Almost every week brings new word of the crisis in public pensions. Yesterday the news was that New York City pensions are underfunded, make unrealistic assumptions about future investment returns, and are subject to political interference in their management. Consequently, public spending for necessary projects like infrastructure is crowded out and future generations will likely be stuck with a big bill.
Public pensions may provide the best illustration of the truth of a branch of economics known as public choice. Public choice understands that politicians are no more public-spirited than other individuals, but are simply maximizers subject to different constraints.