In my now infamous article “Are Canadians Money-Stupid?” I contended that money-stupidity is not correlated with education. BCM of CanajunFinances claimed, on the other hand, that Canadians’ money-stupidity is caused by their lack education about money.
A for-real picture from out front of my for-real condo building, where over 10 units went up for sale as soon as the building was registered.
Last Friday, Erin Trafford of News957 tweeted an interesting article from the Globe and Mail at me. It was interesting to me because it definitively proved me wrong. There is a correlation between education and money-stupidity. But it’s counter-intuitive. People with more education are actually more money-stupid.
I think that we Canadians have dug ourselves into a very deep hole of money-stupid. Call me a pessimist, but I think our hole is so deep that a “financial reckoning” is now inevitable. Evidence of impending doom is painfully obvious. Since I wrote my Magnum Opus on stupidity, the Big Six banks have started publicly feuding with the federal government.
At this point, our government should try to reduce the impending damage of our slow-mo national train wreck. This may seem to be a cynical approach at first brush. It has, nevertheless, become essential. There’s no way to resolve the problem without at least somebody losing. There’s no longer any win/win scenarios. We need to make sure that the ‘big loser’ is not taxpayers.
What, then, should the financial crisis harm-prevention strategy entail? I don’t have a fulsome answer. I do have a lot of ideas. Some of my ideas would prove very unpopular.
- A mandatory retirement age should be re-imposed and lowered to 60 to (1) make way for younger workers and the upward mobility of middle-aged workers, (2) decrease the supply of labour and increase the median wage, and (3) put the fear-of-god into people about saving for retirement because they won’t be able to work for a wage until they’re 80.
- Canada should float a “non-petro” dollar currency for provinces that have to rely on complex value-added manufacturing (rather than taking oil out of the ground in buckets).
- A large infrastructure building stimulus program needs to be centered on real “have-not” provinces like Ontario; investing government dollars in booming provinces like Alberta simply heats inflation and squeezes-out private investment.
- Corporate taxes should be increased, but companies should be able to claim their deductions for wages at more than 100% of their actual wage expenditures (e.g. 125%). This would make hiring people more attractive than offshoring or even contracting-out.
- All 400-series highways should be converted to toll roads with higher rates charged during rush hours.
If you recoiled in horror at one of those ideas, why? It was because the idea would stand to harm your personal self-interest in some manner. But violated self-interest does not a bad idea make. My modest proposals would improve the function and performance of the economy. Your revulsion just makes the ideas unpopular. The problem is that “unpopular ideas” translate into “lost elections”, so no government wants to enact them, no matter how sound they may be.
I can, nevertheless, recommend one idea that would prove popular – if it’s not popular now, it’ll be very popular when the housing market stalls. The idea is a very low-hanging fruit. We should take a bite out of it, before it takes a huge bite out of us. It’s related to the CMHC (Canada Mortgage and Housing Corporation). This idea would save us from the worst of our stupidity in the reckoning that cometh. It’s the ounce of prevention that will save a pound of cure.
I recently read an open letter addressed to the Honourable Minister of Finance Jim Flaherty by way of CanadaBubble. It’s a great letter. It points out many problems with the CMHC. It even proposes good ideas. I, however, don’t think the writer’s ideas are quite extreme enough to resolve the problems that we face. The author of the letter encourages people to write their own letters. Tomorrow, I’m going to do just that. I’ll share my idea with all of you and Mr. Flaherty, too. Try not to recoil in horror. And yes, this article was just a really long introduction.