Disclaimer: I’m not an expert in politics or political ideology so I may be off in some of the statements in this post. This is mostly random thoughts on my interpretation and view of things.
I always thought I was a capitalist and believed in all the great things capitalism does like encouraging growth, innovation, and investments. I was also a pretty strong political fiscal conservative. I still think I am more conservative than liberal on fiscal matters but I find myself questioning these beliefs a little more lately. And then I question, the questioning… I know that probably doesn’t make sense.
What is a Fiscal Conservative
I feel like I came up with this term by myself to describe my thinking but plenty of people have discussed it and defined it. According to Wikipedia a Fiscal Conservative is a political-economic philosophy regarding fiscal policy and fiscal responsibility advocating low taxes, reduced government spending and minimal government debt.
I use the term to differentiate how I feel about social/cultural issues and how I feel about economic issues. So I always say, I’m a social liberal but a fiscal conservative. Obviously some issues in politics affect social and economic matters so sometimes I’m a bit of both. For example I believe in more immigration (might be perceived as liberal), I believe in strict gun laws (also liberal) and other health related ideas (mostly liberal). But I don’t necessarily believe in increasing government debt and spending in order to fund unlimited social programs and increasing public service costs and salaries (pretty conservative). This could be a long debate, but my short answer view of this is rooted in my frugality and fiscal responsibility values where we don’t borrow money for our needs now so that future citizens (our kids) will have to pay it back. I’d love to have unlimited social services and programs but we need spend within our budget as a society and sometimes we have to sacrifice some things.
Canada Child Benefits and Being a Fiscal Conservative
This is probably the biggest issue that I could be accused of being a hypocrite on. My fiscal conservative values would tend to say that this program is a little too generous. However, as a citizen and long time tax payer in our economy, I will not pass up chances to capitalize on benefits that I’m entitled to. And like I mentioned in previous posts, I do think there is value in incentivizing people to have and raise kids. I mean, we are trending towards a future with a disproportionate amount of seniors versus working people so we will need more young people in this country. But this is clearly a bias view since I am directly benefiting from this social benefit so it’s easy for me to justify that “this one is worth it” and “we can’t afford others”.
Capitalism and Socialism
It’s a long subject to explain the difference so here is a good article summarizing the two concepts if you need a refresher.
Like I said, I was always a capitalist. I did a bachelors and a masters degree in business and have always worked for financial services corporations I was kinda influenced (or brainwashed) to think that way.
The more I embrace stoicism and FI, the more I start thinking that maybe socialism has some merits. I do think that capitalism promotes way too much consumption and sometimes the greed leads to unethical behaviours. However I think these are just some negative effects of the economic system and no economic system can be perfect. Socialism has it’s own flaws. It could lead to lack of incentive and stunt innovation and growth. It could also lead too much centralized power in governments. Obviously in perfect systems, both the concepts would probably work fine but that’s not the case.
One argument I always hear from union leaders and socialists is that workers are paid very little (barely enough to survive) and corporations allow the super rich to make millions and billions. I have 2 issues with this argument.
1. I am not a super rich person and had a very modest income for most of my working life. Despite this I’ve been investing in corporations via publicly traded ETFs for almost 10 years now and got to benefit from very profitable years of corporations.
2. The idea that regular workers are paid barely enough to get by is only true if these people are addicted to consumption and spending all their money. The median family income in Canada is now over $70,000. Without 2 car payments, a massive house, premium cable and eating out, I don’t think it’s unreasonable for a family to live on $50,000 or $60,000 a year. So why not invest the rest in the stock market and take advantage of the profits of capitalism? $15,000/year deposited in an ETF generating on average 7%/year will grow to over $600,000 in less than 20 years. Add in some equity built in a house over those 20 years and possibly a small work related pension, there is your 20 year retirement plan. This is not even counting the CPP, and other social assistance benefits you can be eligible in old age.
What I’m trying to outline is that capitalism can help people get to retirement way quicker than otherwise thought.
So in summary, I’m probably still a capitalist and a fiscal conservative at heart but just a hypocrite one who also benefits from our spend happy governments a lot. One thing that has changed is that I seem to care a lot less about politics and the economy. For example I used to really care about who would win the provincial or federal elections. Now I barely follow them and look at it as a “win-win”. If one party wins, I feel like they will tighten up spending and help our economy prosper in the long term (my view). And if the other party wins, then the social spending keeps going and my family (with 2 kids) keeps benefiting from all the free money…