Over the past couple of decades, American companies and American state and city governments have descended into financial purgatory just the way, in The Sun Also Rises, Mike Campbell says he went bankrupt: “gradually, and then suddenly.” A deadly combination of generous pension and health-care packages and years of passing the buck has left institutions like General Motors, Ford, and New York City struggling to fulfill old promises. Companies and governments did an exceptionally good job of evading their impending problems for as long as possible. But actuarial reality has now caught up with them. And, as Roger Lowenstein demonstrates in his vivid and scathing new book, While America Aged, the havoc that reality has already wreaked is nothing compared to what’s in store.

Retirement benefits are, at first glance, a somewhat unlikely source of crisis. They are, to begin with, a relatively new innovation—while American Express introduced the first corporate pension in 1875, it wasn’t until after the Great Depression that pensions became widespread. And in principle, pensions should be relatively simple to pay for: it’s no surprise that workers get old, so you can roughly calculate how much you need to set aside every year to pay what you’re going to owe. Unfortunately, as Lowenstein shows in engaging detail, in their short life span, pensions have become a remarkably destabilizing force, metastasizing out of control. Corporations have responded with a massive rollback—less than 20 percent of companies now offer traditional, defined-benefit pensions. But they’re still on the hook for all their past promises, to the tune of hundreds of billions of dollars, while governments have found it essentially impossible to get rid of pensions or even to trim them back.

So how did this happen? The simple, and true, answer you get from Lowenstein’s book is that the people in charge didn’t care enough to stop it, and often actively abetted the situation. Pensions were an easy way for companies and governments to avoid labor unrest while still protecting their bottom lines. As Lowenstein writes: “A sort of devil’s bargain is struck, whereby the unions (which know that pensions are constitutionally guaranteed) push for benefits that are beyond the ability of governments to properly fund. The unions get their promises; the politicians get to satisfy a powerful constituency. And by shortchanging their pension funds, they can run their budgets on borrowed time and put off the necessity to tax until a later generation.”

Lowenstein looks in detail at three institutions in his book: General Motors, where Walter Reuther and the United Auto Workers pioneered the extension of retirement benefits to blue-collar workers; New York City, which has spent decades bending over backwards to placate municipal unions; and San Diego, where a toxic mix of corruption, cronyism, and anti-tax fervor destroyed the city’s finances. The dynamics in each situation were different. But the way the leaders—CEOs, mayors, governors, and labor negotiators alike—dealt with those challenges was surprisingly, and infuriatingly, similar. They nearly always chose the easy alternative over the hard one. They put off till tomorrow what they didn’t want to do today. What Lowenstein shows is that the pension crisis was not an inevitable problem. It was, instead, a man-made disaster.

Part of what makes this disaster so troubling, of course, is that its origins were so hopeful. The success of the UAW and other industrial unions in winning health-care and pension benefits and a reasonable retirement age for their workers has to go down as one of the most important social advances of the last century. It was a victory that helped make postwar America a genuinely middle-class society. Yet once having won those benefits, unions could not stop themselves from continually asking for more.

It’s easy enough, then, to paint the unions as villains, and there are places in While America Aged where Lowenstein hints at that conclusion. Certainly some of the demands unions have made (and won) seem, in retrospect, absolutely absurd. It’s also true that industrial unions have been surprisingly obstinate in their refusal to adapt to new realities, like the spread of foreign competition in the auto industry. Nonetheless, the unions were ultimately looking for what all Americans seem to want: more. They were asking to be paid as much as they thought they were worth. It was the job of company executives and of city and state officials to figure out what they could and could not afford.

James Surowiecki is a staff writer at The New Yorker and the author of The Wisdom of Crowds.