The Complex Economy

By David Dawson

 The economy seems to be so complex that probably no one can fully understand all its ramifications. At least that is how it seems to me. As I see it, in Canada we are like a leaky boat heading for the Niagara Falls. Our politicians are baling as fast as they can, but they don’t really know what they are doing and they are losing the battle anyway. Enough of metaphors.

 What happens when a company buys a new bigger, faster machine that can do the work of, for example, ten people? One or two people are needed to run the new machine and another to look after the maintenance. The other seven have to find jobs elsewhere, but the other jobs have been taken over by other machines or exported to China. The only jobs available are low-wage service-type jobs, hair stylists, tattoo places, or sticking plastic fingernails onto women’s fingers. These service jobs keep the money circulating and whilst the economy is relatively stable, all seems well.

But millions of Canadians go abroad every year or go shopping south of the border. Some of the money that should be circulating around within Canada ends up in the USA or elsewhere. It is the same when you buy ‘made in China’ – there is less money circulating within Canada.

 In Canada we make up that ‘leak’ through agriculture, forestry and mining that just about keeps us afloat, though I believe more dollars are going abroad than is coming in through our exports. Eventually the mines will be worked out and we will have to rely on agriculture and forestry – but it’s not enough. We are already maintaining our high standard of living by borrowing – personal borrowing, municipal borrowing, Provincial borrowing and Federal borrowing. Sooner or later all this money has to be repaid and at that time our standard of living will inevitably crash. So, what could our politicians do now to soften the inevitable? Instead of running deficits and building up debt they should be building up huge surpluses from our mineral resources, but they practically give them away. How much benefit do you as a run-of-the-mill Canadian get from all the mining that goes on in Canada – very little I suggest. Our politicians could and should do better.

 On another note I see the Liberals got re-elected in Ontario largely on a platform of creating jobs. The only jobs worth creating are manufacturing jobs that have added value with a product that can be exported. However politicians of all stripes seem to think that borrowing money and putting it into infrastructure projects will create long-term jobs. I believe this is erroneous thinking. Certainly it creates short-term jobs and puts more money into circulation, but what do those people who have the jobs do with their pay? They go out and buy a new TV or new computer, cell phone, ATV, snowmobile, clothes etc, all of which are made in other countries. So the money the various levels of government borrow (from us remember) ends up in China, and long-term we are worse off. Our politicians could and should do better.