What Canadians can learn from the U.S. pension crisis – Assets vs. Currency – December 11, 2018,
To Begin, this blog post is in response to the video below:
What’s not being talked about in the United States is why Obama bailout out Wall Street and why The Leftist hate Trump so much. In case you’re wondering why Obama bailout out Wall Street it all revolves around Pensions, in America they’re known as 401K’s, most of America’s pensions are reliant on the Stock market performance and if the stock market crashes, so do their pensions, this is the main reason why Obama bailout those too big to fail banks. Now, most of America’s private sector workforce have their retirements in the stock market.
That aside the current U.S. pension crisis has little to do with the Stock Market because the current U.S. pension crisis revolves around overpaid public servants whose pensions have nothing to do with the stock market and have everything to do with an anticipated growing public sector. Prior to the creation of public sector unions, it was common knowledge that the public sector only had money if the private sector was profitable. However, once you created public sector unions, in order to get favorable legislation passed those public sector unions often told their members/donors lies, which many public servants fell for.
Defined benefit pension plans
I’ve written in length about Canada Post’s pension crisis and the root causes of it. The root cause of Canada Posts Union sectors Defined benefit pension plan is the same problem that America’s public sector is having. In simple to understand terms Defined benefit pension plans are pyramid schemes, which equates to existing workers paying for retired workers pensions, now on paper, that’s not what’s reflected, but this is how it works. The main problem with these pensions is of course that A defined benefit plan is ‘defined’ in the sense that the benefit formula is defined and known in advance, so if the public has less access to money in the future that defined pension could be easily compromised, now pensions that are reliant on Stock Market performance at the very least have the luxury opportunity to bounce back, typically even if a stock market crashes, chances are it will bounce back, whereas when a city declines based on raising taxes to pay for public servants, it’s usually game over for that city. Detroit was destroyed because of highly paid public servants and trust me while taxes were rising in Detroit, most of the greedy big government people didn’t think for a moment that the population in their city could decline the way it did.
In recent years Toronto has overtaken Chicago in Population, most people assume that this happened because of crime, although this might be part of the reason, the real reason Toronto’s population overtook Chicago’s population is because of taxes, namely property taxes, a lot of people that don’t own homes don’t understand that a paid off mortgage doesn’t mean much if your property tax bill replaces your mortgage, also if the cost of public services, utilities rises, the cost of living rises, which of course for people with fixed incomes equates to life becoming more unaffordable, this also leads to less people even considering your city as destination, which of course leads to a decline in tax revenue, if your pension isn’t linked to the stock market you don’t even have a chance to make up for lost revenue in your pension and thus a pension crisis is born.
Now, in Canada, what’s happened in many years is that we’ve had an exploding public sector and with an exploding public sector what you get a lot of is misinformation, another thing Canadians often forget about is that Crown Corporations whether they’re Provincial or Federal Crown corporate entities are still Public Servants or public services even if on Paper it doesn’t say so. Part of the crisis that’s beginning to happen in Canada and has kind of exploded under Donald Trump, is that Canada’s public Sector is operating as if we were living in the late 1990s and because of this a lot of economic disasters are starting to test the Canadian economy all at once.
This would be true in the United States also, but it’s actually a lot worse in Canada primarily because of our regulatory environment. The moment your country sinks below the regulatory environment it created coming out of it is almost impossible, what’s also hard to fathom for most people are the costs associated with an extremely regulated economy.
The Regulations I like to pick on the most are financial regulations like the regulation called the minimum wage, which is the worse regulation ever created because it equates to certain jobs not being created at all. So if there’s a manufacturing company that can only turn a profit if they can pay their employees $5 per hour to start, that manufacturing company won’t exist.
Now, on the surface you’d say to yourself, nobody in their right mind would work for $5 Canadian per hour in 2018? You’d be right, but the real question to ask is why? Do Canadians not remember how people gain experience? People gain working experience by working, the experience is actually more important than the money, the experience, if you use common sense actually, allows you to become your own boss or to demand more wages at future jobs. This society we live in isn’t supposed to be based on working for someone else, it’s supposed to be based on working for yourself. In our society the emphasis is not supposed to be on the collective the emphasis is supposed to be based on the individual, individual rights and liberties.
What’s happened is people have opted to operate as collectives, and the highest form of collectivism is fascism, which is using force, or the force of the government to make other groups or individuals subsidize your lifestyle. This is how most public servants have been taught to think, this is also how most Unions have been taught to think as well, collective bargaining, using the power of government to make other people forcibly pay for your retirement, well when you work in the public sector, what happens is if people are being taxed too much, those people will often just move to a place where they’re taxed less.
This is how things work in the real world, people hate to be oppressed and the oppressors are usually the collectivists and the moment you point this out to them they get offended or in the case of Canada the collectivist when challenged will change the topic, change the narrative and call the people who speak up for individual responsibility selfish, mean and/or racist.
The collectivists will, of course, use examples of particular individuals who may have been born into some sort of bondage, have a physical or mental disability etc. and use these individuals as their rallying cry for more collectivism. But of course, we all know that charities often address mental and physical disabilities, furthermore if there isn’t a minimum wage all forms illnesses can be addressed because the barrier to entry into the job market from a financial perspective is non-existent.
What I’m getting at is Pensions namely Defined benefit pension plans are built on greed, sure they’re being sold to public servants as justice for the working class, but the truth is it’s based on greed, most initiatives for the poor brought forth by collectivists are based on greed, the minimum wage is an excuse not be in business for self, it costs too much to start a business most people will argue, but if you give them a minimum wage, the first thing most will do is find a way to spend their newfound minimum wage wealth on not working for themselves, instead what these people will often do is vote for a politician that promises to give them work free stuff.
Which of course costs society as a whole more money, because in case people haven’t noticed public servants don’t work for free and most of the equipment, materials, and real estate public servants consume is owned and maintained by the private sector and being that public servants typically get paid a higher wage at the expense of the private sector, with job security not afforded to the private sector it’s only natural that the public servant would assume that they’re entitled to the best retirement possible and this is how most economic disasters are formed.
Canada believes that it’s somehow exempt from this but our time is nearing. When you include Crown Corporations Canada’s public sector is HUGE and well what Canadians can learn from the US Pension crisis is that if something isn’t done soon the chances of Canada hiring its own version of Donald Trump is a very real possibility.
Interesting times ahead