Wealth-Building as “Risk Management”

The Sunday New York Times offers crisis-solving thoughts from several economists. Yale's Robert Shiller comes up with two outside-the-box ideas:

1. When people build their financial independence through saving and investing, they are successfully managing risk – their risk of not having enough to live on when they become old and feeble (or unemployed):

Traditional mutual funds and retirement saving plans, as well as insurance plans for loss of one’s home due to fire or flood, or of one’s income due to disability, are actually risk management vehicles that help reduce inequality. The new president’s important mission should be to broaden these plans.

2. The federal government should subsidize programs to encourage and spread investment literacy:

[W]e need to subsidize financial advice for the common man. The crisis we are in is largely due to investor ignorance. Some emergency measures, like the Hope Now Alliance, have been set up essentially to offer such help, but these will presumably be dismantled after the crisis, and they are not well designed for serving investors’ broad needs. We need some permanent subsidies to get the full scope of financial advice out to the people.

Cool idea! Tens of thousands of "Wall Street banking and investment experts" are unemployed. A new version of the depression-era Works Progress Administration could quickly form and deploy several brigades of financial advisers. Worth a try?