Saturday, March 31, 2012

Credit where credit is due.

This week saw the release of the first Harper Majority Government's budget. Perhaps it's because the buildup has been ongoing for almost six years, it struck me as being not particularly extreme. I am not a fan of the Conservatives, and I have profound philosophical differences with them. But there were a couple of points in this budget that were long overdue and on these points, I have to give them credit.

First point is the abolition of the penny. I'm not sure what kind of cost savings this is supposed to accomplish--I'm told it's substantial. But whatever it saves, it was time for that coin to go. I hate pennies. They fill up your pocket and your change jar, they're heavy, and thanks to inflation you can't even buy penny candy with them. You feel bad throwing them away because they're money, and you feel worse carrying them around because they're a pain in the ass. With more and more of our transactions happening electronically, we just don't need currency in that denomination. And I say that as someone who still deals a lot in cash. The nickel is close enough.

The other point that I applaud--provisionally--is raising the eligibility age for Old Age Security from 65 years old to 67. I say this with a lot of caveats. I do have serious objections to how they chose to go about it, but let's hold off on those for a minute.

When Old Age Security came into force in 1952, the average life expectancy at birth was 66 and 71 years for men and women, respectively. At that time you only became eligible to collect at the age of 70.

Through the 1960's life expectancy increased, even as the eligibility age was lowered to 65. By 1971 m/f life expectancy had increased to 69 and 76. The numbers have only gone up since then. Today it's 78 years for men, 83 for women.

So an old-age security program, that was originally meant to provide for people who had lived an unusually long time and really, truly could not be expected to provide for themselves, is now viewed as an entitlement that the average person will enjoy for a decade or two.

To be fair, this is a narrow view. It essentially says that what was good enough for the 1950's should be good enough for now; and that people who aren't rich should expect to work until they drop dead. This is pretty much small-c conservative ideology at its simplest and if that were all there were to it, I wouldn't buy it.

But these decisions have to be made in context. Lots of countries have much lower retirement ages. France, until recently, could afford to let people retire at 60 (there was much outrage when that age was recently upped to 62.)

But such countries can afford to, because they've been wiser with their wealth. Here in Canada, we have allowed ourselves to depend on a resource-extraction economy, especially (increasingly) with respect to energy resources. Canada gets less than half the GDP per unit of energy than does a country like Denmark. We tend not to think about these things but what it means is that we're half as rich as we would be if we built our economy to capture all the value-added work from our resources that currently goes to whoever's buying our oil this week.

If we weren't so stupid about it--and if our elites hadn't so completely internalized a colonial mentality in which our only value is as hewers of wood and drawers of water--we would be fabulously wealthy. We could pay for retirement starting at 55, and provide free university tuition to boot, and a ton of other stuff too.

But that's the box we've built for ourselves. We've lowballed our natural wealth and so people need to work more years, with less vacation. So, 67 it is.

Which brings me to my beef with how this was done.

Generational equity is a hard thing to talk about under any circumstances. This weekend there was an article in the Globe and Mail by a staff writer in her twenties, who laid out a very cogent, fair and reasoned criticism of how the increased OAS age was designed to exempt the baby boomers, and will apply only to people born after 1963. In other words, the door will be held open until the last of the boomers reaches 65, whereupon the new rules will come into effect. The last time I looked, there were some 1500 comments. I sampled a few pages' worth, and fully half of these were snide and condescending retorts from baby boomers advising the writer to suck it up and stop whining.

You can judge for yourself whether she made a fair point or not, or deserved anything like the troll-pileup she got for her trouble. But in my experience trying to tell baby boomers that they have had it ridiculously easy compared to what they've left for their children and grandchildren is a mug's game. It's like trying to tell creationists that, no, Jesus did not have a pet dinosaur. No matter how many numbers and facts you marshall to illustrate your argument--and on either version of the analogy there are plenty--our elders as a whole will simply not acknowledge what has happened.

So I'm not going to do it here. Anyone who will believe me already knows; anyone who doesn't already know, will never believe me. The reality of the post-boomer generations will not become part of the consensus until enough time has passed to illustrate the difference between

(a) being the majority generation (i.e. you outnumber all other demographics combined;) and
(b) being the mere plurality generation (i.e. bigger than any other individual demographic, but now outnumbered by all the voting-age people who are younger than you.)

When (a) becomes (b) a lot of people are going to learn some very hard lessons.

But I will make one contrast that, I hope, illustrates why a lot of younger people are upset about how the OAS change is being phased in.

In the early 1990's, governments across Canada suddenly found themselves with a problem. After a devastating recession and spending beyond their means for decades, they found themselves unable to afford many of the programs people had come to take for granted. One of these was support for universities.

So thanks to the change in societal priorities, subsidies were cut, and university tuition started to go up... and up.... and up. Tuition doubled and then doubled again. Student debts got bigger and bigger, and laws were passed to make it harder and harder for graduates to cope through bankruptcy, even as university education became increasingly necessary (but less and less sufficient) to ensure a reasonable livelihood.

I don't want to make too much of the timing, but 1995 was the year the last of the baby boomers turned 30 and so, presumably, the vast majority of them had stepped safely into the education lifeboat. Almost overnight, public spending on higher education went from being an investment in the future, to be covered by deficit spending if necessary, to being an unaffordable luxury.

In any case, this didn't do anything to reduce the actual deficit. It simply split up and privatized it, moving the debts incurred by education from the public books to those of the individuals foolish enough to have been born too late.

But here's the real kicker: These changes happened really, really suddenly. You could enroll in university in 1993, expecting to pay a certain amount for your degree, and find by the time you graduated that the annual bill had doubled or more. There was no effort made to accommodate people already in, or about to enter the system. This was an emergency and had to be addressed right away.

Compare this to the fifteen-year grace period we've built into the OAS change, simply to avoid vexing a large and active voting block. Had we dealt with the costs of university the same way in 1995, tuition would have been held stable until 2010, and everyone this side of the Miss Daisy's Kindergarten Class of '95 would have been spared the financial albatross that higher education has become.

Looking on the bright side, assuming life expectancy holds up that still gives most of us about a decade of retirement to look forward to. But that's assuming it stays at 67. With apologies to Darth Vader--they are altering the deal. If you were born after 1963, pray they do not alter it any further.

1 comment:

  1. bravo, i commend your ability to discuss this topic calmly. i've lost my ability to do more than froth and seize.