Making Canada Relevant Again- The Economic Super-Thread

[a_majoor]

Debt to GDP is a fairly straightforward comparison of flows, I am just pointing out there are other factors at work.

Considering the ratio of debt and unfunded liabilities to GDP in Canada is something like 4:1, you would expect rational investors to flee in panic. Part of the reason they don't is the ability of Canadians to convert stocks into flows, since we have "de facto" property rights and sophisticated financial institutions capable of converting "dead" property into "live" assets (taking out a second mortgage is the simplist example). Like the earlier post pointed out, our assets should be greater than our liabilities, once stocks are taken into account.

On the subject of Intellectual Property Rights, this is an example of a stock which is rather easily converted into a flow (selling patents, getting licencing fees, royalties etc.). Because it is so liquid, the stock and flow values change a lot compared to traditional properties like real estate, which makes the economy as a whole far more dynamic.

 

[Cloud Cover]

On the subject of Intellectual Property Rights, this is an example of a stock which is rather easily converted into a flow (selling patents, getting licencing fees, royalties etc.). Because it is so liquid, the stock and flow values change a lot compared to traditional properties like real estate, which makes the economy as a whole far more dynamic.

Yes, I agree, but also an IP right is a right to exclude all others from your property for a fixed period of time. Thats worth something right there. So if you have a good idea, and start manufacturing a product based on the idea, and can exclude others from using the idea, then the product is worth more than what profits are being derived, there is also the increase in the value of the market in which the product resides because you can charge what you want for the product- this actually takes the sting out of the supply/demand formula.

Take push e-mail or browser push code, for example. RIM paid 600 million to settle a bogus lawsuit arising from a biased jury verdict even after it had obtained all the necessary patents to control the market. As a result, they basically dominate the corporate e-mail market to the extent the market cap of the company sits at about 20 billion, but with the IP factored in the 20 bil market cap is far, far too low.  The biggest threat to RIM comes not from its domestic competitors, who must take care to not touch its property, but from patent trolls and competitors in a communist country which does not recognize IP rights in the same way we do.

 

[Edward Campbell]

This is not all about economics but I think it fits better here than in a new thread.

Here is an interesting essay from Thomas Homer-Dixon (U of T) published in today’s Ottawa Citizen; it is reproduced here – with my emphasis added – under the Fair Dealing provisions of the Copyright Act:

http://www.canada.com/ottawacitizen/news/story.html?id=b62abead-4e00-4fbd-8be5-8c5f22b50736

Defined by complacency
Canadians need to reach for greatness before we are trampled by history

Thomas Homer-Dixon
Citizen Special

Monday, September 04, 2006

This essay is excerpted from What Is a Canadian?: Forty Three Thought-Provoking Responses, edited by Irvin Studin. A Douglas Gibson Book, published by McClelland & Stewart Ltd. Available in bookstores Sept. 23. The Citizen will publish two more excerpts in the coming weeks.

A Canadian is ... almost always unsure of what it means to be Canadian. Maybe this is a strength. Maybe it is evidence of our tolerance and pluralism and of our enlightened postmodernness. Let a thousand identities bloom! Or maybe it just reveals our hollow core -- a vacuity at the centre of our soul.

Outside of Quebec, at least, we do not really know who we are or what we represent -- other than that we have made ourselves remarkably comfortable in a cold land, and that we are good at hockey. A country with a clear identity and self-understanding would find it easier to develop a consensus around its projet de societe.

To the extent that Canadians do not have a clear identity, it hampers our larger social task of deciding what kind of society we want, and then getting on with building it. Still, we have created an extraordinary country, one that regularly ranks among the very best in terms of quality of life. People from around the world strive to come here to enjoy our economic opportunity, social tolerance and political freedoms.

Canadians today are among the most fortunate human beings to have ever lived. But sometimes it seems to have happened almost by accident -- as if we have created this remarkable country more by luck and happenstance than by consensus and design. Like so many Canadians, I am proud of my country at the same time that I am exasperated by it. Too often we seem to be less than we could be. Second-best or even third-best is good enough.

We have one of the most highly educated populations in the world, yet a bare handful of Nobel Prize winners. We have a population almost twice the size of Australia's, yet Australians win four times as many summer Olympic medals. Our fiction writers are renowned around the world, but astonishingly few Canadian non-fiction writers or public intellectuals are known beyond our borders.

Margaret MacMillan, Jane Jacobs and Naomi Klein come to mind, but that is about it (Michael Ignatieff and David Frum made their reputations outside of Canada). In terms of our numbers, we are about as big as California, but we have not mustered one-tenth, and probably not one-hundredth, of California's influence or achievement. California is a mighty engine of creativity, ideas, culture and research. Why isn't Canada?

In foreign affairs, tiny Norway (population 4.5 million) works to build peace from the Middle East to Sri Lanka, and honours a great peacemaker annually with the Nobel Peace Prize. And what is Canada doing on the world stage? We are bleating about lumber tariffs, whining about BSE-induced restrictions on our beef exports. We rebuffed the United States's ballistic missile defence system, but only with the requisite hand-wringing about the possible American reaction. Our military is pathetically equipped for modern conflict. Despite having the world's second-largest land mass and its 12th-largest GDP (out of more than 200 countries), despite possessing staggering natural resources, and despite a favourable geopolitical and economic location adjacent to America's heartland and bordering on two of the world's great oceans, Canada is not a noted leader in a single domain of global affairs or international public policy.

Why not?

Our greatest failing of all is our unwillingness to face the reality of our second-rate performance in so many areas, and to do something about it. We are too comfortable being average, even mediocre. We are too happy in our complacency, and too sure in our self-righteousness. We wrap ourselves in a national superiority complex, especially when we talk about the United States, but it is really just a cover for our insecurity, and it is not at all justified.

Almost every one of us is responsible for this lack of vision, leadership, and, to be frank, courage. In a thousand and one ways, we subtly disparage anyone who is daring or takes risks. We bicker incessantly, over health-care policy, for example, and we delight in finding victims everywhere, both within and outside our borders. We detest our politicians and pillory them as utter lowlifes, but we are not willing to enter politics ourselves. We love to see the mighty fall: indeed, Schadenfreude -- which means a malicious satisfaction in the misfortune of the once great (like Conrad Black) -- should truly be a Canadian word.

Canada's culture of complacency threatens our survival as an independent society. We drift along without properly addressing our challenges, whether it is the never-ending menace of Quebec separation or our vulnerability to the vagaries of the American economy. Sometimes we do not even see the gravest threats to our survival. Here, for example, is a terrifying but far too plausible scenario: A terrorist group infiltrates the United States through Canada, and launches a radiological or nuclear attack against a major American city, like New York or Washington. Tens of thousands of people are killed, and the United States reacts by demanding unfettered access to all Canadian territory for its military, intelligence and internal security forces. As America establishes a continental security perimeter, Canadian sovereignty ceases to exist -- in fact, if not in law.

We should be having a vigorous national discussion about this very real danger, and we should be working together, urgently and across the country, to lower the chances of an attack being routed through our country. Instead, we are looking at our navels. We can do far better than this.

Let us dramatically raise the standard of public discourse about issues of critical national importance. (We can start by expressing our outrage when our self-appointed national newspaper wastes newsprint by plastering across its front page the headline "Boatpeople Eat Human Flesh.")

Let us identify a few areas of intellectual, scientific, athletic and cultural achievement where Canada can be a world leader, and then make it so. Let us establish a presence on the international stage by focusing our foreign-policy resources on one or two issues of critical concern to humanity. (A number of years ago, Canada succeeded with this approach by promoting an international treaty banning landmines.)

Let us stop whining about our politicians, and instead each invest our personal talents and resources in the political action that will make this country what it should be. If we do these things, then maybe someday we will know ourselves well enough and we will be confident enough in our talents, culture, and achievements to say: "A Canadian is, simply, a Canadian."

Thomas Homer-Dixon is the director of the Trudeau Centre for Peace and Conflict Studies at the University of Toronto, and professor in the department of political science at the University of Toronto. His books include The Ingenuity Gap, which won the 2001 Governor General's Award for Non-Fiction, and Environment, Scarcity, and Violence and most recently The Upside of Down: Catastrophe, Creativity and the Renewal of Civilization.

© The Ottawa Citizen 2006​

While I think a ”vigorous national discussion” about Homer-Dixons hypothetical (but realistic, all the same) continental security situation would be a colossal waste of time and talent, I do agree with his statement of the problem: unwarranted, self-satisfied complacency.

Homer-Dixon does not go far enough; we cannot hope to put aside our complacency and roll up our sleeves, again, unless and until we understand how we got here.  That’s simple: we were led here, willingly, in the ‘70s by Pierre Trudeau and a cabal of like minded petty, provincial poltroons who created and then sold us on a culture of entitlement.

Homer-Dixon, a well known Liberal partisan, whinges about our poor (non-existent?) performance on the world stage and, correctly, attributes some of that to inadequate armed forces but he fails to advocate a return to the great Liberal values of C.D. Howe and Louis St. Laurent.  Their vision and policies and programmes were explicitly rejected and torn apart by Trudeau at the behest of e.g. Tom Kent and Ivan Head.  (See:  http://www.mun.ca/2003report/honour/graduates/kent_bio.php and http://www.idrc.ca/es/ev-66571-201-1-DO_TOPIC.html )

 

[a_majoor]

Let us identify a few areas of intellectual, scientific, athletic and cultural achievement where Canada can be a world leader, and then make it so. Let us establish a presence on the international stage by focusing our foreign-policy resources on one or two issues of critical concern to humanity. (A number of years ago, Canada succeeded with this approach by promoting an international treaty banning landmines.)

Unfortunatly, in typical Canadian fashion, he pawns the responsibility off on the government. Bureacrats choosing the "few areas" will be choosing according to criteria which maximizes their own power and influence. The Ontario government's funding of ethanol is a perfect example; despite the various claims of what ethanol will do it is simply a money and energy sink that will benefit very few people.

It is telling that the one example he does bring up (the Land Mine treaty) is essentially irrelevant, the Great Powers have yet to sign on, and Those uf us who have served overseas are well aware that mines are a clear and present danger even today.

Over all lets just get government out of trying to choose the directions "we" are to go, and I think we will all be better off in the long run.

 

[Brad Sallows]

There's a simpler explanation.  Ambitious Canadians live across an open border from a country with which they share a language and much of their cultural background, and which has a domestic market larger by an order of magnitude or more in nearly endeavour to which one might aspire.  Australians are situated where their language and culture has them relatively isolated.  However, you could look into how New Zealanders feel about living in Australia's shadow.  You might find some similarities to Canada.

 

[Edward Campbell]

When he stays in his lanes the Globe and Mail's Jeffrey Simpson is well worth a read.  Here he is, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today's Globe, on an important topic: what's wrong with Canada?  Why does this country consistently aim to be mediocre?

http://www.theglobeandmail.com/servlet/story/LAC.20070605.COSIMP05/TPStory/TPComment/?query=

Corporate Canada, proud and ... parochial

JEFFREY SIMPSON

June 5, 2007

Andrea Mandel-Campbell asks a disturbing question in her provocative new book: Why do Canadians drink Corona, a beer Mexicans don't consider their best, whereas Molson never even tried to crack the Mexican market and is now a subset of an American brewing conglomerate?

With Algoma, Ipsco and Dofasco being sold to foreigners and now Stelco up for sale, with Alcan a takeover target, with most mining companies under foreign control, and yes, with both major "Canadian" brewers gone, what's been happening to Canadian capitalism?

The answers are not pretty, and Ms. Mandel-Campbell explores them mercilessly and a trifle breathlessly in Why Mexicans Don't Drink Molson.

The prime answer - there are many - is the Canadian mindset.

Canadians, although believing the world loves and need them, seldom think globally. They lack confidence. They are instinctively protectionist in too many areas. They think small. When they lift their commercial eyes, they see only the U.S. market.

Not many capitalists in the Canadian Council of Chief Executives or the Canadian Chamber of Commerce are going to like Ms. Mandel-Campbell's book. She's hardly a predictable, anti-globalization, head-in-the-sand leftie. If anything, she's a free-enterprise kind of analyst.

She therefore lists the usual government policies that shield Canada from global pressures: supply management, a social welfare fishery, unemployment benefits (10 weeks work for 42 weeks of benefits). She adds the list of complaints from business about corporate taxes and excessive regulations.

But her more telling criticisms are directed at business itself.

Few business leaders travel. When they do - and she used to work as a journalist in Latin America - they don't speak local languages and familiarize themselves with local cultures. They are parochial Canadians who, like so many of their fellow citizens, seem to think that just being Canadian will be enough to impress the world.

Canadians fool themselves into thinking they are big traders, whereas more than half of all trade that crosses Canada's borders is between different parts of the same company. Canada has very few companies with a Canadian brand name. Some that had or have a brand name changed it to hide their Canadian roots, as Northern Telecom did.

Mining ought to be a Canadian strength. Take away Barrick Gold and a couple of others, and the rest have all sold out to foreigners.

The same for steel, hotels, beer, energy, and just about every other industry. She writes: "While Sweden has Ikea, Finland has Nokia and Italy has the fashion triumvirate of Armani, Gucci and Prada, Canada does not have, nor has it ever had, [italics hers] a single global brand name."

That's an exaggeration, but not by much. Our banks - the ones Canadians worry are too large - are actually international pygmies.

Sheltered from foreign competition, they worry much more about grabbing small bits of additional market share in Canada than trying to become bigger international players.

The same sheltering behind government protectionist policies has led to small mindsets for telecommunications companies, agricultural producers, manufacturers (in most cases). Corporate Canada's instincts, she argues, are far too directed at running to government for this or that advantage, a mindset that reflects a deeper sense of insecurity in Canada.

Ms. Mandel-Campbell's argument can be taken much further. For Canada's level of prosperity to continue, let alone increase, the entire country has to become more global in its thinking, educational systems, political culture, business philosophy.

Almost every government policy, and the political debates that accompany them, should ask a basic question: How will this enhance Canadians' ability to thrive in a global world?

Instead, our politics is about carving up revenues between federal and provincial governments, beseeching governments for more industrial subsidies, worrying obsessively about the United States, pouring money into equalization and health care, and avoiding even the word "productivity." It is a recipe for slow relative decline - a decline made comfortable by the ease with which Canada can export its storehouse of natural resources.

Worse, we defiantly refuse to learn from others: from Iceland about how to organize a fishery, from Finland about how to educate young people, from Europeans about learning languages, from Denmark about how to make green technologies work, from New Zealand and Australia about reforming agriculture, from every other country (except the U.S.) about how to manage health care, from Japan about telling car companies how they must reduce emissions.

We are Canadians, proud, parochial and, in Ms. Mandel-Campbell's words, entering the "suds of global obscurity."

jsimpson@globeandmail.com

I have only read excerpts from Mandel-Campbell's book – a couple of fairly long ones but excerpts all the same, and I haven't finished Andrew Cohen's Unfinished Canadian which many recommend should be read in tandem with Why Mexicans Don't Drink Molson.

The litany of policy failures – driven I hasten to point out by Canadians' firmly expressed desires – highlighted by Simpson are real: '... supply management, a social welfare fishery, unemployment benefits (10 weeks work for 42 weeks of benefits) ... corporate taxes and excessive regulations.' and '... carving up revenues between federal and provincial governments, beseeching governments for more industrial subsidies, worrying obsessively about the United States, pouring money into equalization and health care, and avoiding even the word "productivity."'  Canadians want – at election time they demand -these muddle headed, destructive policies.

Why?

I can only conclude that our national character is mean, niggardly, timorous and driven by greed and envy (the latter two characteristics focused, now, on the USA – we want everything we see in America but we are unwilling to take risks and work).

The fact is that Prime Minister Harper's efforts to give Canada some international lustre are likely doomed to failure unless and until Canadians, not business leaders, not politicians, not the commentariat and chattering classes, but ordinary Canadians, grow up and shake off the socialistic claptrap and rubbish which is the legacy of Pierre Trudeau.  Yes the great Depression was, without doubt, the most defining event in modern Canadian history.  Yes the depression's effects were exacerbated by stupid, greedy industrialists and bankers.  No, Trudeau neither understood the problem nor did he offer any useful solutions – unless you think Fidel Castro has policies we ought to emulate.  (If you do then you are too stupid to breathe unaided!)

We need to reform ourselves, not just our business CEOs, if we want to leave a country to our grandchildren, much less make it relevant again.

 

[Kirkhill]

Edward, I am having trouble getting my 20 year old son out of the house.  I am told by "those who know" that this isn't unusual and that the government has officially moved the age of youthdom upwards from 19 years old to 29 year old.  Effectively I am told to stop worrying about him leaving the house until he is 30.....or my wallet gets too skinny.

Flashback to the 1930s in Canada.  My Father-in-law from Willow Bunch Saskatchewan started riding the rails, working in lumber camps and fish plants when he was 16.
He was one of 13 kids (I think - kind of lose track of all the wife's relatives).

The difference between the two teens?  One has no reason to leave.  The other had no reason to stay.

I don't think you can change peoples' attitudes until the choices are stark.  And right now - life is purty comfortable.

 

[a_majoor]

I am reading the latest book by Samuel Huntington: Who Are We?; which is about America's identity. While I have only read Part 1 so far, the theme seems to be America has a solid national identity and sense of what it means to be American. This is much different from most other nations since it is a form of Civic Nationalism; people who agree with the tenants of the American Creed are welcome to come to the United States and make themselves Americans.

The Creed has profound historical roots based on the values the settlers brought to the New World in the 16 and 1700's, and is particularistic, being based on the forms of civic governance, ideas of common and natural law and Dissenting Protestantism that were prevalent at that time and place. This particularism also explains why other British colonies like Canada and Australia do not resemble America.

It would be interesting to examine the historical roots of modern Canada (I don't think we can really trace too much back to the Vikings or New France) and see what common values our settlers brought, and why they were too weak to be retained or adopted by later immigrants.

 

[nihilpavor]

Identity to a nationality is usually created with the propagation of stories and myth which in turn tend to lead to nationalism. There are many kind of nationalism but it is nonetheless one of the most dangerous double-edged sword around. It can be a nice tool to shore up a country's spirit, it can make everybody dance on the same tune and give motivations to get through hard times. But basically most nationalism eventually come down to this: we are better than anybody else, we 'x'ians are the best on the planet and we're always right, etc etc.

The Germans tried that a while back, as well as the Japanese and it turned ugly. Post 9/11 showed the best and the worst of US nationalism. They all rallied at once behind their country and government to overcome the adversity but then they lost all common sense when that same government lied its way into the illegal invasion of another country. Closer, Quebecers created themselves an heroic / oppressed past in order to stir some homegrown nationalism and we all remember how that turned out.

One of the problem I see with common values brought by our settlers is that they aren't that common (language wise, religion wise, etc) and that we haven't really been a true independent country until the Statute of Westminster of 1931. Since then, regardless of WWII, the rest of the country's history has mostly been about linguistic and constitutional fights.

Americans are proud of their constitution and bill of rights. We, on the other hand, are left with a confuse constitution that everybody wants to reform but we just can't agree with each other to do it once and for all. Where's the pride in that? Where's the common identity?

 

[RDBZ]

The Creed has profound historical roots based on the values the settlers brought to the New World in the 16 and 1700's, and is particularistic, being based on the forms of civic governance, ideas of common and natural law and Dissenting Protestantism that were prevalent at that time and place. This particularism also explains why other British colonies like Canada and Australia do not resemble America.

From a global perspective though, there are perhaps many more similarities between the three countries than differences.

It would be interesting to examine the historical roots of modern Canada (I don't think we can really trace too much back to the Vikings or New France) and see what common values our settlers brought, and why they were too weak to be retained or adopted by later immigrants.

Here the Canadian experience seems to differ to the Australian, where a substantial part of the modern day psyche can be traced back to its earlier arrivals.

 

[Kirkhill]

Nihilpavor - I agree that we are influenced by myths.  I also agree that myths can be created, inculcated and employed to weld people together.  I further stipulate that once people are welded together it makes it easier for a single individual to move the entire mass (given a long enough lever and a place to stand).

However nationalism is to nation as islamism is to islam.  Both nations and Islam exist without the assitance of the extremists.  Nation and Religion are both expressions of culture and culture is taught on mother's knee.  Along with the most common expression of culture, the mother tongue, religion and national myths are passed on within the family.  Just take a look at how many people consider themselves Christians in Canada but never go to Church.  Or look at Americans and ask them about George Washington, or Scots and ask them about Burns and Wallace and The Bruce, or the French and ask them about Napoleon and Joan of Arc.  The first place a child learns about these people is at home, not at school or on the TV.  And they don't learn the exact truth or dogma.  They learn it as the family filters it and changes it.

But there is enough of a common thread in the tales that two people hearing tales their mother told them from the mouth of some other mother's son gives them a sense of connectivity.  A sense of family.

And that is a natural phenomenon. 

People that do not share the same touchstones ARE the other because their stories are not our stories. 

The more touchstones in common that people share then the greater the sense of family and the greater willingness to trust because you are more likely to be able to predict the reaction of the other. This allows you to steer away from contentious issues (and there are fewer in any event).  If you can't predict the reaction then caution is warranted because the reaction might be hazardous to your health.

Back to Kipling's Stranger:

"The Stranger within my gate,
He may be true or kind,
But he does not talk my talk-
I cannot feel his mind.
I see the face and the eyes and the mouth,
But not the soul behind.

"The men of my own stock,
They may do ill or well,
But they tell the lies I am wonted to,
They are used to the lies I tell;
And we do not need interpreters
When we go to buy and sell....

I don't agree with Kipling's solution - segregation - but I do agree with his analysis of the problem.

Interestingly the only solution to "native culture" seems to be that propounded by church, school and the CBC, Pope Pius XI, Marx, Goebels and Trudeau.  Propagandizing some would call it.

I think our problem is related to "tolerance" and "forgiveness".  As heirs of the Enlightenment (and I will be parochial and stipulate the Scots version) we have been taught that it is good to tolerate the other, to find common ground and not see the other as the other.  We can't even see ourselves as better because we are tolerant because then we are still seeing them as other. 

So we are stuck.  We are better because we are tolerant but because we are tolerant we are not better.  There is no difference between US and Them.  From that it follows that there is no need for us to change because all things are equal and for the same reason there is no need to change others because they are already the same as us.

Of course, in the Canadian context all this falls apart when we consider the Americans.  Everybody knows that while we are not better than them (we can't be because everybody is the same) they are worse than us (they must be because they are Americans  )

 

[nihilpavor]

Nation and Religion are both expressions of culture and culture is taught on mother's knee.  Along with the most common expression of culture, the mother tongue, religion and national myths are passed on within the family. 

I hear what you say.

What I learned on my mother's knee: French. All religions are bad, Buddhism being the only exceptions. Everybody in Canada and the US living between Vancouver and Toronto are dangerous rednecks, steer clear of them. We, people of Quebec, have been exploited by the English since the invasion and we need to get our own country ("le Québec libre") recognized. Capitalism is too extreme to be any good and it only serves as an excuses for generalized exploitation. The Canadian army sees French Canadians as cannon fodder. The Canadian army is the enemy that was so happy to come hit us in the guts during the FLQ crisis... I could say a lot more in this line. Two solitudes really.

Hopefully I am a very curious individual always wiling to reconsider what I was taught as the Truth. But sadly, a lot of people are not willing to go through the pain that comes with questioning who you are and what you believe in. Elevating above the "blame game" is a tough ride in troubled times.

 

[a_majoor]

From a global perspective though, there are perhaps many more similarities between the three countries than differences.

True, there are enough similarities between many parts of the former British Empire that many people believe in a collective "Anglosphere" of common languages, cultures and values. I am certainly a proponent of such an idea, but the foundational influences of the American settlers were rather particular to that time and place, and I think that one reason Canada and Australia don't resemble the United States more is the forms of civic governance, ideas of common and natural law and Dissenting Protestantism had changed by the late 1700's and early 1800's, when Canada and Australia took their modern shapes as nations.

One thing which Huntington is getting at as I read farther into the book is the current influx of peoples coming to North America have more of the hallmarks of settlers rather than immigrants. They come en mass, communities with relatively fixed ideas about how they should live and act and what they intend to accomplish (immigrants tend to arrive more as individuals who are willing and able to adapt to the host culture). given the scale and scope of Hispanic "settlement" in the United States and various groups coming to Canada, these new settlers have the potential to remake society in "their" image.

The United States is defined by the American Creed, and may have the cultural strength and resiliance to continue to be "America" for a long time to come. On the other hand, Canada does not have the hard core of a "Creed", and many of the other symbols and ideas of nationalism were wantonly vandelized during the 1960's on to make way for a new "Progressive" Canada. Since Progressivism is a weak ideology, there is a far better chance for it to be displaced by the firmer systems of believes these new settlers will import to Canada. Calls for Shiara law to be adopted in Ontario were a sign of what is to come.

 

[Kirkhill]

Arthur, there is a great book called "Albion's Seed: Four British Folkways in America" that addresses that very issue.  It points out that there were four distinct waves of immigration from four distinct cultural groups in different parts of Britain.  They brought with them their beliefs, their dialects, their clothing, their food, their housing and their social and marriage practices and sexual attitudes.

The Puritans came from East Anglia to New England before the Civil Wars. (1620-1640)
The Royalists came from Wessex to Tidewater Virginia during Cromwell's reign (1640-1660)
The Dissidents, Non-Conformists and Quakers came from the Midlands to Pennsylvania (1660-1690)
The Hoosiers, Crackers and Hillbillies came from Ulster and the Border Region between Scotland and England starting about 1716 with the failure of the Old Pretender's rebellion.
This last group, my uncouth relatives that were rustling sheep, cattle and horses before they got here were wearing buckskins, living in cabins and drinking whisky, were the back bone of the American Revolution along with the refugees from Louis XIV and Louis XV - the Palatine Germans and the Huguenots.

Canada got the middle class lowland Scots - Anglicans, Presbyterians and Masons and all disciples of Adam Smith - authoritarian conformists with a view to making a Godly profit - as the backbone of its mercantile class.  It also got Highland Scots that were cleared from their lands by their own clansmen - sheep cost less to maintain than crofters.  New Zealand got the same mix.

And Australia? As Trooper Hale and Cobbler will attest - nothing but Irish poachers and Ne'er do wells.  They had to introduce the rabbits to make the Irishmen feel at home. 

 

[Edward Campbell]

Here, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s National Post, is a ‘good news’ article which supports the recent Department of Finance reports debunking the ‘Canada is being “hollowed out” myth’:

http://www.canada.com/nationalpost/financialpost/story.html?id=66dd82fc-5ec1-487f-803f-701573675d20&k=14640

Canada a creditor by 2010?
Would mark first time that country's foreign assets outweigh liabilities

Jacqueline Thorpe, Financial Post
Published: Thursday, June 21, 2007

Canada could be become a creditor nation for the first time in its history by the end of the decade.

Economists said the country could soon join classic creditors like Japan and Germany and the burgeoning list of emerging-market creditors like China that have more foreign assets than liabilities -- which would give it more control over its financial destiny.

"For the first time in its history, Canada would be a net creditor," said Stefane Marion, assistant chief economist at National Bank in Montreal. "Historically we have always depended more on foreign investment than we could afford to pay out overseas."

Douglas Porter, deputy chief economist at BMO Capital Markets, agreed. "We're running current account surpluses on the order of about $25-billion a year so roughly in three years time, that sounds about right."

The forecasts were made yesterday after Statistics Canada reported Canada's foreign assets continued to swell in the first quarter while its foreign debt plummeted. Net external liabilities, the difference between the two, dropped $6.8-billion to $92.2-billion in the first quarter of 2007 from the end of 2006.

As a percentage of GDP, net liabilities fell to a record low of 6.2%, down from 6.8% in the previous quarter, 17.6% in 2003 and 44% in the high-debt days of the early 1990s.

A spokesman at Statistics Canada said Canada has not been a net creditor at any time in its data going back to 1926. Before that, foreign investment, mostly from the U.K. was probably all that kept the young country going.

The value of international assets abroad, which include foreign bonds and stocks, foreign direct investment and other holding such as official reserves, totalled $1.23-trillion, up 3.4% from the end of 2006. Gains on foreign bonds drove 40% of the increase, along with appreciable gains in Canadian direct investment and reserve assets.

International liabilities did creep higher by 2.6% to $1.32-trillion, largely due to an increase in foreign direct investment here.

But for the large part, the data utterly contradict arguments that Canada is being "hollowed out" or being overrun by foreign investors. BMO Capital pointed out that Canadian direct investment abroad totalled $71-billion more than foreign direct investment in Canada.

Statistics Canada said the rise came mostly from injections of working capital into existing foreign affiliates. (Perhaps this is where Canadian companies are deciding to spend their bulked-up loonies, rather than at home? Recent data have shown spending on machinery and equipment has been lacklustre in Canada despite the surge in the currency.)

The turnaround in Canada's net external liabilities has come through a combination of bulging trade surpluses, thanks to the commodities boom and a determination to slash government indebtedness starting in the mid-1990s.

Federal net debt has slid from about 70% of GDP to around 25%. There has been less debt issued, and fewer foreigners holding them. While the total federal debt of about $480-billion has seemed painfully slow to recede, our assets have been swelling while corporate debt has also dropped dramatically.

Having less debt held by foreigners means Canada is not nearly as exposed to foreign whims and reduces the country's exposure to foreign market shocks. Less debt, of course, also means less interest payments and more money to spend on other things.

© National Post 2007

 

[a_majoor]

While this is good news, we should hold off opening the champaign just yet.

Canada's surge is based almost entirely on resources, so anything which pops the resource bubble will take the rug out from under us. Don't forget the Americans have a very compelling reason to find a substitute for imported oil, while the underpinnings of the electronic universe (computer chips and fiber optics) are, in the end, made out of sand. Should the United sStates find an acceptable means of substituting foreign oil, the global oil market will crash (since a $100 billion dollar a year market will abruptly close and other large oil importers like India and China will rapidly copy whatever the Americans come up with).

The other factor which casts a shadow over the good news is the acummulated government debt (something like $500 billion dollars worth at the Federal level alone), along with the vast unfunded liabilities of future pension obligations (see http://www.td.com/economics/special/db1206_debt.jsp for some insight into this subject). Personal savings are at an all time low as well, which could lead to multiple market crashes if large numbers of people needed to liquidate assets like houses or property in order to raise cash. Coupled with the failure of Canadian business to actively invest in the future with new machinery and equipment, we are still balancing on a knife edge.

Of course knowing what the problems are we can work on fixing them, and the acummulating foreign assets "could" be used to pay off some of the overhanging obligations that loom ahead of us. We seem to be doomed to deal with spendthrift governments, so on a personal level, the reader can increase their personal savings, and look carefully at any Canadian business they choose to patronise or invest in. Supporting the ones that do invest in the future will have long term benefits to both the business and investor. Diversification and holding assets in other markets is also a "must do".

Roll up your sleeves Canada!

 

[a_majoor]

A bit more about Canadian parochialism:

http://edeysblog.blogspot.com/2008/01/if-tree-fell-on-politician-would-anyone.html

if a tree fell on a politician would anyone care?

Economy in crisis! But, what would a Canadian pseudo-crisis be without a First Ministers meeting to offer at best non-solutions, if not actively make the problem worse. Exacerbated by panic-laden reporting (e.g. "The big economic question these days is whether the weakening [American] economy will survive the strains or collapse under them." Collapse?) our intrepid Premiers have descended upon 24 Sussex to take action, or more accurately to give a credible impression of taking action.

If any of Friday's results can be taken as good news, it is that this particular non-solution will cost us only $1 billion — a quick glance at the position of the Liberal Party reveals that the price of non-progress could have been much higher. Liberal Intergovernmental Affairs Critic Dominic LeBlanc stated, “We committed $1.5 billion to help the forestry industry make the transition to competitive strength and sustainability. This included things like support for pre-competitive research in emerging technologies and promoting export opportunities for wood products into growing markets such as China." But, to debase any cynical wags from crying 'bailout', LeBlanc assures us that "The aid must also be geared towards long-term solutions to industries affected by the rapid rise of the Canadian dollar. Otherwise, taxpayer dollars will only amount to an artificial respirator for businesses that are no longer able to compete on world markets." Well, that settles it, obviously the Conservatives are for a "purely cynical political" forestry strategy whereas the Liberals propose a "A sustainable forestry strategy."

I suppose it would be too much to expect either government or opposition to invest in any actual introspection into the genuinely perilous state of Canada's forest industry. Despite the endless chirping about the destructive impacts of effective parity between the Canadian and American dollars, the appreciation of the loonie has only served to kick-over the ramshackle termite-infested shack that masquerades as a global industry. Consider, Canada represents 20 per cent of the global forestry trade; but, despite our embarrassment of natural riches and unrivaled access to the world's largest economy, we sport none of the top-20 global forestry companies. Much smaller Finland boasts three of the top ten international forestry concerns, plus a host of related industries that produce the machinery used in forestry plants world-wide. These are not recent developments. Canada is a sapling (a struggling one at that) in a field in which it should be a giant — now why might that be?

The same politicians who are now so eager to to throw millions of dollars at a host of very fragile companies could at least pause to examine their complicity in this industrial enfeeblement. Forestry companies harvest Crown Land through 5 to 25-year leases, while it takes a typical tree 50 years to reach maturity. Cutting rights are tied to the location of the forestry mill, which has left Canada with a host of small, old and, above all, uncompetitive mills scattered across the country. The goal of successive governments has been to above all preserve jobs in remote locations. And, for a time, it worked. The combination of a low dollar, subsidized stumpage fees and a regional rather than a global marketplace allowed Canada to get away with such an obviously wrong-headed approach. Investment, whether in new machinery, the science of silviculture or the development of non-American markets withered. However, under the successive blows of parity, higher energy costs, endless trade disputes with the Americans and robust global competition the Canadian forestry was revealed to be a pygmy emperor without foliage, and without even a healthy nucleus from which new growth could sprout.

If the government had simply had no forestry policy whatsoever, it is likely that the Canadian forest industry would have consolidated and modernized years ago; but, as so often is the case with government protectionism and meddling, we now have the worst of both worlds: all of the pain of an industry rationalization with none of the gain from the emergence of a healthy few global companies. Government policy blunders in no way absolve Canada's forest industry for their failures. They could have not failed to notice what direction their Nordic peers were moving, and if they were not to be leaders, they could have at least studied and learned from those who are.

So, what now? Some good ideas for a phoenix-like resurgence can be found here; but having walked so far down the wrong path, it is clear that there will be much more pain and heartache for Canada's mill workers, their families and towns throughout the hinterland before things can get better. Our politicians could at minimum cease insulting the intelligence of everyone involved, cease peddling acting in place of action and get to the root of the issue -- okay, that's the last lame tree metaphor to appear on this blog, I promise.

just for fun

I am a big fan of Andrea Mandell-Campbell and her book Why Mexicans don't drink Molson, extensively used in the research for this post. Her appearance on the Sunday Edition is available here, and while the whole thing is great, if you're pressed for time advance right to 25:50 for the closer.

Michael Enright: I can hear Maude Barlow now...

Andrea Mandel-Campbell: Oh, she's one of my favourite people!

ME: 'Mandel-Campbell wants to sell the country to the Americans!'

AMC: She's actually the problem, frankly. People like her are the problem with Canada.

ME: Because?

AMC: She's the type of person that creates bogeymen that don't exist, that misdirects all of this energy that should be towards positive, constructive confidence-building Canadians and directs it towards anti-Americanism that really, at the end of day, gets us... well, nowhere, looking at our navel.

ME: [chuckling] I wish you wouldn't hold back. I wish you'd come out and say exactly what's on your mind.

AMC: I am holding back!

personal endnote

Thank you to my friends and readers who have encouraged me to keep writing despite my valiant attempts to alienate and drive you all away through not posting. Why the absence? "Mulroney-Schrieber Scandal!" "Isotope Fiasco!" "AECL-CNSC-PMO Feud!" etcetera. I think the question is: In such an environment, why would anyone direct their time, energy and thought into Canadian politics and public policy? The Canadian political landscape, so generously fertilized with stupidity is bound to produce a bumper crop of disinterested cynics. I find it really quite depressing.

posted by R. Christopher Edey at 12:14 PM

 

[a_majoor]

We didn't have to wait too long for this:

http://kerplonka.blogspot.com/2008/01/someone-mentioned-d-word.html

Someone mentioned the D-word

The word being "deficit".

Fortunately, it's only the Canadian Centre for Policy Alternatives, so take their predictions with a grain of salt.

I'll just add that I think there is a possibility that the tax cuts would cause a deficit insofar as they've eliminated a surplus capacity to deal. But doesn't the government do the Chretien thing and keep a $3 billion or so reserve fund to put towards the debt if it doesn't need to cover emergencies?

More significant is the fact that any economic downturn dries up revenues, regardless of the tax rate. The only good news is that a tax cut has the potential to allow business to weather the coming storm in the US.

UPDATE: And as ALW pointed out, where would we be right now if the CCPA had its way if not in a deficit?

Posted by Jarrett at 11:15 AM

Of course the group does not care to notice that economic activity and government revenues increase after tax cuts (quick historical examples include the "Roaring 20's, Go Go 60's and "Morning in America"). It should also be noted that steep economic downturns at the end of these periods were always preceded (or perhaps caused by) tax increases or other government intervention in the economy.

 

[a_majoor]

More on taxes by Jerry Pournelle:

http://www.jerrypournelle.com/view/view500.html

There is a good discussion of the Huckabee "Fair Tax" in today's TCS Daily. http://www.tcsdaily.com/article.aspx?id=010808A Arnold King (Cato Institute) looks at the effects on both revenue and "fairness" and presents data on the present situation in a calm and comprehensible analysis. He concludes that what we need is a "Semi-Fair Tax" that combines some "progressive" income tax features with a sales tax.

I note that if we want you not to do something -- don't speed, for example, and if you do speed don't really cut loose and rip -- we fine you. Progressive fines for multiple offenses and more severe expenses, and such like. So if you improve your house, we fine you by raising your taxes; and if you make more money, we fine you by increasing your income tax. If you save money, we fine you by taxing the interest income.

Clearly the message is that society doesn't want you to increase your income, improve your property, or save money. Instead, we want you to spend it all lest we fine you for keeping it.

The "Fair Tax" would change that by abolishing the income and payroll taxes (i.e. income tax and FICA) and putting all revenue on a sales tax of -- they say 23%, but you and I would call it 30%. King looks at the effect of this to come up with his conclusions. His essay is worth reading.

As for me, I'd accept King's analysis and try it his way, but I would also impose a 10% across the board tariff on all imports. All imports. If that requires renegotiating all our treaties, so be it; that's better than the European "Value Added Tax" which has a major feature of being nearly invisible.

A fixed "progressive" income tax that can't be changed and is adjusted for inflation; a 10% tariff with the option of adjusting it between 5% and 15% since its purpose is to make US goods produced under US regulations competitive with imported stuff produced by slaves and environmental negligence; and a national sales tax that is easy to see and hurts like hell. That ought to work.

Of course we will never try it. Both parties are conspiracies of elites against the voters and taxpayers. But at least we would be discussing something that could work, and who knows, maybe one or more of the conspirators would bolt and come out on our side...

 

[a_majoor]

Why Alberta is surging ahead and Ontario isn't:

http://freedomnation.blogspot.com/2008/02/lets-do-time-warp-again.html

Wednesday, February 20, 2008
Let's do the time warp again

Generally I don’t bother giving blame when these little moments of cross government spitting contests breaks out. Yet this time around, my provincial government pissed me off a lot more than my federal government.

Dalton says that Harper is caught in a time warp.

Mr. McGuinty said the Harper government's hands-off style - one that he said offers tax cuts for corporations but little in the way of strategic investments for ailing sectors - is a relic of a bygone era.

"I think their approach is caught up in a time warp that better suited a day when change moved at a much slower pace," Mr. McGuinty said in an interview with The Globe and Mail.

Are you kidding me? Are you seriously not kidding me? Strategic investment into ailing sectors? Are you talking about keynesianeconomics? And you say Harper is stuck in a time warp? Didn’t the 60s, 70s and 80s all prove you wrong? Wasn’t that basically what the 80s and 90s was about? Everyone realizing that government interference in the free market ultimately hurt the economy.

"There are actually not many people left who hold the view of Mr. Flaherty, which says just cut taxes, back away and let the economic forces play themselves out," Mr. McGuinty said. "I think the progressive modern view on growing your economy is one where you come to the table."

Who the hell is McGuinty talking to? Do you really need a list of people that still believe that the free market is a good thing? What the hell does “come to the table” mean anyway? All that corporate welfare does is attract the greedy and the lazy; people that are in it for a quick buck or to leach of the body politic. Low taxes attract people that want to build companies and create lasting jobs. I think that the Fraser Institute should invite Dalton to the next student seminar.

Dion throws in his two worthless cents.

"After only two years of Conservative government, the cupboard is bare, manufacturing sales have plummeted to a three-year low, and Canada's trade surplus has shrunk to its lowest levels in nearly a decade," Mr. Dion told a gathering of Quebec manufacturers and exporters in Montreal.

How exactly it is Harper’s fault that the American dollar is shrinking is not clear to me, but there you have it. Dion would fix the problem, presumably by printing off more money so that the dollar would go down.

Then you read that Flaherty says that Dalton lacks vision.

The McGuinty government suffers from a “lack of leadership, a lack of vision and a lack of economic stewardship,” he said in an early morning speech in Toronto to the Canadian Federation of Independent Business. The provincial government “fails to understand the long-term benefits of tax relief,” he added.

The business tax burden is putting Ontario manufacturers at a disadvantage, Mr. Flaherty said. It is also driving away new business investment.

Bailing out individual industries “is just the kind of protectionism that hurts trade and kills jobs” he said.

While Ontario was once the economic engine of Canada, things have changed and “Ontario is failing to adapt to that change,” he said. While the province was “carefully managed” in the post-war period, with prudent fiscal management and spending, that is no longer the case, he said.

He praised the B.C. government, which said on Tuesday it will reduce business taxes.

My province’s response to this well articulated and clear economic arguments?

They called him a liar.

What lies he told I don’t know, they didn’t say. I look at what the Globe and Mail reported that Flaherty said and I can see no lies there. So what is the issue? Did the Ontario Minister hear truth in Flaherty, but because it did not mesh with her universe she had to call them lies?

There is a definite right position here and a wrong one. Mr. Flaherty is in the right.
Posted by Hugh MacIntyre at 11:24 AM