Governments vs. Corporations

Will Wilkinson, along with a bunch of other people, is jumping on Matt Yglesias’ head over Social Security. Well, actually over the implications of the UAL pension bailout for SS. However it goes, I think somewhere along the line we’ll all end up paying for United’s pensions. I realize PBGC is supposedly funded by premiums from covered plans, &c, &c. I doubt that model can hold up if it gets a few more hits like United. (Think Ford and GM.) Kind of like how SS is funded by current workers… Well, only similar if you assume that drastic changes in the balance of payments will screw everything up. That’s a given for both models.

Anyhow, Mr. Wilkinson has pointed out some of the differences between governments and corporations that matter in this case.

Now, it is true that the government is not like a big corporation. It is less efficient, suffers from far more severe principal/agent problems, is more inclined to corruption, and is rather more like an extortion racket.

He forgot to mention that corporations don’t usually have the power to enforce their income assumptions at gunpoint.