Underfunded Public Pensions Put Future Taxpayers on the Hook

Ivan Osorio • August 9, 2019

One of the most well-known and enduring lessons of public choice economics is the dynamic of concentrated benefits and diffuse costs. Well-organized groups have both the incentive and ability to lobby government for benefits for themselves, paid for by taxpayers at large, who lack organization and whose individual payouts toward said benefits aren’t large enough to prompt them to expend much effort opposing this arrangement.

This has gone on as long as there have been governments. That’s bad enough, but this rent-seeking scenario doesn’t just transfer wealth from the general populace to organized interest groups; it also works across time.

This often occurs with the funding of public employee pensions, as a recent Cato Institute research brief by UCLA economist Christian Dippel highlights..........For more on public sector unions, see here........To Read More...