PROBLEMS WITH DEMOCRACY
There is an arrogance associated with people who live under the democratic system, but as I have said in the past in other articles, there is a price to pay for the freedom to vote. Democracy does not change human nature, and personal self-interest is front and centre, no matter the system of government. Politicians are elected by promising benefits, and once given, it is never easy to modify them or take them away entirely. Benefits to workers are extensive in Spain, Greece and Portugal but the ability of their governments in recession to maintain their commitments is now limited.
Americans, and I am sure this is true in Canada, want low taxes and extensive government services. In a time of recession this can be accomplished by government borrowing, on the state, local and municipal level. Interest rates were low and the American people borrowed heavily as household debt went from $665 billion in 1974 to $13 trillion today. In 1980 the U.S. debt was 42% of the Gross Domestic Product (all goods and services produced), now it is 107%. In the same period England moved from 46% to 88%, and Greece and Italy are much higher.
The problems don’t end there. There is a need in the western democracies to reform the tax codes, and to spend more on education and infrastructure. The U.S. used to lead the world in percentage of college graduates. It is now ranked 14th. While the funding for research and development has fallen drastically, in China, Singapore and South Korea it is on the rise. There is a major problem with infrastructure. More money must be spent on roads, bridges and pipe lines for drinking water. Financial reform is imperative but politics interferes. The system is geared to raise money for elections.
Demographics present another unhappy situation for Western Europe and Japan. The industrial world is aging quickly. At the end of the century Japan will go from 127 million to just 47 million young workers. Europe is not far behind but the U.S. and Canada, because of immigration, will stay level in population but with these two North American countries the number of workers is dropping. In the U.S. the ratio is 4.6 workers for every retiree. In 25 years it will drop to 2.7. Who is going to pay for the entitlements for health care and pensions for older Americans? And as goes the U.S. so goes Canada. We depend on a healthy American economy to pay for our Canadian entitlements. Americans must compete against China and India for simple manufacturing or spend money to raise the level of education of their workers to produce goods and services of a more complicated nature. And that takes more money.
Recently, at a Christmas party, I met a man, aged 55 and in good health, who had just retired from East York Hydro, a government electric company. He had a pension of 75% of his salary. When one looks at the obituaries today, dying at the age of 90 is very common. This man will literally be retired more years than he had worked. With each government employee having a vote, find me the politician with the guts to change the system. It will be difficult.
Using Statistics Canada data from 2015, the study finds that government employees receive on average 13.4% higher wages than the private sector for comparable jobs. Eight of 10 government workers were covered by a defined-benefit pension plan whereas only one in ten in the private sector. Government workers retire 1.4 years earlier. In 2015 , six private workers lost their job compared to one in the government. So why the disparity? Easy .Government employees and their kin vote and there is real competition in salaries in the private world. You can if you look hard enough somebody to do the job ,as well, for less. There is an answer. Governments, by law, must pay their workers nearly the same salaries as the private workers for comparable jobs. Difficult to do , but it must be done, as there are very soon going to be fewer young workers in the private sector to pay these inflated salaries.
The Chinese government, communist no less, brags that their system of autocratic rule is working at present, better than the capitalistic system. This bravado may be a little far-fetched, but who knows what the future will bring. Votes…..the Chinese don’t worry about votes.
Your Ststs Canada data stuns me. I appreciate government salaries being comparable to private sector ones, but 13.4% higher? Why? That the government is hanging onto defined-benefit pension plans must be a hangover of its last union negotiations. I don;t know how government can work that out o f its system. Its unionized workers obviously are under no special threat that would make them cave on the issue. On the surface of it, I like the idea of a legal mandate that government salaries must match a range of private-secotr pay.
I am surprised to find myself agreeing with you. Not on everything, but still…