Tories Must Support CPP Expansion

July 2nd, 2016 | J. Hodgson
cpp

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.