When Justin Trudeau took office as Prime Minister two years ago, he also took on the Minister of Youth portfolio. It was a tough assignment, atop a government infrastructure designed from its core to disregard the interests of Canadian youth.
Government is about power and Canadian youth have none. Without interest group backing, it’s almost impossible for anyone, even a Prime Minister, to make meaningful change.
That said, a quick survey suggests that unless Trudeau takes concrete steps, the government apparatus will leave the country’s youth as a generation, for the first time, worse off than their parents.
It also suggest key takeaways about how younger Canadians might want to prepare for the future.
Government hiring practices discriminate against youth
The seniority system and job security prevalent in union contracts negotiated by the Canadian government, the country’s largest employer, systematically block out youth and innovation.
In Canada, not only is it legal to discriminate against youth, Government, at all levels, paves the way.
Government funds target seniors
The Canadian government’s two largest categories of spending are pension benefits and medical benefits which almost exclusively benefit seniors. While everyone knows this about pensions, less well-known is the fact that the lion’s share of medical spending is for Canadians over the age of 50.
The net effect is a massive wealth transfer from the young to the old.
Debts left to Canadian youth
While government jobs and spending are targeted towards older Canadians, government debts are left to the next generation. These include trillions of dollars’ worth of unfunded liabilities, none of which are officially recorded in government books, and which today’s young naturally have no clue about.
Trickle down policies transfer wealth from youth to older Canadians
The Bank of Canada’s complicated low interest rate policy and market manipulations (which few understand, let alone Canada’s young) are designed to boost housing, stock, and bond prices.
The hope is that the holders of these assets will spend that money, generating a “wealth effect” that will trickle down to ordinary Canadians.
But those asset holders are almost all older Canadians. The people hoping to buy them (and who get stuck paying the higher prices) are younger Canadians.
Government central planners destroying the environment
One of the oddest developments following the end of the Cold War was the discovery that Western economies (which still had some functioning free markets back then) had better environmental records than Soviet state-planned economies.
These days (with the rise of government and central bank power), free markets are essentially a thing of the past in G-7 nations, which are now essentially all state-run economies.
Not surprisingly, G-7 nations’ environmental records are starting to resemble those of the old Soviet era planned economies. G-7 nations are, for example, the world’s highest per capita emitters of greenhouse gases.
Ironically, it is the public sector, not businesses, that is mostly at fault.
Government mandated low-interest rate policies are subsidizing high pollution capital assets (in two of the world’s largest carbon emitting industries) that the free market would never allow.
First, low interest rates provide huge subsidies for the purchase of all automobiles and SUVs (not just fuel-efficient ones). These make public transportation less attractive.
Second, low interest rates massively subsidize cattle production (whose methane gas is one the biggest producers of GHGs), making meat farming more attractive than vegetable farming.
Free market interest rates would have reversed both those trends.
Finally, free markets would have spurred several hard recessions during recent decades, and possibly very hard depression.
Bad as that may sound, these would have squeezed as much of the rot as possible out of government and various zombie/protected industries.
More importantly for Canada’s young, they would have created job openings for youth as well as opportunities to innovate and start new businesses.
Leveling with younger Canadians
There are two takeaways from this. The first relates to Trudeau, a former high school teacher and father of three, who does appear to care about Canadian youth on a personal level.
In fact, the Liberal government has made several public relations moves to appeal to Canada’s youth. These actions (though immaterial in the overall scheme of things) range from recently-announced funding increases for family allowances to fostering a Prime Ministerial youth advisory council.
However, governing is about more than cosmetics and selfies.
If Trudeau really wants to help Canadian youth, he needs to use his bully pulpit to raise public awareness of the structural issues they face. Until then, Canadian youth are on their own.
The sooner they begin to prepare themselves, the better.
Written by Peter Diekmeyer, Sprott Money News