What will be the impact of rising gasoline and food prices predicted for later this year? How will those increased costs affect the economic recovery in the U.S., not to mention the economic suffering in the developing world and the resultant political crises and refugee flows?
We are confronted with unending war, not only in Afghanistan, but also in Iraq where the scheduled withdrawal of U.S. troops seems to attract increasing violence. The threat of terrorism is continuous, with new perpetrators being regularly uncovered. We seem to be experiencing earthquakes and extreme weather disasters increasingly now throughout the world. What is the role of climate change?
And then there’s the U.S. and worldwide economic crisis, with uncontrollable deficits and political gridlock. Conflict increases between labor unions and Republican cost cutters. Health care costs are expected to rise beyond our ability to pay. The funding crises in Social Security and Medicare so far seem insoluble. Is another financial collapse coming? Must the value of the dollar decline in response to our foreign trade deficit?
My wife and I regularly discuss when and if we will ever be able to retire. I’ve never had a traditional defined-benefit retirement plan, only a defined-contribution plan which makes me responsible for my own retirement and any market risk. Given the uncertainties in the world, does anyone ever have enough savings to confidently retire?
But do we live with any greater uncertainty and insecurity than previous generations? My parents’ generation, the so-called “greatest generation”, experienced both the Great Depression and World War II. When my father embarked on a troopship in 1944 for the most violent phase of the war in Europe, my parents understood that they might never see each other again. That was living with uncertainty.
As a college history major looking back, I can identify just two periods in modern American history which might be characterized as not uncertain and, in fact, highly optimistic. The first was the decade from the end of the Korean War in 1953 until the assassination of President Kennedy in 1963. The Eisenhower and Kennedy presidencies were a time of rising prosperity and expectations for much of America. But in the 1960’s the struggle for civil rights exposed a violent side of American reality, the terrible war in Vietnam split America down the middle, and the nuclear threat became apparent.
The second period of optimism which I personally remember was from the fall of the Berlin Wall in 1989, and the end of the Cold War and the apartheid regime in South Africa, until the terrorist attack of September 11, 2001. During that period it seemed like the world was turning democratic and more friendly towards America, the sole remaining superpower. Stock markets were rising, the internet was popularized, and the future seemed bright. All that changed on 9/11.
Except for those two periods in American history, most generations of Americans lived with uncertainties and insecurities greater than or comparable to those we face today. Yes, the 1920’s were roaring, but there was no social safety net at all. I compare the 1920’s in America to contemporary Chinese society where there is now potential for both extreme success and extreme failure and suffering.
Ironically, many in “the greatest generation” were able to retire as the first beneficiaries of post-war defined-benefit retirement pension plans. There was only about one generation of Americans that was actually able to realize a secure retirement under such plans before private companies and eventually the federal government replaced them with defined-contribution plans forcing workers to assume responsibility of their own retirement and any market risks. Many insolvent companies have sought bankruptcy protection in order to divest themselves of obligations under traditional pension plans.
Public employees of state and local governments are among the last remaining beneficiaries of traditional defined-benefit pension plans. Like many insolvent companies in the past, insolvent state and local governments are now seeking to abrogate or reduce their obligations under those plans.
No one knows how the struggle over those traditional pension plans will turn out, but I suspect that in the end public employees will end up with the rest of us, living in uncertainty, and wondering if we will ever be able to retire.