Economic Growth Falls again

[geoffrey]

Hmm, the Globe and Mail had a fascinating article today that reflected much of what I've been saying over the last couple months:

http://www.theglobeandmail.com/servlet/sto...y/Business/home

Retail sales are dropping (big trouble) and overall growth is pretty much zero outside of Alberta. What is the Rest of Canada going to do? How are you going to revitalize your economies to compete with the world?

Alberta needs to look at this too. We will be there as soon as oil prices stabilize (likely not for another many years)... we need to ensure that we are super competitive as well. Second place isn't good enough, people will take their business to the first place spot.

Alberta's extremely low small-business tax is step one... New Brunswick has mirrored this (actually N.B. is the lowest in Canada) and has had enourmous success with the program. Quebec and Ontario are still in the stone age with small business taxes... Ontario is nearly double Alberta and Quebec is more than 150% higher than Alberta. How can they compete? That's right, they can't. Especially when much of the world has even lower rates for their big corporations. Why do business in Quebec or Ontario? Many are asking that, and the head office migration west shows that taxes are key.

http://www.alberta-canada.com/economy/posi...porateTaxes.cfm

Even Alberta isn't doing good enough though. I think we could be doing much better with an even more competitive taxation system (internationally). But what would that do to Canada? If Alberta launched another tax hack and slash... Ottawa would be quick to raid the coffers. The RoC can't tolerate a low tax province, it bleeds them of skilled workers and businesses... the welfare state in other places holds back Alberta's growth under confederation. But our own government is to blame for this as well, neglecting infrastructure that would prove to be vital in expanding the oil sands for example, or our struggling power grid.

Canada activitely discourages investment in my opinion, or at least that seems the goal of both the CPC and Liberals. The CPC with their inconsistancy on tax rules (Flaherty changed his mind on trusts again!! made more rules), the Liberals with their ignorance of the need of reformation. Canada has the highest effective capital tax rate on investment in services (read: value added) industries the world.

Source: http://www.cdhowe.org/pdf/commentary_216.pdf

That is simply unacceptable. Income trusts were a fantastic way to reduce that effective rate, but the CPC didn't see it that way. Harper did an about face from the 'victory over the taxman' speech to when he was the tax man... funny how that works.

It doesn't have to be income trusts though, there are problems with them for sure! Cutting all corporate tax to minimal levels (preferably zero) would renew Canada's competitiveness internationally.

Canada might already be a lost cause in being an economic force, especially outside Alberta. We in Calgary and Edmonton will always have power because we have oil and that's what the Yanks need to have their economy function. The rest of Canada? I'd wake up in a hurry and realise your days are numbered. Our standard of living is plummeting compared to other nations, with less resources.

We are doing things very wrong... people need to realise this. If we can't make Canada the best place to do business within the next couple of years, it surely will be forever lost to second rate status... if it's not there already.

--

On another note, despite rampant inflation in Alberta, the BoC is likely to cut interest rates... increasing the pressure on the Alberta economy. I've posted this thread before. A central bank for all of Canada is impractical and hurts minority provinces like Alberta and the Maritimes in exchange for providing stability to Quebec and Ontario.

[jdobbin]

Canada might already be a lost cause in being an economic force, especially outside Alberta. We in Calgary and Edmonton will always have power because we have oil and that's what the Yanks need to have their economy function. The rest of Canada? I'd wake up in a hurry and realise your days are numbered. Our standard of living is plummeting compared to other nations, with less resources.

We are doing things very wrong... people need to realise this. If we can't make Canada the best place to do business within the next couple of years, it surely will be forever lost to second rate status... if it's not there already.

--

On another note, despite rampant inflation in Alberta, the BoC is likely to cut interest rates... increasing the pressure on the Alberta economy. I've posted this thread before. A central bank for all of Canada is impractical and hurts minority provinces like Alberta and the Maritimes in exchange for providing stability to Quebec and Ontario.

Good post Geoffry. I agree that most Canadian provinces need to do more to encourage investment.

As far as the central bank goes, it has a history of helping or hurting different regions of the country from time to time. Generally though, it has done a good job in recent years in balancing things. Any thoughts on what would replace a central bank?

[mikedavid00]

overall growth is pretty much zero outside of Alberta.

9 of 10 jobs created in Alberta have been part time. Even anecdotaly looking at job postings at workopolis for private sector, white collar jobs, there just doens't seem to be many.

I do not believe in Alberta growth boom. A housing boom, influx of people, and part time jobs because more Tim Hortons and Wendy's are being built from investers outside the province means nothing to me. That's just my opinion of course that I'm sure everyone disagrees with which is fine.

What is the Rest of Canada going to do? How are you going to revitalize your economies to compete with the world?

Make sure everyone gets a degree and higher education - that's the key. (/sarcasm off)

We need to stop purposely saturating our schools and job markets with people looking for work. That's a first step in the right direction.

Alberta needs to look at this too. We will be there as soon as oil prices stabilize (likely not for another many years)... we need to ensure that we are super competitive as well. Second place isn't good enough, people will take their business to the first place spot.

Alberta has a healthy, natural economy, not a GREAT economy like Australia. This is because Alberta doesn't get 200,000 people entering each year with no real skills or job prospects.

Income trusts were a fantastic way to reduce that effective rate, but the CPC didn't see it that way. Harper did an about face from the 'victory over the taxman' speech to when he was the tax man... funny how that works.

Canada is becoming an international welfare state for the world to take advantage of.

People won't agree, but if things continue, we won't be able to afford the loss of monies from these tax revenues. We are spent up the gills on healthcare and social services. I would argue, we need to spend 300B on healthcare from the current 100B we are spending.

Do not confuse what I'm saying as I agree with taxes. I'm just trying to make everyone aware that we are in a crisis situation or very close to a breaking point becuase we have a gov't spending problem. Not in the context of a city mayor having a spending problem, but in the context of millions of people are using services and the money has to be spent or poeple will loose services. The gov't needs all the money they can get their hands on right now to give services and pay off the debt. We are in a serious rut right now.

Canada might already be a lost cause in being an economic force

I gree. For 15 years I feel we've slowely headed down hill and people are now beginning to realize that we're in trouble. I just don't think foreign investment is the solution.

The rest of Canada? I'd wake up in a hurry and realise your days are numbered. Our standard of living is plummeting compared to other nations, with less resources.

I agree. We need to completely eliminate our immigration and refugee program and bring in private healthcare. The US spends 12% of it's gov't resources in healthcare, we spend almost 30% and are not providing service.

This is the crux of our porblems.

We are doing things very wrong... people need to realise this. If we can't make Canada the best place to do business within the next couple of years, it surely will be forever lost to second rate status... if it's not there already.

I agree. I feel we need more of a made in Canada solution though. I don't think foriegn investment and business is everything though.

If I can entertain you with the story for a moment.

When I worked at Microsoft, me and a Syrian co-worker got into this craze of wanting to buy a corner store.

I don't know why. We found a lot of private business for sale like cofee shops, corner stores, some dollar stores. etc. they were from $70,000 to $200,000 etc. These businesses basically will prove that they generate x amount of dollars per month. You buy the business, take out a loan to pay for it, and then pay it back with the revenues made from the business.

So I started research this online to see how financing worked. We had $20k to put down at the time so figured we could atleast get something. It was fun. I was dreaming of opening a resturaunt and living the Canadian dream. My cousins in Ottawa and family friends own many diners and private businesses in the food industry so it just fealt natural.

What I found is that the gov't had a small business loan program (like any first world country should) in order to promote small business. Here's the way it works:

You go to any bank that is part of this program (all major banks)

You get the loan on the banks conditions.

If your business fails, our gov't will pay the bank back on your behalf.

So you are probably thinking, yeah so. This is normal for all first world countries. Why didn't you just take the loan? We give out car loans and now even mortgages with no money down. Big deal. Were you afraid? Chicken out? bock bock!

No.

To my shock and amazement, the Royal Bank, TD, wanted 45% of the total money down for the business loan, DESPITE the fact that that they were garunteed to get their money back from the gov't. The interest rate was also higher. The lower interest rate, was the inhouse loan that required 55% of the money down.

Needless to say, I was in shock. So I asked the guy 'how is it that all these small businesses are around. No offense, but a lot of these people who own stores look to be in poverty themselves'. He said that they use family money or borrow it from their parents.

I then asked why they need so much money down when the gov't is garunteed to pay them back the full amount, he said 'that's just the way the rules are set from up top'. He said that the people who do it themselves use the equity in their home and some savings. Basically, if you have $200k of proven equity in a home, only $135K will count towards the loan, and ontop of that, you can't base the whole loan off your equity, only 35% or so of the downpayment can be used from equity. The Bank just wants your cash upfront pretty much. He also said that it might be that they figured only serious people would take the loans if they demanded cash up front.

Not only this, the bank judges your business. They want you to purchase franchises because they have a higher succes rate. They also want a detailed business plan preferably by an outsourced party. I was laughing on the inside in amazement.

I told him I was just amazed under the cirumstances that they are garunteed to have their loan paid back.

After I hung up the phone I realized for the first time,

This country holds back it's own citizens. It's an elitist driven dictatorship that wants to see the common person fail. It reminds me of an Islamic country where the leaders keep their citzens brainwashed and poor in order to keep themselves in power. They want their citizens to have a dependance on them, need them.

This is when I saw things for what they were. The gov't and elites at banks don't want you having your own choices, they don't want you to get your own healthcare or organs, they want you to depend on them for everything. They don't want to allow competition between banks.

They merely dictate to us, and stick to their circle of elites who run things.

I can't live my dream of opening a Canadian resturaunt and helping the economy. They will dicate to me where it shall be open, what type of franchise it will be, and finally, the social status I am before I am allowed to open it. Just like the 1985, you needed 25% downpayment to buy a house. If you didn't have it, you weren't of the 'social class' to be buying a house because you were't born into money.

I guess I needed to be born in the USA to have any kind of dream in life and make them come true.

[Figleaf]

Private health care? Anyone with less than $5M in the bank would be an idiot to want to have to rely on private health care.

[geoffrey]

Private health care? Anyone with less than $5M in the bank would be an idiot to want to have to rely on private health care.

Only people with over $5M are getting care in the US? Holy crap. It's really bad.

Health Care has nothing to do with why Canada is falling to peices economically... or at least very little to do with it.

[mikedavid00]

Health Care has nothing to do with why Canada is falling to peices economically... or at least very little to do with it.

I somewhat disagree. We would have 20% less taxes if we were to have a similar system.

Thus, we would have 30% taxes which would help the economy.

The gov't does not encourage small business.

The gov't does not de-regulate banks. We have the most protected banks in the world.

The president of the Bank Of Canada introduced Paul Martin at the Liberal conenvention. This is very troubling to me.

Look, the economy is very complex. Most economists do not agree with each other. No economy is perfect. It's a balancing act of gov't regulations that set the climate for a certain economy. It's never perfect. Not in the US or anywhere else. There are many sectors and sub sectors involved in the economy.

People will take personal experiences and attribute that to the economy. Some people say that Canada's problems are all income trust related becuase they lost money on their income trusts. Another will say that we should rely of foreign investment becuase that's how their sons current company is funded. Another will say that we need a made in Canada solution becuaes they can no longer get business loans. Another will say it's taxes. We need lower corperate taxes. Then another will say income tax needs to be lower because it stops spending in the economy.

Facts are, it's all above to some extent. There's no major one thing that is killing us.

What I *can* say, is that we are becoming a welfare state to the world. We increase social services spending year after year.

We have a decreasing amount of full time jobs and have lost over 50,000 in the last 5 years, yet have let over 1,000,000 people into the country in that time.

We can say that the gov't has a spending porblem, not a revenue problem. You can't blame them for the spending problem becuase we are a welfare state.

We can say is small business is the #1 employer in Canada, yet we do not promote realistic small business loans to our citizens in order to create employment. This is cause by elite run banks.

The gov't role is to govern and keep a good economic climate. It looks like the Liberals in the last 12 years didn't do such a good job after all.

[Riverwind]

I somewhat disagree. We would have 20% less taxes if we were to have a similar system.

You seem think that the magic healthcare fairy would pay for healthcare. I have news for you: reducing the taxes that pay for heathcare would save zero money and would likely leave most people and businesses with less net income because private health insurance is incredibly expensive.

[geoffrey]

I somewhat disagree. We would have 20% less taxes if we were to have a similar system.

You seem think that the magic healthcare fairy would pay for healthcare. I have news for you: reducing the taxes that pay for heathcare would save zero money and would likely leave most people and businesses with less net income because private health insurance is incredibly expensive.

Exactly. Often a reason for companies to move North from the states is that they don't have to pay excessive amounts for employee health care.

Norway and Ireland have public health care and they are both richer than us and the US.

http://en.wikipedia.org/wiki/List_of_count...l%29_per_capita

Canada is 16th on that list. It's pathetic, especially with our oil wealth. The US also isn't that hot.

[jdobbin]

Exactly. Often a reason for companies to move North from the states is that they don't have to pay excessive amounts for employee health care.

Norway and Ireland have public health care and they are both richer than us and the US.

http://en.wikipedia.org/wiki/List_of_count...l%29_per_capita

Canada is 16th on that list. It's pathetic, especially with our oil wealth. The US also isn't that hot.

I'd certainly like to learn a lot more of Norway's and Ireland's systems of healthcare.

I think we have a few things from our own two healthcare studies that should be looked into. Was the Kirby report all that unworkable? What was the final cost of the Romanow Report in terms of investment in healthcare?

[punked]

Let's try messuring a countries wealth by their GDP is out dated and stuipd.

[geoffrey]

Let's try messuring a countries wealth by their GDP is out dated and stuipd.

I couldn't disagree more. Quality of life by the UN's own extremely socialist biased standards is somewhat proportional to GDP.

If you have money, you can afford the programs (or products) that increase quality of life. If your shit poor, your not living good no matter how you spin it.

Are you one of those people that claims that those in Malawi live a great life because they don't have to worry about the pressures of a 9-5?

[punked]

I am one of those people who sees the GDP as redic because Exxon-Valdase oil spill casued the GDP to sky rocket will actually helping no one and improving nothing. It is all about spending every cent spent in a country makes GDP larger that doesn't mean shit all. If 5% if the country spends huge amounts while the rest starves *Chough China/USA Cough* your GDP goes up that doesn;t mean your counrty is better.

[geoffrey]

I am one of those people who sees the GDP as redic because Exxon-Valdase oil spill casued the GDP to sky rocket will actually helping no one and improving nothing. It is all about spending every cent spent in a country makes GDP larger that doesn't mean shit all. If 5% if the country spends huge amounts while the rest starves *Chough China/USA Cough* your GDP goes up that doesn;t mean your counrty is better.

It didn't help all those tree huggers who were paid a great deal of money by Exxon to clean up the spill and to monitor the ecosystem many years after? Your ignorance of economics is at the core of your rejection of GDP as a measure of wealth.

If it wasn't of worth to anyone, they no one would pay the price. Obviously people gained from it... people were helped and things were improved.

If you think 95% of Americans are starving, your also a victim of Michael Moore style propaganda. Most Americans live better than we do, have you ever been there?

Tell me of a country that lives better than Norway with a lower GDP.

[mikedavid00]

Canada is 16th on that list. It's pathetic, especially with our oil wealth. The US also isn't that hot.

I would use the PPP index to more accurately measure the quality of living for the average person.

http://en.wikipedia.org/wiki/List_of_count...P%29_per_capita

[mikedavid00]

You seem think that the magic healthcare fairy would pay for healthcare. I have news for you: reducing the taxes that pay for heathcare would save zero money and would likely leave most people and businesses with less net income because private health insurance is incredibly expensive.

Idealism, not reality.

People who are well to do would purchase private plans at first, if the economy was to get better due to a stopping of needless immigration employoers would offer healtchare benefits in order to compete with each other and lure in good full time employees. You'd need to give it time though.

[punked]

I am one of those people who sees the GDP as redic because Exxon-Valdase oil spill casued the GDP to sky rocket will actually helping no one and improving nothing. It is all about spending every cent spent in a country makes GDP larger that doesn't mean shit all. If 5% if the country spends huge amounts while the rest starves *Chough China/USA Cough* your GDP goes up that doesn;t mean your counrty is better.

It didn't help all those tree huggers who were paid a great deal of money by Exxon to clean up the spill and to monitor the ecosystem many years after? Your ignorance of economics is at the core of your rejection of GDP as a measure of wealth.

If it wasn't of worth to anyone, they no one would pay the price. Obviously people gained from it... people were helped and things were improved.

If you think 95% of Americans are starving, your also a victim of Michael Moore style propaganda. Most Americans live better than we do, have you ever been there?

Tell me of a country that lives better than Norway with a lower GDP.

You are being ignorant Norway is number 1 as far as HDI and quality of life. So you are ready to dismiss those but it clear that they are also good measurements and i would say better measurements. Lets try Australia 17 on GDP but third in quality of life amd HDI. Yah I pick Australia over Qutar, the US, and most of the rest above it other than Canada on GDP. There that is a better example of how the GDP is a measurement i don;t trust. You pick Qutar over Australia?

[Riverwind]

employoers would offer healtchare benefits in order to compete with each other and lure in good full time employees. You'd need to give it time though.

Do you think healthcare benefits are free? The cost of healthcare benefits increases the cost of doing business for employers which is as bad as a tax.

[jdobbin]

Tell me of a country that lives better than Norway with a lower GDP.

One thing of note, there was a Globe and Mail article last month about how unhappy Norwegians were regardless. I am trying to find that article.

[mikedavid00]

Tell me of a country that lives better than Norway with a lower GDP.

sigh..

Click here to see a garden hom in Norway that sells for $315,215

Click here to see a hom in Atlanta that sells for $330,000

Don't go down this road, you will lose the argumet. We've been through this argument countless times on the news groups back in the day.

The USA is the richest, best quality of life in the world.

[mikedavid00]

employoers would offer healtchare benefits in order to compete with each other and lure in good full time employees. You'd need to give it time though.

Do you think healthcare benefits are free? The cost of healthcare benefits increases the cost of doing business for employers which is as bad as a tax.

That's idealism.

We need to open up private healtchare hospitals and insurance.

Old people, people that are well off would buy their own insurance that would help offload the system immediately.

Over time, and God willing our economy got better, employers would fight for employees and pay the $300 a month it takes to get them.

They already offer dental and eye glasses don't they?

So in time they would offer healthcare. Of course, employers need to be desperate to find and keep people which they are not.

[guyser]

Geoffrey , as much as you may believe it , it does not ring true.

Ontario , now and for the foreseeable future is the economic engine that runs Canada. The power resides in Toronto , and has since the migration out of Quebec before the referendum.

Alberta will ALWAYS be the centre for exploration and oil. It only makes sense.

We need private hospitals and insurance like we need a whole in the head. We spend LESS than our counterparts in the US, and that is including all facets of healthcare. It does need to be looked at , but to entirely change a system is not needed. And no, it is NOT THE IMMIGRANT who is the problem. They may contribute, but far less than the average Canuck shmo contributes to the problem.

Small business' are squeezed, but that is far more a problem on the local tax level than it is fed level. The property taxes are what is killing small business. Make amends to that instead.

And it is amazing to see all the small business' prospering and growing , yet people still see them as poor? Variety store owners make a damn good buck, but the hours they spend there is atrocious . Perhaps per hour they are n't what we think , but somebody must be making money because all my insureds who have variety stores all have nice cars, homes and lives. The only thing that sucks is the hours.

So much pessimism, always saying what is wrong, yet for the most part no one comes up with viable reasons, unless we all want to stick with the old tired "its the immigrants" rant.

[geoffrey]

I would use the PPP index to more accurately measure the quality of living for the average person.

Why?

I'm talking productivity and wealth. Per capita, 15 countries produce more dollars than we do. Pretty bad.

You are being ignorant Norway is number 1 as far as HDI and quality of life. So you are ready to dismiss those but it clear that they are also good measurements and i would say better measurements. Lets try Australia 17 on GDP but third in quality of life amd HDI. Yah I pick Australia over Qutar, the US, and most of the rest above it other than Canada on GDP. There that is a better example of how the GDP is a measurement i don;t trust. You pick Qutar over Australia?

I may pick Qatar over Austrialia... depends on what I was doing. One country isn't good for anyone. If I was a bum and didn't want to work, I'd move to Canada or France or something like that. If I wanted to make money, I'd move to UAE or Ireland.

The USA is the richest, best quality of life in the world.

I strongly disagree... there are very few economists or social researchers that would agree with your viewpoint. Try to find an academic source that agrees and I'll find 5 more that disagree.

[mikedavid00]

I'm talking productivity and wealth. Per capita, 15 countries produce more dollars than we do. Pretty bad.

True, but personally I like to measure the quality of country by the material luxuries and living space the average person has access to. I find the PPP is the closest. China can look very rich by many people standards, or it can look very poor depending on how you look at it.

I'd move to UAE or Ireland.

I wouldn't recommend non-english speaking contries. Plus, these countries are also ver difficult to get into. You would need to come on a work permit.

I wouldn't recommend either country to be honest. Especially UAE. I had friends there. Dubai is an arabic speaking city that is fairly small with not much to do at all from what I hear. And mostly, you will

a lot of this in dubai. and also this.

The USA is the richest, best quality of life in the world.

I strongly disagree... there are very few economists or social researchers that would agree with your viewpoint. Try to find an academic source that agrees and I'll find 5 more that disagree.

You can't believe those economists. Firstly they all disagree with each other, secondly, it's these same economists that said Vancouver was the best city in the world. They said that Quebec city was the best place in Canada to do business. I mean, come on. Any city where you can die waiting for a surgery is should not even be in the running.

Years back we had the same argument that went on for weeks. There is a small sect of Americans that think Canadad is better than the US believe it or not. That's what started the argument. I was like whoah!! hold on there bud. Others started to say that Sweden and Norway and Dubai was better.

Dubai I really, really recommend against unless you are a Muslim and speak Arabic.

Norway is nice, but they speak their own language. It might be very difficult to get in outside the EU.

Ireland? Last I heard 2 years back they were going through an absolute boom with an almost 0 unemployment rate. In 2005 They let in 50,000 people. more than half were from the EU and UK. only 9k were accepted from other parts of the world so I don't know how difficult it would be to get in.

Also, interesting facts about Norway:

"In 2003, Norway set a record by offering nearly 600 applicants asylum out of 15,600 applications, an acceptance rate of just under four percent."

Again, some of these places are very difficult to enter. The UK, USA, and Australia I would consider to be 'easier' countries for a Canadian to enter.

[Curiouscanuck]

Just to jump in here, a report from the fraser institute has been release which is relevant to this topic. http://www.fraserinstitute.ca/shared/readm...?sNav=pb&id=877 essentially states that Canada needs a shake up in health care. Dont agree with all the method they used but its still worth a read.

Also I just want to say a couple things about the health care system with the US. Its not our system or theirs, there is compromise. Im sick of Canadians fear of the word "Americanization" whenever proposal is made to desocialize the system by only a little.

[madmax]

Over time, and God willing our economy got better, employers would fight for employees and pay the $300 a month it takes to get them.

They already offer dental and eye glasses don't they?

So in time they would offer healthcare. Of course, employers need to be desperate to find and keep people which they are not.

Many companies in the US are cutting off health care benefits, because the costs are killing the company. Health Care benefits are one of the main targets of large corporations. Smaller companies in the US are often pressured by their insurance provider to drop people whom are a heavier burden or their policy will not be renewed. Then there is the problem of people whom end up with a chronic or terminal illness and cannot return to work. Regardless of how much coverage they had while working, they can end up with none once the going gets tough.

The US Manufacturing Industries recognize the Canadian Health Care system as a competitive advantage over there own domestic base. That is why GM asks there members to take a cutback in health care benefits, but the benefits that can be cut in Canada are marginal by comparision.

Many companies offer dental and eye glasses. These are some the marginal benefits that I speak of.

With regards to your theory that as the economy gets better more benefits are offered or extended.

As the economy declines the benefits will also decline.

There are two things at issue.

You health coverage can decline when you need it most, such as the level and degree of your illness.

Your Benefit Coverage suffers the from market forces, while your state of health reacts to the state of your health, regardless of the present market conditions.

I don't see any company rushing out to spend an extra $3600/per person in benefits.

I do know that white collar workers in Ontario have had the very benefits you speak of reduced.