Tories Must Support CPP Expansion
Conservatives must support CPP expansion.
Why?
Because if Canada’s baby boomers wake up at the age of 65 and
realize they don’t have enough money to retire, they’ll vote for
the party that promises to give it to them, no matter the
consequences.
We can talk about payroll tax burdens and penalizing business or
the fact that Canadians will see even smaller pay cheques today
as a result of a CPP increase, but so what? It’s a small sacrifice
to make in order to provide a bulwark against constant, future,
(likely) NDP majority, federal governments.
The conservative mantra that people should be personally
responsible for their own retirement savings is a fallacy that was
disproven 90 years ago with the assembling of the modern welfare
state.
Government intervention during the Great Depression functioned as
a (then) modern compromise against a more aggressive and
revolutionary socialism that was brewing amongst the masses. If the
modern social welfare state hadn’t been implemented, it was feared
that the actions that took place in Russia in 1917 would happen
elsewhere.
Conservatives at the time saw an incubator for the type of
socialism that the social welfare state was trying to prevent. It’s
been argued that the policies of the time actually prolonged the
arrival of the recovery and created systemic moral hazard.
Why save for the future? The government will provide!
Some of this may be true, but the situation we are in now makes
these debates academic. Right now, people feel entitled to their
entitlements and if they begin to realize that old age is upon them
and they’re not financially ready, we’ll see three things
happen.
#1. Consumer debt is about to get a whole lot worse
Seniors who embraced debt in their prime years back in the 70’s,
80’s, and 90’s aren’t going to stop now. If they need
it, they’ll borrow for it. The rise of home equity lines of credit
(you’re richer than you think!) means Canadian banks are going to
inherit a ton of residential real estate around 2030. Seniors still
living will be left with nothing but credit-card due-dates and
GIS/OAS charity.
#2. Media will then turn seniors into victims
Seniors ending up with nothing will make for great CBC-styled pity
stories. It won’t be hard to find a senior who’s homeless or in
poverty and then build narratives around how, “In a country as rich
as Canada....this is how we treat our seniors!”. Cue the old lady
crying as the camera slowly zooms in on her face. If you want to see
a preview of this sort of reporting read this tale of staggering
retirement decisions that was recently published on CBC. The vibe of
the story is one of empathy and woe. It’s an absurd way to go with
a story this self-inflicted, but that’s how CBC presented it.
A generation that saw the biggest economic boom in human history
and had every opportunity to work more, save more and educate more,
will be portrayed as victims of our inequitable society. This will
rally outrage among...
#3. Older voters
People over 65 have the highest voter turnout. There’s going to
be more 65-plus people in Canada in 2030 than ever before in our
history. Canadians already vote for raw self-interest without too
much thought beyond the immediate. What do you think they’ll do
when they’re facing decrepitude without means and an election is on
the way?
Barring some kind of Ray Kurzweil styled tech breakthrough or
something; we are likely to have a European-style moribund economy in
the future. This means that when it comes to feathering senior’s
beds with public funds...all other interests will be punted. Tough
choices will have to be made in order to afford the demands and it
won’t be people born before 1970 paying the price.
Conclusion:
Something needs to be done in order to stave off the retirement
crisis. People aren’t saving and when they do they don’t save
enough and when they do save enough, they don’t invest it in the
appropriate vehicles to ensure a return. Harper tried to encourage
the private path, but all we got was millions of confused Canadians
holding cash in their TFSA. People just aren’t able to “do
retirement” on their own accord. I know that doesn’t jive with
conservative/libertarian orthodoxy, but it’s true. Throughout most
of human history people simply died before stuff like this was a
problem and in the last 100 years there were pensions...private and
public. Today requires some “soft” big government in order to
prevent future “hard” big government.
Conservatives need to prevent a full blown socialist (and thus
totally broken) Canada in 2030.
How?
By compromising (and accepting) the enhanced CPP today.
