than you are means that a defined benefit pension is a better deal for me than the same one is for you, but it doesn't mean that a given 401K program would be better than a pension for you.
No but it means that it is more likely that a 401K will be a better deal for me than it is for you.
453 is also not at all what I was looking at. The range of salaries between full professors there was roughly a factor of 2.
There's another factor that's hard to compare between pensions and 401Ks, because the present value calculation systematically eliminates it: the fact that you can't outlive a pension. If you have a pension and a 401K with exactly the same present value, the person with the 401K has less money to spend in retirement because they have to worry about outliving their resources. (If they don't outlive their resources, they may end up having money to leave their kids. If they do, they may end up being supported by their kids).
For someone with enough wealth that it's unlikely they can go through it all on retirement living expenses, that cuts in favor of the 401K, but for the other 95% of the population, a pension is less risky in that regard.
No but it means that it is more likely that a 401K will be a better deal for me than it is for you.
This goes back to the difference between an investment and social insurance.
It is very much a bug, not feature, for a given investment to have widely varying value for different people. But it is normal and good for different people to get different value from social insurance.
The defined-benefit pension includes a strong social insurance element.
As you point out, this makes it easy to attack as being unfair, in some circumstances, and to try to divide different classes of employees. This is socially negative (in the same way that it may be rational for an individual employer to seek healthy employees in order to minimize health costs that efforts creates social loss).
[It's been a long week, and I didn't sleep well last night. I don't feel too dumb today, but I do feel like my writing is much less clear than it could be.]
Just to tie 470 back to some of the earlier comments, a defined-benefit system with a PBGC or PBGC-like entity picking up the risk of employer failure has an even greater social-insurance component to it.
469
There's another factor that's hard to compare between pensions and 401Ks, because the present value calculation systematically eliminates it: the fact that you can't outlive a pension. If you have a pension and a 401K with exactly the same present value, the person with the 401K has less money to spend in retirement because they have to worry about outliving their resources. (If they don't outlive their resources, they may end up having money to leave their kids. If they do, they may end up being supported by their kids).
There are products called life annuities to deal with this problem. There is an adverse selection problem because people buying them tend to be healthier than average but it isn't too bad. There is also an inflation risk but this is true with many traditional pension plans as well.
For someone with enough wealth that it's unlikely they can go through it all on retirement living expenses, that cuts in favor of the 401K, but for the other 95% of the population, a pension is less risky in that regard.
It's true I am in the 5% here which naturally colors my thinking.
470
The defined-benefit pension includes a strong social insurance element.
This may be true but it isn't something most people give a lot of weight to while comparing job offers.
For those in the 5%, there's the 'You can't take it with you' problem, of course. Depends on how you feel about your heirs, but there's an argument to be made that the value of any assets you die with is zero to you.
Shouldn't that show up in your discount rate?
350
I like the idea of a pension, but if employers want to use it effectively in negotiations then they really should have some independent actuarial comparisons at their fingertips in negotiation. Was IBM telling people "according to an independent estimate our pension is worth roughly the same as a 501K which contributes x% of your income"?
Not when they hired me. And there are a lot of problems with doing this starting with the fact that IBM is paying for this "independent" acturial assessment (and probably specifying a lot of the assumptions) meaning a prudent potential employee would be reluctant to rely on it totally.
Another problem is that IBM set up their traditional plans so your pension was based on your highest salary years prior to some date in the relatively near future which was periodically rolled forward. But of course IBM was under no legal obligation to continue rolling the date forward and stopped doing so when it terminated its traditional plans.
367 But the benefit is capped at $54k a year, which seems very low for retirement from a tech company. Just looking at my 401k and other retirement funds, I could retire and expect to draw an income of approximately half that right now, and I've been working for less than a decade at a not particularly successful tech company.
Wow. I'm also boggling at this. I couldn't hope to get even a tenth of that, after a bit more than four years of having a 401k-like plan.
475
For those in the 5%, there's the 'You can't take it with you' problem, of course. Depends on how you feel about your heirs, but there's an argument to be made that the value of any assets you die with is zero to you.
Perhaps there is an argument there but it won't have much appeal to a pathological miser like me. And I expect to be able to live off income without substantially reducing my standard of living which eliminates the living too long problem which arises when you try to arrange to spend all your money.
Our friendly-local libertarian goes to war for what the UK calls "final salary" pensions? (i.e. DB, much prized in the UK as everyone assumes that DB->DC transition is necessarily fraudulent)
Sorry, my head asplode. The Right has been hammering money-purchase (DC, i.e. like a 401k) for 30 years through a succession of horrible disasters, and Shearer thinks the weak-minded innumerates undervalue final salary schemes?
465
I'm done. You have shifted once again.
It's not my fault you don't understand pension accounting.
And it is certainly not necessary for pension formulas to be backloaded, social security isn't, but most traditional defined benefit pension formulas were.
I'd like to put in another plug for the Swiss system. It's made up of an SS type 'public pillar' which provides a minimum of 20% of the average salary and a max of about 40% or the average Swiss salary, funded by an uncapped payroll tax of about ten percent (split like in the US) meant to cover 80% of its outgoing expenditures, with the rest coming from general taxation- i.e. it's highly redistributive. It is supplemented by a mandatory private pension with escalating contributions - from 7% of wages for young people up to 18% for people in their fifties and sixties. Between them, assuming a more or less standard income progression and standard length career, you should end up with an indexed pension of about sixty percent of your late career income. Beyond that you have voluntary retirement funds that are similar to the American 401k system.
Re: the boggling, I think the main factor is that my expenses are very low; I could live fine off of my grad student stipend, and my base salary is more than an order of magnitude higher than that.
The ESPP program is nice, but it seems to be standard at tech companies. You put up to X% of your salary into buying stock, and at the end of the period you get to buy stock at 10% (or perhaps it's 5%) less than the lowest price of the stock over the six month period. Even though our stock has performed poorly, it's been volatile, which is great for employees, if not for investors.
My compensation isn't particularly good for an engineer; because I (used to) really like my job, I've turned down job offers with total compensation > $100k more than I'm making (if you count vesting of RSUs). From the stats I've seen, I'm making much more than both the national average and the regional average, but I don't know anyone who makes anything close to either number*, so I don't know where those stats come from.
*Oh, actually, I can think of a few people who work at a large company that doesn't give raises much above inflation.
378
Let me guess. I should take the market performance from 1960 to 2007 ask a safe assumption for my stocks in a 401k but I can't use the pension plan failure rate from municipal governments for the same period for some reason that isn't at all special pleading.
As an example of the risks to pensions from municipal governments consider this recent NYT article about Chicago teacher pensions:
The State Legislature, whose approval is needed for such changes, has said pensions must wait until next year. But Mr. Emanuel says the system is broken and he is not willing to make any increased contributions until it has been fixed. The mayor said earlier this year that making the larger contributions would lead to "direct cuts in our classrooms."
So the mayor of Chicago is deliberately withholding needed funds from the pension system in an attempt to create a crisis and force benefit cuts. Hard to say how this will end but a Chicago teacher would be ill-advised to assume their benefits are risk free.
(if you count vesting of RSUs)
Rodents of Size Unusual?
486
Restricted Stock Units I believe. Googling says I am correct .
