The decline in worker pensions creates a challenge for private equity
(PE) funds. The funds currently get about a quarter of their capital
from public-sector pension funds and another 10 percent from
private-sector pension funds. But defined benefit pension plans, once
enjoyed by most private-sector workers, have been largely dismantled by
corporations. And public-sector pension plans have come under attack in
recent years as part of a larger effort by politicians in some states to
weaken or destroy public-sector unions. Private equity is worried that
the goose that lays the golden eggs it relies on is on the endangered
species list. With the industry so dependent on workers' retirement
savings, its future growth prospects are likely to be tied to its
ability to tap the estimated $6.6 trillion in 401(k) accounts.
Dean Baker on the crisis of pension system in Detroit (discussed before here) on "All In with Chris Hayes" last night.
The message from the White House is that AIG contracts are sacrosanct while worker's pensions can be broken anytime. It does have implications for North like notions of the role of institutions, and contractual security, in promoting economic development (also discussed here before). And yes it is part of the push for privatization of Social Security.
