The Real Threat to Canada (& Western Civilization)

[August1991]

Toronto, ON (AHN) - Long lives and later retirement may deprive the next generation from a wealth transfer from their parents, a new report claims.

People in their twenties and thirties are going to have to look elsewhere to make their fortunes, as many of them won't be getting that much of an inheritance from their baby boomer parents and close relatives. Only 30 per cent of Canadians currently working are making plans to leave something behind when they die.

This compares to 39 per cent of people who are already retired.

"In Canada, life expectancy already reaches 82.6 years for women and 77.8 years for men, and these figures continue to increase," said AXA executive vice president Robert Landry.

"[Working Canadians] are therefore aware that they will have to make their retirement income last over a longer period of time than is the case for the current generation of retirees."

Link

I haven't seen the original report or its underlying research but I think the observation is accurate. Older Canadians will leave less to their children.

The article above implies that this is because people will live longer and have less to leave as an inheritance. I find this argument spurious. Life expectancy has been steadily increasing for decades if not centuries. Moreover, the actuarial tables of someone aged 50 have not changed dramatically in the past 100 years or so. People don't live longer - they avoid younger deaths.

I have even less patience with the argument that people - babyboomers - are more selfish and don't care about anyone but themselves. People have always been selfish and babyboomers are no different. From a genetic standpoint, taking caring of children is a supremely selfish act.

Instead, I think the reason people will leave less is because everyone now thinks that the government will take care of us all. We have less need to leave for our children because the government now does this.

In Canada, the government supposedly takes care of basic health care, education and a pension. Individuals, privately, need not worry about taking care of their children.

This is dangerous for two reasons:

First, it is unwise to put all one's eggs in one basket. What happens if government fails us? I have travelled to Eastern Europe over the past several decades and I saw firsthand the consequences of everyone trusting one institution. Would you put your entire retirement savings into Microsoft shares?

Second, and more seriously, governments don't "save" as such. Governments are a way to force transfers between individuals alive today, or to obtain forced payments from individuals alive now, in the present. Governments don't leave a nest egg for children. They take the nest of one child and give it to another.

There is much debate about government debt and whether the government should have a budget deficit. This debate is entirely misplaced and I think it is based on a profound misunderstanding of "government". Government can't leave a debt to future generations, and it can't leave an inheritance to future generations.

It is private individuals alone that can leave an inheritance (or not leave one). Because the institution of government is so misunderstood, and because many people believe governments will take care of us all, individuals now leave less inheritance for their children. For society as a whole, this is an understandable individual error but it's a serious collective error. When many individuals believe someone else will take care of the problem, no one takes cares of the problem. And the collective has a different problem.

I have a suspicion that religion plays a role here. Religion is a way for individuals to connect to the future as individuals. Religious people individually save for their children. For too many people in Canada and the West, government has replaced religion - but government is perceived as a collective way to save for children. This perception, and its effect on private saving, is catastrophic. Except for people who are religious.

----

For tech-types, let me consider this idea that rightly deserves a different thread.

Someone born in 1850 might have lived to 1920. In their lifetime, they would have seen for the first time: telegraph, radio, cars, airplanes, relativity, quantum physics.

Someone born in 1920 might have lived to 1990. In that time, they would have seen man walk on the moon, penicillin, DNA.

Whose world changed more dramatically?

Most of the innovations we now see were conceivable in 1930. The world's most significant advances now are applications of theoretical ideas developed before 1930.

The modern world is changing less rapidly than it changed in the past. We are discovering less now than we did before. Why? Because governments are larger and we save less individually, and less collectively.

[geoffrey]

I agree with much of what this post is saying here August, but I'm a little confused by your assertion that the lack of planned inheritence is impacting our rate of scientific discovery.

[August1991]

I agree with much of what this post is saying here August, but I'm a little confused by your assertion that the lack of planned inheritence is impacting our rate of scientific discovery.

If someone stops and thinks about why the present is wrong, that person during that time doesn't produce anything for the present. The idea is (possibly) a gift for the future. (Of course, the idea could be a total waste of time - but then, no new idea will ever occur if everyone thinks that way.)

Isaac Newton could have vacationed in Majorca, safe in the belief that the government (someone else) will worry about future generations. Instead, Newton religiously worked and invented calculus.

If that argument doesn't work, let me consider this one: Mrs. Einstein says to Albert: I'm off to Cuba. The government pays for university education in physics now - apply for a student loan/bursary.

[geoffrey]

That's a very skeptical view of human nature. People just won't bother discovering because someone else will take care of it?

I think people are far more selfish. In fact, so selfish that they themselves desire to solve problems for egotistical reasons. Look at someone like Al Gore. He's no expert on climate change, but he's trying to be the leader of the environmental revolution. Why? He could sit back and let the government deal with it? But his ego and selfishness force him to want to do more.

I think there are many Al Gores in the world. Look at all the young people that enter university wanting to research in medicine, other hard sciences or social sciences. I doubt they are doing this because someone else will take care of everything later. Most don't end up doing that, but I don't think it's because they are convienced that the government will deal with the problems... it's far more economics than psychology there.

There is one possibility that would lead me to consider such a theory. If you were suggesting that with lesser inheritences, less people have the ability to work for society rather than a living, then I'd suggest you may have a point.

I share your overall opinion that people rely and are too dependant on the government... who knows what the leading economic thought will be 30 years from now. It only took Canada 50-ish years to head from an extremely individualistic society by today's standard to something nearing communism by the standards of the 50's. National Childcare, carbon taxes and even CPP would be unthinkable in the 1950's. It's very dangerous to think that these will be vogue in 2050.

Unfortunately, there is not much we can do to change that reliance other than to eliminate the programs that create such a dependancy.

[scribblet]

I'm spending my kid's inheritance now, and enjoying it.

[Borg]

So if I read this right the new generation has to get off it's butt and become responsible working citizens?

Borg

[August1991]

I share your overall opinion that people rely and are too dependant on the government... who knows what the leading economic thought will be 30 years from now. It only took Canada 50-ish years to head from an extremely individualistic society by today's standard to something nearing communism by the standards of the 50's. National Childcare, carbon taxes and even CPP would be unthinkable in the 1950's. It's very dangerous to think that these will be vogue in 2050.

Geoff, I think that we should rely on government for many things if we want a civilized society. For the moment, government is the only institution capable of "fostering" co-operation in many situations - economists refer to these situations as "market failure".

As to your idea that people were more individualistic in the past, I disagree. Ordinary individuals have never had so much choice as today. With luck, your grandchildren will have more choices.

But let me take you up on your CPP idea.

I am willing to go along with the idea that in a civilized society Big Brother, like Mom or Dad, should force a young person to save. IOW, a young man or woman shouldn't be able to consume all now. The State should force them to put something aside for themselves and their children, the future.

But I think the State should leave to parents the choice of how to put something aside and save.

----

Returning to the OP, I think individuals in this generation are not leaving enough to the future. Why? They feel that someone else (the government) is taking care of that problem.

Governments should force us to save but leave it up to us to decide how to save.

[August1991]

Bump.

[Progressive Tory]

We never counted on inheritance to bolster our personal financial plan. Our parents never really had much.

Another problem with the Baby Boomer bubble coming to an end, is that many are now considering delaying retirement, and even working while collecting CPP. This means fewer jobs opening up for younger workers, while pension resources are still being drained. (You can't contribute to CPP after age 65)

Economic worry stalls boomer retirement: Poll

This will definitely have an impact.

[bjre]

The education system need to be checked.

* Why children going home will say: "why other kids need not to do this" when parents ask them to learn a little more.

* Why lots of new immigrant students from China, they can be the genius in their classroom at the beginning.

* Why each Olympic Mathematics Competitions, Canadian team has so many Chinese immigrant kids inside.

* Why Canadian patent number is much less than Japan, China, and Korea.

And with the CAS exist, teachers and parents will not dare to ask the kids to learn a little more.

Lots of people don't willing to have kids.

Some of the parents has to send their kids abroad to receive better education and avoid harassment from CAS.

So the government need more people to contribute CPP (Is this going to bankrupt in the future?). But there are not so many people. That's why Canada have to rely on immigrant. When immigrant comes, they face the same problem, and the worse is, they can not use their professional skill to work in Canada to contribute their energy to the economy because they have no Canadian experience unless they go to college/university again and re-start from very beginning. So they have to compete with low income labor work that already suffered from high unemployment rate, so that they will consume more government supported programs that need everyone to pay for it by tax.

No one in government can do anything on this because they care only about the interest of their own party, the fate of Canadian future is always lower priority compare with their own interest of cause.

So leadership ability is always more important than integrity no matter which direction will the politician lead the country go.

The time when the wealth be running away completely by the politicians, Canada will become another Iceland.

Edited March 8, 2009 by bjre

[msj]

Another problem with the Baby Boomer bubble coming to an end, is that many are now considering delaying retirement, and even working while collecting CPP. This means fewer jobs opening up for younger workers, while pension resources are still being drained. (You can't contribute to CPP after age 65)

People can contribute into CPP until age 70 if they so choose.

It's just that for most people they are better off taking CPP at age 65 (or earlier) and continue to work without paying into CPP (they would be CPP exempt by virtue of receiving CPP).

Those five extra years of paying into CPP as compared to collecting it (and not paying it if one chooses to continue working to age 70) are rarely worth it (i.e. the math, when considering life expectancy, does not favour paying into CPP until age 70).

[bjre]

Why there is American Dream, but I have not heard of canadian dream?

Is it because too many things are not allow to do in Canada?

So most new ideas will be killed in Canada because it won't have any chance to implement.

Even parents need to be qualified according to CAS.

I guess human being might be disappeared long time ago in the competition with other animals before CAS can invent such rules if their ancestor were so qualified parents.

[Canadian Blue]

Perhaps we should just do away with this welfare state altogether and just let the government deal with things it's suppose to instead of absolving individuals of their personal responsibilities.

I don't require a government body to tell me to save, nor should I.

[MontyBurns]

Perhaps we should just do away with this welfare state altogether and just let the government deal with things it's suppose to instead of absolving individuals of their personal responsibilities.

But I can't live without welfare.

[msj]

I don't require a government body to tell me to save, nor should I.

You can arrange your life so that you don't pay into CPP and so that you will not receive much CPP (if any - depends on how young you are when you rearrange your life to not pay into it).

Can't do anything about the OAS pension though and I doubt you would find enough Canadians to support your position to get rid of it. (I would support you on this but then I'm tired of all the tax breaks that old fogies get just by virtue of turning 55 and/or 65).

It would be nice if the government also didn't do things like allow RRSP's, and TFSA's and only tax 50% of capital gains (I can live with the dividend rules as they are a reasonable compromise to integrate corporate and personal taxes).

Those types of incentives, or "welfare," should be dealt with by lowing income taxes across the board and, to some extent, raising consumption taxes. An economic gain is an economic gain - whether by selling one's labour or lending one's capital and it's not the governments' role to decide which should be taxed more favourably - but such thinking puts me in the "insane" camp as noted below.

Of course, this is all moot until one realizes that when considering tax policy (i.e. the revenue side for government) one must also consider government expenditures and for some reason people still have this naive idea that some government is going to ride in, end all inefficiencies, cut spending in areas that "don't need it" and all will be right in Canada.

These people clearly are delusional if not outright insane.

Hence our current tax/spend system which works reasonably well.

[Canadian Blue]

Here's what I think, the federal government should cut all of the current welfare programs and instead put in place a negative income tax. That way the poor will still get some relief and their will still be an incentive to improve themselves and earn money. It works far better than the current monolith of taxation and regulations we currently have.

Edited March 8, 2009 by Canadian Blue

[Progressive Tory]

People can contribute into CPP until age 70 if they so choose. It's just that for most people they are better off taking CPP at age 65 (or earlier) and continue to work without paying into CPP (they would be CPP exempt by virtue of receiving CPP).

favour paying into CPP until age 70).

My mistake. When my husband applied for his he was told he would no longer being paying it into, so I guess that makes sense.

However, I know many people who are working and collecting CPP, which as I said is making it more difficult for people entering the workforce, when others won't leave.

I'm not suggesting mandatory retirement age, but it's still a factor.

[Progressive Tory]

Why there is American Dream, but I have not heard of canadian dream?

Canadians have dreams and many in the U.S. are suggesting that the 'American Dream' be modified to reflect more realistic goals. Everybody wants everything now, otherwise they think they've failed.

[Canadian Blue]

Isn't the American Dream to live your life however you damn well please without interference from the government.

[Progressive Tory]

Those types of incentives, or "welfare," should be dealt with by lowing income taxes across the board and, to some extent, raising consumption taxes. An economic gain is an economic gain - whether by selling one's labour or lending one's capital and it's not the governments' role to decide which should be taxed more favourably - but such thinking puts me in the "insane" camp as noted below.

I'll go with you to the insane camp, because I also prefer lower income tax and higher consumption tax.

We've been paying into CPP all our working lives, so feel justified in collecting it. A lot of the problem arose with the first receipients, since you only had to have payed in for seven years, and many collected it for decades after. I believe Paul Martin put a few safeguards into the program but eventually it will probably dry up.

I just go with the flow.

[bush_cheney2004]

Isn't the American Dream to live your life however you damn well please without interference from the government.

Not completely....the American Dream is about the opportunity to be successful with hard work and circumstances regardless of birth's fortune.

The term is coined from James Truslow Adam's The Epic of America (1931):

"The American Dream is "that dream of a land in which life should be better and richer and fuller for everyone, with opportunity for each according to ability or achievement. It is a difficult dream for the European upper classes to interpret adequately, and too many of us ourselves have grown weary and mistrustful of it. It is not a dream of motor cars and high wages merely, but a dream of social order in which each man and each woman shall be able to attain to the fullest stature of which they are innately capable, and be recognized by others for what they are, regardless of the fortuitous circumstances of birth or position."

....and Thomas Wolfe:

"…to every man, regardless of his birth, his shining, golden opportunity ….the right to live, to work, to be himself, and to become whatever thing his manhood and his vision can combine to make him."

Edited March 8, 2009 by bush_cheney2004

[Oleg Bach]

The only real wealth is hope and health - and wisdom.

It is not so much the tranphere of finacial wealth that is wandering away from western civilization, it is another kind of inheritance - wisdom through experience and tradition.

"Hounour your father and mother and your days on earth will be long and PROSPERIOUS"

Translated: Show repect ( the transphere of power) to your parents and actually heed what they give to you as far as council. With this absorbtion of wisdom - the youth will have a shorter distance to travel in life in order to achieve what is neccesary for survial, happiness and finacial stability. The PROBLEM in secularist western morally neutral world is our children are slowly being trained by the state that parents are bad...I see schools with logos - that state is represented as sunshine and smiley faces - and the parents are represented as this dark cloud with lightning juting out.

Parents are losing authorship over their childrens lives - this loss of authority is due to some strange ideaology that social engineers can create a better world by whipping out the wealth and wisdom of the past - sons do not heed their fathers - mothers have become like teenagers and their daughters "best friend" - the over all results is the loss of accumulated knowledge all past familiar generations...in other words the youth are like turnips that just fell off the truck and were born yesterday - pliable and compliant to the will of the corporatate world that will disgard them when done with them.

If we are allowed to have authority over our offspring and allowed to train them well - If I can take the wisdom from my parents that was passed to me and in turn pass it to my children . The will survive well and prosper - There should be no room in a marriage for contentiousness between parents....if this is the case the kids will be torn asunder intellectually - morally and finacialy - they will not know if they are coming or going. Children who are allowed to recieve their real inheritance will do well - money comes and goes - it is used well and sometimes squandered - a material inheritance does not guarentee happiness or success.

[eyeball]

In the fashion that is so typical of these sorts of these threads that involve the economy is the complete absence of any mention of the environment. Future generations will have to do with less in the way of natural resources, especially the rich diversity of life much of which is now threatened with extinction. All the most easily accessible raw resources have been mined, pumped, fished, felled, dammed etc etc, and most of the sink resources that absorb our wastes are filled, saturated, overloaded, fouled etc etc.

Depending on their moods I've heard my parent's generation remark "you kids have so many more opportunities today than we did" usually this in the context of their amazement at today's technology. Sometimes if they're feeling a little self-rightous they'll say something like "you kids sure have it a lot easier today than we did". There is a difference between trying to instill a good work ethic and a moral imperitive to be productive. I think the latter is often laid on thicker than it needs to be and in a world of diminishing economic opportunities and natural capital it'll only lead to more self-rightousness, probably for those who don't inherit a golden parachute or a plush pillow.

In addition to the national economic debts that will be loaded onto future generations, these will have to labour under the deficit of natural capital that our pig-in-a-python society has been consuming with abandon. Of particular concern to me are the grotesque geo-political situations we're also leaving behind although to be fair we inherited a fair bit of that mess too. This is akin to passing on the sort of intergenerational dysfunction that sexual or physical abuse causes. Our generation has been more aware than any before us how this awful mechanism works and we need to show a lot more effort at fixing this before we can hand that account off to our kids.

I suppose we have to allow for the sorts of technological breakthroughs that might turn a pig's ear into a silk purse but at the moment it doesn't look like we're leaving the world in a better condition than the one we inherited. The best our generation will be able to say to the next is, "kid, when we were given lemons we made lemonade". I expect many will just as glibly say "suck it up kid, you think the world owes you a living or something"?

Looking around the world at the moment though perhaps my generation and our kid's grandparents generation may be getting caught red-handed in their act of inter-generational theft. It seems the bill may be coming due a little sooner and with a lot more charges than expected. There is another observation I recall the real old-timers saying "boy, things sure a lot more complicated today". I still say "somethings will never change pops".

[Oleg Bach]

You have the hand of a writer - well done and throughly enjoyed. I agree with most of the points you make and there is not a lot that we can do as far as the environment. It is incrimental conditioning of the way things are and they get worse. Take an immigrant from China who goes fishing in Canada...He will drop a line in what we consider almost sewage, but by his standards the water is relatively clean and the fish are eatable. Same goes for our youth who did not take a raft or canoe out into the swamps observe life in teaming abundance. Nor did this youth ever dive down into crystal clear waters and spear a pike while taking a drink from the cool springs of the lake while submerged. To the youth environmentalism is picking up dog poop in a city park with hybred trees - It's just a word and ideology.

When a twenty dollar bill had the buying power of one hundrend dollars...it was tolerable - now 100 dollars is worth 15 - and inheritance that is supposed to establish an offsping with a starter home will be so devalued that they will be lucky if they can move into a small condo to suffer like shelved mice. Still I see young people as I walk to this loft past the bistros on Queen - eating their brunch - all well dressed all with cash and credit in their pockets and all in a disconnected dream land - It will end and they will not be prepared - They will be the new poor - the unskilled in survival poor..It's just a matter of time - I see great weakness in the younger generation that had privledge and who did not care for those without - there turn is next - rich is not for ever nor is poor - socio economic revolutions take place constantly - I know of families that at one time commanded society and within two gernerations the are degraded to poverty - because someone in the past gave up the faith and forgot the doctrines that granted privledge.

I can tell from looking at the genetic structure of a beggars face that at one time his family ruled the roost...it was not the inheritance of money or the lack of it that brought him to his knees - It was corruption - personal and social...and the mighty fall.. corruption is what will bring poverty - look at the bailout people - this is a temporary measure - in two generations those that had billions will be on welfare if they are lucky.

[Froro]

I don't believe I should expect any kind of inheritance from my parents/nor my MIL. Why should I. What is this nonsense that the government will take care of us in our senior years? Has the OP ever lived in the real world?

Plan on no inheritance and work to put money away for your own future (hence why RRSP are important). Count on yourself and that way you are your own keeper.

When did this sense of entitlement to inheritances start? CPP and such I can see as we've paid into it our whole lives but your parent's money???

If anyone needs to rely on an inheritance to survive in your future, you need grow up, cut the umbilical cord, and stand on your own two feet.

Blaming parents for actually having a life after raising children (which ain't cheap, ungrateful little ingrates) and working their entire lives by spending their own money for the destruction of the Canadian civilization.....