|Today’s selection — from A History of Public Sector Pensions in the United States by Robert L. Clark, Lee A. Craig, and Jack W. Wilson. Public pensions, which have become a source of controversy in contemporary finance and politics, have been used since ancient times as a way to engender loyalty among military troops. The problems resulting from pensions were fully present in these earliest programs:
“From the Roman Empire to the modern nation state, rulers and parliaments have found it expedient to provide pensions for the workers who carried out their policies and, thus, helped perpetuate their regimes. The history of these public sector pension plans is both colorful and instructive. More than two thousand years ago, the fall of the Roman republic and the rise of the empire were inextricably linked to the payment, or rather the nonpayment, of military pensions.
“During the American Revolution army pensions became such a sensitive issue that only the personal intervention of George Washington prevented a mutiny of Continental troops over their promised pension payments. In the nineteenth century the U.S. navy pension fund went bankrupt on no fewer than three occasions, only to be bailed out by Congress each time. The management of the navy pension fund involved misfeasance, malfeasance, and nonfeasance of a strikingly bold nature. These and other episodes … provide the reader with a chronology of these historic events and a series of policy lessons pertaining to current employer-based pension plans. …
“It is typically thought that employer-provided pensions in the United States are a relatively recent form of compensation having been introduced by employers late in the nineteenth century or early in the twentieth. This perception is correct concerning private pensions and most public pensions for civilian employees; however, pensions for disabled and retired military personnel predate the signing of the U.S. Constitution.
“Military pensions have a long history in Western civilization and have often been used as a key element to attract, retain, and motivate military personnel.”
A History of Public Sector Pensions in the United States
Authors: Robert L. Clark, Lee A. Craig, and Jack W. Wilson
Copyright: 2003 Pension Research Council of the Wharton School of the University of Pennsylvania
Publisher: University of Pennsylvania
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