Federal Government & Politics II

[acottawa]

Originally Posted by Build.It

The war in Ukraine didn't cause the inflation in Canada.

That isn’t what the European Central Bank said

The war added heavily to the inflationary pressures building up in the euro area during the post-pandemic recovery and pushed up consumer prices, especially for energy (Chart 2a) and food. Headline inflation increased from 0.3% in 2020 to 2.6% in 2021 and then to 8.4% in 2022 (Chart 1a). Energy and food inflation accounted for more than two-thirds of this record-high inflation in 2022.

https://www.ecb.europa.eu/press/blog...362af3.en.html.

Or the Bank of Canada

When economies reopened, prices for these commodities spiked suddenly. And because these commodities feed into so many other products and services, the ripple effect on other prices was widespread. Then Russia’s invasion of Ukraine made prices surge even more.

https://www.bankofcanada.ca/2023/03/...igh-inflation/

Or the fed.

https://www.federalreserve.gov/econr...-20220527.html

Or the IMF

https://www.imf.org/en/Blogs/Article...regions-031522

[MolsonExport]

Originally Posted by Build.It

Ukraine's total global exports in 2021 (pre-war) was $68 billion.

Total global trade in 2021 was $28.5 trillion.

Ukraine accounted for 0.2% of all global trade prior to the war.

Total Ukrainian imports to Canada in 2021 was $228 million out of a total of $631 billion in total imports for the year.

In 2021 Ukraine represented 0.03% of all Canadian imports.

The war in Ukraine didn't cause the inflation in Canada.

I'm sorry, but your conclusions are not consistent with those reached by economists. The twin disruptions to supply chains caused by COVID and Russia's invasion had a cascading effect on commodity prices, which reverberated through a multitude of markets. You are posting too frequently about things that you don't seem to clearly grasp.


How global forces sparked high inflation:

At the beginning of the COVID‑19 pandemic, prices for commodities like oil, natural gas and lumber plummeted. Because the economy was shut down, people had fewer opportunities to eat out or travel, so demand shifted suddenly from services to goods. But pandemic shutdowns also affected important pieces of the global supply chain, such as factories and ports. This meant that supply couldn’t keep up with all the extra demand for goods. As a result, prices surged.

When economies reopened, prices for these commodities spiked suddenly. And because these commodities feed into so many other products and services, the ripple effect on other prices was widespread. Then Russia’s invasion of Ukraine made prices surge even more.

In a nutshell, the following global forces combined to create a perfect storm:

a spike in commodity prices
a surge in the global demand for goods
impaired supply chains


How domestic forces fanned the flame:

The Canadian economy recovered quickly because businesses and workers were resilient through pandemic lockdowns. As the economy reopened, Canadians were anxious to catch up on things they had missed, so a lot of spending shifted from goods back to services.

But businesses—many of which had laid off employees during the lockdowns—struggled to hire and train enough staff to meet the spike in demand. This resulted in labour shortages that placed even more pressure on production costs. With demand increasingly strong and supply chains still impaired, many businesses began passing on higher costs to their customers by raising prices.

These conditions resulted in global inflation taking hold in Canada.

-Bank of Canada.

[acottawa]

Even the crypto bro in in chief said the Ukraine war caused inflation

https://www.thenationalnews.com/busi...o-ukraine-war/

https://www.reuters.com/technology/u...ow-2022-03-07/

[someone123]

I wonder how much better the world would be if we didn't have Russia problems. It's hard to say but they have contributed to most geopolitical problems around the world at least somewhat, whether we're talking about Ukraine, the Middle East, Africa, or Cuba/Venezuela. Their promotion of communism held back the economies of major regions like China, India, and Africa. Meanwhile most countries on earth basically get along these days. It would be hard to measure the economic impact of all of this.

Russia itself should be much more productive and contribute more to the world instead of being run as a hellhole that periodically invades other countries. We'd have lower prices for a lot of commodities if they were well governed. Western countries should have a strategy to try to bring this about, and the way to start is probably to get Ukraine (and Belarus) into a better state. I believe this will happen eventually but it's worth many many billions to speed it up by a decade or two.

[kool maudit]

Upthread, there has been some discussion as to whether Polievre plans to make meaningful cuts to immigration. Barring a few high-profile, unpopular programmes, I doubt it. The base wants it, but he is in a jam. This is how you get Johnsons and Melonis, too.

It is not only that Canada's sterility impacts the population pyramid with regard to an aging population and fewer youngs propping up more olds. It is also that an expanding population allows for the issuance of more debt and secures borrowing power for the state. Not only that, but each new immigrant represents someone whose debt stands at zero when they cross the border, so the process of bringing them up to average (however this is calculated) represents a large and fairly short-term expansion of debt.

The fact that modern economies create inverted demographic pyramids while requiring population (and more pointedly, debt) expansion is the issue of our day.

The responses to this issue are becoming more frenzied and secretive as we enter the whirlpool.

Polievre has likely already had his sitdowns with the bankers.

[acottawa]

Originally Posted by kool maudit

Upthread, there has been some discussion as to whether Polievre plans to make meaningful cuts to immigration. Barring a few high-profile, unpopular programmes, I doubt it. The base wants it, but he is in a jam. This is how you get Johnsons and Melonis, too.

It is not only that Canada's sterility impacts the population pyramid with regard to an aging population and fewer youngs propping up more olds. It is also that an expanding population allows for the issuance of more debt and secures borrowing power for the state. Not only that, but each new immigrant represents someone whose debt stands at zero when they cross the border, so the process of bringing them up to average (however this is calculated) represents a large and fairly short-term expansion of debt.

The fact that modern economies create inverted demographic pyramids while requiring population (and more pointedly, debt) expansion is the issue of our day.

The responses to this issue are becoming more frenzied and secretive as we enter the whirlpool.

Polievre has likely already had his sitdowns with the bankers.

Our current immigration numbers are way higher than what is needed to maintain population growth or replace retiring boomers. It is unclear what was wrong with 2019 immigration levels, for example.

[someone123]

Originally Posted by kool maudit

The fact that modern economies create inverted demographic pyramids while requiring population (and more pointedly, debt) expansion is the issue of our day.

I feel like it is overrated and that while these problems are not imaginary the focus on them reflects the biases in our politics toward people with more assets and Boomers who implicitly value present-day comforts over future issues like debts they will never repay.

Our demographics aren't really that bad (immigration >> retirements), the low fertility is to some degree caused by the economic circumstances the government is choosing to create, and deleveraging could happen but a lot of people want to keep the music going.

I'm not even sure about this idea that shrinking populations are a crisis. We live in an era of technological progress and there is a lot of low-hanging fruit in Canada if we want to become more productive. Infrastructure-wise we're really behind and it's getting worse. If we had negative population growth for a few years we'd still be able to build lots of new infrastructure if that were a priority and we'd end up better off in that department. It would take a long time in Toronto or Vancouver to get those cities working really well for just the current populations.

[Acajack]

Originally Posted by acottawa

Our current immigration numbers are way higher than what is needed to maintain population growth or replace retiring boomers. It is unclear what was wrong with 2019 immigration levels, for example.

They weren't enough to satisfy ever-growing insatiable coeporate greed?

[kool maudit]

I don't really disagree, but my point was that the longer-term structural problem is likely less confining for politicians. I think there is an issue in bond markets. I suspect Canada's massive debt expansion has created financial conditions that require very high levels of immigration (or rather, that are perceived as being best addressed by such), and that any incoming PM will feel the weight of these.

[someone123]

Originally Posted by kool maudit

I don't really disagree, but my point was that the longer-term structural problem is likely less confining for politicians. I think there is an issue in bond markets. I suspect Canada's massive debt expansion has created financial conditions that require very high levels of immigration (or rather, that are perceived as being best addressed by such), and that any incoming PM will feel the weight of these.

I guess it depends on what you think the counterfactual would be if we didn't have the immigration. On paper if you borrow a lot and bring in more people then the debt per capita shrinks, but we are not seeing a lot of economic growth or productivity growth and debt to GDP per capita, the real debt burden on each Canadian, has been exploding.

You could argue that Canada would be at -5% GDP per year without the immigration and so it's a big net win. I am skeptical of this. I think there's a portion of immigration that's economically valuable that we've had going back many years while the fake school scheme is going to be a net loss.

I also believe the federal government could cut spending if they wanted and it wouldn't cause major economic problems.

[acottawa]

Originally Posted by kool maudit

I don't really disagree, but my point was that the longer-term structural problem is likely less confining for politicians. I think there is an issue in bond markets. I suspect Canada's massive debt expansion has created financial conditions that require very high levels of immigration (or rather, that are perceived as being best addressed by such), and that any incoming PM will feel the weight of these.

But the Tories could also cut spending and lower the deficit to ease pressure on bond markets.

[YOWetal]

Originally Posted by kool maudit

Upthread, there has been some discussion as to whether Polievre plans to make meaningful cuts to immigration. Barring a few high-profile, unpopular programmes, I doubt it. The base wants it, but he is in a jam. This is how you get Johnsons and Melonis, too.

It is not only that Canada's sterility impacts the population pyramid with regard to an aging population and fewer youngs propping up more olds. It is also that an expanding population allows for the issuance of more debt and secures borrowing power for the state. Not only that, but each new immigrant represents someone whose debt stands at zero when they cross the border, so the process of bringing them up to average (however this is calculated) represents a large and fairly short-term expansion of debt.

The fact that modern economies create inverted demographic pyramids while requiring population (and more pointedly, debt) expansion is the issue of our day.

The responses to this issue are becoming more frenzied and secretive as we enter the whirlpool.

Polievre has likely already had his sitdowns with the bankers.

Bay Street is not his base. Not even his fundraising base. His base is probably anti-immigration full stop.

These new fake student immigrants actually arrive with a lot of debt owed to their home country and quickly accumulate more.

PP will avoid talking about immigration during election but I'm sure will normalize levels once elected. Of course grandparents will still come in for us to pay their healthcare and pensions but many other categories will be cut.

[acottawa]

Originally Posted by Acajack

They weren't enough to satisfy ever-growing insatiable coeporate greed?

I don’t know, were corporations even pushing for this? It seems like a lot of recent immigrants are in the gig economy.

[whatnext]

Originally Posted by kool maudit

Upthread, there has been some discussion as to whether Polievre plans to make meaningful cuts to immigration. Barring a few high-profile, unpopular programmes, I doubt it. The base wants it, but he is in a jam. This is how you get Johnsons and Melonis, too.

It is not only that Canada's sterility impacts the population pyramid with regard to an aging population and fewer youngs propping up more olds. It is also that an expanding population allows for the issuance of more debt and secures borrowing power for the state. Not only that, but each new immigrant represents someone whose debt stands at zero when they cross the border, so the process of bringing them up to average (however this is calculated) represents a large and fairly short-term expansion of debt.

The fact that modern economies create inverted demographic pyramids while requiring population (and more pointedly, debt) expansion is the issue of our day.

The responses to this issue are becoming more frenzied and secretive as we enter the whirlpool.

Polievre has likely already had his sitdowns with the bankers.

Last century thinking.

The demand for so many positions is going to be vaporized by AI and other tech. The last thing we need during this process is a slew of young, predominantly male arrivals with time on their hands.

[someone123]

Originally Posted by acottawa

It seems like a lot of recent immigrants are in the gig economy.

I wonder how much of a net win this Uber driving and food delivery is. As consumers people make their choices and that's fine but how does it look once you start considering traffic, future public services for the gig workers, and so on?

I'm not sure how it is all around Canada but I find the gig economy services are worse in Vancouver than in other places that aren't in countries with similar immigration policies. The most obvious comparison is that the US seems to have better service than Canada (and in Western states at least those service workers are earning pretty good wages and have a lot more buying power; your average McDonald's worker in rural Oregon is likely better off than a low end white collar worker in BC).

I think this policy misstep is more a case of the federal government losing the plot and being somewhat ideologically blinded while key blocs in this country feel the drawbacks less acutely as they are insulated by wealth and privilege. Probably less true that it's a huge win for big business overall although I'm sure some profit along with the degree mills.

[whatnext]

Originally Posted by acottawa

I don’t know, were corporations even pushing for this? It seems like a lot of recent immigrants are in the gig economy.

Yum Brands, RBI and more corporations benefit from cheap unskilled labour.

[thewave46]

Originally Posted by someone123

I guess it depends on what you think the counterfactual would be if we didn't have the immigration. On paper if you borrow a lot and bring in more people then the debt per capita shrinks, but we are not seeing a lot of economic growth or productivity growth and debt to GDP per capita, the real debt burden on each Canadian, has been exploding.

You could argue that Canada would be at -5% GDP per year without the immigration and so it's a big net win. I am skeptical of this. I think there's a portion of immigration that's economically valuable that we've had going back many years while the fake school scheme is going to be a net loss.

I also believe the federal government could cut spending if they wanted and it wouldn't cause major economic problems.

The win/loss thing isn't going to pencil out in a time frame that makes bond markets happy. The party's over, Canada still reeks of pissing itself from drinking at the party.

Even if it is a loss overall, the short-term effect of large-scale immigration is to paper over the problem in the now. Bring in a body, load it with debt. Pumps up the GDP in the short-term, loosening the low-end labour market with the flood of warm bodies. Canada 2024 isn't doing (much) value-add. Adding bodies makes the Bank of Canada's job easier - low-end wage inflationary pressures decline with 1930s-style lineups for job at Dollarama.

This also prevents an ugly housing market correction as somebody out there (i.e. cash-rich landlord) will buy inflated housing asset to rent to pile of new suckers.

Net effect in the short term: declining wage inflation with a hit of GDP growth. It's why Canada eked out a 1% GDP gain on 4% population growth last year. Inflation wrangled out of economy despite historically low Bank of Canada interest rates. Declining GDP per capita is always an easier sell than declining GDP, and one is only basically fucking everyone under the age of 40. If I'm a political leader, I try and favour the asset rich old people who are more likely to vote for me.

The political 'will' to address government fiscal imbalance is DOA in current demographic state.

[Truenorth00]

Originally Posted by casper

I think there is zero chance that a major multi-year ship building contract makes it way through any cabinet that involves laying off shipyard workers in Canada to build ships overseas.

Not as impossible as you think. If our shipbuilding sector finds it difficult to deliver, contracting out is very possible. We're having this discussion about submarines right now.

Originally Posted by casper

I don't think concentrating the supply chain for the Navy in Ontario and Quebec will make anything easier and more efficient. Those fleets are based in Halifax and Victoria.

I didn't say anything about concentrating the supply chain for the navy. But you do realize that a warship pant all maritime things right? For example, the combat system for the new frigates is being built by Lockheed Martin in Ottawa and Montreal. So yes, of we had the choice, DND would love to see a lot more of the defence industry concentrated in an area that is accessible by car or train from Ottawa (where project staff for all of DND are located).

Originally Posted by casper

The current federal government has been reasonable to some extend. There are P-8s on order instead of business jets after all.

They've been better than expected. But not nearly as good as their rhetoric would claim. And not nearly enough to avoid the rust out that is happening. Also, Canada is now the only country in NATO without a plan to meet the 2% target. If Trump is elected, that's going to make for some interesting discussions.

Originally Posted by YOWetal

For sure it's not easy. A huge majority does allow them to piss off people for the greater good. I don't think the regional development agencies are even a rounding error in our budgets.

The actual agencies are small. But their influence is massive. They drive requirements which literally cost billions.

Originally Posted by YOWetal

Most of our spending is not useless DEI people telling TrueNorth how to fight a war. Admittedly sure let's get rid of those but to get real savings we have to hit benefits to people or defence and public safety. Cutting child and elderly benefits and the staff that administer them is politically tough for sure. Health even more so and reform is out of the Feds control anyway.

Something radical like cutting benefits but eliminating the GST would be very deflationary and allow CRA (and businesses) to cut thousands of administrators. Sure economically income tax cuts would be better for productivity but eliminating GST starves government and binds the hands of any future government.

A radical "Starve the beast" strategy is an interesting one. Stephen Harper basically attempted a mild version of this with his 2% GST cut. Eventually people got so sick of austerity they elected Trudeau. This idea only works if the would be spendthrift government is scared to borrow. The LPC didn't feel as constrained. Indeed, they've now flipped the script and are basically going to force a future conservative government to impose austerity just to balance the books. Any kind of heavy tax cut will require the kind of austerity that would probably cost the CPC a future election. Look at the UK and the bind British Tories are in. That's kinda what any "scrap the GST" fantasy would lead to.

It's also why Poilievre is so focused on the carbon "tax". It's the only thing he can cut that doesn't actually cut government revenues,while giving the illusion of a tax cut. Lucky for him that most people don't think of the rebate they are going to lose or are really ignorant on their own net cost.

[Acajack]

Originally Posted by acottawa

I don’t know, were corporations even pushing for this? It seems like a lot of recent immigrants are in the gig economy.

Behind the scenes, most definitely.

[Truenorth00]

Originally Posted by acottawa

I don’t know, were corporations even pushing for this? It seems like a lot of recent immigrants are in the gig economy.

Fast food and retail are substantially dominated by foreign students now. It's becoming a stereotype. I think it's fair to ask if some of these places can survive without that cheap labour. I, personally, don't care for these places. But I suspect there's more than a few places where people would start complaining if the local Tim's went under.

And if course, a lot of Canadians are hypocrites here. Hate the housing crisis caused by these students. But also want a fully staffed Tim's drive thru at every suburban intersection. Just look at the complaints post-Covid even all these restaurants were short labour.

I do think we'll see some kind of cut from the CPC. I am curious to see the public reaction with degrading services when this arrives.