Why the financial industry’s argument is weak

Lobbyists, consultants, and think-tank representatives, all paid handsomely by the financial industry, probably plied gullible politicians with convincing arguments that revealing the CPP’s surplus would cause severe economic disruption. When the impact is depriving millions of struggling Canadians of hundreds of billions of dollars, and more, that argument deserves intense scrutiny and debate. Consider the following.

Why is their argument not in the media

Is there a more newsworthy story in Canada in years than the story of the CPP’s surplus and potential to solve so many of Canadians’ and Canada’s current financial problems? As demonstrated earlier, only the financial industry and actuarial profession would lose. Why are the pros and cons of CPP reform not debated frequently in our media?

Despite repeated submissions by me, our entire media has never mentioned the CPP’s surplus. Instead, our media portrayed Premier Smith as un-Canadian, uncooperative and unhinged when she requested Alberta’s fair share of our CPP fund. Lifeworks, the suspicious actuarial firm, not Premier Smith, ridiculously claimed Alberta deserves 53% of the CPP fund. Because Premier Smith is the only senior politician who has defied this cover-up, she is arguably the most honest politician in Canada. Her use of referendums further proves she is interested in true democracy and the overall welfare of all Albertans.

Our media remains very unbiased on all issues that will not decrease the profits of the financial industry. However, because the threat of the CPP’s surplus being revealed surfaced in Alberta, the media becomes a misinformation machine that would make FOX NEWS proud. Why are our politicians not saying to the financial industry,

"If releasing information about the CPP’s surplus would be so harmful, why not present your arguments publicly so Canadians can hear both sides, weigh the evidence, and decide for themselves? That is how democracy is supposed to work."

Their share of all corporate profit is almost double the financial industry’s share in the US and Europe

Canada’s financial industry now collects 47% of all corporate profits. In the US, it is 25-30%. In Europe, it is roughly 25%. If Canada’s 47% share were reduced, it would not create economic disruption. It would merely move Canada closer to normal international levels. 

In numerous other industries, layoffs are decimating struggling Canadians

Millions of Canadians have been or will be victims of devastating job loss. Artificial intelligence, robotics, ATMs, online shopping, self-checkouts, self-driving taxis, self-driving trucks, and tariffs have resulted in, or will result in unemployment, lost income, retraining, reduced self-worth and prolonged suffering. Why should a handful of millionaire executives in the financial industry be protected from a slight decline in income while millions of low-income Canadians are unprotected?

How impactful will CPP reform be?

The benefits for 99% of Canadians would be in the hundreds of billions, and more.

Nor is the likely decline in financial-industry profits as catastrophic as lobbyists may suggest. For example, if one million younger Canadians stopped investing $10,000 privately this year because they had greater confidence in their CPP pension, the shortfall in private investment flows would be $10 billion. At a 1% fee, that would reduce fee revenue by about $100 million. With the profit on that revenue estimated at 30%, the resultant $30 million decline in profit would represent only about 0.02% of the industry’s annual profits, roughly $160 billion.

It is understandable that the financial industry is concerned about legislation that would allow voluntary contributions to CPP Investments. CPP Investments’ likely 10% return would give investors over seven times the profit over 40 years, when compared to the financial industry’s likely 5% return. 

However, CPP Investments would become much less profitable if they were forced to invest hundreds of billions of dollars for Canadian investors. A maximum investment of, for example, $1,000 per year per Canadian might be necessary. Such a policy would contribute considerably to reducing mounting income inequality in Canada. Even with such a policy in force, the financial industry would still be asked to invest trillions of dollars for millions of wealthier Canadians.

By contrast, a no-risk $200 billion CPP surplus distribution could deliver enormous benefits to ordinary Canadians. In each federal riding, the direct impact could be roughly $760 million, followed by additional economic stimulus as households use the money for necessities, debt repayment, food, housing, repairs, and local businesses.

Former Finance Minister Chrystia Freeland sent me a weak defence of her inaction. She argued that the CPP needs the surplus because baby boomers are retiring and living longer. However, actuaries have already accounted for this. She also argued that the surplus is needed in case investment returns are poor. That is precisely why standard pension practice maintains a 25% surplus cushion. A 200% surplus violates the principle of generational equity, resulting in many Canadians dying earlier than they should, with a lower quality of life. Soon after sending me her unconvincing email, Ms. Freeland, the author of PLUTOCRATS, resigned from politics, probably unable to stomach the hypocrisy and injustice that she was forced to endorse.

UK HAS A MINISTER OF PENSIONS US? eUROPE?