Richard Vague likes to probe data. The Philadelphia businessman—who is a managing partner of Gabriel Investments and chairman of the nonprofit Governor’s Woods Foundation—spent three decades in the banking and credit card industries, where he would routinely analyze datasets with millions of pieces of information to solve a pressing problem. Today, Vague studies voluminous statistics out of a desire to help address some of the tougher financial issues facing Americans.
His interest in data led him to examine the factors surrounding the Great Recession, and he recognized that private debt had quickly increased in the years preceding the crash, which he believes was a major contributing element. To probe the connection, he dug into the statistics behind other financial crises across a 200-year time frame and several countries—Great Britain, Germany, France, Japan, and the U.S. among them. His resulting book, A Brief History of Doom, published in May, makes a well-researched case that a financial crisis becomes likely if the ratio of private debt to gross domestic product grows by 15 to 20 percentage points over a five-year period and also reaches 150 percent or more. The book was his second on the topic.
Vague’s in-depth work on this and the Private Debt Project—a Governor’s Woods Foundation initiative in which a team of seven researchers studies the relationship between private debt, economic growth, and financial stability—led him to survey pensions for public employees. The debt project underscored for him that a holistic approach to state and local debt would require pensions to be part of the big-picture equation.
In 2000, most states’ pensions were fully funded. Today, The Pew Charitable Trusts’ research shows that only three states—South Dakota, Tennessee, and Wisconsin—have at least 95 percent of the assets needed to fund their pensions, and on average state pensions are only 71 percent funded. And according to the same report, “The State Pension Funding Gap: 2017,” state pension funds cumulatively report a $1.28 trillion deficit. This shift from 2000 to 2017 happened partly because of the significant hits that pension fund investments took during the dot-com crash and Great Recession, and because of a drop in state revenues; both factors contributed to a shortfall of funds devoted to state employee pensions. The decline affects taxpayers as well as millions of state and local workers—first responders, teachers, and other public employees—who count on pensions as a critical component of their retirement income.
“Pensions are one of those almost intractable problems where all of the conventional solutions, while they might result in some improvement, won’t really fully address the problem,” says Vague. “Pensions are an area where truly creative breakthrough thinking is going to be required. Pew is doing research on policy issues and approaches that may prove enormously useful to states and cities.”
Pew’s public pensions project has been researching the challenges facing states and cities as they try to ensure their public sector retirement systems are affordable and sustainable, help provide a secure retirement for workers, and preserve governments’ ability to recruit and retain a talented workforce. Pew’s reports were among the first a decade ago to call attention to the growing gap between the promises made to public sector employees and the funding set aside to meet them, and the project now provides personalized technical assistance to state and local policymakers, recognizing there is no one-size-fits-all solution to the problem.
“We hope to be able to provide states with evidence-based solutions and the necessary tools to advance sound policy reform in their pension systems,” says Greg Mennis, who directs the project.
Vague decided to support Pew’s pension work because he had encountered the project’s research for years, in almost every area that his team has investigated.
“Pew is best not only in regard to the quality of their work, but also in their willingness to consider all sides of a problem,” says Vague. “There are any number of foundations that have a kind of vested interest or agenda they are trying to push. Pew almost uniquely in my view has a very balanced approach to things.”
Vague’s support of the public pension project is one example of how Pew works with philanthropists to tackle complex issues, including substance use disorder, the scarcity of antibiotics, and plastic in the world’s oceans.
Mennis said that Vague’s professional background and work on the debt burden faced by state and local governments have helped shape the team’s efforts. “We are so grateful for Richard Vague’s support,” Mennis says. “We’ve found that we’re able to learn as much from Richard on the subject of debt as we might learn from our data, which is a real advantage of working with him. His team’s extensive work on debt has helped us to think more holistically about measuring and addressing states’ long-term liabilities, including infrastructure deficits.”
Vague’s partnership with Pew is just one of his wide-ranging interests. He is the founder of Delancey Place, a daily blog that was inspired by his love of reading and features a quote from a work of nonfiction meant to be thought-provoking. His philanthropic efforts include the Richard W. Vague Professorship of Immunotherapy at Penn Medicine’s Abramson Cancer Center, a hub for innovative cancer research; gatherings of leading thinkers on the budget, public and private debt, infrastructure, and other issues; and Philadelphia’s FringeArts festival, which supports local artists and brings cutting-edge cultural experiences to the city. The last has a personal connection.
“When I was young, I trained as an artist,” Vague says, referencing his early passion for oil painting and charcoal drawings. “It was my intention as an 18-year-old to become a professional artist. But life happened, and I got into business instead.”
Across all his philanthropic efforts, data-driven or not, Vague explains there is a common theme: He likes to support projects that combine disparate and unconventional methods to find creative new solutions.
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Demetra Aposporos is the senior editor of Trust.