Yahoo Canada reports something that comes as no surprise at all to Austro-libertarians:
More Canadians say they simply can’t afford to invest, making it tougher to build a retirement nest eggs [sic.], according to a poll released on Tuesday by Scotiabank.
In the bank’s annual investment poll, 64 per cent of Canadians said affordability continues to be a high barrier to investing more — a trend that has been growing over the past couple of years — as the March 1 registered retirement savings plan (RRSP) deadline looms, up from 59 per cent in 2011.
As usual the problem, and thus the solution, is sought after in all the wrong places. The suggestion is that investments are too expensive in absolute, rather than relative terms:
â€œThe key is to get a solid financial plan in place to help overcome affordability issues,â€ says Mike Henry, Scotiabank’s senior vice president and head of retail payments, deposits and lending.
â€œAustrianâ€ insights suggest otherwise: taxes in all their various forms are too high, which results in an inability to save. Investment would not be too expensive if people had the money for it. Hereâ€™s what Henry Hazlitt had to say about the power of taxation concerning production and investment:
There is a still further factor which makes it improbable that the wealth created by government spending will fully compensate for the wealth destroyed by the taxes imposed to pay for that spending. It is not a simple question, as so often supposed, of taking something out of the nationâ€™s right-hand pocket to put it into its left-hand pocket. â€¦ This is to talk as if the country were the same sort of unit of pooled resources as a huge corporation, and as if all that were involved were a mere bookkeeping transaction. The government spenders forget that they are taking the money from A in order to pay it to B. Or rather, they know this very well; but try to dilate upon all the benefits of the process to B, and the wonderful things he will have which he would not have had if the money had not been transferred to him, they forget the effects of the transaction on A. B is seen; A is forgotten. (Economics In One Lesson, pp. 24-25)
Who is â€œAâ€ and who is â€œBâ€? â€œAâ€ is the producerâ€”the earner; while â€œBâ€ is the consumer: here we have a re-distribution of incomes. â€œAâ€ is the person who is being disabled to save his own earnings in order to invest. But itâ€™s worse than that. The recipient of governmentâ€™s spending of â€œAâ€™sâ€ money, â€œB,â€ does not save what he receives either, for the simple reason that there is not enough to pay left over after his immediate consumption. Furthermore, â€œBâ€ is given a signal that he need not worry about saving and investment (i.e. the future), since there will always be more of â€œAâ€™sâ€ money forthcoming.
In our modern world there is never the same percentage of income tax levied on everybody. The great burden of income taxes is imposed on a minor percentage of the nationâ€™s income; and these income taxes have to be supplemented by taxes of other kinds. These taxes inevitably affect the actions and incentives of those from whom they are taken. When a corporation loses a hundred cents of every dollar it loses, and is permitted to keep only 60 cents of every dollar it gains, and when it cannot offset its years of losses against its years of gains, or when it cannot do so adequately, its policies are affected. It does not expand its operations, or it expands only those attended with a minimum risk. People who recognize this situation are deterred from starting new enterprises. Thus old employers do not give more employment, or as much more as they might have, and others decide not to become employers at all. Improved machinery and better-equipped factories come into existence much more slowly than they otherwise would. The result in the long run is that consumers are prevented from getting better and cheaper products, and that real wages are held down. (Economics In One Lesson, pp. 25-26)
And low real wages make investment too expensive.