Canada’s finance ministers are meeting this weekend and a proposal to expand the CPP is at the top of the agenda. If implemented, this proposal would bolster an important public program at a time when public programs are under attack and the public sector as whole is shrinking. There are many good arguments in favour of strong public pensions, but I want to focus on one not often discussed: revitalized public programs are a counter to forces that aim to make us accustomed to taking on more and more (potentially disastrous) financial risk.
In yesterday’s post, I noted that austerity is not only a strategy to maintain business profitability, but also part of a broader agenda that can be neatly summed up by the phrase, “privatize gains, socialize losses”. From bailouts to public-private partnerships to the outright privatization of public services, the aim of much right-wing economic policy is to allow the private sector to capture economic gains, at the same time ensuring that society absorbs the costs of something going wrong. This removes financial risks from the private sector and distributes them throughout society.
Effecting such an agenda, however, requires more than just the appropriate policies – it also requires a fundamental change in attitudes towards risk. People have to become habituated to taking on ever-greater individual risks, especially in areas where risks were previously low. Pensions are a prime example of a policy area that can impact on attitudes toward risk.