It�s not all tears and quivering lower lips on the European Union�s fiscal ship of doom.
The accountability deficit and misguided monetary stewardship that set the vessel on its course have generated much below-decks bilge, but also some interesting insights, including a modest made-in-B.C. proposal, and some instructive warnings that more Canadians will soon be forced to book passage.
First to those warnings. The most recent are included in a CIBC World Markets debt-to-income report. It shows that a combination of low interest rates and anemic household income growth has increased Canadian debt burdens and eroded prosperity prospects. Too many older Canadians are now gargling the buy-now-pay-never Kool-Aid by borrowing more and saving less. The report points out that the number of citizens over 45 in the high-debt category has been rising faster than their share of the overall population. The result: �Canadians nearing retirement who should be in their prime savings years are, instead, getting themselves deeper into debt.�
Couple that with the pension-fund bubble revelations from Pension Ponzi author Bill Tufts outlined in a previous Public Offerings (�Old, in the way, broke and belligerent� – BIV issue 1161; January 24-30) and more trombones, kettledrums and tambourines are being added to the post-prosperity era�s hell-in-a-handbasket soundtrack. Featured soloists include politicians and their gullible electorates.
Herbert Grubel, Fraser Institute senior fellow and emeritus professor of economics at Simon Fraser University, has some insights here.
Among the interests of the former Reform Party MP: monetary unions. The ongoing contretemps embroiling the European version would likely convince the casual observer that such unions are best avoided. But Grubel remains an advocate. His proposed �Amero� would apply the monetary approach to Canada, the United States and Mexico. He points to assorted monetary union benefits, including savings and transaction costs, greater stability of price relationships that encourage trade within the union and, because exchange rate differences are eliminated, lower interest rates for some members.
But aside from those economic upsides, Grubel argues that there would be a win for the democratic process in the bargain. The Amero, he says, �would provide a remedy to one of the fundamental flaws of democracy: politicians in all democracies, except in a few, try to win elections by promising goodies for special-interest groups in return for their votes.�
The addiction to mercenary special-interest support would largely be neutralized under an Amero because direct access to government currency printing presses would be placed at arm�s length from local elected officials. That would make it harder for today�s politicians to hang the cost of political promises around the necks of future generations.
But Grubel�s Amero has little chance of being embraced by any political party. Nobody gets elected today without bribing the electorate, and the electorate is increasingly happy about being put on the government payroll. But his proposal provides at least one option to reduce the proliferation of political patronage and its corrosive impact on our economic futures.
More options need airing because, as evidenced by the ongoing Greek budget tragedy, an economy given over to political parties bribing taxpayers with their own money is not sustainable. Especially when those taxpayers don�t have any to begin with.��
