ABSTRACT
In some cases, as with the pension fund legislation that established the Employee Retirement Income Security Act, it has been necessary for government to underwrite the funding of social costs in order to protect society from bankrupt firms. Unfortunately, firms may use that protection by declaring bankruptcy to shift the burden of social costs back onto society, as the LTV Steel Co. attempted with its pension fund obligations. The imposition of the burden of social costs on private firms is, for good and ill, tied to the problem of bankruptcy. In early 1991, it became evident that the social cost and the competitive elements of pension guarantees were being recognized. Congress gave the Pension Benefit Guarantee Corporation more ability to stake a claim on the assets of firms in bankruptcy, preventing them from escaping their obligations. More responsible firms favored this new power, for they "hate seeing competitors gain an advantage by off-loading their pension obligations."1
