As finance ministers meet today, Jim Flaherty argues that our fragile economy can't afford enhancing the Canada Pension Plan. It's the latest version of an old argument -- the very argument that got us into our mess in the first place. Paul Krugman writes that Flaherty's world view is at the heart of the problem, Focusing on the United States, he writes:
Start with the numbers. On average, Americans remain a lot poorer today than they were before the economic crisis. For the bottom 90 percent of families, this impoverishment reflects both a shrinking economic pie and a declining share of that pie. Which mattered more? The answer, amazingly, is that they’re more or less comparable — that is, inequality is rising so fast that over the past six years it has been as big a drag on ordinary American incomes as poor economic performance, even though those years include the worst economic slump since the 1930s.
But the prime minister and Mr. Flaherty pay little attention to numbers. Their budget documents are remarkably free of them. They speak for the conventional wisdom -- both before and after the Great Recession:
What do the pre- and postcrisis consensuses have in common? Both were economically destructive: Deregulation helped make the crisis possible, and the premature turn to fiscal austerity has done more than anything else to hobble recovery. Both consensuses, however, corresponded to the interests and prejudices of an economic elite whose political influence had surged along with its wealth.This is especially clear if we try to understand why Washington, in the midst of a continuing jobs crisis, somehow became obsessed with the supposed need for cuts in Social Security and Medicare. This obsession never made economic sense: In a depressed economy with record low interest rates, the government should be spending more, not less, and an era of mass unemployment is no time to be focusing on potential fiscal problems decades in the future. Nor did the attack on these programs reflect public demands.
In the United States, the boogeyman is public healthcare. In Canada it's public pensions. But the same people are leading the charge. And they're the same people who got us here in the first place.