Pensions Under Attack: What's Behind the Push to Privatize Public Pensions

David Robinson is an associate professor of economics and dean of the
Faculty of Social Sciences at Laurentian University.

Pension reform really is “mind numbingly technical.” Deep in the
fog, however, a civil war is being fought over the nature of Canadian
society. On one side are arrayed the collected forces of the right, the
C.D. Howe Institute, Stockwell Day, and the financial community, all of
whom want to privatize the Canada Pension Plan. On the other side are
the scattered defenders of public pensions. Privatizing the pension
system, as General Pinochet did in Chile, will reduce transfers from
rich to poor, increase transfers from the poor to the people who run
pension funds, and eliminate the social insurance component of the
public system. According to a recent World Bank study, privatization is
simply unnecessary. According to Monica Townson, there is a carefully
orchestrated privatization campaign.

Townson is one of our most experienced public-policy economists. She
not only makes the issues comprehensible, she also describes the
contestants, their tactics, and what is at stake. Chapters have loaded
but descriptive titles like “Why Are Public Pensions Under Attack?”
and “Pinochet and the Chicago Boys Privatize Chile’s Pension System.
” Because the same debate is happening all over the world, the same
issues come up in chapters on the Chilean, U.S., British, and Canadian
experience. Part of Townson’s message is that the struggle over
pension reform is worldwide, and that the same misleading arguments are
being used on every front. Of all the facts and figures she presents,
the most startling pair may be the overhead cost in Canada’s public
system (1.8 percent) and the corresponding cost after privatization in
Chile (over 30 percent). They provide a powerful argument for reading
the book and buying copies for your friends.