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April 13, 2020 | Come and Get It

A best-selling Canadian author of 14 books on economic trends, real estate, the financial crisis, personal finance strategies, taxation and politics. Nationally-known speaker and lecturer on macroeconomics, the housing market and investment techniques. He is a licensed Investment Advisor with a fee-based, no-commission Toronto-based practice serving clients across Canada.

“I played golf yesterday and asked one of the other guys how his investing is going?” says Mike from the Left Coast. “His answer ‘not doing well right now but when I get my $2000 benefit it will go straight into my investment account’.

“I stewed on that for half a hole and when we got to the next tee I asked out loud to the group ‘so you’re still working for your brother but have applied for the CERB?’ ‘Yup’ was his response. Then another member of the group said, with a smile on his face, ‘I applied for it too’. I asked why, he said ‘my hours have been cut’ again with a smile. I stopped talking about this as it would have got ugly.

“I will not be golfing with two of the three members of this group anytime soon. I’m not sure how all of this will play out but it’s not going to be pretty. Maybe you should write about it.”

Well, here we go. Unleash the hungry hounds of avarice.

There are some 19 million working people in Canada. In the last three weeks almost six million of them have applied for money from the government. Astonishing. Historic. Troubling. A couple of million rushed to claim EI once the pandemic hit and jobs started to evaporate. Another four million have signed on for the emergency benefit in just the last seven days. Almost two hundred thousand claims came in over the Easter weekend. They continue.

The $2,000-a-month payment (for 16 weeks) is intended to support people who have lost their jobs to Ms.Virus, are in quarantine or must care for kids (since all the teachers went home). In other words, people without income. The feds have made it simple – three clicks and the cash is on its way. If nobody else applies (and they will), this will cost us $49,000,000,000 over four months. This is but one piece of the pandemic bill which will raise the annual deficit from just over $20 billion to almost $200 billion. Your grandchildren will still be paying for it when they retire.

Are there really six million people unemployed right now? Of course not. That would be a 32% jobless rate, when the number is likely a third of that (yet still appalling). But what the pandemic has done – prompting governments to turn off the economy, then having to support so many millions – is twofold. First, it exposes us as a nation of ne’er-do-well financial illiterates and hedonistic profligates who confuse debt-infused assets with wealth and save nothing. Second, this could be the death of personal responsibility. I mean, sheesh, have you checked what the moisters are saying on social media?

To a lot of kids the CERB is the teaser for UBI. They believe and expect that in an unfair world in which Boomers stole all the jobs and made houses too rich to afford a universal basic income is their right. Increasingly a bunch of politicians agree with them. It’s the social justice policy swamp from which Jagmeet and Bernie Sanders crawled. So just wait until the Mills start filling the seats in the House of Commons.

Anyway, this is the crossroads. Giving people ten billion a month for not working is a crippling expense. Ottawa has an obligation to support those whose livelihoods it destroyed in the pandemic fight, of course, even if those citizens had failed to look after themselves. It’s a moral imperative.

But do all citizens have a right to the money – just because it’s there? Because it’s not means-tested? Is that a clever, smart thing to do? Certainly accepting enough cash to top up your TFSA with growth-oriented ETFs at a time of market decline is an amazing benefit. Yet in doing so, are you making future taxes higher? Indenturing your kids? Legitimizing political stupidity and overspending? Hurting Canada? Guaranteeing there’s less health care money when the next pandemic comes? Being greedy and myopic?

Or does your personal situation and family need trump all of that?

Perhaps those taking the cash without need feel it’s an act of political retribution. Maybe they agree with the prime minster that we’re a post-nation state. Maybe like many of the young they think government exists to support them. Maybe after declaring an emergency to fill us all with fear, the authorities are diverting us with greed.

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April 13th, 2020

Posted In: The Greater Fool

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