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Verizon CEO Lowell McAdam (sort of) coins a new phrase that is apt: “Rotary Phone Economics.” That is the kind of economics practiced and espoused by the Bern and the group of kids trying to have me unionized. You may be entertained by McAdam’s post. Now, I am not sure what I think of the entire post, but it is pretty clear at least that “Big Company” is synonymous with “evil” for the Rotary Phone Economics club. Note, too, that this is not an endorsement of “Big Company” … I think there is not nearly enough competition in┬átelecommunications and there are likely places where lots of rent seeking is occurring that I just do not know about.

The kind of economics I might have some respect for, however, if you want to have an instinctual negative response to places like Verizon, is not the bash-brothers form of socialism that Bernie and his supporters seem to want, but something closer a feedback crazy free-market anti-capitalist position. More on that position over some beers one day!

Question: Does anyone have a clue for how well funded SEIU pensions are? Just curious.

Update: and in other news from the frontiers of our “Free Market Paradise” … Exxon strikes back from the stake against the burning of witches.

2 Responses to “The Rubicon Was Crossed a Long Time Ago”

  1. Gabe says:

    I can tell you that Government pensions are conspicuously exempt from the funding standards outlined in ERISA, which is why Governments are still able to offer DB plans while they have become virtually extinct in the private sector. I know that the discount rate is 7%, which is about 300 bps higher than the discount rate we use in our best estimate scenarios (they should be using their projected portfolio rates, not some arbitrary figure). I also know that their plans would fail any stress test, including very favorable ones (short of 10% equity returns, persistently low interest rates to keep MV of assets high, perfectly immunized portfolios, and low mortgage prepayment assumptions, none of which would be considered stressful by the State of New York). Well, this doesn’t answer your question at all, but I wouldn’t be surprised if the SEIU had the same lack of funding requirements that Government plans have.

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