The Debt Scandal

debtA merry Christmas to all, in these eight or twelve days of Christmas, depending on how one counts them. Of course, as we learn from the story of the Grinch, and of course the Gospel, Christmas is about giving, family time, offering to others a part of ourselves, reflection on the gifts of God in our lives, shared meals and the occasional drink or few.


However, most of us are, to some extent, wrapped up in the commercialism of the season, and if you bought anything on a credit card, the racking up of debt.


Debt, from the Latin debitum, or ‘something owed to another’, is usually used in English to mean what is owed on a financial level (although we still use the word occasionally to mean something owed in general). Debt is not always a bad thing, even though the name conjures up unpleasant images. After all, we owe our parents an infinite debt for giving us life and raising us up, and that is good and wholesome.


But here, in these joyful days of Christmas, when we soon have to face the music of our own personal debt over the holidays, we should ponder the notion of financial debt, whether good and bad debt, as well as manageable and unmanageable.


Ideally, of course, we should only buy things we can immediately afford. That is the way money should work, as an artificial symbol of wealth. If I have a certain amount of what other people want, and am wiling to exchange some of that for something someone else has that I want, we could, and should, trade. We could decide to just barter, and exchange physical services or goods, but to expedite things, our civilization long ago has invented ‘money’, artificial wealth, to stand for what we might term ‘natural’ wealth, food, chattel, services, that are not so easily transportable. (I recommend Hilarie Belloc’s ‘Economics for Helen’ for an excellent introduction to the basic history and philosophy of economics).


The problem arises, of course, when the artificial wealth (the money) no longer corresponds to the natural wealth (the actual and real goods and services). That is when we go into debt, hoping at some point to pay off what we cannot afford in the present.


Our artificial wealth has become, in the latter half of the twentieth century, even more artificial with the invention of credit, and the nefarious credit cards, which is really debt upon debt. Here, we longer pretend even with artificial wealth, but with the promise of artificial wealth. Who is paying for what and with whose money?


Eventually, when an individual goes into too much debt, reality catches up. They realize at some point that they do not have the artificial wealth, to say nothing of the natural wealth, ever to afford what they may desire. You may live the high life for a time, but then the creditors start calling, the repo men show up, cars are impounded, television sets absconded, houses foreclosed, and bankruptcy looms.


In the ‘old’ days, things were a bit more brutal than today, with debtors’ prisons, where one would not be let out until they ‘had paid off the last penny’. But at least our forebears, ‘poor’ as they were, lived within their means. People today are, I would argue, even poorer, but live far beyond their means. I am always surprised by the number of brand-new 50 grand pickups I see, the 50 inch television sets and the ubiquitous techno-gadgets that even the ‘poor’ have.

pick-up truck i pads

One may argue about the morality of such penalties for debt as prisons and stockades, but the principle behind controlling debt makes sense, for one of the primary tasks of the State is to maintain a solid financial house, so that one’s hard-earned wealth may be secure.


If I asked you to link two concepts together, ‘financial responsibility’ and ‘government’ would not, perhaps, be the first things that come to mind. We are living in an age of grave financial irresponsibility, both in government and in private individuals. In both realms, debt has never, in the entire history of the world, been higher and more unmanageable than it is today.


Here is the thing: Governments ask us to save, yet squanders what money they take from us. They spend like drunken Canadian sailors on leave in the Caribbean (I’m not sure why that image came to mind…perhaps the recent scandal involving a few members of the naval reserve, and the subsequent draconian policy of puritan-level temperance imposed on all Canadian sailors, but more perhaps on that later).


One need only reflect on the recent billion-dollar boondoggle gas-plant cancellation fiasco, and Dalton McGuinty’s clumsy and likely criminal attempt at a cover up, paying an aide’s spouse 10 grand to delete hard-drives in public, governmental computers, like something out of a B-level spy movie.  Is Dalton still receiving his gold-plated pension, I wonder?  I’m kind of hoping he gets to spend it buying cigarettes in prison, but there is little chance of detention for Dalt.

Dalt Debt

This leads to the scandal of debt: Not only does the government offer a bad example, piling up debts that can never reasonably be paid off, but, for those of us who still strive to be virtuous, and save what little money we have, our efforts mean little, for the governmental debt, and the payments required to maintain even the interest on this debt, devalues what savings we, the humble hoi-polloi, do have.


This, dear reader, is a grave evil, and one that we should ponder more deeply as we enter 2015. Here are some numbers for your reflections: 

Ontario, whence I write, is over $300 billion dollars in debt, more than California, with three times the population and ten times the economy. Yet the income of the so-called ‘public sector’, those employed by the government, continues to skyrocket (along with their pensions and benefits), well and truly beyond those in the actual wealth-producing private sector who pay their salaries.


The base salary of firefighters and police officers (not including overtime) is approaching $100,000 (recent arbitration put firefighters in the Kitchener area at $92,000). Both can retire in their mid-forties, with life-long pensions and benefits.


University professors (paid for largely by transfer payments from the federal government) are well above the sunshine level of 100 grand. Many nurses and almost every teacher is at this level now also.


Politicians? The base salary of a member of parliament is $163,700, exclusive of all the expenses they can charge, including funds for an ‘extra residence’ and, of course, their pensions, which kick in after two terms.


Physicians make well into the six digits, with the number of hours they work actually decreasing. Even nurses are now often paid well-above average wages; the days of nursing Sisters, as well as physicians who make house calls, are well behind us.


The myriad of government workers (there are, in Ontario alone, quite literally millions on the government payroll in one way or another, directly or indirectly) are being remunerated with wealth that not only does not exist, but will not exist for many years into the future. Who can pay off a third of a trillion dollars in a province of 10 million people with a stumbling economy? Even the car companies are being propped up by public funds, so now I as a taxpayer have to subsidize someone else’s new car, that I myself cannot afford, as well as their unionized wage, that I myself, and most of us, do not make.


The average household debt in Canada, exclusive of mortgage (and more on them also later) hit a whopping record $28, 853. That’s where all those pick-ups, ATV’s and i-pods come from.


The economic picture in Ontario, and most of the rest of Canada, is almost the textbook definition of ‘unsustainable’, and I am beginning to ponder the morality of receiving such exorbitant public salaries, to say nothing of offering them.


No wonder we cannot afford all the infrastructure required in our fair land. Raillways will not be built, highways will fall into disrepair, and our health-care system will face imminent collapse, unless something is done, and soon.


One may take a pollyanna view, and hide one’s head in the sand, and, yes, governments, as well as large corporations ‘too big to fail’, can kick the debt can down the road far farther than a private individual, who must face the music on a more immediate time-frame (as in, a few missed credit-card payments). This is due to the (immoral) principle that governments can tax many generations ahead, sort of like having a credit card without limit, whose debt passes down to your great-great-great grandchildren. Good for you; not so good for your descendants.


For eventually, someone, sometime, is going to be at the door of those descendants asking for payment, and what will happen when payment can no longer be made? Sooner or later, when the party’s over, ‘we’ are going to be that generation.


On a note of optimism: Our hope is not in this world, but the next, and unrighteous mammon has always been unreliable. So keep your own house in order, for he who is faithful in little things, will be faithful also in much, whether that fidelity pays off in this transient life. Remember the Who’s, who danced and sang even after the Grinch stole all their presents.


So Merry Christmas to one and all, in the true spirit of the season!


December 29, 2014