| > This is why I question the rationality of handicapping the USPS with the responsibility for funding far-future liabilities based on those projections. You're ignoring the fact that those liabilities are being incurred today. If you can't pay them with current revenues, how are you going to pay them with future revenues that also have to cover the liabilities that you're incurring when you're receiving said future revenues. I'm sympathetic to the idea that there's no way to properly estimate the NPV of this sort of open-ended liability, but that's an argument for not incurring such a liability. It's not an argument for paying less than your best guess of said NPV. > Even if you ignore the opportunity costs of this fund, There is no "opportunity cost" in not paying NPV now. Suppose that your landlord offered to let you pay each month's rent starting 1 year from now and over the 10 succeeding years. How much should you set aside? The only answer that keeps you solvent is to set aside the NPV of the payment stream for each month's rent payments each and every month. Do the arithmetic. After each month, you've got a new liability that you're going to owe after you stop receiving any corresponding benefit. At the end of year N+1, you're making payments on N years worth of rent (capped at 10) and those payments will continue for 10 years after you stop renting. (Yes, they'll decrease over time, but since you won't be getting the benefit of whatever you were renting, it's unclear why you're happy paying for it with "new money" that you probably need for replacement digs.) |