It’s well known that Sears Canada has been having financial trouble for some time. As often happens in these situations, the Sears defined benefit pension plan is underfunded. According to Steven G. Kelman, “Ill-advised government policies” have resulted in former employees getting only “81% of the commuted value of their defined benefit pensions.” What we have here is a tension between trying to keep companies afloat and keeping pension plans fully funded. It’s easy to decide today that Sears should never have been allowed to delay properly funding their pension plan. But, if Sears had been forced to fully fund the plan sooner, they would have gone bankrupt sooner. If we go back to a time when there was still hope to save Sears, few people would have agreed to force Sears into bankruptcy over their pension funding. But allowing sick companies to let their pension obligations slide inevitably leads to some bankrupt companies with underfunded pensions. We can agree that it’s u...

Common belief is that those who declare bankruptcy lack the self-discipline and morals to live within their means and pay their debts. After extensive studies of people who declared bankruptcy in the U.S., Elizabeth Warren and Amelia Warren Tyagi paint a very different picture of the reasons why people go bankrupt in their 2003 book The Two-Income Trap: Why Middle-Class Mothers and Fathers are Going Broke . If we go back to the 1970s, the typical family with children had a father who earned an income and a mother who stayed home. Thirty years later, the typical family with children had both parents working. It’s natural to assume that this means the modern family is better off financially, but the authors show that this isn’t true. According to the authors, U.S. families entered into a bidding war for housing in good neighbourhoods near good schools to give their children a safe place to grow up. Between the explosion in housing prices and other higher inflation-adjusted costs,...