Sunday, November 18, 2012 | Categories: Episodes
The economy: Europe has gone into recession, the U.S. is facing a fiscal cliff, and growth in China is now slowing. What does it all mean for Canada?
The finance minister has reduced his expectations ...what about you? Are you tightening your belt? Can Canada avoid this economic slump?
With host Rex Murphy, Sunday on Cross Country Checkup.
Watch replay of the live chat.
Fixing the world's economies is an astonishingly simple chore to which there are two simple rules: tax wealth and regulate the free market. To anyone who's paying attention, it's clear that wealth is being hoarded by the few, untaxed and moved offshore unimpeded (and often illegally). It's equally clear that free markets are anathema to an orderly and civilized society and must be regulated. Milton Friedman's laissez-faire experiment has been a destructive failure. Unfortunately, plutocrats who still believe in it, perhaps disingenuously so, have taken control of governments and economies and will not relinquish control willingly. They even control the conversation. As long as they do, we'll be mired in economic turmoil and the 99 per cent will continue to suffer.
Victoria, British Columbia
Canada is one of the richest resource countries in the world and hard work by our parents and grandparents has made us a wealthy country. The last forty years we have been going in the wrong direction. Health care and education alone is enough to bankrupt Canada. If Canada is going to compete on the world market we can not pay these workers who do not produce anything over $100,000 a year or $100 an hour. Canada can not compete in a trade war with China. Canada will have to do almost what the Chinese want, so the Nexen deal will go ahead and this will be bad for Canada.
Mirimichi, New Brunswick
Merely talking about expectations can affect the economy. If car manufacturers expect to sell fewer cars in the coming year, and as a result reduce production by laying off some workers, ordering fewer parts, reducing loans, that contributes to a contraction of the economy. Reduced expectations of homes sales will induce fewer homes to be built. Forecasting reduced economic activity will make it self-fulfilling, as the subjects of the forecast react to the forecast.
Victoria, British Columbia
We need to stop worrying about what China does and focus on jobs and locally-based industry. The more we buy abroad, the more we ship our jobs abroad. We need a government that focuses on us in Canada and stops pandering to globalization. Its killing every country in the free world. They ship in jobs and ship out the money. Wake up!
Vancouver, British Columbia
The economy? How about its motor: the monetary system? How is money created? Money and capacity to produce - do they balance? Is it money available that commands the capacity of production, or is it the capacity to produce that commands the money available? Can x=x+y, or can money created be equal to money to be refunded plus interest? Are national debts refundable? Who do we owe it to?
Barry's Bay, Ontario
For several decades we've been living far beyond our means. Most of us grew up with one bathroom. Now people seem to need at least two, even though families are smaller. People want luxuries formerly considered the province of the very wealthy, and they're apparently willing to hock their future prosperity to get them now. A recent PBS documentary called Affluenza nailed it when it pointed out the factors that actually make people happy: being in nature, being with friends and being creative. None of these things need cost a bean.
Victoria, British Columbia
Given the Canadian economy and Canadian dollar is strong, would it be a good idea to promote the Canadian Dollar as a global reserve currency?
New Westminster, British Columbia
Here in Southwestern Manitoba, around Virden, we are in a time of growth and expansion because of oil. Pump jacks dot the countryside here and they are in fields everywhere you drive. People are moving into the area to work on the rigs as well as in the supply and service industry that surrounds this, including construction, road building and housing. But the oil patch wages make it very difficult for other employers to afford the wages people expect. Plus, more staff is needed for restaurants, stores etc. No matter how much business a restaurant does, the overhead doesn't change and wages are still low.
We have had oil here for 50 years, and with new methods such as horizontal drilling and fracking, it shows new and continued growth.
We are perceiving that this is the time for this town of about 4,000 people to grow and develop critical mass and a balance of service industries so it can become self sustaining.
The cost of improving infrastructure such as streets and sewer treatment is almost beyond the town's ability to keep up with, even in an oil boom area. In this town and area we see a wide spread of people's financial positions, with new oil money, some prosperous farmers and business owners, the professional wage earners down to blue collar wage earners and single parents trying to make it. There is a sense of wealth, but it is not a reality for everyone here. And yet the trend here is to have stuff like a cottage, boat, skidoo and holidays. Personally, we are struggling to keep our spending within our means.
What we have is the result of trickle-down economics. What is needed is a pump to provide cash to the lowest on the economic ladder. May I suggest that we revisit the idea of switching from income tax on earned income to a much higher tax on retained income? That is, any income that is donated or used to hire and attributable to another SIN number is no longer the recipient of the original earner. Tax rate would be in the order of 50% to 95% on retained earnings. An allowable tax-free allowance of $20 to $30 K and no limitation on tax-free service spending, would see the circulation of currancy like that of the best economic times of the 1950s and '60s. To elaborate further would be, to use a RexMurphyism, pedantic.
Maple Ridge, British Columbia
The first principle all adults should learn is to live within one's means. The vast majority of families have never heard of a budget. Once a realistic budget is prepared, then one is able to compare that outflow of funds with the amount of funds coming into the household within the same timeframe.
Our economy is very dependent on consumer spending which in many cases involves wasteful expenditures on vacations to other countries, new automobiles with payments at zero per cent interest spread over seven years, and the latest in electronic gadgets.
The main problem is that everyone wants everything now (no waiting!) and they borrow to satisfy their desires.
Halifax, Nova Scotia
According to a Centre for Economic Policy Research graph, there is only a small dip in 2012 and it is mainly due to the economic crisis in Spain and Greece. Most of Europe is booming.
Kimberley, British Columbia
We basically are spending more than we can afford, as a country, as a province, as a municipality and most households. Most folks in this country seem to not understand the cost of spending money that one does not have. This could be partially offset by a mandatory high school course on credit and personal finance.
If a fiscal unit (household, company or level of government) is spending more than they receive, they are digging a hole. The more they do this, the deeper the hole. Then, when things go awry, it is very difficult to get out of this hole. As my father told me when I asked if I could get a new bicycle, he said yes. I excitedly asked when, and he replied, "When you have saved the money to pay for it." His measure of affordability was you can afford it when you have saved the money to pay for it.
Our world functions on supply and demand. If demand exceeds supply, prices rise. If supply exceeds demand, prices fall. We all seem to think that we deserve an annual raise in order to get ahead. This is our biggest fallacy. We only deserve a raise when we have increased our output.
Good job and thanks for having an interesting program!
North Sydney, Nova Scotia
I have some credit card debt that I am paying down. Because of this the credit card company has been steadily trying to reward me by giving me more credit. They have done this by phone and mail. I am very annoyed and wish the government would regulate interest levels and prohibit the credit card companies from tantalizing debtors to take on more credit. I can imagine what it would be like for a family before Christmas to receive these solicitations. Even though I have emphatically turned these solicitors away they persevere. In short, the better you maintain your debt, the more you are enticed by your bank to go further into debt.
West Vancouver, British Columbia
My partner and I both have well-paying jobs with very good coverage and we have no debt but our mortgage. We have been tracking all output of money for the past six years and the cost of everything is going up. We have recently had a child and are trying our best to plan for his and our future and I feel as though even with our current heathy incomes I can not relax, and it boggle my mind how others (who make much less then we do) live the way they do. I am very worried for my freinds and family.
I dont know how to make my money grow without risking too much. All I can do is save as much as possible, prepare for the worst and hope for the best. Also, I think the low interest rates are encouraging people take on more debt then they can handle.
What is the objective of your show today? On one hand, you have the people saying the situation is dire for many, most are just getting by and they are looking to debt as a solution to get by. Then the finance minister for Oz come on and says it's all good and our economy is doing great compared to the rest of the world. Where is the disconnect?
the government serving the people, or are the people serving the government? The solution to all of this is for the citizens to begin dragging their elected representatives into town hall meetings and demanding that they begin to account on all matters to the citizens for the privilege they have to serve us.
Burnaby, British Columbia
The only reason Canada's economy is doing better than others is because of the banking and financial regulations set up by the Liberal government of Chretian/Martin in the 1990s. Harper and Flaherty should not be taking any credit for this. We'd be in much better shape without the Conservatives who trashed our surplus even before the recession. Thank goodness that Harper wasn't prime minister in the '90s as he wanted to deregulate the banks just like the U.S.A. was doing. Canada would be like Greece if he'd had is way.
The government introduced a stimulus program under threat of a Conservative defeat in 2009. That program was beneficial to stave off economic stagnation. However, now austerity programs here and elsewhere have a similar multiplier effect in the opposite direction. We have the largest trade defecit in history, but trade treaties will pay off long after the Conservatives are gone. As long as the government just says "We're okay," focuses on defecit reduction alone and relies on trickle-down economics, we will still have unrest and unemployment, especially among youth.
People are our greatest resource in a terribly rich country. There is much more that our government can do to stimulate the economy by focussing on people and concrete programs, like badly needed infrastructure development.
Nanoose Bay, British Columbia
I have not heard anything about the expectations of the average Canadian rising. It is no longer food, housing, heat and clothing. It includes, at the very least, cable or satellite TV, a cell phone and high speed access to the internet. Hundreds of dollars every month leaves household accounts to Rogers and Bell. Daily trips for coffee add up like crazy, too.
I have heard many references to higher education being expensive and not necessarily practical. There are a whole lot more benefits to society than better paying jobs. An educated public is a better public.
As a single mom, a real one with no contact with dad at all, I never had a cell phone or paid for TV access and I only go to Tim's on holidays and put the thousands saved into his education fun. My son was really annoyed when he was younger. As a third-year student at UBC (no universities where I live), he will graduate debt free and boy is he grateful. (Also, he loved your recent talks in Vancouver Rex, and even skipped his first class to see the one you held during the day.)
Port Rupert, British Columbia