Carney said he’s propose “some big changes and some bold new ideas” in the coming weeks to address those economic issues. He vowed the Liberals “are going to win the (next) general election” despite the party’s months-long polling slump under Trudeau.
One detail is that the drop in value that we’re replacing with pension is payment over time, not a one time hit, just like the home owner would draw from the equity till they pass away. So a 700K house would be eaten by 35K every year for 20 years or so.
But we don’t have to even consider that. You’re working from the inflated home values backwards. That way you’re making us pay for the speculation. We don’t have to. We’re trying to make the inflated prices irrelevant, not pay the speculators. With that, if you work from pensions forwards you get a different result.
Say we want to add $1500/mo to every person over 65’s income. Coupled with the existing government pension and supplements, this should total 2500-3000/mo. We have ~7800000 in this group (2023 numbers).
7800000 over 65 * 1500 * 12 = 140400000000 = 140.4B. Note we haven’t removed the 4.5M people with defined benefit pensions, or the 1.2M with defined contribution pensions. We can either subtract that and get to 37B or we could get employers to pay into the universal pension system instead, or we could free them from it and have wages rise proportionally or increase corporate taxes. With a universal scheme there is also 3-5% yearly compounded savings that would otherwise go through bank commissions, straight up to the 1%. If you ignore all that and divide 140.4B by the 20.7M working population, you get an additional cost of 6.7K/yr. This doesn’t look impossible and again, it will be lower since it’s double counting a lot of money that are already being contributed by DB/DC.
For cross reference - there are plenty western countries with sustainable universal pensions. We cannot be too out of the ordinary and if anything we’re in a better position to have it, given that we have better demographics and a boatload of natural resources.
We have to pay for the speculation otherwise from the homeowner’s perspective, they have again just lost all that value, regardless of how it was acquired. That’s literally the whole issue.
And it’s kind d of odd to say that if you have defined benefits, you won’t mind losing however many hundreds of thousands of dollars you lose when your home value drops. People are doing their financial planning including both their defined benefits AND the values of their assets.
You can’t just hand wave and say there’s infinite money if we just raise wages or tax corporations more. We probably could tax corps more but there’s all sorts of secondary consequences to that.
I don’t believe this is true and I speculate there are good reasons enough homeowners (like me) will sign up for such a scheme. For example that this shields them from the risk of devaluation which can happen in number of unrelated ways. Another example is that many are worried and understand their children will not be able to afford a home unless prices fall. Ultimately the only way to know for sure is to see how people vote on a proposal like that. Homeownership is around 60% so you don’t even need most homeowners to go along with this for it to have broad support. I’m just speculating enough will. Could be wrong.
I didn’t do that. I did a back-of-the-napkin feasibility calculaton like you did and I think it shows what I suggested is feasible. No more, no less. If other first world countries have such schemes and are doing alright, likely we could too.
How does your scheme protect from devaluation? If my home drops say, 200k but you’re going to offset some of that in pensions, okay, let’s put aside the lost equity, how does this stop me losing say, half the equity in my home from some random devaluation?
Providing a living pension doesn’t mean I’m no longer interested in the investment I’ve spent 20 years paying off…
This is not a napkin calculation, this is handwaving!
The value of what I proposed is 320K. If I signed up for the scheme, I will get 320K guaranteed by the government pension and I no longer care what my home is worth. If I don’t and the market crashes for whatever reason, I lose whatever the market shaves off from my property’s equity. I guess you wouldn’t like this deal. I would. ☺️
I’m fairly confident few people would choose this scheme because otherwise you would’ve already sold your homes and kept the difference…