“If you drive a car, I’ll tax the street, if you take a walk I’ll tax your feet.” — The Beatles.
While the Americans struggle to find a solution to the fiscal cliff (don’t ask me; I don’t understand it either) and Canada very quietly passed the $600 billion national debt mark, ordinary people have the right to ask, “Do the people running these federal governments know anything about fundamental finances?” The answer of course is, “Apparently not.”
A typical lifespan spending and investing scenario is that of a young couple starting out earning their own way, climbing up the career ladder, scrimping and saving to afford a home, getting into debt over their children’s education and, in 25 years, the house is paid for, the offspring are on their own and enough savings have accrued for a comfortable ride into the sunset of their golden years. That’s the old-fashioned, small c nservative way most of us arrived at where we are today.
Judging by the financial headlines of the day it seems that a large class of supposedly educated youngsters missed this pattern, and it gets worse sadly. Even college educated professionals making six-figure incomes are living paycheque-to-paycheque. People who make secure, big money aren’t supposed to scramble each month to stay afloat. The world seems to have sped up.
It’s actually very clear for households to see and respond when things go sideways; for big government it’s harder to zoom out and see the big picture. Pension liabilities? Yeah later. Medical commitments? Sure, when they’re due (now by the way). Debt reduction? Call me tomorrow, we’ll think of something.
It’s only funny if one has no clue about the very serious implications of what happens when debts and IOUs aren’t paid. The violence in Michigan was really about future unfunded liabilities rather than union rights. It’s going to get worse.
San Bernardino and Compton, California have declared bankruptcy due to the familiar reasons of overbearing unions, political dysfunction and unrealistic financial assumptions. When over half a city’s budget is being paid out for pensions, there’s not much left for real municipal work.
Taxes and government revenue the world over have never been higher. The word cutback doesn’t exist when every single federal and provincial administration for 50 years now has had a bigger budget than before. Each one is taxing more and, worse yet, borrowing more.
Other than not getting much bang for the bucks, the beleaguered private sector worker watches as public sector pay and pensions leap inexorably higher. The average federal employee in Canada makes $114,000 in pay and perks. We should all have it so good. Who is serving whom?
Most government services other than roads and infrastructure, basic policing and what used to be national defense are useless nowadays. They exist only to take money from some people and give it to others under the guise of “fairness.”
On that cheery note, happy 2013 everyone!