"It was like dandelions. You just accept them. They were there,
something you've seen all your life."
Dandelions are a perfect metaphor for institutional corruption. In
this case, the dandelions were extra payments (beyond those due to
retirees) made by Detroit's two pension funds, to active employees
(54%), retirees (14%), and the city itself (32%), the latter to
lower annual contributions to the funds, according to a front-page
article in today's New York Times
. The extra payments totaled almost
$2 billion over 23 years. The quote is from Detroit's former
independent auditor general, Joseph Harris.
Why would pension boards hand out payments to active employees? May
it have had something to do with the fact that the boards were
controlled by government employee unions? Back in 2008, I wrote a blog post
which dealt with this issue
. The post talks about whose
property a pension fund is: that of the employees who will be paid
from it or of the citizens whose money is being spent? In good times
and when pension board trustees are acting responsibly, the citizens
have little to lose. But in bad times and when pension board trustees
are acting irresponsibly, not only is the citizens' money wasted,
but they may find themselves paying extra money of their own.