Today on the news I heard that RI state pension funds had a return on investment of 1.5% in the last fiscal year. Grew right along with the growth of the economy for the 1%. Rest of us fell further behind.
But what the pension fund really fell behind on was its expected growth, the growth that allows the fund to make payments to retirees. The official expectation for the pension fund is growth of 7.5% each year. This is recent as previously the rate of return expected had been close to 8%. In either case the actual return was only 1/5 of the expected return. Adding to a long string of years in which growth targets were missed by a wide margin.
In a place without an out of control ruling class seeking new ways to loot the populace, the state would tax the wealthy to make up the difference in the pension funds because there is a clear understanding that equalizing the wealth strengthens the economy.
But even that will not really solve the problem that the pension funds are going to get smaller and smaller returns over time. Not due to mismanagement, but because the economy is going to get smaller. The stringing out of the recovery after the bubble burst being only the latest and most abundant clue that we have essentially reached the end of economic growth in the west, especially any growth that actually flows into the hands of the 99%.
There are many levers that can be pushed to create more economic growth, but the one thing economic growth is unable to survive is ecological collapse. The loss of soils, clean water, forests, fisheries, and biodiversity, combined with the fires, droughts, floods, and heat waves of climate change is eating up all the actual growth and many people are ending up poorer even if a few in the cities are getting richer.
This is why over the last 15 years the west has either been in the midst of some bubble or in recession. We have gone from HI Tech and internet, to Housing and strange financial instruments as the bubble we obsess over, but the results are the same. A small class makes out, everyone else falls behind, and the Earth becomes a less hospitable place with diminished life.
Rhode Island’s pension fund is hurting even with the current “fix” and the economic shenanigans used to grow the economy faster are a disaster (remember 38 Studios). Rhode Island needs a new course, based on ecological healing and economic justice if it is going to have prosperity.
Read more at: ProsperityforRI.com