Let's take a break from lamenting the problems of the capital market this morning and turn our attention to scams in the labor market. The New York Times comes through big for us with this fine piece of investigative journalism, "A Disability Epidemic Among a Railroad's Retirees." In a nutshell, retirees of the LIRR appear to be gaming the Disability Insurance program within Social Security. The factors leading to this are the usual culprits:
The answer, according to government records and dozens of interviews, stems from a combination of factors, including highly unusual L.I.R.R. contracts that allow longtime workers to retire with a pension as early as age 50, federal rules that let railroad retirees claim disability for jobs they no longer hold, and an obscure federal agency called the Railroad Retirement Board that almost never says no to a disability claim.
The parallels with the financial sector meltdown are evident -- poorly considered incentives, lax oversight, outright fraud, and regulatory capture. And with the same precipitating factors, we get the same result: the American taxpayer is left with the bill (upwards of $3.6 billion last year). Why did Phill Gramm think we are a nation of whiners? We are behaving like a nation of panhandlers.