Walk a Kb or Two in my Moccasins- Nobody 'splained it to me like that!

Simple answers to Complex Questions and Complex Answers to Simple Questions. In real life, I'm a Greater-Toronto (Canada) Realtor with RE/MAX Hallmark Realty Ltd, Brokerage. I first joined RE/MAX in 1983 and was first Registered to Trade in Real Estate in Ontario in 1974. Formerly known as "Two-Finger Ramblings of a Forensic Acuitant turned Community Synthesizer"

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Saturday, January 28, 2006

If an economist falls in the Forest, does it make a sound?

My, my, my Canada is sure enough at a crossroads.

A dilemma perhaps, but surely a point of decision and opportunity.

During the 'Phoney War' phase of WWII, Canada's central government used its extraordinary powers under the War Measures Act, the Income Tax Act, its budget 'spending power' and its sovereignty/suzerainty over the Bank of Canada to transform Canada's industrial focus from comfy self-satisfying complacency into a war-production mega-corporation.

Wm L M King's government saw Canada was the last hope for Great Britain's survival and mobilized everything towards solving the Mother country's problem. The government took over the economy - industry by industry, factory by factory, commodity by commodity and person by person. It was a roaringly successful 'planned' achievement.

Canada, after acquitting itself admirably with personnel in WWI, came into its own as an industrial nation through this grand socio-economic-political-industrial 'plan', proving that indeed necessity IS the mother of invention.

After the war two things happened. 1)The conceivers and executors of this grand undertaking needed 'another project', and 2) a new government philosophy 'central government planning' became desirable in the minds of 'people who stood to gain from it' - the central planners and the citizens who thought they'd personally benefit from the government 'looking after them'.

Farmers, Unionists, the poor, the educators, 'communist-socialist' thinkers as well as the 'we can do more FOR our people' governors all saw the Canadian war effort (and both the enemy National Socialists and allied Russian communist economies) as proof that central management of the entire economy was do-able, a public GoodThing and a political GoodThing.

The government i.e the House of Commons Cabinet decided to 'run' the economy in peacetime too. It's not too much to imagine - after all, these fellas had been hobnobbing with Churchill, Roosevelt and Stalin (who were planning to re-construct and 'run' the world. Surely the Canadians could 'run' Canada.

They had reams of Statistics (and statistic gathering departments) to monitor performance, they were in tight with (if not in control of) the manufacturers, the banks, the markets and resource producers, they had absolute control over the Crown's sovereign assets - the land, the mines, the forests, the waters- and they had the confidence of the people who were acclimatized by the war-effort to having the government tell them what to do and what not to do.

The Office of Governor General was 'patriated' and the decision made to place a well-respected malleable sort of 'local' in that job (the GG's constitutionally-entrenched set of independent advisors, the Privy Council, had already been absorbed into the Office of the Secretary to the Cabinet by Order in Council P.C. 1121, 25 March 1940).

Hooray!! the 2nd half of the 20th Century would (at least might) belong to Canada! Industry was stimulated, investment was sought (& found), highways and seaways and pipelines and homes (like crazy) were built.

Consumers bought cars and appliances and homes. Newcomers poured in. Virtually everybody had a job AND THREE KIDS. - Marvellous. Then the 'we can do more FOR the citizens' crowd took over.

In addition to baby bonuses, old age pensions and unemployment insurance, the decision was made to provide government coverage of "major Medical" expenses - anything that required Hospitalization (the little stuff was covered by private insurance, savings or charity). The upshot being that zillions of hospitals were built.

AND WHY NOT!! all the babies, all the immigration, all the employment, the opportunities still untouched - the all-around prosperity prompted the feeling that Canada was on a never-ending 'up' cycle and the government COULD do more and BE a vital force in Canadian everyday life.

How grand.

So grand that the decision was made to cover all medical expenses (especially if the minority-in-the House Cabinet wanted the support of the CCF/UnionDP to keep it in office) And it would have grand ... if the baby boom had continued unabated.

But as soon as the 'statistic' showed that the birth rate was levelling and then falling away all that ended. New 'plans' needed formulation. New projections needed analysis.

But no new plan was enacted. No new course of action -from the new data- was followed. As revenues slipped relative to expenses, a decision had to be made. Cut services, raise taxes or borrow the shortfall.

So thought went into deciding to borrow.

After all Keynes had said that governments could borrow in (typically short-term) 'bad times' as long as they paid off the debt in the (bound to be) ensuing 'good times'. Tommy Douglas didn't believe in that - he only introduced medical coverage because he had the revenue to cover it (and because he was a Big Government is Good, central planning kind of guy).

Hmmmm. The Minority in the House Cabinet took the easy way out.
Pity.

Only in Canada, you say? No it was done all over the world - governments borrowing the money to pay for the programs that they'd promised to deliver instead of raising the "premiums" to cover the proven and predictable increased costs.

Insurance. Health Insurance, Unemployment Insurance - were they devised and run on 'insurance' principles? Baby Bonus, Old Age Pension, Canada Pension. Were these programs paid for by 'magic money' that flowed from the natural resource wealth of the country and flowed as dedicated revenue streams to the programs?

Nope, they were funded by pay-as-you-go plans. The current earning public paid each year for the benefits each year. As soon as the 'statistics' showed that the Baby Boom was over, these plans were dead-in-the-water.

When did we know the Baby Boom was over? 1965? 1968? 1972? 1974? 1979?

Was it discussed it the general election of that year? the next one?

Hmmmm was somebody pulling the wool over somebody's eyes? or did we all just keep our eyes shut?

With all that borrowed money out at interest and more money being borrowed every year to PAY the interest (and this is happening in many other countries too) - what happens if interests rates go through the roof?

We all know what happens.

Joe Clark & John Crosby tried to tell us. But we didn't want to hear.

Trudeau was busy on legacy matters (after all you cannot expect a legend to admit he was wrong and that he and Pearson had screwed up the fisc for the next two generations just to maintain minority Cabinets).

Brian, Mike & Maz expounded on the concepts of 'operating' deficits, budget deficits and debt reduction, but interest rates and inflation ran against them.

Finally a world-wide bank-recession with high interest rates brought everything to a halt, a realization of errors and a determination that "if another boom came, we wouldn't flit it all way"

Except we were flitting it all away - and only the interest cuts of post-9.11.2001 have kept the federal budget in surplus (albeit at the expense of the greedy provinces, now forgetting that they agreed to accept lower federal transfers IF those transfers came without strings-attached)

So here we are.

A country accustomed to central planning, accustomed to government telling us what's good for us, accustomed to being misled by half-true information, accustomed to having our butts saved by the 'next boom' and accustomed to not really paying that close attention to the charts and graphs that show the 'economic plan for the next 25 years'.

But wait, we don't get to see 25 year projections. We got 5 year ones (but always too optimistic under Maz et al), 2 year ones under pre-Dithers Martin and now 5 year projections again(this time always too pessimistic).

Only the Ontario Government (Toward 2025) & the Clear-eyed Vision committee in Quebec are making assessments of the least likely,best possible and most likely scenarios for the next generation. And they say it cannot go on this way!

The Canadian attitude of entitlement-to-our-entitlements is un-sustainable.

There will not be enough people and money to pay for all the stuff the 'caring and sharing' crowd promised based on perpetual Baby Boom projections.

Why do you think immigration policy has gone nuts? the central planners are trying to save their butts by bringing in MORE people. Sadly the 'trade Guild' attitude (and regulations) and our ridiculous taxes are keeping the entrepreneurs and professionals out and we're just getting reunification of family grandparents etc, ne-er do wells/ spongers from around the world that think that free medical and a free education for their kids is a bargain (the smart ones keep dual citizenship and play in both countries).


Enough of the complaining.

I started out saying that Canada is poised at a crossroads. We are perfectly equipped to be one of two extra ordinary nations. 1) The dream centrally planned 'true-socialist' country. Where everybody OWNS everything, but OWNS nothing. Everybody contributes to the general good and is given what they need. No one goes hungry, no one has extravagant wealth.

Why socialist heaven? because they are no property rights in Canada - everything here is a Crown grant. The Crown owns everything (save trademarks and copyrights) and the government has usurped control over the powers of the Crown. Plus we're overloaded with people 'making a living' or just scrapping by who have no idea how their going to live next year, nevermind how they'll retire. A Government that promised (and could prove) that they'd take care of all those worries would be elected immediately (just check the Family Income Averages on Statscan)


2) The Dream Mixed-Economy. Where everybody shares a piece of the natural wealth revenue, contributes a fixed and predictable portion of their income to the provision of government programs that are NOT insurance-based and everyone contributes to INSURANCE based programs based on the risk they present TO those programs.

Take the biggest INSURANCE-based program, healthcare funding, OFF the budget. Take that $80-100 billion in taxation off too.NB that is a sum just about equal to total fed +prov personal income taxes !!

Take it off the budget, dedicate it to healthcare!! Let there BE a single payer and let that payer be accountable for what they collect and how they spend it!

Nationalize the program, enlarge the pool of contributors and unify the coverage. Go back to1950's basic philosophy, totally cover the big stuff and let citizens cover the first oh, $2500/yr themselves through, private insurance or savings.

With the provincial budgets cut in half and much less need for equalization and criss-cross govt-to-gov't subsidization look at Section 94 and consider unifying all the laws in the non-civil-code provinces (Quebec can participate too if they so choose).

With the laws all similar across the country, look real hard at the boundaries.
Does Longitude matter?(latitude does sortof represent climate)

Since the governors of the country have officially given up on God (and are indoctrinating the public in the Secular Humanist me-first, me now State Religion), why preserve boundaries based Protestant & Catholic sentiments?

Further since we know longer 'discriminate' based on ethnic or national origins, why keep boundaries based on those historic settlement zones?

Then maybe we'll look at creating 10-30 city-provinces that can finance they're own everything-but-healthcare provincial mandates and the balance, the Great Non-urban, East-North &-West can provide for itself from stewardship and husbandry of the natural resources.

Toronto can sustain itself, so can Montreal, Vancouver and Calgary and Edmonton BUT they cannot not when the natural resources are sold off as raw materials, the short-term jobs are in the hinterlands (benefiting the provinces) and these same cities are forced to pay through Ottawa for the under-developed areas of Canada where the resources are being stripped to be sent out of the country as raw materials (and that's where I started)

Canada you choose.

Tell your governors you what 25 yr plans.

See if they can fool you again

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