Alice in Pensionland

April 9, 2010

"But I don't want to go among mad people," Alice remarked.
"Oh, you can't help that," said the Cat. "We're all mad here. I'm mad. You're mad."
"How do you know I'm mad?" said Alice.
"You must be," said the Cat, "or you wouldn't have come here."

--Alice's Adventures in Wonderland

No, I'm not talking about federal health care reform (though that's pretty big). I'm talking about the pension reform package that New Jersey Governor Chris Christie signed into law on March 22, 2010. It hasn't gotten as much play amidst the political drama and anticipated sweeping impacts of the Patient Protection and Affordable Care Act, but anyone who is concerned about the pension bombs ticking in state and municipal governments across the US - and we all should be - should keep an eye on the Garden State.

The New Jersey reforms 1) require all state and local government workers to contribute at least 1.5 percent of their salaries toward health care costs, 2) cap the amount of unused sick and vacation time that workers can cash out at retirement, and 3) ban part-time employees from enrolling in the state pension system. Gov. Christie estimates that these reforms will save the state $8 billion over the next 15 years and local government and school districts $315 million in the coming year alone. Even though these savings pale in comparison to the $46 billion unfunded pension liability that New Jersey faces, these reforms are miles ahead of what most state and local governments have been able to do.

Whether he realizes it or not, Gov. Christie has chosen an extremely apt cultural reference in talking about New Jersey's unfunded pension liability and other budget challenges. He frequently talks about putting a stop to "the days of Alice in Wonderland budgeting in Trenton." Taking a trip through Lewis Carroll's classic looking glass provides some useful perspective on the pension mess. Anyone who dares go down the rabbit hole like Christie to try to defuse the pension bomb will soon enough have some of the same "a-ha" moments that Alice had along her journey, such as ...

The math isn't necessarily wrong. It's just different.

Wonderland is a place where fuzzy math prevails, and that's not by accident. Lewis Carroll was just the nom de plume of the Rev. Charles Dodgson, a mathematician who littered his deceptively complex children's stories with allusions to mathematics. If Alice broadened her thinking, she would have realized that her seemingly illogical times table recitation after falling down the rabbit hole - "4 times 5 is 12, and 4 times 6 is 13, and 4 times 7 is ... oh dear! I shall never get to 20 at that rate!" - actually makes perfect sense if one uses another number or base system. Indeed, 4 times 5 is 12 in a base system of 18, 4 times 6 is 13 in base 21 notation, and 4 times 7 is 14 in base 24 notation.

Dodgson recognized that there are mathematical or accounting tricks that you can play to get the numbers to make sense. Such creativity in the form of overly ambitious return-on-investment projections or risky bonding gambles have made the mathematics of pension liabilities seem logical at times inside the halls of government and wholly illogical outside.

When surrounded by nonsense for too long, it can get dangerously easy to lose one's bearing.

The challenge, as Alice found, of getting into persistently illogical situations is that you need to find a voice of reason or sane person to get grounded back in reality. Alice's journey is defined by her bouncing from one bizarre encounter to another. If she entered Wonderland convinced that 4 times 5 didn't equal 12, both the relentless peer pressure of others asserting that it could be so and the lack of a proper role model could strip her of her wits over time. It requires a certain level of self-possession and determination to confront the people who are standing in the way of a more reasonable approach (e.g., the Queen of Hearts) because they happen to benefit from the looney-tunes logic of existing conditions.

Eventually, we all need to wake up and start acting like adults.

Alice in Wonderland scholars broadly take the story to be a coming-of-age parable about letting go of childish things and entering adulthood. Despite her fears and uncertainties, Alice ultimately rejected the insanity and injustice of the Queen of Hearts' court, called them what they were - a pack of cards - and at last woke up from her dream.

Back on our side of the looking glass, there's no pension crisis dream to wake up from - it's all too real. We can, however, dismiss the way we have been avoiding our pension obligations as wholly illogical, if not childish, and demand a more adult-like approach.

--Josh Sevin is the Economy League’s Director of Projects and painted the roses red as the Seven of Spades in a 5th grade production of Alice in Wonderland at Merion Elementary.