Federal Government & Politics II

[Truenorth00]

Originally Posted by acottawa

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

Yeah. But all the talking heads he listens to, tell him that all mainstream economists are morons. So....

[kool maudit]

Originally Posted by whatnext

Last century thinking.

While I am not sure about AI etc., I certainly agree that this is not only last-century thinking, but short-term to the point of foolish thinking. I wasn't intending to endorse the debt narrative, but just to point to it.

[acottawa]

Originally Posted by Truenorth00

Yeah. But all the talking heads he listens to, tell him that all mainstream economists are morons. So....

That’s why I quoted the Princeling of Trumpland in the next post.

[Acajack]

It's also really important for that Timmies to be open 24 hours.

[acottawa]

Originally Posted by whatnext

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

Ok, but that is a drop in the bucket of the economy.

[acottawa]

Originally Posted by Truenorth00

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.

Somehow these companies managed to staff their outlets before the pandemic.

I also suspect likely cutbacks will have a knock on effect in terms of freeing up labour for the McEconomy.

[casper]

Originally Posted by Truenorth00

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.

The biggest issue on the west coast was how the previous conservative government were restricting cash flow causing delays on the project. That help have a balanced budget. This government is less into playing those types of games.

Originally Posted by Truenorth00

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).

I do. That said, it is fairly spread out now. A good part of that industry is near the dry dock and port facilities.

Originally Posted by Truenorth00

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.

I don't understand what motivates the US electorate, as it looks like Trump will be elected. Lots of time for that to change.

I fear the 2% target may be irrelevant in our relationship with the US. The US under Trump may well pull out of NATO.

Originally Posted by Truenorth00

A radical "Starve the beast" strategy is an interesting one. Stephen Harper basically attempted a mild version of this with his 2% GST cut.

What the Harper government would do is ask each department for three budgets. Baseline, 5% cut or 10% cut each year. Then treasury board/cabinet would pick one.

Not a bad thing in year one or two. An organisation of any size always have some questionable activities that no one will notice if they just did not happen. If you do that year after year, at some point you start to compromise what is being delivered.

[Acajack]

Originally Posted by acottawa

Ok, but that is a drop in the bucket of the economy.

New people coming in from poorer countries depresses wages across the economy.

They also represent millions of new consumers for corporate Canada.

[thewave46]

Twenty-first century stagnation is going to be a drawn out process. I personally am unsure of what gives out first.

Do the money men get wise that debt accumulation is unsustainable?

Do people get wise that the technological bounty of the 20th century is unlikely to repeat itself in the 21st?

How long does the West's inverted population pyramid drive political inertia?

Can a country that has essentially no strategy other than 'paper over current problem' survive in a harder environment?

If we're going down the free-market Australia 'resources uber alles' path, please crimp immigration to reasonable levels and put the country on a sustainable fiscal path.

If we're going to try and make something against the grain of the former, provide a strategy that can survive multiple governments and have the stones to defend that policy.

The 'high immigration', 'ladel on debt for the old', and 'resources uber alles' current moment is just such such a risky and stupid strategy.

[theman23]

Originally Posted by Acajack

New people coming in from poorer countries depresses wages across the economy.

They also represent millions of new consumers for corporate Canada.

Every single foreign student needs to eat and buy a cell phone plan.

[YOWetal]

Originally Posted by Truenorth00

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

I don't think it's these agencies but basic politics.

Originally Posted by Truenorth00

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.

Agree with most of this. But cut CCB and OAS (second never going to happen) and and eliminate GST and a future government would have to struggle just to restore those programs. I am probably very wrong about the nature of cuts but suggest we will see something much more radical than we are talking about. Maybe 50% of DFO, CIRNAC, Heritage Canada etc. All the departments mainstream Canadians have no interaction with. A huge cut to CRA also seems inevitable.

Originally Posted by Truenorth00

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.

Good point. I think any other tax cut requires a painful cut in spending which generally isn't on politically however in this environment and with a 200+ seat majority he could try it.

[lio45]

Originally Posted by Acajack

New people coming in from poorer countries depresses wages across the economy.

They also represent millions of new consumers for corporate Canada.

Exactly. If you’re selling a given widget (especially an affordable one) and have to pick only one market between India and Switzerland, knowing you’re barred from the other, which one will you pick?

The quality of life of the average person isn’t the important metric here; it’s how much total buying power there is, the per capita is irrelevant.

[lio45]

Originally Posted by theman23

Every single foreign student needs to eat and buy a cell phone plan.

Yep

The Ponzi Scheme has pros and cons, it’s obvious the Liberals’ deliberate erosion of the average Canadian quality of life isn’t something they’re doing just for fun (as an evil cliché villain would do); it comes with positive effects too.

[Acajack]

Originally Posted by theman23

Every single foreign student needs to eat and buy a cell phone plan.

Loblaws-Weston

Rogers

[Acajack]

Originally Posted by lio45

Exactly. If you’re selling a given widget (especially an affordable one) and have to pick only one market between India and Switzerland, knowing you’re barred from the other, which one will you pick?

The quality of life of the average person isn’t the important metric here; it’s how much total buying power there is, the per capita is irrelevant.

Corporate Canada doesn't care about the quality of life of individual Canadians, or even the future of Canadian society.

[YOWetal]

Originally Posted by acottawa

Somehow these companies managed to staff their outlets before the pandemic.

I also suspect likely cutbacks will have a knock on effect in terms of freeing up labour for the McEconomy.

Yes they will have to hire students again who are a lot less productive at $16 an hour or they'll have to pay $25 for efficient staff they are losing to tipped restaurants where everyone is migrating as food inflation has seen their compensation soar.

Knock on effects are also big for sure as will cutting benefits cause a return to the labour market.

And at the end of the day maybe we will lose a few marginal Subway locations and fast food profit margins might fall. We'll survive. They've already raised prices as if they are paying $30/hr Swiss wages so seems like there is a margin there. McDonalds Canada for example was one of the leaders in revenue growth up 30%+ since pre pandemic same store sales.

[someone123]

Originally Posted by lio45

The Ponzi Scheme has pros and cons, it’s obvious the Liberals’ deliberate erosion of the average Canadian quality of life isn’t something they’re doing just for fun (as an evil cliché villain would do); it comes with positive effects too.

I could see it coming about due to a complicated mix of factors though, and this outcome might have been contingent on some relatively minor things. Maybe even the McKinsey recommendation.

For example one of many factors is that Canadian society can be very moralistic and immigration has taken on an almost religious quality here for a lot of people, so on a collective level people's brains are effectively partially shut off when it comes to considering immigration policy. Another is we have oligopolies that are cozy with government and another is that a large portion of political power is held by people who like when housing becomes less affordable. And what are the NDP doing? Nothing.

[Truenorth00]

Originally Posted by lio45

Yep

The Ponzi Scheme has pros and cons, it’s obvious the Liberals’ deliberate erosion of the average Canadian quality of life isn’t something they’re doing just for fun (as an evil cliché villain would do); it comes with positive effects too.

I honestly believe it's mostly some combination of can kicking and naivete about several things. I actually do think they believed the market would just build more if demand picked up. They were also extremely naive about how student admissions would ramp when they opened it up. And they made it as liberal as possible. No pun intended. They didn't restrict student visas to needed fields. They simply granted a pathway to residency to all grads. It's why we see much less growth with foreign students at universities than colleges. That might flip now that graduate students are exempt from the quota. We're about to have a boom in MA graduates.

[Truenorth00]

Originally Posted by acottawa

Somehow these companies managed to staff their outlets before the pandemic.

Fewer locations. Shorter hours. Lower pay. I'm okay with going back to fewer locations and shorter hours. I do wonder how the public will react though. Especially, in some smaller towns and suburbs.

Originally Posted by acottawa

I also suspect likely cutbacks will have a knock on effect in terms of freeing up labour for the McEconomy.

I'm not sure this is a good thing. Gig work is even more precarious than retail.

[Truenorth00]

I was listening to a recent Gen Squeeze podcast on a long drive today. The guest was "Millennial pollster" David Coletto. He pointed out some huge generational differences on several issues. Younger voters are much more likely to support both carbon taxes and taxing capital gains on housing. He also pointed out that Trudeau wouldn't be Prime Minister of it wasn't for voters under 40 in 2015, which makes the current Liberal approach to housing and immigration particularly surprising because it virtually guarantees a loss.

I wonder if there's a political case to tax capital gains as a winning housing policy. Everybody always assumes it's a losing issue. But maybe the politics have changed?