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Ten years ago I joined the Canadian middle class. After years of travel and study abroad, odd jobs, itinerant language teaching, freelance writing and short-term contracts, I became a salaried resident of southern Ontario suburbia. Earning a salary meant learning about RRSPs, mortgages (I soon bought a condo) and planning for the future. Members of the middle class, it seemed, lived for the future. This puzzled me; prior to acquiring a salary, I had lived in the present, with long glances back at the past.
Realizing that I needed professional advice, I signed up for a financial planning workshop offered by my employer. The workshop leader, a representative of a local investment firm, opened the day with what I assume was his standard speech for such occasions. He was talking about RRSPs when a middle-aged couple waved him to a halt. “What’s an RRSP?” the husband asked.
They were Americans. Having just moved to Canada, they weren’t familiar with some of the terms.
The workshop leader stood to attention like a private in the infantry. “Sir,” he said, “first, I want to tell you how much I respect Americans. Americans know how to hold on to what’s theirs. That’s a lesson we need to learn in this country.”
With this reference to the lower income taxes in the United States, the workshop essentially ended. We remained in the room for six more hours, punctuated by a dry-sandwich lunch, but little useful advice was dispensed. For the rest of the day the workshop leader prefaced every statement with a nervous glance at the American couple and vehement assertions of the superiority of the U.S. banking, income tax, educational, insurance or health-care systems. He spent so much time telling us how much better everything worked in the States that he became unable to advise us on managing our financial lives in Canada.
The assumption I took out of the workshop was that with which I’d gone in: that I should plan for the future. With this in mind, I went to the local office of a well-known national firm and made an appointment to speak to an investment advisor. The advisor, Frank, was a tall, lean young man. He had a short, neat haircut and wore an elegant suit. A reassuringly domestic photograph of an attractive young woman adorned his desk. Frank’s long, curled sideburns suggested that his respectable façade masked a certain restlessness. I arranged for a small portion of my salary to be invested with Frank’s company each month. Having recently returned to Canada after more than six years in Europe, I believed that the European model of applying higher taxes to fund higher social spending was the most certain guarantee of sustainable growth. Frank was offended when I told him I wanted to invest in European funds. “The United States is the greatest engine of growth in the world today. I won’t represent you unless you put at least half your money into the U.S. And it should be three-quarters.” Finally, I agreed to divide my investments between Europe and the United States.
In my quest to acquire middle-class credentials, I began going to the bank every winter to buy an RRSP. The RRSP salesman was young and pudgy: simultaneously consoling and innocent. When the foreign-content rules were relaxed, he urged me to diversify away from my tiny collection of low-risk Canadian RRSPs into something racier. “There’s this guy named O’Shaughnessy. He’s American and he’s really smart. You invest in O’Shaughnessy’s funds and you’ll never regret it.”
By this time Enron had imploded and the U.S. had invaded Iraq. The cracks in the financial edifice were evident. But I was fed up with fighting these guys and their American obsessions. For three consecutive years I plunged my RRSP contribution into O’Shaughnessy’s adventurous funds and walked out of the bank relieved to have kept the salesman happy.
The next time I saw Frank, two years later, the atmosphere was rife with robber-baron capitalism on the brink of decadence. There were lines in Frank’s forehead; his wicked sideburns had grown longer and thinner. The photograph of the young woman on his desk had been replaced by a framed portrait of George W. Bush. Frank’s lips curled as he talked about the women he was dating. A Bush-Cheney re-election poster covered the back wall of his office. A survey of my (modest) investments revealed that although the European portfolio had held its own, the American mutual funds were stagnating. I ripped into Bush’s irresponsible tax cutting, his imperialistic foreign interventions, his huge trade deficit. How could Frank believe that these policies were conducive to growth?
“Cutting taxes is the best way for any society to grow. You just have to look at America . . . I believe that firmly.”
“I can see you believe it,” I said. “That doesn't mean you’re right.”
I pondered moving my investments but never got around to doing it. To give Frank credit, when the crash came, he did a respectable job of protecting my miserable little stash. My O’Shaughnessy RRSPs, by contrast, lost 60 percent of their value. All across the country, Canadians were paying the price for the colonized mentalities of their investment advisors. An objective assessment of conditions in the United States would have prompted a sensible advisor to get out years ago. Even in a global crisis, there are better and worse places to invest one’s money. Yet most members of our “investment community,” conditioned by years of slavishly aping the rhetoric of the U.S. right in order to voice their alienation from their own liberal society, betrayed us. When the Canadian middle class stares at its ransacked investment statements, part of what it sees is the cost of a lack of cultural self-confidence.
This crisis should teach us that we can’t be free riders on a system based upon values from which most of us modestly dissent. We would be better off putting our money where our social liberal mouth is. Can we learn this lesson? I haven’t given up hope. The last time I saw Frank, he had shaved his sideburns. His manner was sober and subdued. There were no photographs on his desk; he spoke of a new marriage and a baby. “We have to look at this crisis as Canadians,” he said. As we reviewed the state of the economy, I realized that, for the first time, Frank and I agreed.