Enraged Greek Journalists Thrash Their Pension Fund Manager

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If you want to get a peek at what the future holds for entitlement democracies like our own, look no further than Greece. The spectacle of enraged journalists "punching, kicking, and tearing at clothes" on the way to sending their pension fund manager to the hospital offers a poignant vignette of the coming war of all against all when the broken promises made by generations of politicians come due. The story, recently reported by Reuters, shows a society that is unwinding, crushed by unfunded liabilities that have piled up for years across both the public and private sectors.

What helped kill the Greek Journalist Union's pension fund was a requirement to pool the union's investments with other pension funds, placing them in Greek government bonds now trading for pennies on the dollar. With no chance that these bonds will be redeemed at face value and every prospect of default, retired and soon-to-be-retired journalists worked themselves into a frenzy, attacking not the politicians that robbed them, but one of their own members responsible for looking after their nest eggs.

That's probably how U.S. pension fund victims felt when their bonds were wiped out as part of the extra-judicial Chrysler bailout. The difference is that they had no one to beat up. But as the federal government's credit rating heads south and the rule of law that protects private assets continues to erode, don't be surprised when the mob starts looking for the nearest bystander to pummel and the largest pile of assets to plunder.

You would hope that the fiscal cliff drama now playing out on every 24-hour news channel would prompt a re-examination of our propensity to spend ourselves into oblivion. Instead, in an effort to garner public support, progressive politicians are demanding even more stimulus and entitlement spending. After all, the goal is to "win" the negotiation, isn't it? How else could they blame their opponents for anything that goes wrong while laying claim to rescuing us from the latest self-inflicted crisis? Even when the economy begins spiraling down in the aftermath, without their heroic efforts "it could have been worse." To demonstrate the seriousness of these negotiations, our safely re-elected president recently campaigned at a Tinkertoy factory. Fitting, no?

Of course, whatever compromise our brilliant leaders cobble together at the eleventh hour will be merely a "down payment" sure to last only until the next crisis. After all, that's where this crisis came from. And when that happens, and the media circus once again whoops up tales of dire consequences should agreement not be reached, the boys from Washington will be back demanding more "sacrifice." By that they mean finding someone else to stick with the tab, which always makes for great theater. Who is not enthralled watching the Greeks stick it to the French, who then stick it to the Germans, who then stick it to their taxpayers, all dancing a giant game of musical bill as ouzo-besotted pensioners threaten to burn down the establishment if the music stops?

So after this latest round of shared sacrifice, when everyone figures out that eating the rich and confiscating their wealth won't be enough to pay Washington's overdue bills, the hunt will be on for a fresh pile of money. The most likely candidates? Your IRA and 401(k).

Unlike the so-called Social Security trust fund, which Congress looted and replaced with worthless IOUs, individual tax-advantaged retirement accounts currently hold about $10 trillion of real assets. Is it fair that all that wealth should be hoarded by the comparatively well-to-do while the needy are forced to go without everything that politicians promised them?

After all, none of that money has ever been taxed, so it's not really yours. Who is to say what a fair tax rate is, or why the government should have to wait until you retire to get its hands on its share? Shouldn't we put it to a vote, making a special effort to get all "stakeholders," including people who haven't saved through IRAs and 401(k)s, to weigh in on how the nation's savings should be distributed? You don't want to suppress their vote just because it's not their money, do you? Doesn't everyone have an equal right to a comfortable retirement? And shouldn't that money all be safely managed by the government rather than be left to the mercies of the stock market, which could go down?

By now you're probably saying, "Sure we have problems, but the actual looting of private retirement accounts can't happen here." Really? Better tell the American Society of Pension Professionals and Actuaries. They are seriously worried that they are the next ones being primed for sacrifice. They've even launched a website to sound the alarm, Save My 401(k). Check it out. The cartoon video showing Congress cracking open piggy banks would be amusing if it weren't so frighteningly possible.


Bill Frezza is a fellow at the Competitive Enterprise Institute, and a Boston-based venture capitalist. You can find all of his columns, TV, and radio interviews here.  If you would like to have his weekly columns delivered to you by e-mail, click here or follow him on Twitter @BillFrezza.

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