Apparently, greed isn’t good after all.
The chorus of people accusing Canadians of being greedy, careless debt-mongers just got louder. David Chilton was in town this week, and reportedly told the audience at a St. John’s Board of Trade luncheon that Canadians are borrowing too much money. Chilton chided consumers for their out-of-control spending.
His credentials? He is the author of the 1989 bestseller, “The Wealthy Barber,” a how-to book on getting rich on a non-rich income.
Dissing debtors has become de rigueur. The Bank of Canada does it. The Harper government does it. Wealthy barbers do it. It seems every week or so there’s yet another group or another report tut-tutting Canadians for their personal profligacy.
This week, it’s credit agency TransUnion, which released a report stating Canadians’ personal debt loads have gone up again.
If nothing else, such reports give you a chance to compare yourself to the average Canadian consumer (ACC) and see where you rank in the blowing-money department.
An ACC, TransUnion reports, has a debt of $26,768, not including his/her mortgage. A typical ACC has a car loan for $19,228 and owes $3,573 on his/her credit card.
Pay it backward
This is bad. Very, very bad. The tone of such reports is condescending and judgmental, as if ACCs are
misbehaving children who simply cannot control their extravagant impulses.
Look around your neighbourhood. The proof is everywhere. People live in ginormous houses, their driveways are spilling over with boats, Ski-Doos, ATVs and other motorized toys, but they’re seldom home because they’re always taking unaffordable vacations to Florida or the Dominican Republic.
At least, that’s what the tut-
tutters would have you believe.
Their admonishments ignore a small but hugely important statistic: only a tiny fraction of ACCs are unable to make their monthly debt payments. TransUnion says the number of ACCs who miss payments is actually declining. Their rival credit agency, Equifax, says only 1.22 per cent of ACCs miss debt payments, according to news reports.
Add it up, Mr. Chilton. Your conclusion must be this: ACCs don’t earn enough money to meet their needs, and thus have to borrow. They do, however, earn enough money to make their debt payments.
Even the banks and the government admit ACCs’ incomes have been stagnant for a generation. Might that have something to do with why so many ACCs are in debt? Nah.
Meanwhile, over in the Harper government’s bean-counting department, they’re using a much different standard to judge debt — same problem, different explanation.
Head bean counter Jim Flaherty, who doubles as the federal finance minister, revealed this week the Harper government’s deficit for this year will be $5 billion higher than originally forecast — $26 billion rather than $21 billion.
ACCs might be tempted to point a finger right back at the Harper government and accuse it of being
a greedy spendthrift. After all, its deficit is going to be $6 billion higher than forecast next year, and $7 billion higher than forecast the year after that. In fact, it won’t be until 2014-15 that the Harper government stops racking up debt.
Is this because of greed? Is this because of irresponsibility? Curious ACCs want to know.
No. Not at all. Flaherty says it is because of … wait for it … insufficient revenue.
There you have it. ACCs are greedy, rather than merely underpaid, but the Harper government’s own financial woes can be explained by declining tax revenue, due to the recession and falling commodity prices. (Note: “commodity” is a euphemism used by economists and politicians to describe stuff that Canadians send to foreign factories, such as wood, minerals, oil, fish and so on.)
Brian Jones is a desk editor at The Telegram, and can be reached at email@example.com.