Ledyard’s Law is simply a statement that human beings seek to enjoy benefits today and defer costs until the day after tomorrow. It is one of the cornerstone principles of modern political economy. Studies of public opinion have repeatedly found voters reluctant to make tradeoffs between taxation and government services. They much prefer the cheery premise that they can obtain something for nothing— or at least that somebody else will pay for it later.
The abstract of the article spells out the consequences:
The Pew Center estimates that as of July 2008, state and local governments in the United States had promised current and future retirees $3.34 trillion in benefits but had only $2.35 trillion of projected assets to pay for them. The investment losses that public employee pension funds experienced during the market downturn of 2008-09 made the trillion dollar gap much larger. In this paper I discuss how the pension funding gap has developed, compare the situation in California with that of other states, and discuss the ways in which the state government and local governments in California are responding to the increasing strains pension obligations place on their finances. I recommend that the constitution of California be amended to forbid the state and all local governments from ever again issuing pension obligation bonds, and to forbid the state of California, as well as all local governments within the state, from ever again offering their employees defined benefit pension plans.