Liberals get so nostalgic about the 1950s American economy. Why, they ask, can't corporations be forced to act as they did then, with their generous pay and guaranteed retirement benefits? The irony is that many companies are in dire straits today -- becoming less competitive, facing grimmer prospects and not hiring as many new workers as they would otherwise -- precisely because they are stuck with the World War II-era compensation model for which liberals pine.

Three and a half years into the Obama recovery, America's economy is contracting again and the unemployment rate ticking upward. Many big employers are still not expanding their operations and workforce. The reasons for this vary by company, but in many cases the culprit is crushing pension debt. Rather than invest in their own operations, companies like Ford, Boeing and Verizon have been forced to pour billions into their workers' defined benefit pension funds just to make up for their poor market performance and keep them afloat. And even then, some of the funds are barely scraping by.

"It is one of the top issues that companies are dealing with now," Goldman Sachs pension strategist Michael Moran told the Wall Street Journal this week. Ford alone plans to put $5 billion into its plan this year -- a reaction to low interest rates that are depressing the fund's value. It is right and just for companies to honor their obligations thus, but bear in mind that that large sum would otherwise go into building the business, keeping it competitive through research and development, hiring new employees or even hiking wages. Instead, Ford's $5 billion is necessary just to plug a hole, and even then it is not enough.

Ford is not alone. The 400 largest companies with defined benefit pension plans have a combined deficit of $418 billion -- up 23 percent from two years ago, according to the economic analysis firm Towers Watson.

The proliferation of defined benefit pension plans, which guarantee an income level for retirees, were largely spurred by wartime wage controls and the desire of companies to reduce their tax exposure, all at a time when U.S. manufacturers faced little international competition. By the 1980s, these plans had already become money pits. That's when companies began putting new employees into defined contribution retirement plans instead, such as the common 401(k).

According to Towers Watson, 89 of the companies in the Fortune 100 offered traditional defined benefit plans as recently as 1985. Since then, that number has fallen to just 11. This is in part due to companies making the switch, but also because defined benefit plans make companies less competitive so that they are less likely to remain in the Fortune 100.

Labor unions -- including the one that represents journalists at the New York Times -- have clung to the fossilized defined benefit model and resisted the trend toward defined contribution plans. They argue that the old model guarantees workers an income. But the unions' unstated rationale is that defined contribution plans are fully portable, meaning that workers can go to another job without penalty, whereas the old defined benefit plans usually tie workers to a particular company or industry, thus making them more likely to remain in the union.

Defined contribution plans are more directly subject to the vagaries of the market, but pension funds for both government and private employees take the same hits and sometimes fail. Moreover, the personalized nature of defined contribution plans protects workers against a company's bankruptcy -- a very real threat in those cases where companies succumb to 1950s nostalgia.