# Basic Economic Question



## tygrus (Mar 13, 2012)

I have seen everyone bemoaning the drop in the dollar but it has me thinking a little deeper about it. Maybe someone can enlighten me.

So for the past 20 years or so, we have had an interest rate policy whereby it balanced the export price of our commodities with the import prices of finished goods from abroad. Not too low, not too high. I guess that worked for some, but nothing is made as a finished good in canada anymore. A piece of furniture was probably canadian lumber shipped to china and returned as final product. I guess globalization has created cheaper goods but at great inefficiencies and human costs. Imagine shipping raw materials half way around the world then back again in finished form.

Now the BofC has dropped rates again in order to make our exports cheaper, however, that has the added effect of making our imports more expensive now. Doesn't it make economic sense to take this to the next logical level, drop rates to zero or negative until we flood the world with cheap commodities and in return, we can now afford to make finished furniture and other products right here at home. So what if the dollar is 50 cents? I guess you couldn't go to Vegas but thats a small price to pay knowing your neighbor has a job. 

What am I missing?


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## james4beach (Nov 15, 2012)

tygrus said:


> Doesn't it make economic sense to take this to the next logical level, drop rates to zero or negative


A couple problems with this.

(1) Cutting the overnight interest rate (especially at such low levels as we have now) is an emergency measure to enhance stability in fragile financial systems. It's a tool to be used *in emergencies*.

What used to be normal, before 2008, were BoC rates of say 4% to 8%. Then if there was a sudden economic shock or disaster such as banks in trouble, or other acute financial crisis, interest rates were cut. This suddenly boosts liquidity available to banks and other financial players, and alleviates financial distress.

But now we've effectively had zero rates for a stretch of 7 years. This is unheard of, historically. What will the Bank of Canada do in case of an emergency occurring now? They've been in constant emergency mode for 7 years. This is obviously very dangerous. Ideally they would raise rates back towards normal and regain the use of this emergency tool.

Basically, the Federal Reserve and Bank of Canada have more or less lost this vital tool (the emergency rate cut). Rates are not meant to be left at zero for long periods of time.



> So what if the dollar is 50 cents?


Brings me to point number two,

(2) We don't want a weak currency because it *makes all of us poorer*. There are consequences to having a very weak currency. Say you're near retirement and your household has $1 million net worth. If your currency has lost half of its value (say against a basket of other major currencies)... you've lost half of your net worth. Even if you don't travel outside Canada, you will still see this in the form of higher costs for goods and services, groceries, etc.

I have a decent amount of capital, nearly entirely in CAD. I conduct business in the global sphere. As the CAD plummets, my ability to go around and buy assets diminishes... I become poorer in the scope of the world. Anybody with positive net worth should be angry at the Bank of Canada for deliberately weakening our currency.

Personally I think the mainstream economists have it all wrong. I want a stronger currency (so that my wealth is preserved) and I want higher interest rates, to go back to a normal financial system. I think the economists are also totally wrong in the "race to the bottom" idea on currencies. So as Europe crumbles and disintegrates and EUR weakens, we're going to try matching their deterioration by keeping our currency just as weak? What kind of madness is this?

What's with this current obsession about making ourselves as poor as the Europeans or Americans? I'd like to see the opposite: strengthen our currency, normalize interest rates. We rocket ahead in wealth vs the rest of the world. Then we go and buy up their best assets which builds our national power.

But let me tell you... it won't happen. There's a reason the BoC keeps rates near zero, and will cut further: our financial system is extremely fragile. The banks are not that strong, and they are hyper-leveraged. They can't sustain any major shock. This is why we've been sitting at emergency-low rates for 7 years.


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## james4beach (Nov 15, 2012)

I know that was a long reply but I'll try to summarize my thoughts:

Ideally, rates would be much higher. That's the normal situation in a healthy, stable financial system.

A low currency hurts your net worth and makes the whole nation poorer. The central bank should be keeping our currency strong, ideally.

Near-zero rates are supposed to a temporary measure in times of emergency. The BoC (and Federal Reserve) aren't keeping rates near zero because it's a good idea or a good economic strategy. They're keeping rates low because the system is so fragile and dependent on liquidity, that there's no way they can raise rates back towards normal. The banks (and consumers) can not tolerate higher interest rates, so we're trapped in this situation.


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## sags (May 15, 2010)

You are right James, but how do we compete for manufacturing with countries that pay $500 a month salaries, unless we devalue our dollar as much as possible ?

The full and true story of unfettered global free trade is coming to fruition.

Unless the world was a level playing field in terms of access to markets, wages, safety requirements, environment ..........it was inevitable we would be the losers.

Some people have money but most Canadians have debt, so interest rates have to be kept low or the whole scheme collapses.

Which I think is probably going to happen some day anyways.


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## Davis (Nov 11, 2014)

The Bank of Canada ha been keeping interest rates low by expanding the money supply (liquidity). This is designed to keep the economy moving by getting businesses and consumers to borrow to invest and spend, creating jobs. It also keeps the Canadian dollar down because investors park their money in economies with higher interest rates. The low dollar encourages job creation by encouraging domoestic consumption and exports over imports. 

But keeping rates low only works if there is slack in the economy. If we had "full employment" (i.e., an unemployment rate of around 5-6%), the demand created by low interest rates and a low dollar would cause wages to rise. If an employer can't find skilled labour and the current wage, they will pay their employees over time, or try to outbid other employers by offering higher wages. Rising wages lead to rising prices as merchants realize they can sell their goods without discounting. So you end up with inflation. We learned from the 1970s, that expanding the money supply to push down unemployment only works in the short term. Wage inflation will cause the unemployment rate to return to its "natural rate". This is another word for "full employment". 

The preferred term for the full employment rate is the NAIRU - the non-accelerating inflation rate of unemployment. This captures the idea that in order to keep the unemployment rate below that 5-6% rate in Canada, you need not only inflation, but ever-accelerating inflation. the Bank of Canada aims for 2% inflation per year. If it raised that to 5%, unemployment would fall below the natural rate for a while, and then return to 5-6%. Then the Bank would have to let inflation go even higher to get unemployment to fall again.

Why 5-6% unemployment? Why not 0%? The 5-6% includes various groups:
1. People who are "between jobs". I don't mean that euphemistically, but literally. People will leave jobs and then take some time to find the "right job". If i uit my job today or was fired, I could get a job at Tim Hortons tomorrow, but i don't want to work there. I would take some time to find a job that is a better fit for my skills, interest, and desired income. And EI is there to help me spend time to get the right fit.
2. People who don't live where the jobs are. Not every Newfoundlander who is unemployed can go to Fort McMurray. Some have family commitments that keep them on the rock, or they may just not want to leave, and stick aorund hoping to find a job near home. So tehy are unemployed longer.
3. People who are unemployable because they don't have the skills, aren't responsible enough to hold down a job, have addictions or mental health probelms, etc. Many of the people in the latter groups are not counted in the unemployment rate because they are not looking for work, but some are. 

There is your economics lesson for the day/


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## sags (May 15, 2010)

Perhaps we should consider if past economic models and theories are even relevant in today's world, since they were developed many years ago under totally different economic realities ?

We have cut corporate taxes, have the lowest interest rates on record, a devalued currency, available workforce, stable wages, stable governments, and supporting infrastructure.

At least 7 factors that are supposed to stimulate job growth...........so where are the jobs ? We should be up to our ears in jobs.

Last month there were 1,000 net jobs created, but there were 24,000 jobs created in the public service. If not for the public service hiring.........the private sector lost 23,000 jobs.

It is going to get worse. Thousands more have been laid off since then and their numbers are not reflected yet.

Over the last decade, there has been a simultaneous sharp increase in part time work, predominantly in the low paid service sectors.........and a sharp decline in full time jobs.

Benjamin Tal, chief economist for the CIBC produced a recent report on it. The statistics are clear that a continuation of the trend will not support our economy.

Jobs are created by business when there is demand. We don't manufacture anything that is in demand because our prices would be too high for the consumer.

Everything that is in demand is manufactured somewhere else. They are the ones experiencing job growth from our consumer demand for those products, not Canadians.

When asked for a solution the experts inevitably say.......we need to educate and prepare people for high tech and high education kinds of jobs.

But that is what every city in every Province aims to do. It is what every city in every State in the US plans to do. It is what other countries are trying to do.

It is a very crowded idea, and Canada arrived late to the party.

Personally, I think you can throw past economic models, based on long gone home grown manufacturing and exports..........right out the window.

Canada's trade deficit is widening, despite a lower currency. 

We are in a new world where new economic models need to be developed.

As BOC's Poloz opined in a rare moment of clarity during an interview, the central bank doesn't have any economic modeling that reflect today's reality.

They are working on developing some, he said.

We are in an economic no man's land where nobody knows the end result, and everyone is stumbling around in the dark.

What the solution is..........I have no idea, but I don't think it will end well when it does.

I think we are too far down the road now to affect the ultimate outcome..........and the only thing left to do is brace for impact.

Survival gear and zombies...............no, but soup lines and a depression until the economy begins anew are certainly possible.

Edit..........and I didn't even mention the growing income inequality and wealth disparity issues, which continue to trend in a bad direction.


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## Guban (Jul 5, 2011)

It seems to me that most governments around the world are playing the currency devaluation game. This stops the flood of cheap foreign goods discussion; if all countries devalue, there is no net benefit from this point.

Of course, most governments are debtors so the lowering of interest rates makes their borrowing costs lower, so there is definitely an incentive to drop interest rates.

We will see if/when the US goes against this trend and actually increases interest rates. They have been saying that this is coming in the US as wel as Canada for a loooooong time now. So far, nothing.


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## carverman (Nov 8, 2010)

tygrus said:


> I have seen everyone bemoaning the drop in the dollar but it has me thinking a little deeper about it. Maybe someone can enlighten me.


Tell me about it! :biggrin: Just sent my daughter in AZ some money for her b-day by PayPal..(the safest method).
Paypal charged me $3 USD, but the exchange on CDN funds is getting brutal ..77cents on the dollar today.
(303 USD = $389.42 Cdn, which also includes the Paypal service charge).
Someone once told me that the CDN dollar is directly related to the world price of oil and I can believe that now!



> So for the past 20 years or so, we have had an interest rate policy whereby it balanced the export price of our commodities with the import prices of finished goods from abroad. Not too low, not too high. I guess that worked for some, but nothing is made as a finished good in Canada anymore. A piece of furniture was probably Canadian lumber shipped to china and returned as final product. *I guess globalization has created cheaper goods but at great inefficiencies and human costs. Imagine shipping raw materials half way around the world then back again in finished form.*


It has to do with the price of manufacturing in Canada and the taxes imposed on factories that made goods here with the Canadian workforce...by the time, a factory pays business taxes, soaring electrical rates, and other things such as health/dental plan and other benefits (the company contributions to CPP), it is cheaper to ship the lumber from Canada in container ships to China, have the item made for a few cents on the dollar in labour costs (Chinese factories probably don't pay worker benefits..its all sweat shops there)..so it is a lot cheaper for the distributor of furniture to import knock down kitchen cabinets or dining room sets from China, and sell it here for a profit.

After all..*profits is all that matters these days*..nobody cares about the future of manufacturing, certainly not the provincial gov't...busy wasting more money these days. 


> Now the BofC has dropped rates again in order to make our exports cheaper, however, that has the added effect of making our imports more expensive now. Doesn't it make economic sense to take this to the next logical level, drop rates to zero or negative until we flood the world with cheap commodities and* in return, we can now afford to make finished furniture and other products right here at home. * So what if the dollar is 50 cents? I guess you couldn't go to Vegas but thats a small price to pay knowing your neighbor has a job.
> What am I missing?


Industries lost (such as the "German craftmanship factories"...I remember Knechtel in Hanover..makers of excellent quality furniture in the 70s, (when I lived in Hanover for a while) I guess they are still in business today.

https://www.lib.uwo.ca/programs/companyinformationcanada/ccc-knechtel.htm

.and Gibbards of Napanee, are gone forever.
http://www.theglobeandmail.com/news...ntario-manufacturers/article1386707/?page=all



> NAPANEE, Ontario - After 173 years, the Gibbard Furniture Shoppes of Napanee, Canada's oldest furniture maker and one of the oldest continuously operating companies in North America will close its doors sometime early next year, the latest victim of a surging Canadian dollar, increased competition from Asian imports and the inability to find new owners.





> At one time, Gibbard had a network of 107 retailers across the country, including Eaton's, which was counted once - even though it had almost 100 stores across the country at one time. Gibbard was on the floor at every Eaton's with a furniture department.


 Sad, but this is a fact of modern life these days..once the manufacturing base is gone..it will never come back. Not only are the factory workers and owners deceased
by now..but those skills are now lost. You cannot make any money by hand sanding furniture anymore as an example.
if you don't invest millions in automation (Like Gibson Guitars in NASHVILLE USA for instance) then the product becomes too costly for consumers.


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## Davis (Nov 11, 2014)

With respect, dear sags, every single person who has forecasted the end of the world to date has been wrong. The economy is changing, as it always has. And economic policy must change with it. But when you're driving towards a cliff, you don't keep your foot on the gas until you go over the cliff. You take action: change your course, put on the breaks, whatever. I don't see us going over the cliff. 

The continued focus on manufacturing bewilders me. That ship has left the barn, and that horse has left the harbour. We can't compete for low-end manufacturing jobs. We have to compete for knowledge-based jobs and some high-end manufacturing. And we are already there. Manufacturing is a much smaller share of the the Canadian labour market than it used to, so not getting those jobs back won't make or break us. 

Unemployment in Canada is not that high at 6.8% from Trading Economics: "Unemployment Rate in Canada averaged 7.73 percent from 1966 until 2015, reaching an all time high of 13.10 percent in December of 1982 and a record low of 2.90 percent in June of 1966."

More importantly, one month's results, as you've cited, are not a good basis for making forecasts. if you look at all of 2014, you get a different pitcture: 
http://www.statcan.gc.ca/daily-quotidien/150128/dq150128a-eng.htm



> "Employment gains in 2014 amounted to 121,000 or 0.7%.... the unemployment rate declined 0.5 percentage points to 6.7%.
> 
> ... full-time employment increased by 158,000 or 1.1%, while part-time employment was little changed.
> 
> ...


So 2014 presents a very different picture from February 2015: more jobs, more full-time jobs, more private sector jobs.

This last line I included because I have never known that US and Canadian unemployment rates are calculated differently. I always assumed that the rate in canada was higher because of regional economic differences.


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## james4beach (Nov 15, 2012)

Actually that's a good point about the US. I forgot to mention that. The Bank of Canada policy rate very closely follows the Federal Reserve interest rate policy and has for a long time.

We're closely married at the hip for various reasons (heavy trade, banks that are tied into both countries, etc). So really we're at the whims of US policy on this matter.

There's also a growing theory out there that ultra-low interest rates actually leads to people hoarding money, cutting back spending, and cutting back large capital investment. This is contrary to common thinking by economists.

It has to do with the effect of losing out on all the interest income. All of us, and near retirees in particular, have lost out on tremendous amount of interest income that we should be getting on our deposits. Everyone's retirement looks much more uncertain as a result of near-zero interest rates.

So it encourages hoarding money and cutting back spending. Great job, central banks.


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## carverman (Nov 8, 2010)

james4beach said:


> So it encourages hoarding money and cutting back spending. Great job, central banks.


It boils down to two fundamental issues...do you want to eat in your retirement?(hoard what money you have),
or invest it in a low growth investment and have the gov't tax some of that away.


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## Beaver101 (Nov 14, 2011)

carverman said:


> ...
> Sad, but this is a fact of modern life these days..once the manufacturing base is gone..it will never come back. *Not only are the factory workers and owners deceased
> by now..but those skills are now lost. You cannot make any money by hand sanding furniture anymore as an example.
> if you don't invest millions in automation (Like Gibson Guitars in NASHVILLE USA for instance) then the product becomes too costly for consumers*.


 ... yep, the lost art of hand-made workmanship has started decades ago. Look on the bright side, these "antiquated" goodies will become a "rarity" and then will fetch a pretty buck ($1 million Canadiana peso) or two? :biggrin:


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## carverman (Nov 8, 2010)

Beaver101 said:


> ... yep, the lost art of hand-made workmanship has started decades ago. Look on the bright side, these "antiquated" goodies will become a "rarity" and then will fetch a pretty buck ($1 million Canadiana peso) or two? :biggrin:


Yes, that is true but only for those that have money..like collectors of the old "hand made/sanded Gibson guitars from the 50s/60s and the beautifully crafted Gibbard dining room furniture..which is now being sold to collectors or antique auction furniture dealers.



> Beautiful Gibbard dining table in solid cherry. Comes with 6 chairs (includes one captain chair). This is a classic dining piece manufactured by Gibbard Furniture Shops and is of the highest quality. This is a dining table which has been admired by guests for its elegance and boasts true Canadian craftsmanship from one of the most reputable furniture makers of its time.


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## sags (May 15, 2010)

This is how job creation has evolved for the past 20 years in Canada.

This does not indicate a transition into high paid knowledge based jobs or high technology jobs, but a continual downgrade into lower paid jobs or self employment.

The official unemployment rates don't quantify the quality of the jobs, and the public service has been a major contributor to job creation, which is unsustainable unless Canadians are willing to pay continually rising costs for increasing numbers of public servants.

Doesn't really matter now I don't think. The inevitable decline is entrenched and will play itself out.

Maybe some next big thing will be a major job creator..........but it is hard to envision when all the next big things are created here and made in China.


_The index’s first measure tracks the distribution of part-time and full-time jobs. Since the late 1980s, the number of part-time positions has risen “much faster” than that of full-time jobs, Mr. Tal said. 

“The damage caused to full-time employment during each recession was, in many ways, permanent,” he noted. “That is, full-time job creation was unable to accelerate fast enough during the recovery to recover lost ground.” 

Over the past year, however, some of this reversed as the number of full-time jobs rose twice as fast as the number of part-time jobs. 

Self-employment is the second key measure of job quality, as economists tend to view it as less stable and, on average, lower paying than salaried employment. The number of self-employed workers has been on a “steeper incline” over the past 25 years, and the last year grew at a rate four times faster than the number of paid employees, the bank said. 

The third main factor the index tracks is the compensation ranking of full-time paid employment jobs in about 100 industry groups. This too, shows a weakening. 

Full-time paid-employment work is generally of higher quality than part-time and self-employment jobs, but “not all full-time paid-employment jobs were created equally,” said Mr. Tal. “The number of low-paying full-time jobs has risen faster than the number of mid-paying jobs, which in turn, has risen faster than the number of high-paying jobs.” 

That has been the case over much of the past two decades. Moreover, in the past year “the job creation gap between low and high-paying jobs has widened,” with low-paying full-time paid positions rising at twice the pace of high-paying jobs. 

http://www.bnn.ca/News/2015/3/5/Job-quality-in-Canada-declining-on-all-fronts-CIBC-index-shows.aspx
_


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## carverman (Nov 8, 2010)

> That has been the case over much of the past two decades. Moreover, in the past year “the job creation gap between low and high-paying jobs has widened,” with low-paying full-time paid positions rising at twice the pace of high-paying jobs.


Lots of full time jobs have been converted to part time to save employers money..very little benefits for part timers and they can
be taken out of the "job pool" and returned there when no longer required.

Most of the low paying jobs have been taken over by temporary Foreign workers...the only ones willing to work at these jobs, besides
students.
So where will this transition in the workplace lead us 10-20 years from now?


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## Beaver101 (Nov 14, 2011)

I think the answer is in sags' post: 



> The official unemployment rates don't quantify the quality of the jobs, *and the public service has been a major contributor to job creation*, which is unsustainable unless Canadians are willing to pay continually rising costs for increasing numbers of public servants.


 ... does Joe/Jane Canadian have a choice of not paying more taxes for supposedly increasing services? 



> Doesn't really matter now I don't think. *The inevitable decline is entrenched and will play itself out*.


 ... very true whatever that decline may be.


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## Davis (Nov 11, 2014)

Sags: on what do you base this statement: "the public service has been a major contributor to job creation"? I think if you look at employment over the last few decades, you'll see the public sector's share declining, not rising.


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## james4beach (Nov 15, 2012)

I think this is all fundamentally about globalization, automation, and the global competitive economy. What we think of as "normal" employment will never come back... anywhere in the western world. It's gone and not coming back.

The western world (US, Canada, Europe, Japan) have taken to the idea of money printing as a stop-gap measure. Now the west is becoming overconfident in money printing and zero interest rates as a solution to everything.


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## Pluto (Sep 12, 2013)

james4beach said:


> A couple problems with this.
> 
> (1) Cutting the overnight interest rate (especially at such low levels as we have now) is an emergency measure to enhance stability in fragile financial systems. It's a tool to be used *in emergencies*.
> 
> ...


don't know what they will do. But the wise stock investor should look out below, and put on your parachute. As I'm sure you are aware, the US too has no emergency room to lower rates. wouldn't surprise me if they go back to buying bonds before the year is out.


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## sags (May 15, 2010)

The Alberta PC government, bastion of all that conservative fiscal prudence...........announced their budget today.

Tax, spend and put the other 5 Billion debt on the layaway plan................just like all the other parties would do.

Party on everyone, might as well enjoy life before it all goes kaboom.


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## 5Lgreenback (Mar 21, 2015)

sags said:


> The Alberta PC government, bastion of all that conservative fiscal prudence...........announced their budget today.
> 
> Tax, spend and put the other 5 Billion debt on the layaway plan................just like all the other parties would do.
> 
> Party on everyone, might as well enjoy life before it all goes kaboom.


I can't help but wonder if saving and investing a good portion of my earnings is going to leave me the sucker in the end as most people I know in my age bracket blow it all on living it up. 30-40 years till "retirement" seems like a long time to avoid this potential meltdown in our unsustainable financial system plagued with problems our governments can't solve but keep trying delay. Delay at all costs other than real government cut-backs or down sizing of course.


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## carverman (Nov 8, 2010)

sags said:


> The Alberta PC government, bastion of all that conservative fiscal prudence...........announced their budget today.
> 
> Tax, spend and put the other 5 Billion debt on the layaway plan................just like all the other parties would do.
> 
> *Party on everyone*, might as *well enjoy life before it all goes kaboom*.


Of course, it is the natural thing for a gov't to do. Do you remember Jim Prentice and the hulaballoo about the deficit
a few weeks ago? 



> Prentice told a radio call-in show that Albertans should *"look in the mirror" if they want to know who is responsible for the current fiscal situation in Alberta*.


There you go..it's a politics...."nobody willl take any responsiblity for Alberta's fiscal predicament, not Alison Redford (spending her way as fast as she could while in office), nor Jim Prentice, who came in after her to "mop up the mess" she left behind, nor the good people of Alberta enjoying the years of good times they had when the oil was bringing in all that gov't revenue...
...now it's just the beef left ...and there's a lot of "beef" there.


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## andrewf (Mar 1, 2010)

The last thing Alberta should do, in the face of an oil price recession, is to try and cut public services to the bone to avoid a short-term deficit. All that would serve to do is worsen the recession. If anything, the next few years are probably a good time for Alberta to catch up on infrastructure investment.


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## CalgaryPotato (Mar 7, 2015)

sags said:


> The Alberta PC government, bastion of all that conservative fiscal prudence...........announced their budget today.


You apparently haven't followed the AB PC government in the last 10 years.

They've made some bad decisions over that time period. However there are a lot of factors involved. Alberta has the highest private sector wages in the country, and thus has to have the highest public sector wages in the country to get quality employees. That takes it's toll. Plus all the influx of people is hard on every aspect of infrastructure.

You can't just cut $7 billion from the budget overnight. Especially when there are more people still moving to Alberta.

IMO what they should have done, is in the surplus years spent money to find future efficiencies. But they didn't do that.


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## lonewolf (Jun 12, 2012)

andrewf said:


> The last thing Alberta should do, in the face of an oil price recession, is to try and cut public services to the bone to avoid a short-term deficit. All that would serve to do is worsen the recession. If anything, the next few years are probably a good time for Alberta to catch up on infrastructure investment.


 The added infrastructure will not be needed when the population in Alberta declines from less jobs in the oil fields.


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## carverman (Nov 8, 2010)

CalgaryPotato said:


> You can't just cut $7 billion from the budget overnight. Especially when there are more people still moving to Alberta.
> 
> IMO what they should have done, is in the surplus years spent money to find future efficiencies. But they didn't do that.


They blew the "Heritage Fund" like drunken sailors...now the cupboard is empty. 
No, you can't spend your way out of a recession due to dwindling oil revenues on infrastructure improvements.
Years ago, our one and only NDP gov't (Bob Rae) tried that and we ended up in worse financial shape than if things
were left alone to normal course of events.
Our current Ontario gov't is headed down a slipperly slope of massive debt..with no income, other than raising taxes
to pay that off.


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## sags (May 15, 2010)

There are always reasons why a government is in deficits and debt. 

In Ontario it is largely due to the hollowing out of manufacturing. In Alberta it is some other reason. 

Bottom line to me.............is that politicians who say they will cut taxes and still balance the budget..........are blowing smoke.

They can cut taxes..........like the corporate and royalty taxes in Alberta, or the corporate tax cuts across Canada..........but it creates deficits..........not balanced budgets.

Because.............the spending is entrenched and nobody knows how to put a lid on it...............and still get elected.


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## andrewf (Mar 1, 2010)

lonewolf said:


> The added infrastructure will not be needed when the population in Alberta declines from less jobs in the oil fields.


Would you care to bet $100k CAD that Alberta's population will decline over the next ten years? I will take the opposite side of that bet. I will even give you odds.


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## carverman (Nov 8, 2010)

sags said:


> There are always reasons why a government is in deficits and debt.


Spending more than taking in would be the primary reason.

Involving ourselves in foreign wars...Afghanistan, Iraq and now Syria....add up those billions to the national debt..
but nobody is interested in balancing the budget anymore...its' the "fight against the jihadists" that is foremost on
the Harper gov't.


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