Should Detroit pensioners suffer for the mismanagement of government funds?
Detroit bankruptcy moves forward as judge rules city can shed debt
A judged ruled that Detroit can move forward with their bankruptcy which essentially has guaranteed pensioners will lose a significant portion of their benefits. According to an infographic from huffington post, over half of Detroit debt is related to pensions.
Should pensioners suffer due to years of mismanagement of government funds?
Pensioners have to pay
Side Score: 11
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Pensioners should be exempt
Side Score: 1
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The city is filing for bankruptcy. In a bankruptcy case, all debts are defaulted on. The municipal government made promises to every other entity to which it owes money as well, and I have heard no express reason why pensioners should be exempted from the default. Does it suck? Yes. For everyone. It is unfair for the state to default but the reality is that the government has defaulted. That being a fact, it is more unfair to exempt some parties and not others from the default. With so much of the city debt deriving from pensions, exempting pensioners would also make the default to other parties largely if not entirely pointless. The hard truth is that the government fucked up, as did many cities now struggling under the weight of pensions. But this is a democratic republic, and that mistake was not made without opportunities for citizen input and opposition. People could have objected to the widespread provision of pensions... if anyone had had enough foresight to appreciate the financial tole it would have on cities down the road. The truth is, the people are just as much at fault in a democracy/republic when their government fails as the leaders. Reject that truth, and you reject the very premise of a democracy altogether and also negate the agency of the people. Side: Pensioners have to pay
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Jace beat me to this argument, good response. Pensions are contracts like every other engagement the city has undertaken. Part of contracting is counter-party risk. I don't offer a loan to a drug addict because the risk of non-payment is high. If a company goes out of business the labor contracts are voided, the entity (the company) you contracted with no longer exists. This situation is extremely similar to a person buying a city bond. Lets say a retiree buys a city municipal bond in order to get an income stream. That city goes bankrupt, does the retiree still get the income stream back? Of course not. The same applies here, workers traded a portion of their "wealth" (their labor) for a promise of a future income stream. They invested in a party with significant risk (a city run by people unwilling to act fiscally responsible) and that risk didn't pan out. Side: Pensioners have to pay
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