MINOT, N.D. — I want to tell you, dear reader, about a very interesting meeting of the House Government Operations Committee in Bismarck today. But before we get to it, I need to fill you in on some backstory. Because, I’m certain, the fight over pensions that’s happening in Bismarck probably hasn’t been on your radar.
Making policy for something like pensions is a moral hazard, mostly because those setting the policy are, temporally speaking, so far removed from the consequences of it. Fiscal choices made now may not be felt until years, or even decades, from now.
Imagine a slow-moving ship. One captain and crew decide to begin a turn, but by the time the turn happens, there’s a whole new captain and crew. There is a lot of temptation for current leaders to make expedient, politically convenient decisions in the here and now, knowing they’ll be long gone once the ramifications appear.
That we can rely on politicians to be feckless and shortsighted is one reason North Dakota must move away from defined-benefit pension plans for its workers.
These plans guarantee a specific retirement benefit for the workers, making them politically popular, at least when initiated. But those guarantees are based on uncertain revenues.