Peter Dorman at Econospeak, who is smarter and nicer than I am,* boils down the question:
[D]o you believe that managers normally make the right decisions over how to run organizations?
If you believe that premise, please explain:
- Why all those great managers of the late 1940s through the mid-1970s ran defined benefit contribution plans, but their successors—who supposedly are more capable—are only capable of offering defined contribution?
- That “underfunded pension benefits” are evil, but “overunded” pensions led to the LBO (now “Private Equity”) movement of the 1980s.
- That, in the 1980s, GM being $1B underfunded caused Congress to pass a bill allowing pensions to become fully funded over 20 years—and that most of those targets were missed?
If bosses are so good at managing “ongoing concerns,” why do they take their payments upfront? What does—and should—this tell us about discount rates?
*This is a fairly low standard, outside of people who work in finance.