Each Canadian Worth $137,000 on Average

[August1991]

Canada's national net worth reached $4.5 trillion by the end of 2005, or roughly $137,300 per person, Statistics Canada said Friday.

The country's net worth grew by 1.4 per cent, or $60.4 billion, over the last three months of 2005, up sharply from 0.7 per cent in the third quarter, when growth was constrained by an increase in net foreign debt.

The national net worth is the total of the non-financial assets, such as produced assets, land surrounding structures and agricultural land, less foreign-held debt.

CBC

Government debt is excluded from this statistic, as it should be. IOW, when the government borrows (runs a deficit) or pays back debt (runs a surplus), Canadians' wealth is unaffected. Well, not quite. If the federal government cuts taxes (and doesn't raise its purchases), then more Canadians would likely be able to afford a house - and net worth would increase.

Similarly, if the government kept taxes lower, and ran a deficit, more Canadians would be able to afford a university education.

Which raises another point. This $137,000 net worth does not include human capital. Most Canadians are rich because of their knowledge, skills and talents.

----

Canada's Left and Right have both made "balanced-budgets" a litmus test of fiscal competency. It shouldn't be. We should measure our governments by how they spend our money.

For example, this is a good start:

The Harper government is scrapping funding for the Council for Canadian Unity, effectively shutting down the Montreal-based agency founded to promote federalism.

..

The council has regional offices in Moncton, Quebec City, Toronto, Calgary and Vancouver. Eighty per cent of its $16-million annual operating budget came from Ottawa.

Montreal Gazette

$13 million down, several billion to go.

[stignasty]

For example, this is a good start:

The Harper government is scrapping funding for the Council for Canadian Unity, effectively shutting down the Montreal-based agency founded to promote federalism.

..

The council has regional offices in Moncton, Quebec City, Toronto, Calgary and Vancouver. Eighty per cent of its $16-million annual operating budget came from Ottawa.

Montreal Gazette

$13 million down, several billion to go.

Say goodbye to:

Encounters with Canada

Encounters with Canada gives 14 to 17-year-old high schoolers an opportunity to spend time in Canada's capital, living in surroundings that encourage friendship and the sharing of experiences with others from every part of Canada; it is an environment in which they get a better grasp of Canada's diversity.

Every week, during the school year, about 130 high school students are brought to Ottawa from across Canada. The first part of the week stresses Canadian institutions. Participants tour the National Capital Region and visit such places as the House of Commons, the Senate, and the Supreme Court of Canada. Later in the week, the focus shifts to one of eleven areas of activity that include arts and culture; science and technology; and Canada and the world. These young people, from more than 2,000 high schools, meet with experts from the field under study. The focal point for this unique experience is the Council's Terry Fox Canadian Youth Centre, located in the heart of a residential neighbourhood.

After acquiring the site in 1980, the Council renovated it, building dormitories and a cafeteria. There are six meeting rooms, recreation areas and an "internet café" where participants can go on line and exchange e-mails. Sports and games are played on the centre's spacious grounds. It is in this setting that young people form new friendships - that often become lasting - with other young people from across the land.

Encounters with Canada vividly illustrates the spirit of volunteerism that underlies Council activities. Hundreds of guest speakers and resource persons donate time and expertise to the program, while more than 100 teachers from across Canada supervise the young people. In each province and territory, volunteers recruit young participants.

Through an agreement between the Council and the Government of Canada, Canadian Heritage subsidizes participants' travel costs. The Council can ensure that a proportional cross section of students from high schools in every part of Canada take part in the program.

There is a registration fee. However, subsidies from some provincial governments and private sector support ensure that Encounters is accessible to young people from all economic backgrounds.

Summer Work-Student Exchange

Summer Work - Student Exchange allows teens from French and English-speaking federal ridings to experience the Canadian reality first hand. Young people trade places, staying with the families of their exchange counterparts, working in jobs provided by local non-profit organizations and participating fully in the daily life of their adopted communities. They improve their second-language skills while getting practical work experience and exposure to another part of Canada.

This program of the Council and participating Members of Parliament is supported by MPs from all parties in the Commons. Originally, it was started by MPs. As demand grew, MPs turned to the Council, with its demonstrated expertise in organizing exchanges, to administer it. When the Council began running it in 1998, 353 young people took part. The number doubled the following year and grew to 800 during the summer of 2000. At present, about 40 per cent of Canada's 301 ridings take part in the exchange. Summer-Work - Student Exchange also provides employment for more than 100 university students who serve as program coordinators from April to the end of August. They recruit employers, organize activities and supervise participants.

Volunteers at the local level ensure that young people derive maximum benefit from their summer.

Experience Canada

Experience Canada is a program that builds bridges between young people from Canada and abroad. It helps them develop leadership qualities, and increase their understanding of the challenges of globalization. It provides them with an opportunity to know Canada — its institutions and values — better.

For three weeks, along with other young Canadians and young people from 15 nations, you will take part in a unique program of personal development that includes: learning about the challenges of globalization; athletic and cultural activities; visits and excursions; and much more … Experience Canada in a special way. You can live a once-in-a-lifetime adventure by qualifying for a bursary that will cover all living and travel costs.

Experience Canada marries theory and practice through:

* Presentations on advanced technology and visits to high-tech companies;

* Discussions on environmental protection and wilderness excursions;

* Challenges arising from cultural diversity and a visit to Quebec and Niagara Falls.

* Meetings with opinion leaders.

http://www.ccu-cuc.ca/en_html/program.html

[August1991]

...

Every week, during the school year, about 130 high school students are brought to Ottawa from across Canada....

That means about 5000 high school students each year get a free trip to Ottawa on the taxpayer's dime.

As a very rough guess, there several hundred thousand high school students in Canada. Is it fair that 5000 get to go and not all? Should the federal government be involved in this?

Canadian high schools organize all kinds of school trips, and that's who should be organizing trips to Ottawa.

This program of the Council and participating Members of Parliament is supported by MPs from all parties in the Commons. Originally, it was started by MPs.

Participating Members of Parliament? OMG. I know what that means....

[Renegade]

Government debt is excluded from this statistic, as it should be. IOW, when the government borrows (runs a deficit) or pays back debt (runs a surplus), Canadians' wealth is unaffected. Well, not quite. If the federal government cuts taxes (and doesn't raise its purchases), then more Canadians would likely be able to afford a house - and net worth would increase.

From where did you draw the conclusion that governmetn debt was excluded from this figure?

This Article seems to peg the net worth at $146,900 a person. I'm assuming this excludes government assets and debt.

[geoffrey]

August,

You raise a very excellent point when you say that those in Canada have a large amount of human capital, which makes us considerably richer. It's also next to impossible to measure.

Government borrowing or loan payments can affect our wealth induvidually, but over the long term and not in a immediate asset valuation. Remember that government borrowing on public markets increases interest rates through a decrease in supply of loanable funds. Continuous deficits do mean higher interest rates, meaning we can afford less expensive homes and cars. On the other side of the equation though, those with homes and cars will become richer of a large return on higher interest rates. Just normally it affects those borrowing considerably more. Your also correct with the tax cuts make us richer. Just don't fall into the neo-conservative tax cuts and more spending trap of deficit financing.

Your example about running a deficit for lower taxes to pay for university would be great for those that have the money now. Those borrowing the money would be faced with higher interest rates.

One of the principals of the neo-liberal approach (Washington Concensus), which is generally the approach by most western developed nations, is restrained spending to limit deficits. So your running debts to afford tax cuts is definitely not the norm for fiscal planning outside the US.

A very important figure in my view is the 18.1% debt to net worth ratio. We are keeping that debt in check, and according to the article, we are paying off that debt. Less debt to worth ratio generally also means less consumer spending, so there is a dark side to every positive, of course.

[mcqueen625]

I want know where to apply for the $137,000.00 for both myself and my wife. It will, certainly allow us to pay off the bit we owe and allow us to take a few vacations before we kick off. Now that would be really nice but not realistic since every time we turn around corporations are lining up to raise their rates whenever they hear that seniors have received or are about to receive a cost-of-living raise. $137,000.00 my ass!!

[geoffrey]

I want know where to apply for the $137,000.00 for both myself and my wife. It will, certainly allow us to pay off the bit we owe and allow us to take a few vacations before we kick off. Now that would be really nice but not realistic since every time we turn around corporations are lining up to raise their rates whenever they hear that seniors have received or are about to receive a cost-of-living raise. $137,000.00 my ass!!

Include the value of your house, your car, all your equity inside the house, any RRSP's and investments... minus outstanding loans and payments... like the CIBC commerical... I bet your richer than you think.

[August1991]

Remember that government borrowing on public markets increases interest rates through a decrease in supply of loanable funds. Continuous deficits do mean higher interest rates, meaning we can afford less expensive homes and cars.

I would argue that government spending increases interest rates, not government deficits.

You seem to think that when the government runs a deficit and borrows, it "crowds out" the available "loanable funds", driving up interest rates. Well, if the government raises taxes instead of borrowing, it also "crowds out" the "available funds".

IOW, you seem to think that is OK for a government to spend as long as it taxes to get the money. I'm arguing that government spending is the problem, and it is false to believe that taxes are better than borrowing.

From where did you draw the conclusion that governmetn debt was excluded from this figure?

If you hold a government bond, should that be considered part of your "wealth"?

The initial article referred to real wealth held by Canadians. That statistic would be unaffected by changes in the government's budgetary position, unless the government's budget had an effect on individuals asset choices - such as buying a house.

[geoffrey]

Remember that government borrowing on public markets increases interest rates through a decrease in supply of loanable funds. Continuous deficits do mean higher interest rates, meaning we can afford less expensive homes and cars.

I would argue that government spending increases interest rates, not government deficits.

You seem to think that when the government runs a deficit and borrows, it "crowds out" the available "loanable funds", driving up interest rates. Well, if the government raises taxes instead of borrowing, it also "crowds out" the "available funds".

IOW, you seem to think that is OK for a government to spend as long as it taxes to get the money. I'm arguing that government spending is the problem, and it is false to believe that taxes are better than borrowing.

When the government borrows funds it does crowd out the available funds, this is reflected in actual market evidence. The government raising taxes to pay the bills does the same, I do not disagree.

Both taxes and government borrowing are harmful to economic growth. I was arguing against your implied position that the government can borrow money with little effect on the economy, or a lesser effect than paying through taxation.

I would also venture an argument that paying for programs through taxation instead of debt financing reduces the long-term costs of carrying a debt burden. 30% of our tax dollar goes to paying for past deficit spending.

If you hold a government bond, should that be considered part of your "wealth"?

The initial article referred to real wealth held by Canadians. That statistic would be unaffected by changes in the government's budgetary position, unless the government's budget had an effect on individuals asset choices - such as buying a house.

Such as interest rates being higher and preventing some from entering the home market or choosing lesser valued dwellings.

[August1991]

Both taxes and government borrowing are harmful to economic growth. I was arguing against your implied position that the government can borrow money with little effect on the economy, or a lesser effect than paying through taxation.

You seem to view the government borrowing or taxing as the problem, and not the government purchasing. Governments don't borrow or tax for the fun of it. They borrow and tax to buy stuff. It is the buying that it is the problem.

I would also venture an argument that paying for programs through taxation instead of debt financing reduces the long-term costs of carrying a debt burden. 30% of our tax dollar goes to paying for past deficit spending.

I can make a very good case that borrowing is better than taxing. For example, you refer to the government's "debt burden" yet between the federal government and me, I know who can borrow at a lower interest rate. So, who should carry the burden of the debt?

When the government raises my taxes to pay off its low-interest debt, then I have less money to pay off my higher-interest debt. Does that make sense?

In Canada, both the Left and the Right have made a fetish of "balanced government budgets". A fetish may have its place in life but in economics, it usually results in no good.

Canadians should be concerned about federal government spending, and should ignore whether the budget is in deficit or not. To state, as the Liberals did, that they had a balanced budget is meaningless and says nothing about the competence of a government.

I'll add that the nature of federal government spending is so complex that it is hard to measure whether it is going up or down.