Corrigenda remuneratio

sunshine listI must admit when I have been mistaken.  Well, not completely mistaken (at least in this case!) but perhaps seeing things from the wrong point of view.  I have been rather harsh on the public servants of our country (and our neighbours to the south), for their high wages and benefits, implying that they make an unjustly high income.  Many of those on the sunshine list in our debt-soaked province (that is, an income of over $100,000) are in the public service.


But I have been pondering, and perhaps, rather than they making an unjustly high income, it is by and large only the public servants who are still making, or at least guaranteed, a just wage, and the hoi polloi, the poor chumps in the private sector eking out a living, providing for their own pensions, who are making unjustly low incomes.


Here is the rub:  A just wage must be measured by some objective standard, and by natural law, history and universal right, the most objective standard of a just wage is whether or not one can buy private property, a home with at least a small piece of land.  Only thus can one be free, and autonomous to some degree from the State, or from some dictatorial landlord.


In any urban centre west of Montreal, the average house price is anywhere from over $400,000 (Guelph), $538,000 (Calgary), to over a million dollars (Toronto, Vancouver).   To afford a house even on the low end of this spectrum, one would have to rather high up on that sunshine list (for my take on houses and homes, see my recent blog).  For most single-income families, it is impossible; for those families with both parents working and someone else raising their children either by nannying or daycare (themselves problematical), it is difficult, and becoming impossible even for them.


So, in short, the government is artificially raising the salaries of their own employees, all the while private sector salaries follow the stagnation in the ‘real’ economy, and the deflation in the currency.


Private property is the foundation of a free and prosperous society, as any ‘real’ economist will admit, at least in moments of candour.  Without it, an economy dribbles away its wealth and resources, work ethic diminishes, and one’s attachment to one’s land and country attenuates.  One need only compare rental neighbourhoods to those with mortgages for empirical evidence.


It was not always like this.  Not long ago, in fact just back in 1975 when ‘real’ incomes dropped for the first time, a family on one income (which almost always meant the father as provider) could purchase a home, a car, food, furniture, and all other basic expenses and still have some to save.  Of course, most people were property owners, and all those houses now ‘for rent’ in Toronto, divided up into multiple dwellings, were once family homes.


Here is what a 2011 Globe and Mail article on the ‘Demise of the One Income Family‘ (even that, sadly, now sounds quaint) has to say:


Expressed in 1950 dollars, U.S. median household income in 1950 was $4,237. Expenditures came to $3,808. Savings came to $429, or 10 per cent of income. The average new-house price was roughly $7,500 – or less than 200 per cent of income.


A worker in 1950 could easily pay off his mortgage in jig time, still in their early adulthood.  To put that into context, consider that the average income in Toronto in 2013 was about $73,000, which would mean by the same ratio that a house should now cost just over $140,000.  What could you buy in Toronto for that?


Or, to put it another way, for incomes to have kept up to house prices, the average worker in the province’s capital would have to be making over $500,000.


Hence the need for dual generous incomes, deep debt, borderline mortgages sensitive to the least increase in interest payments (a 2% increase on a $480,000 mortgage would mean an extra $700 or so per month).


So even the sunshine boys (and girls) have it tough in the big city, where almost all of their jobs are to be found, except those on the high end.


As we contend about whether to raise the minimum wage to $15 per hour, we should keep in mind that, as unrealistic as even that is for many small businesses, that is nowhere near what we mean by a just wage, a measure so far beyond anyone’s control that the very term has lost almost all meaning.


Rather than artificially raising everyone’s wages so that we all go bankrupt, it seems that the only way for things to return to normal is for the housing bubble, for bubble it is, to burst, or at least deflate, causing some degree of short term pain for many whose mortgages would be underwater.  Afterwards, we hope, house prices would return to something the average family could once again afford.


Then we can all bask in the sunshine in our own private yards.


Oh, and a blessed solemnity to all, one message from which is that our only real home is in heaven, and we are all on pilgrimage here.  And pilgrims should lighten their loads, or at least carry their loads lightly…


August 15, 2015


Solemnity of the Assumption