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June 18, 2020 | The Dilemma

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.

Dipper leader Jagmeet Singh did a victory lap on Parliament Hill this week after blackmailing the Trudeauites into another $34 billion in CERB payments. The program will have dished out roughly $90 billion to workers claiming a virus impact by the time it ends (Christmas).

In exchange for allowing the T2 gang to survive a money vote (confidence), Singh demanded – and received – the 16-week benefits extension. And so the most costly short-term social program in Canadian history continues. Rest assured his next demand will be for UBI. If the Libs don’t agree to start crafting a universal basic income, well, we get an election. Ironically that could wipe out the lefties and usher in a Liberal majority. (Peter? Erin? Anybody home?)

The deficit for 2020 may well be $300 billion (the indie PBO says $256 billion so far). The federal debt will squirt past $1 trillion. The debt-to-GDP ratio will rise from the mid-30% range to 50%. With provincial borrowing added, the number becomes 90%. Still better than the US (110%) but poor contrasted with Germany (60%). Expect these comparisons when Bill Morneau gives his ‘fiscal snapshot’ on July 8th arguing that it’s no big deal when the deficit increases by a factor of 10 in a single year or that one administration adds more new debt than any which has gone before.

Chances are most voters will agree. After all, eight million households are getting direct deposits of two grand a month. Four in ten already pay no net tax. Child support benefits have inflated bigly. Wrinklies receive more, too. Plus billions going to companies to subsidize the wages of people who aren’t working, and business loans a quarter of which is forgivable.

It’s all astonishing. And as Galen Weston found out in the last few days, you can never take back what you generously gave. Society has turned. Not for the better.

Well, let’s dive into a single little example in the life of one woman to ascertain the impact of CERB. It’s spring, so we’ll call her Iris. She lives in Ontario, reads this blog and admits being pissed.

Your last post was about CERB extension, so I thought you might be interested in posting just another view. The math is very disturbing. I lost my job due to COVID. I am eligible for unemployment benefit, but was forced to get CERB instead.

Now the interesting part – I was offered a part-time job. First 2 months it paid $2600 and now less hours offered and the pay – $1300. Should I refuse it? It just doesn’t make any sense to work for $1300 when you can get $2000 for doing nothing, right? And the room for extra earning is max $1000 under CERB. However, under old EI benefit more extra earnings allowed, I would get $3592 the first 2 months and $2942 for the third and forth. So overall for 6 months I would lose 2×292 + 2×992 + 2×1642 = $5852

First time in my 20 plus years career I am collecting benefits and so very disappointed and angry. I don’t know what to do. Shouldn’t we all have a choice to collect CERB vs EI? Do I start a petition?

Iris is miffed CERB replaced EI (although she can go back on unemployment benefits when the emergency money ends). This, she argues, is unfair. She feels entitled to the larger amount after twenty years of making EI contributions. But by the time CERB ends, Iris will have collected $16,000, and paid no tax. With an average income of $30,000, it would take 33 years of EI contributions to equal that amount. She’s way ahead of the game. But wants more. Another Galen Moment.

Here is the dilemma. Accepting a job and going to work isn’t even an option in her mind. Why work for less when the government will pay you more to watch Netflix?  It’s a question many are asking since the virus came to town and the direct bank account deposits started.

There are answers, Iris.

Accepting a position can lead to advancement, more hours, better pay and responsibility. Sitting at home watching Space Force does not. Never will. You stay unemployed.

Working means human contact and interaction with others (even with social distancing). To do this you must put your pants on (well, usually), wash your hair, leave the couch and practice social skills. Or you can stay home and hoover cheezies.

Being employed gives daily meaning and context to a life. ‘And what do you do?’ is a universal question. ‘I brush the cat’, is a bad answer. There is a sense of dignity and self-worth that comes when you are paid and have a task. No pogey payment can provide that.

Having a job means building a resume. Staying employed and gainful during a global pandemic will probably be noticed, admired even, by future employers. Staying on the CERB will be noticed, too. So, Iris, why not collect a grand a month for part-time hours, plus an equal amount from Ottawa, and let it be known that you’d like a full-time gig?

Some people worry leaders like Singh (and now, Trudeau) are hastening the destruction of our work ethic. Moreover, they’re helping ensure small business failure. When people get more to do nothing than take temporary, part-time or entry-level employment, what are entrepreneurs to do? Just pay more? But many cannot and stay viable. The failure rate – even in good times – proves the fragility of Main Street.

Yes, millions of people need temporary relief. Covid’s been a bitch. But Iris gives us a small example of the unintended consequences of political actions.

Workers who don’t work. Employers who can’t hire. Soon, taxpayers on the brink.

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June 18th, 2020

Posted In: The Greater Fool

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