Toro

Right. And Norway won't enter the EU because it doesn't to get poorer because it would have to share its oil wealth

Lots of social programs. Lots of press bans. Can't take flagpoles into Skydome. That sort of thing. Actually, Canada is a nanny state. Ontario is the only place I know that had an order on its liscence plate as its slogan. "Keep It Beautiful." Yah, or else...

A Nanny state, yes. A police state, no.

I don't think you can say that, even with the qualification. It is unfortunate that too many see the foreign price of our currency as the measure of our worth, as if economics were some sports game.If you are selling, you want a high price. If you are buying, you want a low price. It is best for all that it is the "right" price. No, its the opposite. A higher dollar means imports are cheaper, which leads to lower inflation. It is also usually accompanied by capital flows of foreigners buying domestic bonds, which lowers the interest rate.I wouldn't be so quick to say that either. It depends on why the currency is appreciating.If the Canadian dollar is now rising because of rising commodity prices (eg. oil), then this will be reflected in inflation. I think it's fair to say that this will have a negative impact on the economy of Central Canada and the Bank of Canada will be very, very cautious now in raising interest rates. (Another poster referred to this problem as the "Norwegian Disease".) <{POST_SNAPBACK}> That certainly hasn't been the case so far though. The CRB has doubled over the past five or so years and inflation is no where to be seen. Also, in the US economy, energy is only about 4-5% of the economic input now, compared to about 20% 30 years ago, so it has less of an influence.

Why do we want the government to lower energy costs? If you want the government to offset the effects, give people and corporations a tax cut. It has the same effect. Plus, if you're a Leftie Environmentalist, you want the price to go sky-high because it will mean less oil demand and will spur research in alternative energy sources. Oil is climbing. Its been going straight up the past two weeks. Its going to go higher. We may be reaching a near-term blow-off top, or we may be marching towards $80.

Because they are paying A LOT of money for this property. A LOT. I can't remember the terms of the deal, but it was something like 13-14x cash flow. The chatter in the investment community was that since Kinder was overpaying for the company, they must be convinced the price of energy is going to remain high.

About a decade ago, municipalities in Saskatchewan were selling acreages for $1 as long as you built on the property. What a bargain that would be today - and will continue to be as wheat prices rise over the next decade.

The answer to the question in the topic is "No."

Doesn't a higher dollar usually lead to higher interest rates & inflation? <{POST_SNAPBACK}> No, its the opposite. A higher dollar means imports are cheaper, which leads to lower inflation. It is also usually accompanied by capital flows of foreigners buying domestic bonds, which lowers the interest rate.

The structural deficits in Canada began under Trudeau, as did the rapid accumulation of debt. The last balanced budget, before Martin did it, was John Turner, in, I believe 1974. Mulroney inherited a bad situation, and didn't have the courage to tackle the issue, but every time they tried, one side of the political spectrum screamed and Mulroney's poll numbers dropped. Simply, the country wasn't ready yet. But Mulroney did balance the operating budget, i.e. excluding interest payments, in 1989 or 1990.

The loonie is going to hit $0.90 and maybe hit par. That probably is too strong, but I doubt it will lead to a recession. The trade-weighted value of the loonie is around $0.75-$0.80. It was when it hit $0.62 and it will be when it hit $0.95. A strong currency is indicative of a strong economy BTW, or at least when there are structural reasons for the appreciation.

I don't know if I agree with mirror or not - and I do have a degree in economics AND work in a field where we actually get to apply economics in good ol' real life. But I don't know if he's wrong either. I think we're in a bull market in commodities, and because Canada is a net exporter of commodities, rising commodity prices are good for Canada as it increases export earnings. Certainly, it takes a bigger chunk out of our pocketbooks and hurts manufacturing, especially the auto sector in Ontario. But on the other hand, its increasing our currency as the loonie heads to $0.90 or higher, which cheapens imports, no small feat for a country who derives 40% of its economy from trade, especially when 80% of our trade is with the country of which our currency is appreciating. That's good for consumers. What is also good is that it should mean lower interest rates as foreigners buy our bonds.

Yes, and oil going to $5. I still have that one!

I have insomnia. No, globalization has been occurring for centuries. The fact that it involves different factors of production is not really relevant. In fact, the time period 1850-1910 may have been even "more globalizing" than today. Currently, there are tremendous restrictions on the movement of labour. There were none a century ago. Pretty much anyone could come to Canada or America (while at various times, America did halt immigration altogether, only to rescind such restrictions later.) Tariffs may have been low in 1912 - and August is correct on tariffs being erected during the intra-war years - but that's not necessarily true throughout most of the latter half of the 1800s (which lead to agreements such as the Reciprocity Treaty between Canada and the US). Tariffs were once a primary source of government revenue. As for this idea that manufacturing is disappearing being bad, manufacturing "wiped out", or a better word is "replaced", agriculture as the primary source of economic growth in the 18th through 20th centuries. Manufacturing also replaced hand-drawn industries, which lead to riots in England and elsewhere - this is where the term "Luddites" comes from. That economy is now transitioning to a service/knowledge based economy. There is absolutely nothing inherantly good or bad about manufacturing. It just is. And its now being replaced by the service economy, which has been occurring for several decades. Finally, Mulroney had balanced the operational budget of the federal government in his second term, i.e. before interest payments. Its awfully hard to argue that the structural fiscal problems of the 1980s weren't caused by what occurred in the 1970s.

That is misleading and even wrong.The lesson of the 1960s and 1970s is that government deficits cannot be financed by printing new money. Starting in 1979, central banks began to refuse to accommodate governments. Initially, this drove up interest rates causing numerous other problems in the 1980s. But the long run payoff has been ongoing economic growth since the 1990s. General inflation no longer creates noise confusing changes in relative prices, as was the case in the 1970s. That's what I was trying to convey. Its interesting to note, however, that the monetary aggregates were accelerating at a 21% pace in 2001-2002, which I believe is the highest we've ever seen, and we haven't seen inflation, or at least price inflation in the CPI or PPI. Some argue that is because of heurisitic adjustments within the indicator, and I would argue you are seeing asset inflation.

As have all governments. I am not sure where you get this information from. I read the article and didn't see anything other than a personal interview with Norwood. There was a study by an economist at one of the Ohio Universities - I think it was Ohio State, but I'm not sure - a decade or so ago who looked at the differences in statistical methodologies between Canada and the US and came to the conclusion that the difference was about 0.8%. Anecdotally, as someone who works and has hired people in the US, as well as having worked in both Canada and England, I will tell you that the unemployment rate being similar is simply not true. My agency has had problems in the past finding qualified people, and I mean people right out of school. That's changed a bit the past few years, but in the late 1990s, we had jobs for college graduates going vacant. I never saw that in Canada. Actually, ironically, the largest debts in US history were under Reagan in the 80s. It’s ironic because nobody spent more time pushing a balanced budget amendment and nobody had bigger deficits. But you are right that the current administration in all practical ways has larger deficits. Right. I meant to say "government spending." Reagan's tax cuts were the main reason for the deficits, and I wouldn't disagree with you. I have a hard time believing that Reagan and Mulroney "destroyed" the economies when I look at how the anglo-american world is doing compared to the franco-german model. Real growth under Reagan and Mulroney was in the 3% range. I didn't say there were no recessions between 1945 and 1970 because there were. There was one in 1954-1955, at least one more in the late 1960s and one I believe in 1950 or 1951. My point though is that pent-up aggregate demand from the intra-war years drove the economy over the next few decades.

If you live on a credit card, you can live well, which is what happened in the 1970s. The card was being paid off in the 1980s and 1990s. (The US has begun ramping up the card the past few years.) Since you are insisting in drawing political boundaries here, it is the Left that failed to realize the effects of spending like a drunken sailor in the 1970s, and it is why either those countries that are still reliant on big government spending, i.e. France, Japan have sclerotic economies, while those that have not, i.e. the US, the UK, and to a lesser extent, Canada and Australia, have done better. If government spending was the driving force of the economy, then Germany, France and Japan would have done better the past 25 years than the UK or the US. They have not. Full-stop. To somehow demark 1980 as the time of "globalization" and lowering of taxes as the reason for slower growth is false. The world had been "globalizing economically for the past 300 years. The difference in globalizations over decades is merely the rate. Not only that, but there was enormous globalization during the post-war period to 1980s. Tariffs averaged around 40% after WWII. Through the GATT, they had fallen to around 10% by 1980 and now are around 5%. Not only that, but you had enormous technological advancements in commercial aerospace and telecommunications that shrunk the world.

And its interesting to understand why that happened. The period from 1945 to around 1965-1970 was a recoiling from the depression and the world war. After 16 years of depression and war, there was enormous pent-up consumer demand. This is not unusual. The same thing happened from 1920 to 1929, when, after WWI and a recession in 1919, the economy boomed. Then, in the 1970s, growth was fueled by government spending, which lead to indebtedness. Of course, as everyone knows, you can live like a king if you have enough credit until the bills come due. (And I would include the last five years as living beyond our means.) This lead to high inflation and high interest rates, which stopped growth in its tracks and lead to a the worst recession since the depression. But breaking the back of inflation eventually lead to the prosperity of the 1990s, of which, BTW, Slick Willie deserves as much credit as Reagan/Bush. What you really should be comparing, however, isn't so much time periods but similar national economies while understanding the differences between the structures of the economies. Looking at previous time periods is, of course, instructive, but economies work through long cycles. Its valid to compare time periods, but we must understand underlying global trends during different time periods. The example of pent-up consumer demand is one example. Another is that the economy currently is being partially driven by an asset boom - i.e. housing - which is due in part to excess liquidity in the global financial system, which is a lot different than looking at 1980-1984 when the fed funds rate hit 16%. If you want to compare political economies, its more appropriate to look at how similar economies during the same time period. How did France, Japan, Germany, Canada, the US, Italy, etc. all do from 1980-2005 for example. I once owned a book published in 1981 or 1982 with many articles written by British economists entitled "The British Disease." It explored the reasons why Britain grew slower than the US and continental Europe. It would come in handy now if I still had it. But I will address this at another time as I have promised to play with my son before bedtime. Thank you. Yes, I am aware of Sen.

Well, here's the evidence in the world. Its below. No its not. Its a publication from the Minneapolis Federal Reserve Bank by a Nobel Prize winner in economics. Here is his biography. http://wpcarey.asu.edu/directory/stafffacu...47709&from=dept Here is the Fed link http://minneapolisfed.org/research/prescot...LaborSupply.pdf And here's the link to the paper he if you want to read it http://minneapolisfed.org/research/QR/QR2811.pdf Of course there are other factors to growth, because, obviously, there are. But the question can also be posed that if taxes were lower, what would the rate of growth be? Well, that's a specious example because Britain had been bombed to smithereens, and people will react differently during war, or in the aftermath of war. A better example is what happened to the UK in the 1970s when the country was bailed out by the IMF and what happened to Britain under Thatcher. Now, of course, the structure of the British economy was different during the time of "The British Disease" and post-1980 as Thatcher reformed the country in other areas besides the tax system. But certainly, the tax system played a role. I don't agree. De facto confiscatory tax regimes existed under communism, and we know how that turned out. But Americans are more productive than Europeans, at least since the early 1980s. You can find the productivity numbers here. http://www.oecd.org/topicstatsportal/0,264...0.html#30453948 (I'd quote the exact numbers but I'm getting a new computer up and don't have excel running yet.) And if anyone wants to check out levels of GDP, and extrapolate growth rates, they are here. And once again, America is ahead. http://www.oecd.org/topicstatsportal/0,264...1_1_1_1,00.html

I think its pretty simple. And rational. There are nuclear powers to the east of Iran - China, India and Pakistan, a nuclear power to the north of Iran - Russia, and nuclear powers to the west of Iran - the US in Iraq and Israel.

Thanks August. I didn't really feel like digging.

But how do you know? But even if no one did take the time, that's different from saying that there are no studies saying lower taxes mean higher growth. There are, in fact, many that do.

First, who is Ayrton Sen? I did a Google search and couldn't find anything. I know who Ayrton Senna is, but I've never heard of Ayrton Sen. If you could supply a link, or at least a reference, I'll take a look at it. Second, let me get this straight. You are saying that in the entire discipline of economics - where there are tens of thousands of papers published - there are NO studies concluding that lower taxes have no effect on growth? In fact, you are telling me that higher taxes are more likely to lead to growth? Are you sure?

Are you joking?

In most cases, the right does have economics on their side.