Making Canada Relevant Again- The Economic Super-Thread

[a_majoor]

An idea that should be given lots of traction here. Imagine if this is presented as the centerpiece of the government's "stimulus" package in Jan 2008?

http://www.humanevents.com/article.php?id=29733

Sign the 2-Month Tax Holiday Petition Today!
by  Human Events
12/02/2008

Sign the petition today! HUMAN EVENTS and its sister website RedState are fighting to get Rep. Louie Gohmert's income tax break proposal enacted. This saves the typical American family around $2,000 -- we think it makes sense for you to keep the money rather than throwing $350 million at bailout programs that don't help the American people.

Sign today -- just click here.

HUMAN EVENTS will use this petition to help force Congress to pass this tax break proposal. It's for you -- and worth trying, rather than sitting on our hands while Congress acts irresponsibly with the American people's money.

 

[a_majoor]

Rather than a two month tax holiday, the bureaucratic counter offer is tax snitches:

http://westernstandard.blogs.com/shotgun/2008/12/feeling-the-hea.html

Feeling the heavy burden of taxation? Blame a businessman and snitch on your neighbour: Canada Revenue Agency

You should pay your taxes. The consequences of not doing so are just too high. But when you do write that cheque to the government, take some time to consider that the burden of high taxation has been brought to you courtesy of a bloated public sector.

While that may seem obvious, Canada Revenue Agency (CRA) wants you to blame business owners for this tax burden. In fact, they want you to snitch on the very people who create jobs and wealth in our society.

CRA issued a warning today to business owners against using electronic sales suppression software to hide sales in order to evade taxes.

According to CRA, businesses that do this are “placing an unfair burden on the individuals and other businesses that accurately report their income and pay the taxes they owe.” And CRA has over 5,000 employees dedicated to making sure this doesn’t happen.

Of course, the heavy burden of taxation has nothing to do with businesses evading taxes in a struggle to survive, and everything to do with the ever increasing size of government, including the salaries and pensions of these 5000 tax enforcement bureaucrats.

Still, the CRA wants you to do your “part to ensure tax compliance” by turning in the butcher, the baker and the candlestick maker if you think they’re not paying enough taxes. It’s called the Voluntary Disclosures Program and it’s ominously familiar to the Soviet tactic of encouraging citizens to report on each other for crimes against the state. This practice was best embodied by Pavlik Morozov, a thirteen-year-old boy who became a national symbol of Soviet selflessness and virtue after denouncing his parents for anti-government activities. Pavlik, as he was known in propaganda literature, while likely a fictional character, was used by Soviet propagandists to teach children that opposition to the state is selfish and reactionary, and that the state is more important than friends, family and what Edmund Burke called the “little platoons” that make up our lives.

The CRA’s Voluntary Disclosures Program tears at the fabric of civil society and shifts the blame for high taxes from government to citizens – but you should still pay your taxes.

 

[Infanteer]

Bullshit - what about the civic duty of paying one's taxes as prescribed by law?  Encouraging citizens to report tax evasion and fraud is a "Soviet Style tactic"?  Is Crimestoppers on the same boat?

Sounds like garbage commentary from the Western Standard to me.

 

[a_majoor]

This has been pointed out several times before, but the shift of population and GDP to the West is causing more divisions in the Canadian body politic:

http://unambig.wordpress.com/2009/01/02/this-recession-is-an-eastern-thing/

This “Recession” Is An Eastern Thing
January 2, 2009 — Raphael Alexander

Craig Offman of the National Post wrote just before the New Year an article about the balkanization of Canada being three solitudes: Ontario, Quebec, and Western Canada. The sinking of Ontario as the cash cow in Canada has ushered in a new era of importance to Western Canada, which is partially why the attempted usurpation of power by the coalition was so reviled by those west of Kenora. That the western provinces will be providing the stability that the Canadian economy needs at this time is clear, so why would it still make sense in anyone’s mind to consider a divisive coalition that would wrest the power from the main producers? It doesn’t, which is why the coalition will die here in 2009.

    The rising affluence of the West is not exclusive to British Columbia and Alberta, but has also travelled east to Saskatchewan, which no longer feeds at the federal trough.

    Now it’s Ontario’s turn to receive equalization payments.

    “Nobody shed a tear here when that announcement came out,” said Mr. McGrane, an expert on Western alienation. “If there were tears, they were crocodile tears.”

    Last November, Ottawa announced that for the first time in its history Ontario will qualify for federal handouts next year: an estimated $347-million.

    A TD Economics report projected that Ontario’s situation would only worsen. By 2011-12, it could receive around $1.3-billion.

As a former Easterner, I can understand the kind of hostility that the West feels because of being ignored. After all, they survived a hostile Pierre Trudeau government that quite literally stole the prosperity rug from under their feet, and not many people who remember that far back want a repeat anytime soon by idealistic Liberal M.P.’s sitting in isolated pockets of inner-city red fortresses. Mr.Trudeau was the original “wealth spreader”, arguing at the time that Alberta’s oil profits must be shared throughout the country. If you read between the lines, not much has changed from the rhetoric out of the mouth of today’s Liberal M.P.’s [and why should it, they're almost exclusively Eastern], and this is evident by the fact that the new Liberal leader is trying to woo the economically irrelevant Quebec almost out of some kind of archaic rote tradition.

You can see that Eastern-style politics still resonates in the decision-making of Western-elected politicians, however, as even the federal Conservative government has created policies commensurately proportionate with those of the U.S. in Ontario auto sector bailouts. But the new economy, as Craig Offman writes, is clearly in the west, including the surging Saskatchewan, who is Canada’s growth leader for two years running and clearly the opportunity for the most diverse of natural resources investment. But even if Western Canada continues to be ignored by Ottawa, it will be more palatable than any programs aimed at wealth distribution or policies that attempt to curtail growth that would damage the west. If, by act of Deity, a coalition government came into power and began enacting such policies, I think you would see just how far that balkanization has come.

 

[a_majoor]

The Governor makes many of the same points the Prime Minister does. Is the Governor Harper's "lap dog"?

http://www.esquire.com/the-side/opinion/mark-sanford-bailouts-010709

Choosing the Right Mechanic for America's Economy: Op-Ed

In an exclusive response to a new Esquire.com column highlighting him and other "anti-bailout" conservatives, the governor of South Carolina offers three reasons why government intervention isn't the answer.

By: Mark Sanford
In an exclusive response to a new Esquire.com column highlighting him and other "anti-bailout" conservatives, the governor of South Carolina offers three reasons why government intervention isn't the answer

In his Tuesday column, "The Anti-Bailout Republicans' Highway to Economic Hell," John H. Richardson compares the state of the American economy to a car that has suddenly stopped working. While I won't attempt to imitate his rhetorical flair, I would respectfully suggest adding a little more realism to Richardson's analogy to more accurately reflect what's transpired during the financial crisis -- and why more government intervention will only make matters worse.

Richardson argues that people like myself who have talked of restoring financial responsibility to our nation -- rather than piling on bailout after bailout -- are in essence walking away from the "engine" of our economy rather than trying to repair it. In fact, what we're arguing is that government has been an incompetent mechanic who at times has even played the role of saboteur, slowly pouring sugar into the gas tank.

To that end, I'd make three quick points.

First, the idea of more "stimulus" as the answer to this crisis approaches the point of flat-out unbelievable. Leaders in Washington told us last spring that things would get better if we just sent $150 billion in stimulus checks. We were told the same as we reached $2.3 trillion spent and committed to various stimulus and bailouts for the year. Now the tab for what's been committed has crossed $7 trillion -- half of the yearly U.S. economy. A group of Democratic governors, meanwhile, recently promised that spending just $1 trillion more would be the answer.

Would Americans continue to frequent the same mechanic if each repair bill increased in cost but got no closer to fixing the problem? Taxpayers are already on the hook for over $52 trillion in unpaid-for political promises. That represents a hidden mortgage of $450,000 per American household, and some of us don't think it's right to bury future generations even further under this mountain of debt.

Second, be careful which mechanic you visit. Looking forward to what comes next, I've heard seemingly unending opinions from former congressional colleagues -- Sen. Chris Dodd and Rep. Barney Frank foremost among them -- who opposed reform for Fannie Mae and Freddie Mac. Those reforms could have been instrumental in avoiding what we are just beginning to withstand in 2009. If they didn't have the answer then, why do they have it now? This is particularly true since they pushed in the opposite direction. They insisted with others in Congress that Fannie and Freddie and the Department of Housing and Urban Development increase purchases of mortgages -- and lending -- to low-income borrowers, as well as to people who represent poor credit risks. They insisted on specific targets and quotas irrespective of a borrower's ability to repay.

From the time of the Community Reinvestment Act to the present, Washington -- rather than pure "market forces" -- has driven much of what would come next on housing credit. Despite what today's populists suggest, this was not a simple failure of capitalism. Its opposite, "crony-capitalism," is what paid over $100 million to the connected few who ran organizations like Fannie Mae in Washington. Politics drove a big part of what has happened.

Finally, we need to learn from history but not repeat it. While Richardson's version of the Great Depression is interesting, Amity Schales' book The Forgotten Man chronicles its real history, and shows how it became prolonged and worsened by raising taxes and limiting free trade. Depression-era policies of expanding labor union power and increasing spending did little to improve the economy, as we had nearly twenty-percent unemployment in 1939 -- ten years after the stock market crash.

In the same vein, history shows the consequence of pulling money from the private sector to fund large public projects. Few people know that it was Hoover, not Roosevelt, who initiated the practice of piling up big deficits to support huge public-works projects like the San Francisco Bay Bridge, the Los Angeles Aqueduct, or the Hoover Dam.

If government spending were the key to preventing recessions, then we'd never have one, since increasing spending is oftentimes the default response from Washington when times are tough.

The bottom line is that history indeed suggests that we need to look much more broadly as we attempt to define "economic stimulus." It is more than simply borrowing money and sending out checks of Washington. It is about making sure that our country's finances are on stable ground so that our real source of economic stimulus -- the American entrepreneur -- isn't paying for today's political quick fixes for generations to come.

 

[observor 69]

Now a word from a Nobel Prize winning economist:

The New York Times
January 5, 2009
OP-ED COLUMNIST
Fighting Off Depression

By PAUL KRUGMAN
“If we don’t act swiftly and boldly,” declared President-elect Barack Obama in his latest weekly address, “we could see a much deeper economic downturn that could lead to double-digit unemployment.” If you ask me, he was understating the case.

The fact is that recent economic numbers have been terrifying, not just in the United States but around the world. Manufacturing, in particular, is plunging everywhere. Banks aren’t lending; businesses and consumers aren’t spending. Let’s not mince words: This looks an awful lot like the beginning of a second Great Depression.

So will we “act swiftly and boldly” enough to stop that from happening? We’ll soon find out.

We weren’t supposed to find ourselves in this situation. For many years most economists believed that preventing another Great Depression would be easy. In 2003, Robert Lucas of the University of Chicago, in his presidential address to the American Economic Association, declared that the “central problem of depression-prevention has been solved, for all practical purposes, and has in fact been solved for many decades.”

Milton Friedman, in particular, persuaded many economists that the Federal Reserve could have stopped the Depression in its tracks simply by providing banks with more liquidity, which would have prevented a sharp fall in the money supply. Ben Bernanke, the Federal Reserve chairman, famously apologized to Friedman on his institution’s behalf: “You’re right. We did it. We’re very sorry. But thanks to you, we won’t do it again.”

It turns out, however, that preventing depressions isn’t that easy after all. Under Mr. Bernanke’s leadership, the Fed has been supplying liquidity like an engine crew trying to put out a five-alarm fire, and the money supply has been rising rapidly. Yet credit remains scarce, and the economy is still in free fall.

Friedman’s claim that monetary policy could have prevented the Great Depression was an attempt to refute the analysis of John Maynard Keynes, who argued that monetary policy is ineffective under depression conditions and that fiscal policy — large-scale deficit spending by the government — is needed to fight mass unemployment. The failure of monetary policy in the current crisis shows that Keynes had it right the first time. And Keynesian thinking lies behind Mr. Obama’s plans to rescue the economy.

But these plans may turn out to be a hard sell.

News reports say that Democrats hope to pass an economic plan with broad bipartisan support. Good luck with that.

In reality, the political posturing has already started, with Republican leaders setting up roadblocks to stimulus legislation while posing as the champions of careful Congressional deliberation — which is pretty rich considering their party’s behavior over the past eight years.

More broadly, after decades of declaring that government is the problem, not the solution, not to mention reviling both Keynesian economics and the New Deal, most Republicans aren’t going to accept the need for a big-spending, F.D.R.-type solution to the economic crisis.

The biggest problem facing the Obama plan, however, is likely to be the demand of many politicians for proof that the benefits of the proposed public spending justify its costs — a burden of proof never imposed on proposals for tax cuts.

This is a problem with which Keynes was familiar: giving money away, he pointed out, tends to be met with fewer objections than plans for public investment “which, because they are not wholly wasteful, tend to be judged on strict ‘business’ principles.” What gets lost in such discussions is the key argument for economic stimulus — namely, that under current conditions, a surge in public spending would employ Americans who would otherwise be unemployed and money that would otherwise be sitting idle, and put both to work producing something useful.

All of this leaves me concerned about the prospects for the Obama plan. I’m sure that Congress will pass a stimulus plan, but I worry that the plan may be delayed and/or downsized. And Mr. Obama is right: We really do need swift, bold action.

Here’s my nightmare scenario: It takes Congress months to pass a stimulus plan, and the legislation that actually emerges is too cautious. As a result, the economy plunges for most of 2009, and when the plan finally starts to kick in, it’s only enough to slow the descent, not stop it. Meanwhile, deflation is setting in, while businesses and consumers start to base their spending plans on the expectation of a permanently depressed economy — well, you can see where this is going.

So this is our moment of truth. Will we in fact do what’s necessary to prevent Great Depression II?

http://www.nytimes.com/2009/01/05/opinion/05krugman.html?_r=1

 

[a_majoor]

Paul Krugman has always called for higher taxation and greater nationalization of the economy. Nobel Prize or not, anyone versed in history can point out numerous examples of regimes that floundered due to excessive taxation and overregulated economies. The late Roman Empire is perhaps the earliest well documented example...

The key to understanding Mr Krugman's thesis lies in the remark:

money that would otherwise be sitting idle, and put both to work producing something useful.

Money that would be sitting idle according to whom, and useful by what criterion?

Obviously Mr Krugman would have you believe that he knows better than you what to do with your earnings (after all, that is where the money is coming from), and is willing to use State power to compel you to turn your earnings over to him (or at least the Obama administration) so they can eat the fruits of your labour.

Simple math shows this is a very dangerous path to take; if Mr Krugman gets it wrong, there are no chances for recovery, while if the American people are entrusted with their earnings @ 300 million possible solutions that can be tried, even with a 50% success rate there are @ 150 million "winners" and the people who lost have 150 million possible saviours.... (For Canada the numbers are 30 million and 15 million respectively). The only part of the recovery package that will do any good is the $300 billion in tax cuts, trumping and extending the Bush era tax cuts.

 

[observor 69]

Mr.Krugman is a believer in Keynesian economics.

"In economics Keynesianism (pronounced /ˈkeɪnziən/, also Keynesian economics and Keynesian Theory), is based on the ideas of twentieth-century British economist John Maynard Keynes. According to Keynesian economics the state should stimulate economic growth and improve stability in the private sector - through, for example, interest rates, taxation and public projects."

http://en.wikipedia.org/wiki/Keynesian

In his columns and blog on the New York Times site he says it has been shown that the only effective option is for the government to spend money.

"Let’s lay out the basics here. Other things equal, public investment is a much better way to provide economic stimulus than tax cuts, for two reasons. First, if the government spends money, that money is spent, helping support demand, whereas tax cuts may be largely saved. So public investment offers more bang for the buck. Second, public investment leaves something of value behind when the stimulus is over."

http://krugman.blogs.nytimes.com/

 

[Edward Campbell]

Mr.Krugman is a believer in Keynesian economics.

"In economics Keynesianism (pronounced /ˈkeɪnziən/, also Keynesian economics and Keynesian Theory), is based on the ideas of twentieth-century British economist John Maynard Keynes. According to Keynesian economics the state should stimulate economic growth and improve stability in the private sector - through, for example, interest rates, taxation and public projects."

http://en.wikipedia.org/wiki/Keynesian

In his columns and blog on the New York Times site he says it has been shown that the only effective option is for the government to spend money.

"Let’s lay out the basics here. Other things equal, public investment is a much better way to provide economic stimulus than tax cuts, for two reasons. First, if the government spends money, that money is spent, helping support demand, whereas tax cuts may be largely saved. So public investment offers more bang for the buck. Second, public investment leaves something of value behind when the stimulus is over."

http://krugman.blogs.nytimes.com/

And Keynesians might be right in countries with high savings rate like Japan and China and even, to a lesser degree, Canada, but the USA is pretty much the world's lousiest 'saver.' Americans are chronic big spenders, dangerously BIG spenders; the last things the USA needs is a big dose of John Maynard Keynes; the USA - people and government, alike - needs fiscal discipline.

 

[Brad Sallows]

>namely, that under current conditions, a surge in public spending would employ Americans who would otherwise be unemployed and money that would otherwise be sitting idle, and put both to work producing something useful.

When that was in vogue in the 1930's, the government could hand a bunch of unemployed guys some shovels and put them to work building WPA outhouses.  Useful work could be obtained at the expense of a very short learning curve.  What sorts of projects do these brilliant luminaries imagine that we have legions of appropriately-skilled workers ready to execute?  A "shovel ready" project is really one which is already in the preliminary stages of execution or is only waiting for overemployed labourers to finish whatever already occupies their overtime.

>First, if the government spends money, that money is spent, helping support demand, whereas tax cuts may be largely saved. So public investment offers more bang for the buck. Second, public investment leaves something of value behind when the stimulus is over

Those statements omit the problem of mis-spending the money and also fail to acknowledge the fact that a paid debt leaves the debt-holder with the cash to be "spent".  There is no law that public investment must leave something of value behind.

If you want me to spend $10, and you take away $10 from me and piss it away, now I have to come up with $20 to meet your aim: $10 to replace the $10 you destroyed that I did not want to spend, and $10 to spend.  That is what is going to happen when governments start throwing bags of money around, and the downturn will be accordingly prolonged.  Depend on it: the free market is to public bureaucratic centralized direction as manoeuvre warfare is to bataille conduit, aka methodical battle.

The proper way to solve the economic "crisis" is to leave people with more of their own money in their own hands until they have retired whatever amount of their own debt that they deem necessary in order to be confident to spend again.

 

[Kirkhill]

Maybe Keynes wasn’t quite the man I have been led to believe he was.

“Lenin is said to have declared that the best way to destroy the Capitalist System was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens ... Lenin was certainly right. There is no subtler, no surer means of over-turning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.”

Author: John Maynard Keynes, Source: Economic Consequences of the Peace, pp. 235, 236, [1920]

“ “Never let a crisis go to waste” – Rahm Emmanuel 2007 (Reference Global Warming)

"Painful crisis also provides us with an opportunity to transform our economy to improve the lives of ordinary people," Obama said (http://tinyurl.com/67x8ec).

“This is not the first time a president chose reform over recovery. Franklin Roosevelt did it with his New Deal.......... Roosevelt's priorities were criticized .......by none other than John Maynard Keynes, the British economist whose theories rationalized big government. Before FDR had been in office a year, Keynes wrote him an open letter, which was printed in The New York Times:

.... Keynes's concern. Government interventions, ....., "will upset the confidence of the business world and weaken their existing motives to action." In other words, investors will not take the risks necessary for recovery if their profits and freedom are subject to unpredictable government action. Economic historian Roberts Higgs calls this phenomenon "regime uncertainty" (http://tinyurl.com/6cjyqb).

Keynes's letter apparently had little influence on Roosevelt, who stuck to his plan. In his second inaugural address a few years later, FDR feared that signs of recovery had jeopardized his reform plans by removing the sense of emergency: "To hold to progress today, however, is more difficult. Dulled conscience, irresponsibility and ruthless self-interest already reappear. Such symptoms of prosperity may become portents of disaster! Prosperity already tests the persistence of our progressive purpose." (Emphasis added.) (http://tinyurl.com/6j7ra8)” “  per John Stossel

Keynes appears to have been a temperate man who was disinclined to the drastic.  The worst thing that could happen to an economy in his opinion was a loss of confidence.  Once that occurred he does not seem to be a big supporter of intervention.
If anything he seems to have been disinclined to do anything other than let the market sort itself out – FDR and Paul Krugman notwithstanding.

On the other hand, those that wish to bring about radical change seem most in favour of bringing about a crisis in confidence.
Without running too far down the rabbit hole manufactured crises of confidence are not unknown.

It has been done with the Pound and with the Asian Tigers.

 

[observor 69]

Well seeing as how I don't have a degree in economics I can't offer a professional rebuttal.
But two points made by Krugman come to mind. FDR quit the stimulus path to early and

"Gurk! ZIRP!
That’s Zero Interest Rate Policy — which is now, in the wake of this morning’s terrible employment report, inevitable. Yes, we’re Japan.

Add to this the news of a retail sales collapse, and we’re looking grim, grim, grim.

Monetary policy obviously isn’t enough. It’s time to raise Keynes: we need big fiscal stimulus, now now now."

http://krugman.blogs.nytimes.com/2008/11/07/gurk-zirp/

 

[a_majoor]

FDR's "New Deal" lasted almost a decade, and the biggest collapse of industrial output during the Depression occurred in 1937. Good thing FDR quit "too early" or there would not have been much industrial plant left to prosecute the beginnings of WWII.

The argument that individuals saving money is somehow harmful to the economy is only valid if the method of "saving" involves stuffing dollars into your mattress. Even inefficient savings like an ordinary chequing account in the bank provides economic power, you might not get much out of it due to low interest and service charges, but the bank lends that money to others who do spend it (hopefully on useful goods and services like mortgages and "white goods", alternatively on commercial lending and credit).

The real crunch is due to the fact that market signals are being obscured by government interventions (AKA regulatory failure), which makes it difficult to determine who is credit worthy or if the money is actually being used to create new wealth and value. The nationalization of large sectors of the economy only worsens the situation (as any reader of Austrian School economics knows and understands). The true issue here isn't so much about promoting economic recovery as using the economic crisis to gain more control over the economy and hence you and me.

 

[observor 69]

Do you work for the Fraser Institute by any chance ? 

While we could keep bouncing this topic back and forth I think it is obvious we come from two different schools of thought on economic recovery or just plain macro economics.

Guess which member of this panel I feel is on the wrong path,The National "Hard Times Hard Choices " THE BOTTOM LINE - PART 2,
http://www.cbc.ca/national/blog/special_feature/hard_times_hard_choices/

Regards, BG

 

[a_majoor]

Do you work for the Fraser Institute by any chance ? 

If I did, I'd probably be paid more  ;D

While there are several schools of economics, I have chosen to follow the prescriptions of the Classical/Austrian schools because I am a student of history and also because I observed first hand the terrifying effects of Stagflation in the late 1970's (incidentally, I was taking introductory economics at that time and it was difficult to reconcile what I was seeing in the real world with the Keynesian economics we were being taught: specifically, Keynesian economics explicitly denies that such a thing as Stagflation is possible). The Reagan revolution of the 1980's demonstrated the real power of Classical economics, and it is difficult to argue with success

Seven Fat Years by Robert L. Bartley

From Publishers Weekly

Wall Street Journal editor Bartley here extols economic policies of the Reagan years and calls for more of the same. Tracing the pre-Reagan "stagflation" produced by Nixon's price controls, Ford's WIN campaign and Carter's "voluntary" price guidelines, the author tracks how 1980s tax cuts and deregulation, combined with Federal Reserve chief Paul Volcker's inflation-curbing money controls, unleashed American enterprise and boosted national production 30% with a 20% rise in per capita income. In extraordinary detail, and with frequent ironical jabs at the "unenlightened," Bartley analyzes (among other things) congressional economic attitudes (mostly awful), foreign trade debits (complex but necessary), the federal deficit (not to worry), the savings-and-loan debacle (the New Deal started it), mergers, acquisitions and junk bonds (not so bad, really) and the fallacy of "fairly" taxing the rich. He puts in a good word, too, for Jay Gould and other maligned 19th-century "robber barons" for their roles in our economic expansion.
Copyright 1992 Reed Business Information, Inc. --This text refers to an out of print or unavailable edition of this title.

 

[a_majoor]

While pulling the plug might actually be an option, I suspect it will be far messier and more unsustainable than the blogger seems to think. (For those of you who are literary minded, see the last section of Atlas Shrugged as the American economy collapses under the pillage of the "looters", and devolves into piracy and warlordism. If you are not inclined to literature, I invite you to contemplate third world kleptocracies for real life examples). Being the strongest warlord in the valley *might* ensure your survival and standard of living after the collapse, but is hardly the nucleus of a future Libertarian paradise:

http://unambig.wordpress.com/2009/01/10/ontario-public-sector-unions-sucking-at-the-teats-of-the-motherland-sow/

Ontario Public Sector Unions: Sucking At The Teats Of The Motherland Sow
January 10, 2009 — Raphael Alexander

What, exactly, is wrong with the public sector unions of Ontario and the news that the province is perpetually under threat from some governmental body uninterested in healthy raises during an economic recession? Article after article is about some governmental branch or another, either provincial or municipal, having trouble with unions who don’t seem to recognize the kind of financial straits this nation is in, or else are willfully ignorant to it as they wallow in the trough of the Canadian taxpayer. As a worker of the private sector, I will be happy just to keep my current job in the marketplace, although I would even accept a pay cut if it meant avoiding the unemployment line. Fortunately my personal situation seems protected for the moment, but if I were promised a contract that included guaranteed raises on top of job security, I would be tripping over my own legs trying to run fast enough to sign it. But then again, I’m not enslaved to power hungry public sector unions for whom, apparently, too much is never enough:

    The union representing Ontario’s elementary school teachers said Thursday a strike vote could be called if progress isn’t made in their contact talks with school boards by Feb. 13.

    The Elementary Teachers’ Federation of Ontario (ETFO), which represents 73,000 public school elementary teachers, is upset because they claim management wants to strip away some other contract provisions regarding preparation time and other non-monetary issues.

    [...]

    Last month, Ontario’s elementary school teachers failed to reach a deal in ongoing contract talks with the organization representing public school boards.

    The proposed deal included a 12.55% salary increase over four years, the province said.

The strike isn’t about money, they say, which is understandable, since the top salary for a teacher in Ontario would grow to $94,000 under the current offer, but about preparation time and other expectations. But a strike right now in Ontario would be an unmitigated disaster, since let it be freely admitted that for many parents, school is little more than a full-time daycare subsidized by the government. What families would do while the union negotiates over the trivialities of the teacher’s duties is difficult to hazard a conjecture. The loss in revenue to the economy from the parents who would have to stay home or find alternative solutions would definitely be noticeable. Make no mistake: that is a hostage situation in waiting.

And then there are Ontario’s correctional officers:

    Ontario’s correctional officers are bracing for a potential strike, and if it ends up being anything like the 51-day labour dispute of 2002, life inside the province’s jails could become exceedingly ugly in a few weeks.

    The workers provide an essential service and can’t walk off the job entirely, but the last time the Ontario Public Service Employees Union went on strike, staffing levels in the corrections system were minimal and chaos was common.

    [...]

    The union will vote on its latest contract offer at the end of the month, but members are being told they should reject it.

    The union is furious with proposed cutbacks to sick time, which follow a report from the provincial auditor general that noted correctional officers used an average of 32.5 sick days in 2007, up 63 per cent from 2001.

    Almeida admitted there is likely some abuse of sick time, but he said in most cases the numbers aren’t being inflated and reflect the stressful, dangerous nature of the job.

    [...]

    A spokesman for Government Services Minister Ted McMeekin said paying for sick days in 2007 cost $20 million in overtime, and the government needs to save some of that money given the state of the economy.

Un-[expletive deleted]-believable. 32.5 sick days a year? That is appalling. I’ll give readers here a guess how many sick days Raphael Alexander took in 2008 since arriving to his private sector non-unionized job in B.C.:

Give up?

Zero.

You see it’s quite simple in my job. If I don’t go to work, I’m out my hourly salary for the day. So I don’t take sick days unless I’m actually, you know, sick. The only reason that public sector employees can get away with sick days representing roughly 10% of the total working days in the year is that the union has strong-armed the government into accepting it. If I missed 32 sicks days a year, or even something in the order of 12, I’d probably be let go for someone not quite so chronically ill.

The award for absolute selfishness, however, disregard for one’s city, and all who live in it, has to go to the Ottawa Transit Union:

    Ottawa transit workers have rejected the city’s offer nearly three-to-one, prolonging a strike that has kept buses off the roads in the nation’s capital for 30 days.

    “We knew our membership would support our recommendation,” said Jim Haddad, secretary-treasurer of the Amalgamated Transit Union Local 279, whose leaders advised 2,300 striking OC Transpo workers to reject the offer. “We’re ready to go back to the table. Hopefully, they’ll negotiate properly now with us instead of bargaining through the media.”

    [...]

    A $35,000 poll by Harris/Decima of 816 Ottawa residents recently found that 63% support the city in the strike, while 14 per cent support the union’s position.

But who cares what the people of Ottawa want, right? They only pay the taxes that pay the salaries of the bus drivers, and that doesn’t mean much anymore since nobody has been able to get to work on a bus since early December. The union recently turned down a generous offer of a 7.25 per cent wage increase over three years and a $2,500 productivity bonus. Why? Because they were angry at the city for taking out ads in the newspaper to appeal to the union members to vote for the latest proposal and end the hostage negotiation that has been the shutdown of Canada’s capital for nearly a month. The union wants people to understand that the union is in charge here, not the members, and certainly not the people of Ottawa.

There is a simple and inevitable end result to all of this. Total collapse. There is nothing sustainable about public sector unions and their wanton drive to bring their representatives to the highest and most generous paid positions in the economy at a time when the private sector taxpayers are struggling just to hang on. When the boom is lowered, and it will, there will thousands of whiny public sector employees on Employment Insurance and welfare, wondering why they allowed the union to negotiate them into insolvency. And then that will collapse inevitably, too. Welfare and E.I. will be unsustainable in the event of a public sector crash as governments are unable to afford the exorbitant demands of public sector unions when private citizen taxpayers start hitting the skids.

I, for one, welcome this collapse. We need total ruin before we can rebuild in a pragmatic, logical, fiscally responsible manner. It won’t be pretty, but it will be necessary. When the country is crushed under debt and spending like our southern neighbours, we’ll need to make massive cuts to Canadian socialist entitlements, and this in turn will lower our overall individual burden. We can return to a normal state of capitalistic enterprise and self-sustainability. Our pensions and health care and education and services may be lost, but in the end we will become more responsible for it. A new era is dawning, and we are witnessing the dusk of the socialist-capitalist hybrid that led to it.

 

[a_majoor]

How Republics die; how any human civilization dies:

http://www.tcsdaily.com/article.aspx?id=020609A

How Republics Die
Plato's Cautionary Tale
By Mark J. Boone : 06 Feb 2009

Plato

Insofar as an economic downturn has traceable causes, the present recession seems to have origins in the behavior of at least three groups of people: reckless lenders, who encouraged people to spend their money irresponsibly; reckless borrowers, who took their advice and spent well outside the limits of need and the ability to repay; and a government which at times encouraged such behavior through organizations such as Fannie Mae and Freddie Mac.

This is old news to the astute observer and the regular reader of TCS. What they may not know is how vividly, and how long ago, great philosophers warned us just how dangerously our society was using money. The great philosophers understood that economics operates on a moral plane, indeed a spiritual plane; that economic problems are often moral problems; and that financial markets are corrupted as much by bad behavior as by bad economic theory. The antiquity of their advice only serves to belie its strikingly acute contemporary relevance.

Read along from an excerpt of Plato's Republic (Book VIII, 550d-566), and see if any of it sounds familiar. It's the tragic tale of a declining republic, a tale of war, money, and politics all gone wrong through a combination of bad judgment and disordered cravings. We begin with moneylenders who have a nasty habit of lending money to people they know will use it irresponsibly, especially to youths whom they encourage to fritter it away on useless luxuries. They prefer that their money be wasted on frivolities; the more of it is wasted today, the more they can charge in interest tomorrow.

But their clients are just as bad, if not worse. By spending others' money on frivolities, they fail to take responsibility for themselves. A group of people recklessly spending other people's money soon becomes a leech on society: a class of those who have ruined themselves burning through borrowed money.

The class of bitter, bankrupt borrowers finds it has a friend—or what looks and talks like a friend—in a group of politicians who promises them honey, served in a silver bowl at the expense of the moneylenders who got them into trouble in the first place. Their alliance only lasts until one of the honey-tongued politicians stirs up the bankrupted class, whips them into a frenzied mob, and makes war against the wealthy class, seizing their money by force. This politician emerges as a tyrant, and the old republic has died.

Republic is a complex and profound morality tale in which we can see, if darkly, the reflection of our own republic. Its story is not exactly ours, but we have a lot in common with this once-beautiful city. Specifically, we have the same moneylenders and borrowers. The eeriest similarity to Plato's moneylenders is the agressive marketing of credit cards to college students. However, the reckless use of home loans on the part of both lender and borrower has proven more devastating.

We have been blessedly spared from the final stage of the societal destruction portrayed in Republic, wherein a redistribution of wealth proceeds by way of a violent coup to tyranny. The American republic is stable enough that for the foreseeable future we need not fear such madness.

But the same disease can also kill a republic slowly. Cicero, the great Roman statesman and philosopher who was also a great reader of Plato, warns that redistributing wealth by taking it from lenders and giving it to borrowers is among the worst things a leader can do because it wreaks havoc on a credit system (On Duties, Book II, chapters 83-85). This in turn can cripple an economy and lead to the same awful result: the death of the republic. Since credit is a function of the credibility a borrower has in the eyes of a lender, nothing can damage it more than if lenders expect to be repaid with their own taxes. While we can be grateful we haven't seen more of this, we should keep a hawk's eye on the new Congress for any signs of this sort of redistribution.

After all, we would only be deceiving ourselves if we thought that our republic by virtue of its size, technology, hefty GDP, or anything else is somehow immune to what destroyed other republics. Human nature destroyed ancient republics, and it could destroy ours.

 

[a_majoor]

While the article is about the US; the effectiveness of a "stimulous" package needs to be known and understood here since the Liberals AKA "the coalition" pressed for it and forced the minority government to create a deficit budget:

http://www.commentarymagazine.com/viewarticle.cfm/special-preview-stimulus--a-history-of-folly-14953

SPECIAL PREVIEW Stimulus: A History of Folly
James K. Glassman
March 2009

Before he was sworn in as President, Barack Obama began to lay out his plans for reviving an American economy that, it would later be discovered, had declined 3.8 percent in the fourth quarter of 2008, its worst performance in 26 years. About the first part of his project, “stimulating” businesses to invest and consumers to consume through government spending and tax remittances, he was forthcoming and enthusiastic. About the second, stabilizing the financial system, he wished to reserve judgment.

He anointed the stimulus proposal with a convenient and vivid metaphor. “We’re going to have to jump start this economy with my economic recovery plan,” he said on January 3. According to the image, one can jolt a dormant economy into action just as one can hook up polarized cables to a car battery, clamp a defibrillator to the chest, or breathe into the ear of a reluctant lover. Suddenly, the object of our attention will be back in action, aroused.

Alas, the questions raised by a proposed stimulus—whether to apply it, what sort it should be, how much it should cost, and when it should begin and end—are far trickier to answer than problems involving dead batteries. And, remarkably enough, history and economic research offer no conclusive answers. The recession that began in 2008 could turn out to be the worst slowdown since the Great Depression of the 1930’s. For three-quarters of a century, economists have been studying it diligently. And even now they cannot come to a definitive conclusion about the cause of that depression, the reasons for its severity and duration, or what cured it. In an introduction to a book of essays on the Great Depression he compiled in 2000, Ben S. Bernanke, then a Princeton professor and now chairman of the Federal Reserve Board, wrote, “Finding an explanation for the worldwide economic collapse of the 1930’s remains a fascinating intellectual challenge.”

Today, of course, the challenge is more than intellectual.

When he wrote in 1936 that “practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist,” John Maynard Keynes surely did not have himself in mind. But, in times of trouble, Americans still cling to Keynes, or at least to the caricature of him as the economist who said you could spend your way out of a recession. His big idea was that, left to its own devices, an economy can fall into a slump and just stay there. Self-corrective mechanisms will not necessarily work on their own; they will need help.

Prosperity depends on investment, on businesses building new plants, buying new machines, and employing more workers. In a typical case, when an economy slows, businesses reduce their demand for credit. At the same time, worried consumers save their earnings in banks, and by doing so, add to the store of money available for lending. These two forces—as well as actions taken by the Federal Reserve Board—combine to push interest rates to levels so attractive that businesses start borrowing again, and the economy picks up. The Great Depression, however, was atypical. The economy slowed and interest rates fell, but businesses were so frightened about the future that they refused to invest; instead, they did the opposite, shutting plants and firing workers. As for consumers, while they may have wanted to save, they lacked the cash to put away. Because they were out of work, they depleted what savings they had.

Keynes argued that, when businesses and people cannot or will not invest, then the government must take on the role of filling the gap. The key is speed. The means, Keynes wrote in The General Theory of Employment, Interest and Money, really did not matter so much:

If the Treasury were to fill old bottles with bank notes, bury them at suitable depths in disused coal mines which are then filled to the surface with town rubbish and leave it to private enterprise on well-tried principles of laissez-faire to dig the notes up again, . . . there need be no more unemployment and with the help of the repercussions, the real income of the community would probably become a good deal larger than it is.

Of course, Keynes favored large public-works projects over the burying of bottles. Building roads in the right places, for example, would both put people to work and provide the basis for more commerce. At first, Keynes emphasized government spending as stimulus, but, when pressed in 1933, he advocated tax cuts as well—specifically in response to criticism that public-works projects do not put cash into the system quickly enough.

The dire situation for which Keynes prescribed a cure bears distressing similarities to our own. Interest rates set by the Fed stand effectively at zero percent, but banks are recalcitrant about lending and even businesses flush with cash are hesitant to invest. It appears that the current sickness occurred because the Fed, in an effort to keep the economy stimulated after the collapse of the tech-stock bubble and in the wake of September 11, cut interest rates far too much during 2001 (from 6.5 percent at the start of the year to 1.75 percent at the end) and waited too long to raise them, making credit so easy that businesses expanded beyond all reasonable bounds, and banks, flush with cash and trying to make higher returns, shoveled money at borrowers with poor credit; risk aversion disappeared, and loans, especially to home buyers, went bad. Booms do, after all, create their own busts.

In response, Congress last year voted funds for the Treasury to use to shore up financial institutions—the widely maligned Troubled Asset Relief Program, or TARP—and the Fed opened wide its lending window. Those actions forestalled mass failures, but banks, chastened by their past overindulgence and worried about depleting their capital, still do not want to lend. So while government action proved necessary (and remains necessary) to maintain public confidence in the banking system, it became clear those actions could not and would not mitigate the parlous effects of the recession that, we were told late in 2008, had begun at the end of 2007. So the question becomes: In a world in which monetary adjustments do not appear effective, can tax and spending policies pull us out of the slump?

The track record is discouraging. Despite Franklin Roosevelt’s aggressive spending, unemployment reached 25 percent in 1933, fell only to 14 percent by 1937, and was back up to 19 percent in 1939.1 In the end, the New Deal did little or nothing to resuscitate the economy. Certainly, inept monetary policies helped prolong the Great Depression, as did tax increases, constant interventions in the conduct of business, and the erection of global trade barriers, beginning with the Smoot-Hawley Tariff in 1930, more than two years before Roosevelt took office. There was a stretch of twelve years from the stock-market crash to Pearl Harbor, and, during that time, fiscal stimulus simply did not jump-start the economy (or, in Keynes’s own metaphor, “awaken Sleeping Beauty”). Now, some do attempt to make the case that Roosevelt did not increase government spending enough during the early and mid-1930’s and that it took World War II and the unprecedented infusion of government dollars into the economy to provide the stimulus that finally pulled America from the swamp.

But even if that were true—and considering the fact that federal spending tripled during the Great Depression, rising from 3 percent of the country’s gross domestic product to nearly 10 percent in 1939,2 it does not seem the likeliest explanation—it still does not offer much in the way of guidance through our current thicket. Few economists today believe the United States could tolerate the kind of budget deficits that developed during World War II, which ran more than 50 percent of gross domestic product, or about $7 trillion annually in current terms. When the federal government ramped up its spending during the war, it had not yet grown into the entitlement cash machine it is now, spitting out trillions of dollars a year in retirement and health-care benefits.

Not only was the stimulative effect of Great Depression fiscal policy non-existent, but follow-on efforts during the ten subsequent recessions proved equally ineffective. As a result of that hard-won experience, the consensus until recently among economists was that attempts at stimulus through emergency fiscal policies—as opposed to monetary policies and the automatic effects of increases in unemployment assistance and decreases in tax payments—were useless at best. Typical was the statement of Martin Eichenbaum of Northwestern University in the American Economic Review in 1997: “There is now widespread agreement that countercyclical discretionary fiscal policy is neither desirable nor politically feasible.” Martin Feldstein, then president of the National Bureau of Economic Research, agreed. Fiscal stimulus, he said in 2002, “has not contributed to economic stability and may have actually been destabilizing.”

A good place to turn to understand the failure of the jump-start is the work of Frederic Bastiat, a French politician of the early 19th century. “In the economic sphere,” he wrote,

an act, a habit, an institution, a law produces not only one effect, but a series of effects. Of these effects, the first alone is immediate; it appears simultaneously with its cause; it is seen. The other effects emerge only subsequently; they are not seen; we are fortunate if we foresee them.

To prove his point, Bastiat described what happens when a vandal breaks a shopkeeper’s window. The seen effect is that repairing the glass creates economic value in the payment to the glazier, who then has money to buy a new suit or hire a part-time employee. What is unseen is that the shopkeeper has to pay the glazier with money that he would otherwise have used to buy a suit or add an employee. “The broken-window fallacy, under a hundred disguises, is the most persistent in the history of economics,” wrote the economic journalist Henry Hazlitt in 1946.

Like payments for broken windows, tax rebates and new roads (the seen) do not come free. The stimulus money that flows to taxpayers, government agencies, and businesses has to come from somewhere (the unseen). During a recession, it is usually borrowed, and the anticipation of taxpayers is that they will have to repay these loans, which means their taxes will rise in the future. This knowledge makes people anxious about spending the extra money, or even about investing it in the kind of ventures that help an economy grow.3

Lately, however, economists have become more sanguine about the power of fiscal stimulus, in large part because of the apparent success of the tax-rate reductions and rebates in 2001 and 2003 (although such a conclusion may ignore the monetary effects of the huge cut in interest rates). A summary of a conference held in May by the Federal Reserve Bank of San Francisco stated that “the consensus” against stimulus “has unraveled and perhaps even begun to emerge on the opposite viewpoint.” Last year, Jason Furman and Douglas Elmendorf of the Brookings Institution wrote, “Fiscal policy implemented promptly can provide a larger near-term impetus to economic policy than monetary policy can.” And, in a paper delivered to the American Economic Association in January, Feldstein himself switched sides and said he now favored tax cuts and government spending.

The views of these economists are undoubtedly heartfelt, but it must be recognized that one of the great attractions of Keynes’s theories is that he gives you permission to do what you wanted to do anyway. Feldstein, chairman of the Council of Economic Advisors under Ronald Reagan, proposes a stimulus policy that extends the Bush tax cuts currently scheduled to expire in 2011 and increases spending on defense and national intelligence. In their stimulus proposal, Furman, now deputy director of Obama’s National Economic Council, and Elmendorf, head of the Congressional Budget Office under the current Democratic majority, adamantly oppose extending the Bush cuts and instead want to extend unemployment and Food Stamp benefits and issue short-term tax credits, even to people who owe no taxes.

Also, in the new enthusiasm for stimulus, there is not a small degree of panic; monetary policy is not working, so fiscal policy must! To his credit, however, Feldstein writes toward the end of his January paper, “It is of course possible that the planned surge in government spending will fail. Two or three years from now we could be facing a level of unemployment that is higher than today and that shows no sign of coming down.”

The truth is that we have learned almost nothing about the use of fiscal stimulus since the Great Depression, and it is a fatal conceit to assume that we can hurriedly construct a fiscal policy that will produce the prescribed results today. Economists seem to admit this fact by advocating what they prefer anyway, for political or ideological reasons. I would feel better about stimulus if Elmendorf were clamoring for permanent tax cuts and Feldstein food stamps.

On being presented the Nobel Prize in economics in 1974, Friedrich von Hayek devoted his Stockholm lecture to acknowledging the severe limitations of his profession. “It seems to me,” he said, “that this failure of the economists to guide policy more successfully is closely connected with their propensity to imitate as closely as possible the procedures of the brilliantly successful physical sciences—an attempt which in our field may lead to outright error.” Government simply cannot know enough to direct an economy successfully, and when the President claims that his fiscal stimulus plan will create (or save) at least three million jobs, he is taking a wild, and dangerous, leap. Said Hayek:

If man is not to do more harm than good in his efforts to improve the social order, he will have to learn that in this, as in all other fields where essential complexity of an organized kind prevails, he cannot acquire the full knowledge which would make mastery of the events possible. He will therefore have to use what knowledge he can achieve, not to shape the results as the craftsman shapes his handiwork, but rather to cultivate a growth by providing the appropriate environment, in the manner in which the gardener does this for his plants.

What is that environment? First, it provides a confidence that, in a crisis, bank deposits are safe and insurance policies will be paid in full. Such confidence can be provided only by the government of the United States in its legitimate and essential role as the lender of last resort. Second, the environment supports, rather than denigrates or browbeats, productive members of society. The U.S. will not emerge from a serious recession unless businesses and investors lead it out. Third, it recognizes that Americans have undergone a financial calamity and that we need time to adjust; we cannot, like a car battery, be shocked back to life, and we aren’t in the mood to have someone blow in our ear.

In fact, stimulus may be precisely the wrong metaphor. Rather than getting jazzed up, we need to be calmed down and to take the time to learn from the Great Depression, a time when government did too much, not too little. Amity Shlaes makes the argument in The Forgotten Man, her book about the Great Depression, that the constant experimenting and meddling of the New Deal froze investors and business operators in fear: “Businesses decided to wait Roosevelt out, hold on to their cash, and invest in future years.”

Despite the warnings of Keynes, the experience of the past half-century indicates that today’s low interest rates will start having a positive effect, though it still will take many months. Meanwhile, left alone, what Hayek called “spontaneous order” will find its way forward. Using a different metaphor, James Grant, in his history of credit, Money of the Mind, wrote, “The cycle of decay and renewal is as much a part of capitalism as it is of the forest floor.” But, in the 1930’s, “something in the normal regenerative process was missing. There was no decisive recovery from the business-cycle bottom. People had lost their speculative courage, and the more government legislated and taxed, the more that credit sulked.”

Stimulus—that is, fiscal intervention with the express purpose of speeding up the normal regenerative process that Grant describes—is unnecessary and almost certainly harmful, a policy based on hubris and anxiety, rather than on history and good sense. Under such circumstances, the proper way to analyze discrete proposals today for spending or taxing is on their own merits, not on their supposed ability to stimulate something else. There may, in fact, be a good reason for government to spend billions of dollars today on building highways, and it has nothing to do with stimulus. It is that long-term interest rates are at historic lows and that the right highways can boost the economy in the long term. There also may be a good reason, again far apart from stimulus, for revising the tax code and reforming Social Security and Medicare. It is that Americans now understand that the economic future is not so assured as they believed a couple of years ago, and it is time for decisions to be made—in a manner careful, sensible, and unstimulated.

 

[a_majoor]

Build on this idea: Canada is the North American tax haven:

http://thecanadianrepublic.blogspot.com/2009/02/america-all-of-your-businesses-will-be_18.html

America: All Of Your Businesses Will Be Ours

Yes. Let's do this thing.

Captain Capitalism:

    First you have the corporate tax rate. Oh sure, not a big advantage, but a large enough advantage it behooves the question, why havn't American firms been fleeing north to set up corporate HQ's? I mean if they're going to endure constant negative media coverage, an ignorant villianization of their existence, why suffer a 39.5% tax rate when you can suffer a mere 33.5% tax rate. (interpolation: cut the subsidies to business and we eliminate $19 billion/year that can be used to further reduce the corporate tax rate).

    Oh, and did I mention they have nationalized health care? That may not seem like an advantage to us die hard capitalists, but for a corporation that would cut IMMEASURABLY MUCHO on their labor costs as they no longer have to pay health care insurance. So lower corporate taxes, plus savings of roughly 1/3 on labor, all the while still having the benefits of a modern, English speaking economy geographically close to their market. Please, somebody tell me why corporations haven't fled to Canada yet?

    Second, corruption. I opined earlier that the US' corruption index would collapse under all the corruption, sleaze and parasitic scum buckets ranging from everybody like big fish like Bernie Madoff to the millions of smaller scumbucket fish like the investment banking, blue blood, bulge bracket nepotist and cronyists who got their jobs because of daddy and not because of skill, but forget that. Even ignoring that likely collapse, Canada is already significantly less corrupt. 8.7 vs. a 7.2. Why deal with a bunch of criminals in institutions such as the government, corporations, your employer or your educational institution when you can have significantly less crime in the institutions of Canada? It's not like we're Somalia, but give it time.

    Third, government deficits as a % of GDP. Never mind that the OECD data I pulled for the US is already outdated as Obama just sign the "F#ck America over" bill which puts the real government deficit closer to 10% GDP. Let's just "hope" it stays at the previously OECD projected 5.2%. Whether it's 5.2% or 10%, it's a many-multiple of the insignificant .5% deficit the Canadians are racking up.

    Fourth, and what does the fiscal recklessness that causes deficits culminate into? Why the national debt.

    Yes, the national debt!

    "Sick and tired of having to pay for what you want to consume? Why then just borrow it from future generations by saddling (and screwing them over) with the national debt. All you have to do is vote for socialists who couldn't balance their check books as mommy and daddy paid for their philosophy degree in college, who inevitably ended up in politics, because, well, that's where true scum bags with no skill end up. Slavery isn't dead! It's just deferred! Vote for the national debt!" (interpolation: we Canadians are not out of the woods ourselves, the combined national debt and unfunded liabilities [pensions] is close to a trillion dollars. Provinces and municipalities would probably double that. We have lots of work ahead of us)

    Apparently the Canadians (and I know, this sounds crazy) don't hate their children nor their grandchildren. Apparently they seem to have this thing called "fiscal austerity" or "fiscal discipline." Because they've ran smaller deficits, they naturally have smaller debts. Their national debt is only 22% GDP while ours is 52% (oh, and yeah, that doesn't include the debt the genius "stimulus" package just saddled us with).

    So you can either forever serve in servitude to pay for the "Great Society" and social security and medicare (because that form of slavery is OK), or you can move and not be so indebted.

    Fifth (or as Dave Chappelle says, "fif") corroborating their fiscal austerity and their remarkable ability to maintain the simple 3rd grade level concept of spending within their means, it is not just the government that seems to balance the books, but the people in general. The current account deficit, though a deficit, is only 1.8% of GDP compared to the US' 4.4% (again, Obama, socialists, stimulus, not adjusted, more like 10% GDP, etc. etc., never mind). Yes, not a surplus, but 1.8% versus what in reality will be closer to 11% in the US, where would you rather be.

    And finally, six, that whole thing about "Canadians are taxed WAY more than the US!"

    Oh really?

    You see the ideal measure of the tax rate is government spending as a percent of GDP. In that revenues don't really matter since spending, not matter if you pay for it with borrowed money or current tax revenues has to be repaid with future taxes. I've mentioned this before, but for all practical purposes, the US and Canada have the same effective tax rates, both roughly 39%. At least in Canada you get "free" health care (and I know how weak that argument is, but just to goad the left).

Tell all your American friends.

Clearly, this will increase our productivity and attract American investors and skilled workers (bringing capital and skilled labour to Canada when we are running short). Increasing Canadian productivity will blunt the importation of American inflation, since inflation is too much money chasing too few goods (and with 82% of our exports going to America we will be importing inflation). All in all, a win/win scenario.

 

[Kirkhill]

Just got through reading this WSJ article:

"A Resolute Ally in the War on Terror Canadians are with us in Afghanistan. We should be with them on free trade"

A generally flattering piece.

A thought flitted.....

If the Yanks are going to be hard pressed for the time being, maybe now is the time for Canadians to send steel to India and have Indians build ships to ship raw materials to India where they can turn them into goods for the Canadian and Indian and international markets.

We have the resources.  They have the market that would supply the economies of scale.

Why not China? Because China has already established itself as a rising statist champion.....and I don't like that.

India has tried statism, decided that Laski got it all wrong, and that their wallah-culture (dhobi-wallahs, pani-wallahs.....) is more in tune with entrepreneurial capitalism.  Hence the success of micro-credit out there.

For the military oriented types around here, such an economic strategy would also put pressure on the need for a naval force to protect all that commerce.