Segacs's World I Know

Posts Tagged ‘economy’

That’s the theory behind this site: We are the 1 percent. It contains manifestos of a bunch of people who claim to be part of the American super-rich, but who feel that it’s unfair that they aren’t taxed their fair share.

Now, admittedly, this concept might be better if more of the people in the blog’s photos actually said what they were doing to help the 99%, besides writing statements on paper. But the spirit ain’t bad.

The Occupy Wall Street movement has its share of problems, namely, the lack of any coherent demands, the lack of focus, and the general sense of a movement with lots of gripes but few answers. But they’re not wrong to point out the negative consequences of large income disparity in the US. And while the income gap isn’t nearly as dramatic in Canada, there’s a strong sense that we’re moving in that direction.

The fact is, while these people claim to be in the so-called 1% of Americans, and most of us aren’t, we’re pretty much ALL of us part of the luckiest 0.00001% in the world – we hit the mother of all jackpots just by being born here in Canada, having enough food to eat, a roof over our heads, security and safety and education and healthcare and the chance to grow to be an adult. It’s worth it for all of us to think about how we can do more to give something back.

(Not for nothing, but this goes back to my long-standing call for Quebec to raise university tuition for those who can afford it and increase bursaries and financial aid for those who can’t. More access to opportunity benefits everyone. Just sayin’.)

As the eyes of the world have been on our American neighbours and their efforts to make a deal childish grandstanding and petty squabbling to avert a default on the national debt, it’s understandable that many of us Canadians have been feeling pretty smug. After all, we may have problems, but not problems to the tune of nearly $15 trillion dollars… right?

Well, sort of right. We’re a smaller country with a smaller economy, so of course the total number is proportionally smaller as well. But what you may not know is that Canada’s public debt has been steadily rising over the past five years, and now sits at an all-time high of $564 billion dollars. That’s nearly $17,000 per Canadian – which, granted, is much lower than the $46,000 per American that our neighbours to the south are on the hook for. Still, that’s 17 grand for every man, woman and child in Canada, and I suspect that if you were asked to pull our your chequebook, you might balk at coming up with that amount.

This happened on Stephen Harper’s watch – the same Stephen Harper who got elected on a fiction of being good for the economy. As you can see by the chart below, the previous Liberal governments had balanced the budget and were steadily lowering the public debt each year… but the Conservative government since 2006-07 has increased it to its all-time high levels and is continuing to spend:

Sure, you might argue, the Liberal government years were years of relative economic prosperity in the world, while the Tory government has been navigating Canada through a global recession. But how, exactly, does building more federal prisons, buying military fighter jets, and pouring money into the Harper government’s promotional campaigns constitute responsible spending during recessionary times?

What’s happening in the US ought to serve as a cautionary tale for us Canadians on how debt can spiral out of control and severely weaken our economy when irresponsible politicians are at the helm. Of course, liberals and conservatives (and NDPers) will never agree on where to spend and what to cut. But anyone who voted conservative because they believe that Harper is good  economy needs a bit of a reality check. As the Tory government has shown time and time again, a balanced budget is not a priority for them. And Canadians will be paying the price… to the tune of almost $17 grand apiece – and rising.

A new BMO report suggests that on average, Canadians pay about 20% more for the same goods and services as our American neighbours do — even though the loonie is above par:

BMO’s survey compared 11 items, including golf balls, Blu-ray movies, running shoes and cars.

There is no denying Canada is smaller and that means less competition, which in turn means higher prices.

But Michael Mulvey, marketing professor at the University of Ottawa’s Telfer School of Management, also noted some of the biggest difference in prices between the U.S. and Canada are in the areas where there isn’t free trade, such as telecomunications.

I’ve ranted about the higher telecommunications prices before. Those are due to price-fixing by the corrupt CRTC — something not mentioned in this study.

But for consumer goods where actual competition exists, how do we explain the price gap?

Taxes, for one thing. The study is comparing pre-tax prices, so you might think that’s not a factor. But there are taxes all the way down the chain of distribution, not just at the end-consumer point. That 15% you pay in combined GST and QST is merely the tip of the iceberg. The higher taxes down the line help pay for our essential social programs, like medicare, but they do make things more expensive.

Another factor that is mentioned by the study is the size of the country, and the fact that distribution and shipping is more expensive when you have a sparser population in a less concentrated area. This helps explain why prices would be more in, say, Yellowknife. It doesn’t explain why something retails in downtown Toronto for 20% more than it does across the border in Buffalo, NY.

The rapid rise of the dollar is another factor. When the Canadian dollar was worth 60 cents US, we understood the price gap. Now that it’s above par, it’s frustrating to see this gap. But the price adjustment period takes longer to catch up than the loonie takes to rise in the first place. The gap is closing somewhat — just more slowly than we might like.

But the main reason is merely supply and demand. In a market economy, prices are less about what something costs to produce and more about what the market will bear. We pay more because we pay more because we pay more. It’s circular. If people stopped buying things that were too expensive, the prices on them would drop. They would have to.

Lots of people would like to complain, protest or mobilize to correct this. What they don’t understand is that these prices aren’t being fixed by the government, and the economy cannot – and should not – be centrally managed in order to make people happy.

We do have choices. We can drive down to Burlington or Plattsburgh, shop in lower US dollars, and come back across the border — and pay duty (or not, as every good Canadian knows the tricks of how to avoid that at some point. Not that I’m endorsing that, mind you.) We can order online and pay the extra shipping charges, though the vast majority of US online retailers won’t ship to Canada, frustratingly enough.

Finally, a little perspective: Prices are higher in Canada than they are in the USA, but they’re lower here than they are in a lot of other places in the world, including South America, most of Europe, some places in Asia, or Australia. We constantly compare to the Americans because we’re so close; it’s hard not to get jealous and feel like the outsider with our face pressed to the glass when we get American ads on TV, radio or digital media splashing prices around that are inaccessible to us. But if you saw what people were paying elsewhere for the same items, you might appreciate our prices a bit more.

High-ho, high-ho, it’s election time again in Canada. And it sure does feel an awful lot like 2008:

• 4 out of 5 of the party leaders are unchanged. Only Iggy is new this time around, though his post-election political days are probably as numbered as Stephane Dion’s were.
• The party positions and platforms are largely unchanged since 2008 as well, at least on the big issues.
• Elizabeth May is once again angry about being excluded from the debates – and, like last time, I predict she’ll probably get her way.
• Jack Layton is still sporting his used car salesman ’stache.
• The Tories are once again sitting in comfortable minority-government territory, at once unlikely to lose and unlikely to form a majority.

So remind me again why we’re going to all this expense and trouble?

I would love to see the Tories get the boot. Between the long-form census debacle, the convenient-for-Harper prorogation of Parliament, corruption scandals, arts funding cuts, attacking women’s right to choose,  social engineering in the guise of economic policy that punishes anything other than the “traditional” family values, and Harper’s megalomania, the reasons abound. I simply cannot believe I live in a country where we keep electing this party.

Unfortunately, the only hope for replacing the Tories, the Liberal Party of Canada, is still in shambles. Ignatieff’s personal popularity is fairly low (no doubt made worse by those horrible Tory attack ads), the vote-splitting on the left bolsters the NDP and Greens at the Liberals’ expense, and the Bloc is standing at nearly 50% popularity here in La Belle Province.

My vote, which I have no problem saying will be for the Liberals, is a wasted vote, since I live in Gilles Duceppe’s riding and unless he gets morphed into an alien and starts singing Vegas showtunes in the shower, he’s going to run away with it here. But I will still trudge out and cast my ballot – on my birthday, no less – even though I know it won’t do any good at all.

No, I’m not a huge fan of Michael Ignatieff. I liked Stephane Dion a lot better, even though he failed to rally widespread support. But I’d much rather have a party in power that I agree with ideologically on most points, as opposed to one that I believe is steadily taking the country in the wrong direction.

The CBC has launched a short but fairly accurate online tool to help you gauge your political positions vis-a-vis the major parties. Check it out. And make sure you vote, because if we’re paying for this pointless election anyway, you might as well get your voice heard.

(Even if I do sometimes wish I could vote for the onion ring.)

A coworker, on hearing the recommendation of the Senate Finance Committee to finally, finally get rid of the penny: “We have a Senate that actually does something?”

Cheque’s in the mail? Not after 2018 in the UK, it seems:

Cheques will disappear within eight years after the Payments Council decided today to abolish the 350-year-old payment method by October 2018.

[. . . ]

The decision will save banks hundreds of millions of pounds a year, as each cheque costs banks about £1 to process – that is four times more expensive than electronic payments.

So far, no sign that Canada plans to follow suit. But it wouldn’t surprise me too much. Just to give you an idea of how often I actually write cheques, mine are so old that they still have my previous address… from two moves ago.

Friday, the loonie closed at a 12-year high of over 81 cents. Might be a good time for a cross-border shopping trip…

The Jerusalem Post has an interesting interview with Benjamin Netanyahu, currently Israel’s Finance Minister, about his plan to reverse the disastrous trends in the Israeli economy.

Israel with a right-wing economic policy, focusing on lowering taxes, paying down the deficit, and privatization and decentralization? This should be interesting indeed.

Something strange happened today: the price of a litre of gas dropped below the value of the Canadian dollar.

For the first time in I can’t remember how long, the Canadian dollar rose above the $0.70 US mark. At the same time, a litre of gas dropped below the $0.70 Cdn mark to 69.9 at the corner gas station near my house.

Looks like a good time for a road trip to the States!