Is anyone minding the store?


All the political parties of Canada are working together to ensure that there is no mention, no discussion, no action, in relation to the economy.  They all follow the same policy, a policy of no policy and no action.

In relation to the economy there is only one party, the "Canadian political system" party. 

The Canadian political system is not governing.  It is not acting.  It is doing nothing.  It is letting everything slide.  It is criminal negligence.  Here are some examples:

No action plan to put people back to work.  Two million Canadians, including 250,000 young adults in the age range 25 to 29, are unemployed.  No policy or plan to get those numbers down.

No action plan to control purchasing of houses and apartments in Canada by foreigners.  The result is skyrocketing prices in Canada so that people who actually live in Canada cannot afford to buy a house or apartment. 

No action plan to keep car manufacturing in Canada.    Forty years ago Japanese car manufacturers were told to manufacture in Canada if they want to sell cars in Canada.  Now this principle is being thrown aside.  General Motors got a bail-out from Canada in 2009 but our thank-you is that GM now wants to move out.  Our economy is already weak.  If we lose our car manufacturing, our economy will be destroyed completely.

No action plan to control importation of manufactured goods.  The imbalance between our exports and our imports increased by 660 percent in the last ten years.  We are bleeding out to pay for foreign-made goods that are not balanced by our exports.  $120.7 billion in 2014.

No action plan to prevent sales of Canadian companies to foreign interests.  Our economy is withering as we lose our best companies, our technology, and often our jobs.  Sale of a Canadian company to foreign interests creates no benefit to Canada whatsoever.  Remember how Jack sold the family cow in town and came back with a handful of beans?  But they were magic beans while our beans are simply beans.

No action plan to control the size of the foreign-owned sector in Canada.  Nothing to prevent giant foreign companies, Walmart, Home Depot, Nordstrom, from moving into Canada at will and doing whatever they please.  Our economy is bleeding out because foreign-owned companies send the profits back home.   And when we sell a Canadian company to foreign interests, we convert a Canadian company into a foreign-owned company and increase the bleed-out.

The list could go on.  A policy of no action is still a policy on an issue.  The Canadian political system is wrong on every issue.

Please take a look at our free on-line book, revised based on 2014 data. We take not 400 or 700 pages, but just over 50 pages, to show in detail what the problems are and what corrective actions are needed:

http://savecanadianeconomy.ca/SaveTheEconomy.pdf

Do we want to continue our present downward path to destruction, or do we want to turn Canada around and put Canada on an upward path to prosperity? 

Who benefits from destruction and why?  There is enough room in Canada for everyone to be on the upward path!

The economy of the United Kingdom (UK)

I was asked to comment on the UK economy, so here goes!

The idea of sending manufacturing away to low-wage countries was dreamed up in the 1960s.

The process of sending manufacturing away has been going on for 50 years, not 30 years as some people say.

In the early 1960s, I had just graduated from university and I heard a news report that Singer Sewing Machine Company was going to send manufacturing away to low-wage countries.  I knew immediately that this idea would take hold and would lead to the disaster we see today.

In 1966 I moved to Canada and I found that Canadian business and government officials wanted to do the same thing as in the United States. i.e., send manufacturing away to low-wage countries.

Similar to going to the confessional, Canadian officials went to a think tank to get a dispensation in advance, that would allow them to do what they wanted to do.

The think tank provided the following:

+  Manufacturing is old-fashioned and can be done anywhere  

+  Instead of manufacturing, we can do high-tech work, knowledge-based work

The above statements coming from the think tank were and are completely fallacious and incorrect, and demonstrate no understanding of anything.

From the above, it is clear that "ideas" that dawned in the minds of UK officials and "thinkers" in the 1970s and  1980s were already old-hat.

Let's summarize the facts

To be prosperous, a nation must have an adequate level of manufacturing.  It can be paper clips, toys, garden tools, toilets, subway cars or jet engines, but a nation must do manufacturing.  It is vitally important to understand and accept this fact. 

Manufacturing creates wealth because it creates a needed item that was not there yesterday.  No other sector of the economy provides this wealth creation effect.  Send away the manufacturing and you send away the wealth creation effect, leaving the nation impoverished.  This result is clearly seen in the UK and in other western countries.

Knowledge-based work is very good but the physical items that are manufactured based on this work must be manufactured at home, not in the Far East.  Note also that "knowledge-based work" can also be sent away to foreign countries.

The connection between manufacturing and national wealth can be seen in the prosperity of China, Thailand, and Mexico, and in the absence of prosperity in the UK and other western countries because they have sent away their manufacturing.

Some people say that there is no point bothering to bring manufacturing back to western countries, because the manufacturing will be automated and will not create employment.  This viewpoint is one of many completely wrong viewpoints that are repeated over and over again.

The fact is that if you do the manufacturing in UK the UK economy will receive the wealth creation effect even if there is not a worker in sight in the factory.  But there will be tremendous further benefit to the UK economy if the automatic manufacturing equipment is designed and manufactured in the UK. And of course this work will create employment.

Dr. Jon Rynn, is a political science professor in the United States and is the originator of the idea that for full prosperity a nation has to make the machines that make the goods.   

China

The Chinese government in 2006 announced a long-term plan to become self-sufficient in manufactured goods.  So even China is concerned about too much importation of manufactured goods.

This move by China provides the perfect opportunity for western countries to stop worrying about WTO and other bureaucratic nonsense.  The western countries must stand up on their own two feet and take back control of their countries.  The idea of uncontrolled and unlimited free movement of goods has been totally discredited.

Included in the above, western nations must arrange with their suppliers to reduce importation of manufactured goods, down toward balance with the exports of the western countries. 

China and other supplying nations must be brought to understand that if they don't agree to the above arrangement they will kill the goose that lays the golden egg.  In other words, the western nations will be so completely wrecked that they will no longer be able to buy ANY imported goods.

As an example I analyzed the trade for Canada in 2013.  Canada trades with 220 countries.  In round numbers, 100 of those countries supply more goods to Canada than Canada exports to those countries.  As an example within an example, China provides five times more goods to Canada than Canada provides to China.

I calculated that if all the 100 countries reduced their supply to Canada by a reasonable 50 to 60%, Canada's severe and damaging trade imbalance would largely disappear.  Canada could get on to an upward economic path with increased manufacturing, increased employment, and increased wealth creation that would benefit all sectors of the economy.

A busy business of fantasies

In the USA, there are commentators who create fantasy explanations for why the economy is so bad with so many people unemployed.  These fantasies have been imported into Canada by the largest "news" magazine in Canada.  A UK cabinet minister apparently had time on his hands and created another fantasy explanation that can also be found in the same Canadian magazine.

One commentator puts forward the blame-the-victim theory, in which ordinary people, not powerful business and government officials, are responsible for the problem.

The FACT is that the present negative situation in the western countries has been created by sending manufacturing away.  This insane action is the ONE AND ONLY cause of the problem.

And the FACT is that the one and only way to SOLVE the problem is to reduce importation of manufactured goods to allow domestic manufacturing to recover and grow.

Canada

Canada has a strong censorship problem.  ALL the political parties of Canada are cooperating with each other to prevent any mention or discussion of the obvious idea of  reducing importation of manufactured goods.  The election campaigns consist of the softest of generalities rather than any hard facts or proposals related to improving the economy.

For example, I have proposed to the Ontario Minister of Finance (Ontario is one of the provinces of Canada) that the Ontario government would put in place the principle that all purchases by the government must be from Canadian sources.  This measure would cost the government nothing and would increase employment and improve the economy immediately.

There is surprisingly little information available from Statistics Canada regarding imports and exports of manufactured goods.  They claim there is no information prior to 1988.  When I asked for the information for 1988 and later, they said it is under review and not available for release. 

Industry Canada has released data showing that from 1992 to 2005 inclusive the balance of trade in manufactured goods bumped up and down between plus and minus $20 billion.  This amount is not of great concern.

But in 2006 the imbalance suddenly jumped to $27.9 billion, nearly double the highest previous values.  And from then on the imbalance increased significantly every year, up to an estimated amount of $121 billion for 2014.

These amounts refer to the net amount of money that Canada has to send out to foreign countries in each year, to pay for imported manufactured goods.  ("Net" refers to payment for imports over and above the imports balanced by exports.)

From 2005 to 2014 the net amount of money sent out increased by a factor of 7.6, or in other words a 660% (six hundred sixty percent) increase in only ten years. 

Canada is a small nation with a population under 36 million, suffering under total mismanagement by the political system.  No controls are placed on huge foreign companies coming in, at any time, as they please.  In addition, many Canadian companies have been allowed to be sold to foreign interests.  All of these companies send their profits back to their home countries. 

The total outflow (net purchases of foreign goods, plus profits of foreign-owned companies going out) was $199 billion in 2014, in round numbers $5,600 for each and every man, woman, and child in Canada.  The total for the ten years 2005 to 2014 inclusive for both outflows was $1.453 trillion.  Think how the Canadian economy and the Canadian people could have benefited if even half this amount had been retained in Canada, to work in the Canadian economy.

And the other question is how long can Canada survive these two growing outflows, real wealth hemorrhaging out of Canada, never to be seen again. 
 

Canada: The Unaffordable Cost of Foreign-made and Foreign-owned

Thank you for your interest. Please have a look at our new book.  It deals with the Canadian economy, and it's available on Amazon. The title is above.

You can click on this sentence to see the book.

You will see "Look inside".  Click on that and you can read the first five pages free of charge on Amazon.com.

For people who own a kindle, we suggest to purchase the book from Amazon for the very reasonable price of $0.99! 

For people who don't own a kindle, if you provide your e-mail address, we will send the book to you free of charge.

See our e-mail address below. 

A free app is available from Amazon for use by people who don't have a kindle.  However this method seems very complex.  

For Canadian residents, it is probably easier to order the book on Amazon.ca.  The book is ordered from the Amazon page where you see the book.    

Please tell relatives, friends, co-workers, about the book.  We need a lot of people tuned into the ideas in this book.  We want to put pressure on managements of chain stores to carry more made-in-Canada goods, and on politicians to wake up.

Thanks again for your interest and support, and feel free to get in touch at esj@interlog.com or via Twitter @canrestartjobs

Down and Down and Down

+

Please note:  Some words in the article below are in red and underlined, the result of unauthorized advertisements creeping in.  Please disregard!





The following text recently appeared on the cover of a major Canadian magazine:

THE NEW UNDERCLASS

 

Why so many smart, educated, ambitious young people have no future

 

 

The above text accurately describes the tragic employment situation in Canada, for young adults and for Canadians of all ages.  The further tragedy is that it does not have to be this way.  With correct and rational management of our country, our employment/economic situation could be a lot better.

The media generally, including TV, print, and on-line media, will not publish factual presentations on how we got into our unfavorable employment/economic situation, and how we could turn the situation around.  All we see in the media is one side of every issue. 

Prime Minister Harper's policies are very damaging to Canada but the Liberals and the NDP are providing only very weak if any challenge to these policies.

Students are busy with their studies.  But I suggest students should take time to look up and out into the world they will be entering after completion of their programs.  I hope to attract many thousands of students to join with me to force politicians of all parties to take real action to increase employment opportunities for young adults and generally for Canadians of all ages.


Conclusion

We need forthright action to deal with the severe lack of employment faced by Canadians.  Waiting and hoping that the economy will improve is not enough.

There is no way to exaggerate the importance of manufacturing to a healthy economy.  We have to increase manufacturing in Canada to make it possible for the economy to offer employment to Canadians of all ages and all educational backgrounds.

To increase domestic manufacturing, we have to reduce imports of manufactured goods.  For example, our imports of manufactured goods from China are five times our exports to China.  This situation is not reasonable; it is not "trade".  It is a pathological phenomenon never envisioned by economists prior to the 1960s.  

We have to tell each country we "trade" with that we will not allow imports of manufactured goods above the level of that country's purchases from us.  We can do this.  We don't have to be slaves to the World Trade Organization.

Reducing imports of manufactured goods, not to zero but down to a level with our exports, with resulting increase in domestic manufacturing, is the only way to turn our economy around and turn the employment situation around.


Seven deadly sins: seven wrong Harper policies taking Canada down and down and down

Selling Canadian companies to foreign interests (Liberals and NDP also support these sales), despite polls showing 70% of Canadians are against these sales.

Allowing sales of mines, lands, and forests to foreign interests, thereby losing sovereignty over these priceless and irreplaceable assets.

Allowing sales of raw logs to foreign interests, without requiring processing in Canada of the logs into finished lumber, thereby losing Canadian manufacturing jobs.

Allowing sales of crude oil to foreign interests, without requiring processing in Canada of at least some of the oil, thereby losing Canadian manufacturing jobs.

Trade deficit in manufactured goods tripled since Harper took office, to an estimated $100 billion in 2012 (almost $3000 per capita).   Demonstrates massive failure of Harper policies on trade and other aspects of management of the economy. 

Entering into trade deals and treaties with China and EU that will severely damage the services sector in Canada, as well as further damaging the manufacturing sector.

Failure to recognize that loss of manufacturing creates government deficits, due to loss of value-added effect and loss of manufacturing jobs.  Cutting needed services in an attempt to reduce deficits does not get at real cause of problem, and is counterproductive.


Down and down and down

In addition to our present severe employment problem, we have to face the fact that Canada is continuing to go further down because every Harper policy is absolutely wrong and aimed exactly in the wrong direction. 

 

But I do not claim that the Liberals or NDP if in power would be doing any better.  A glaring example is that all three major parties, Conservative, Liberal, and NDP, amazingly and inexplicably are prepared to allow sales of Canadian companies to foreign interests.  All three parties try to explain why a very bad idea is somehow good for Canada.  And they take this position despite recent polls showing that on the order of 70% of Canadians do not want to see sales of Canadian companies to foreign interests.

Is there some behind-the-scenes central authority that has ordered all three parties to support sales of Canadian companies to foreign interests?  Or are the Liberals and NDP making their own decisions to support sales of Canadian companies?  Are they afraid to be different from Harper?

The three parties are on the same page of the same hymnbook on this issue.  On request I will provide texts of statements from the three parties, showing the strong similarity!

Generally if the reader has questions, comments, criticisms, please contact me  immediately at          esj@interlog.com

I want to enter into dialogue with Canadians to improve my message and make it more effective.


Policies that are taking us down

Under this heading and following headings, I mention policies and actions of the Harper government that are doing more damage to the Canadian economy every day.

Selling Canadian companies to foreign interests is absolutely the most stupid and short-sighted action we could take.  After the recent sale of Nexen, Harper seemed to say that there will be no more sales.  But I strongly suspect that in fact Harper after an interval will allow further sales. 

The government is allowing the sale of Canadian mines, land, forests to foreign interests.  Again, these actions demonstrate complete stupidity and short-sightedness beyond belief.  Sell the coal, sell the oil, but don't sell the companies, don't sell the mines, don't sell the land, don't sell the forests.

Sales of raw logs to foreign interests are being allowed, abrogating regulations that existed for many years prohibiting such sales. The object of the regulations was to create employment through processing of raw logs into finished lumber, thus benefitting the economy and all Canadians.

There is no effort to do refining or processing of at least part of the crude oil we are selling or propose to sell in the future.  Similar to the issue of raw logs, we are missing the opportunity to benefit the economy, benefit the employment situation, and benefit all Canadians, through domestic processing of crude oil.


Failure to understand

Most ordinary Canadians have a strong, practical, commonsense belief that manufacturing is important to our economy.  Manufacturing provides employment directly, and also creates a more complex economy with lots of niches where people of all levels of education, in many different fields of study, can find employment.

In addition, and very important, manufacturing provides a value-added effect that enriches the economy.  Very few people understand this critically-important fact.  If we send manufacturing activity away to foreign countries, we lose jobs AND we impoverish our economy and our country. 

The problem is that the people who have power in Canada, the people who run the country, do not understand, or more likely do not want to understand, that a viable economy requires manufacturing. 

This lack of understanding was demonstrated in the 1960s, when power groups in Canada created a rationale for what they already wanted to do, namely send manufacturing away to supposedly low-cost countries.

These power groups went to a tame think-tank in 1968 (approximate date) and obtained a report stating that manufacturing can be done anywhere.  In place of manufacturing, Canada will forge ahead with knowledge-based industries. 

The idea that where manufacturing is done is immaterial to the health of the nation is one of the biggest bloopers of all time.  Western countries have now completed a 50-year test of this idea.  The present disastrous state of the economies of all western countries proves beyond any doubt that this idea is wrong.  

Another fallacy is that we can rely on "knowledge-based " jobs, as we now see that these jobs can also be sent away to low-cost countries!


Harper relationship with foreign countries

Once we understand that we can't have a healthy economy without manufacturing, then we see the disaster in all Harper's trade deals since he took office in 2006, completed and proposed.  Rather than helping manufacturing in Canada, these deals are destroying manufacturing.  See below for further comments on this issue.

Harper is delusional when he thinks he wheels and deals on an equal footing with China or European Union (EU). In fact, in terms of population, Canada is a tiny country in comparison with China and EU.

China and EU have huge and varied manufacturing bases.  As a result they have little or no need for our manufactured goods.  So we can only lose through Harper's naive wheeling and dealing.

Harper's proposed TransPacific deal, which includes other Asian countries, will also not help Canadian manufacturing.  Some of these countries do a lot of manufacturing themselves, and in any case China is right at hand for any manufactured goods needed.

Proof that Harper's policies are headed in exactly the wrong direction can be seen in our international trade figures.  Our trade deficit in manufactured goods with all foreign countries has tripled since Harper took office.  The estimated trade deficit for 2012 is $100 billion, almost $3000 for each and every Canadian man, woman, and child.  The disastrous trend in these trade figures directly demonstrates continuing job loss in manufacturing.  See the Appendix for detailed information on this topic.

This net $100 billion is real wealth hemorrhaging out of our country, weakening our economy.  $100 billion kept in Canada could provide manufacturing equipment and wages for one million Canadians. 

Completed and proposed deals with China and EU also include trade in services.  The further total delusion is that Canada, the mosquito to the elephant of China or EU, will obtain service work.  What will really happen under these deals is that Canada will suffer further employment loss as powerful companies from powerful countries march in and take our service work.  In addition, if for example a city in Canada has a policy of placing engineering service work with Canadian firms, we will be subjected to penalties decreed by tribunals set up under these deals.


On the same page on another issue

If you are driving your car along the 401, and you see on your dashboard that the engine temperature is going up and up, are you going to keep on driving, or are you going to stop the car and investigate the problem?

In Canada we have, at substantial cost, a highly competent agency that provides data on our trade deficit in manufactured goods.  If we see the trade deficit going up and up, do we keep on driving, or do we pull over and lift the hood to see what's wrong?

Answer:  Our politicians keep on driving, despite the fact that in so doing they have wrecked the engine (of the economy)!  Politicians pay no attention to the trade deficit data, even though we spend money to have the data collected and presented on the government website.

No politician talks about the steady increase in our trade deficit in manufactured goods since Harper took over.  (Again, please see Appendix.)  The Harper record of a tripling of our trade deficit is a huge target that could be attacked by the Liberals and NDP to their great advantage.   But not a peep!

Do we have here another case of a mysterious central authority dictating what the political parties are allowed to say?  (In this case, nothing!)  Or have the three parties made their own decisions not to mention this extremely frightening issue?

More generally, Liberal and NDP reaction to Harper's trade deals and other policies is muted.  So Harper is free to proceed with his insane policies and actions.

I have absolutely no connection with the Green Party and I am not suggesting how anyone should vote. But it appears that the only voice in Canada sounding the alarm on Harper is the Green Party.


How can we turn Canada around?

The first step is to recognize that China is an enemy, not a friend.  For example, China's objective in buying a Canadian company is to help China, not Canada.  Selling a Canadian company to China helps China, with absolutely no benefit to Canada.

Rather than cozying up to China with trade treaties and trade deals, we should be cutting ties with China.

All western countries, USA, UK, Australia, EU, others, have suffered tremendous job loss by allowing jobs to be sent to China and other low-wage countries.  But no other country has cozied up to China the way Harper has.

Canada buys five times more manufactured goods from China than China buys from us.  (USA figure is just under four.)  Our trade in manufactured goods with all other major countries except USA is also in negative territory.  The result is our $100 billion per year net hemorrhage to foreign countries.  See Appendix for details. 

If a patient is bleeding heavily when brought to the emergency room, hospital staff drop everything to work to stop the bleeding.  Canada or any other western nation is no different, except that we have not yet been taken to emergency!

How long can Canada go on, suffering a huge hemorrhage of money and jobs?

We have to end the blind obedience to World Trade Organization (WTO) rules and regulations.  It is crystal clear that the whole WTO concept is a complete disaster for all western countries. 

We have to tell each supplier country we deal with that we will not allow imports of manufactured goods beyond the level of that country's purchases from us.

Within weeks of putting this policy into place, there will be hope in the air, as existing and new Canadian manufacturers begin to ramp up.  When the policy is fully implemented on a stepwise basis over three or four years, we will have a new Canada with much stronger employment and stronger economy.

Detractors will object to this idea, but they have no solution of their own.  They point to allegedly higher costs of Canadian-made items, but fail to consider the hidden societal/financial cost of saving one dollar by buying a foreign-made item, probably in the area of five to ten dollars.


The famous bottom line!

Reducing imports of manufactured goods, not to zero but down to a level with our exports, with resulting increase in domestic manufacturing, is the only way to turn our economy and our employment situation around.


Appendix

The discussion in this Appendix relates to trade in manufactured goods.

International Trade is measured in the following way:

Balance of Trade = exports - imports

If exports are $10 billion and imports are $5 billion, the Balance of Trade is $5 billion and you are in good shape.

If the opposite, the Balance of Trade is $5 billion - $10 billion.

The result is        -$5 billion

The Balance of Trade is negative and you are in trouble!

Math is coming in here.  It is necessary to understand positive numbers and negative numbers. 

To make discussion easier, if the result is negative as shown above, we simply say
"Our negative balance of trade is $5 billion."

If we are doing even worse, and the Balance of Trade is    -$20 billion, we say the negative balance of trade is $20 billion.  As the negative balance of trade gets larger, we are in deeper and deeper trouble.

Harper became prime minister in 2006.  The following numbers express our negative balance of trade in manufactured goods with all foreign countries, over 200 countries, for each year.  For an individual country, the Balance of Trade may be positive or negative.  Add the Balances of Trade for all the countries, using the correct procedure as learned in math courses, and you get the net result, namely the Balance of Trade for that year.

Negative balance of trade in billions of dollars
2006  27.9
2007  32.6
2008  59.0
2009  76.0
2010  81.0
2011  93.1
2012  100.0

2012 figure is estimated; the official government figure was not yet available at time of writing.

Note that the negative balance of trade became worse every year.  In other words, our negative balance of trade was larger every year. 

Now look at our major traders:

Amazingly, our Balance of Trade with USA is positive!  It was $19.7 billion in 2011, and a lot larger a few years earlier.

We have a negative balance of trade with the following, for 2011:
(again in billions of dollars)
ASEAN countries    7.5
China                    38.2
European Union    27.0
Japan                     8.3
Mexico                  17.8

The ASEAN group of countries is made up of Indonesia, Malaysia, Phillipines, Singapore, Thailand, Brunei, Burma (Myanmar), Cambodia, Laos, Vietnam (10 countries in all).





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+
 



Two huge issues for Canada

+

 

 

The Canadian people desperately need someone who can and will save Canada.

Prime Minister Harper’s plans, if not stopped, will destroy the Canadian economy.

The ordinary working people of Canada know what has to be done.  They are looking for a leader who will do it. 

The first issue is that we have to stop all sales of Canadian companies to foreign entities.  There is absolutely no benefit whatsoever to the Canadian people or the Canadian economy in selling a Canadian company to a foreign entity. 

The other huge issue where Canadians are desperately looking for leadership is Harper’s delight in making big business deals with China, and also with the European Union.  Again, the ordinary working men and women of Canada know that these deals are disasters for Canada. 

The reasons why these deals are bad for Canada are two-fold:

o  We are tiny Canada (in terms of population) getting into a deal with a huge entity, China or European Union.  It is a deal between an elephant and a mosquito.  The mosquito never comes out ahead in this type of deal.

o  Rather than getting closer to China with the latest Harper deal, we should be cutting ties with China.  Our imports of manufactured goods from China are five times our exports to China.  This situation cannot continue.

We are at a crossroads in Canada now, created by Harper's proposed deals.  We are facing a stark choice.   Either we go forward with Harper to destruction of the Canadian economy, or we find leadership to stop Harper and put Canada on a path to economic recovery.

A funny/sad story

I want to tell you a funny story.  About three weeks ago I received a statement from the Liberal Party, stating how good the Liberal Party is and how bad the other parties are.  The criticism levelled at the NDP was that the NDP is against all sales of Canadian companies to foreign entities. 

In other words, the Liberal Party is saying that sales of Canadian companies to foreign entities are very good for Canada, and any party that does not support these sales is doing a disservice to Canada.

The funny aspect and the very sad aspect is that unfortunately the NDP is not against selling Canadian companies.  In a recent NDP policy statement I received today, there are comments made by Ms Helene LeBlanc, NDP MP for Lasalle-Emard, and Industry Critic, referring to issues of determining net benefit to Canada of the proposed Nexen sale, and also the issues of whether jobs will be protected and whether the head office will remain in Canada.

Ed Farkas comment to Ms LeBlanc:  If you are worried about these issues, then obviously you should come out strongly against all sales of Canadian companies to foreign entities.  In this way you will achieve the best chance of maintaining jobs and head offices in Canada.  If you discuss the details of a proposed takeover with the Conservatives, you legitimize the idea of takeovers.

The NDP statement also includes a statement by Mr. Peter Julian, NDP MP for Burnaby-New Westminster, and Natural Resources Critic.  Mr. Julian is quoted as follows:  "Foreign investments are crucial for reinforcing our economy, but we must ensure that these investments are not made at the cost of quality jobs and the sustainable development of our resources".

Ed Farkas comment to Mr. Julian:  My comment is the same as my comment to Ms LeBlanc.  In addition, I am very unhappy to see your statement "Foreign investments are crucial for reinforcing our economy."  Where did you get this statement?  What factual basis do you have for this statement?  Have you received instructions to use this wording?  Are you aware that this is the same wording used by the Conservatives and the Liberals?

Where is the left-leaning party that is supposed to be acting in support of the ordinary working (or unemployed) people of Canada?


Further discussion of sales of Canadian companies

The Conservative, Liberal, and NDP parties (alphabetical order) appear to accept “foreign investment” as a good thing.

 

“Foreign investment” is code for “selling a Canadian company to a foreign entity”.   A code phrase is used because it sounds better.

 

After decades of infinite repetition, many people use this code phrase without thinking of its real meaning.

 

Regardless of terminology, the fact is that a foreign purchase of a Canadian company provides no benefit whatsoever to the Canadian economy, to the Canadian people, or to Canada itself.

 

Often we hear

 

+   “…the need for foreign investment to grow our economy and create jobs.”

 

+   “We need foreign capital to develop our resources.”

 

These statements are completely and totally incorrect.

 

How could our economy get larger by selling one of our companies?  If we now own a smaller number (by one) of billion-dollar companies, our economy must in fact be smaller!  We have a one-time wad of cash, but profits and dividends formerly going into our economy from this company are now whisked out to the foreign entity.

 

The real and correct meaning of “foreign investment” applies to a case where a country does not have the capital needed to build a facility.  Examples:

+  A country borrows money from a foreign entity for use in constructing facilities that are needed immediately.  The country sees the interest payments as an acceptable price for having the facilities available at an earlier date.  The borrowed money is ultimately paid back to the foreign entity.

+  A foreign company comes in and builds a facility, such as a railroad, using its own money, and is compensated by receiving the profits from operation of the facility.


The issue of capital

Canada is a fully-developed country with plenty of capital. Based on the Vanier Institute report “The current state of Canadian family finances 2011-2012”,Appendix C, with data from Statistics Canada on number of households, Canadians own investments totaling over one trillion dollars. 

The dark side is Canada’s growing trade deficit in manufactured goods.  The trade deficit is real money sent out of Canada, never to be seen again.  This money is a true waste of capital.  Under a wise, rational, intelligent, government (have we had one of these in the last 50 years?), the capital we send out to foreign countries to pay them to do manufacturing for us could instead be used in constructive ways here at home.

 

When a foreign entity comes to Canada to buy a Canadian company, it is cherry-picking the best companies, not investing in Canada.  This process is the financial version of the one night stand. There is no commitment.  Even if a purchaser provides promises, usually the promises are broken.  Again same as a one-night stand!

 

A further result of a purchase is that control is put in foreign hands.  As one modest example, a foreign company purchasing a Canadian store chain will not be interested in ensuring that Canadian-made goods are on the shelves.

 

More serious is foreign purchase of a resource company.  Twenty years from now, the price of that resource, oil, coal, natural gas, or other, may be five or ten times higher than now.  Canadians may desperately need that resource for their own use.  But the mining rights are in the hands of a foreign entity that probably will not wish to sell to Canada.

 

Why have successive governments allowed the sale of Canadian companies to foreign entities?  Top officials of Canadian companies receive millions if their company is sold.  Maybe these officials influence the government to allow the takeovers. The shareholders also receive windfall profits.

 

In summary, when a foreign entity purchases a Canadian company, there is absolutely no benefit to the Canadian economy.  The only benefit is to the foreign entity, and to the country where that foreign entity is located. 


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Government for all the wrong reasons

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My wife and I recently returned from a brief holiday visit to Prince Edward Island.  We found the holiday extremely pleasant.  We enjoyed the beautiful scenery and found many opportunities to learn about the interesting history of Prince Edward Island as well as current trends.

We visited two family-owned small businesses that are manufacturing and exporting.  Very encouraging to see this type of development.

Inevitably, visitors find themselves in gift shops.  It is not encouraging to see Chinese-made items in gift shops.  The visitor to Prince Edward Island wants a souvenir of Prince Edward Island, not a souvenir of China.  But it is the usual dilemma.  The gift shop can make so much more money from a Chinese item, than from the same item made in Prince Edward Island.

I am not criticizing Prince Edward Island.  Anywhere you travel in the western world, you see Chinese items in gift shops.  I bet if you visit Japan you will find Chinese items in gift shops!


Manufacturing in Canada

In 2011, Canada exported manufactured goods to a total value of $280 billion.  This statistic sounds good and it is good.  The little niggling problem is that our imports of manufactured goods in 2011 totalled over $372 billion.

A very good measure of the health of an economy is the quantity

Exports minus imports

(All referring to manufactured goods, not crude oil, raw logs, coal, etc.)

For Canada in 2011, the calculation "exports minus imports" gives you the result:

Minus $92.4 billion

Conclusion: We have a large trade deficit, also referred to as negative balance of trade.

Prime Minister Harper has totally mismanaged our economy since he came to power in 2006.  Evidence for this statement is that our trade deficit has more than tripled since 2006, to the 2011 figure $92.4 billion mentioned above.

Tripling of the trade deficit is a direct measure of how many manufacturing jobs have been lost under Harper and how the totally uncontrolled import of manufactured goods has increased.


What could we do with $92.4 billion?

This figure $92.4 billion is real wealth pouring out of our country, going to foreign countries.  It is the net amount we pay to foreign countries to do manufacturing for us.  It amounts to over $2500 for each Canadian man, woman, and child.

If we could keep that $92.4 billion in Canada, it could provide factory equipment and wages for one million Canadian manufacturing workers.  One million Canadians going back to work in manufacturing would be a tremendous shot in the arm for the Canadian economy.

There is a multiplier effect of manufacturing that would create additional employment.


How to move in the right direction?

We have to eliminate the trade deficit of $92.4 billion.  It is impoverishing our country and our economy.  My proposal is simple.  To each country we trade with, we say that we will allow imports from your country only up to the level of your purchases from us, to be phased in over three years.  (Again referring to manufactured goods.)  There would be a special arrangement with the United States.

How much of a reduction in imports are we talking about?  We are talking about a reduction of 25% in total imports.  We are not talking about building an isolationist firewall around Canada.  We only want to bring imports under rational control, rather than the wild-west free-for-all we have now.

How would it be determined what goods would come in to Canada and what goods would not?  It might be entirely determined by the foreign countries, or it might be determined by interaction between Canadian business and foreign countries.

Maybe gift shop souvenirs would not come in so readily from overseas, giving Canadian craftsmen and craftswomen more of a chance.


What is the kicker in all this?

If we look at the detailed numbers and do the arithmetic, we find that imports from China would have to be reduced by 80%, to bring imports from China into balance with Canadian exports to China.  This dramatic figure underlines how China has taken over.

If my proposal were to come into serious discussion, the fury of China would have no bounds.  I don't know what they would do.

China is a serious threat in ways other than imported manufactured goods.  One example is a systematic program on the part of China to take over port operations in dozens of countries.  Prime Minister Harper and other western "leaders" are totally asleep at the switch in relation to the multiple threats posed by China.

But in-depth discussion of the real situation and the real reason for the economic problems in all western countries does not occur, because there is censorship. Obediently, newspapers, magazines, TV, etc., do not allow mention of the need to cut imports from China.  Even "alternative" radio, newspapers, etc., do not allow in-depth discussion of China.

Politicians and many other people in western countries are beholden to China in various ways.  In addition, thousands of columnists, analysts, commentators, and authors continually pump out fantasy explanations of why there is so much unemployment and why our economies are failing.  The objective is to take attention away from the real cause, namely uncontrolled imports from China and other foreign countries.


Honest discussion

Until we get past this censorship, we will never have an honest and real discussion, and we will never bring imports under control.  A depressing situation, since reduction of imports, and corresponding increase in domestic manufacturing, is the only way to solve our jobs and economic problem.


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Canada a slave of China

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When Canada started sending manufacturing jobs away in the 1960s, believe it or not nearly half a century ago, I predicted the huge unemployment we see today, in manufacturing and in many other employment areas.

What I didn't predict, and what no one predicted, was that China, the most aggressive source of our imported goods, would ultimately be able to control Canadian government policy, so that we become slaves to China.

Every day we see TV advertisements for new medications, accompanied by long lists of side effects, including death of the patient.   The insane idea of sending manufacturing away to foreign countries also has side effects, including enslavement to China and death of the Canadian economy.

The fact is that China owns a major portion of the Canadian economy.   But what evidence is there that China controls Canadian government policy?


Our hemorrhage of wealth

A country may hire foreign mercenaries to fight its wars.  We hire foreign countries to do a major part of our manufacturing.  The reverse would be much better.  Hire mercenaries for pointless wars such as Afghanistan, and do our manufacturing at home.

Our net cash outflow to foreign countries to pay for manufacturing was $92 billion in 2011.  This figure is more than triple the figure that existed when Prime Minister Harper first came into office in 2006.  Each and every year since then the net cash outflow has increased.

Any rational and thinking Prime Minister would look at those figures and sound the alarm bells.  Our economy is permanently crippled by a net cash outflow that grows larger every year.  A hemorrhage growing larger every year.

But no one talks about this net cash outflow.  The Head of the Bank of Canada somehow omitted to refer to the net cash outflow to foreign countries in a recent economic analysis and prediction. I don't know how anyone can talk about the economy without referring to this net cash outflow, and yet you see examples of this omission in newspaper articles every day.  This net cash outflow, this hemorrhage of real wealth going out to foreign countries, is a true elephant in the room that everyone pretends isn't there.


The squeaky wheel gets the grease

China was the lucky recipient of 41.5% of our 2011 net outflow of cash to foreign countries to pay for manufacturing services.  Our purchases of manufactured goods from China in 2011 totalled five times more than China purchased from us.  The word "trade" does not apply when there is such a large disparity.

Prime Minister Harper devotes his energies to support of two clients, the Alberta oil industry and China.  No actions are taken that would benefit all Canadians in the area of the economy and specifically jobs.

Effectively China controls Canadian government policy because Prime Minister Harper does everything China asks him to do, i.e., accedes to all requests from China.

The refusal to recognize the seriousness of the yearly hemorrhage of wealth to foreign countries is part of the program to keep China happy.  Any attempt to control or reduce this hemorrhage would be a threat to China's manufacturing sector.

Harper has a naive, child-like view of China.  In fact, China is an aggressive adversary, not a friend.  China's objective is to take over our resources and raw materials, and to take over more and more of our domestic manufacturing, facilitated by an obedient Prime Minister.  The logical end result of this process is that Canadians who don't work in the Alberta oil industry will be impoverished and will not be able to buy Chinese manufactured goods or in fact any goods.


Chinese intrusion into our economy

As an example of obedience and subservience to China, recently there were news reports that China will participate in telecommunication activities in Canada.  No one in his right mind would allow China to work its way into our communications systems and gain access to sensitive high-technology information, and yet apparently it will happen.

Harper's visit to China some months ago can be accurately characterized as taking candy from a baby.  The Chinese must have privately laughed their heads off at how easy it was to gain further access to the Canadian economy.

On July 23, 2012, related or not to the visit, we heard the announcement that China has purchased a Canadian oil company for $15 billion.  This transaction is another addition to China's ownership and control of the Canadian economy, and is another serious error by the Canadian government.  When we sell companies, mines, land, etc., to China, or any other foreign country, we create a potential for disaster.  In future we may need the oil, gas, coal, raw logs, for ourselves, but won't be able to get at them because China and other foreign countries own everything.

The above discussion demonstrates China getting its way on multiple aspects of our economy.  How else can we take this situation other than evidence of control of Canadian government policy?


Where do 34 million Canadians fit in?

The only economic action undertaken by our PM that applies to all Canadians is "cuts".  Cutting government expenditures is unimaginative and often counter-productive.  It throws a chill into people and contracts the economy, making things worse.

The net cash we send to China, in 2011 just a shade under three-quarters of a billion dollars per week, is used by China to come right back and buy up our economy.

Do 34 million Canadians really want to be slaves of China?  I doubt it!


Balance imports/exports to save Canada

I have proposed a practical plan in which Canada would break the chains of enslavement to China and other foreign countries, in which Canada would regain control of its destiny, by reducing imports of manufactured goods down to balance with our exports, for each foreign country we deal with (special arrangements for the U.S.).

This plan requires elimination of 80% of our manufactured goods imports from China, based on the 5 to 1 ratio in 2011.  A real "Chinese revolution", but the only way to put Canadians back to work and save the Canadian economy.

The concept of ensuring that the total value of imports each year approximately equals the total value of exports is plain common sense.  This concept is fair and reasonable.  This plan adheres to the true meaning of the word "trade".  This concept shows our belief in free trade, but balanced free trade, rather than exploitation.


Benefits and perils

We would have to abrogate trade arrangements to take control in this way.  So be it!  Do we value a pile of paperwork more than we value Canada?

How would we fend off a furious China?  I don't know, but we can't go on in the way we're going now.

Canada breaking the chains of China would provide leadership and example to other western countries to do the same.

Reaching the objective of approximate equality between exports and imports would have interrelated positive effects:

• Eliminate the lethal net cash outflow ($92 billion in 2011) related to foreign countries doing manufacturing for us
• End the sending of net money to China that they can play with and use to enslave us
• Create conditions for a large increase in manufacturing, putting millions of Canadians back to work in manufacturing and in many other employment areas
• Great increase in tax revenue from newly employed workers and newly operating factories in Canada, thus reducing government deficits

Bottom line:  The only way to avoid enslavement to China, and the only way to save the Canadian economy, is to greatly reduce imports of manufactured goods, down to approximate equality with exports.

If anyone has a better idea on how to accomplish the objective of greatly reducing imports, let's hear it and discuss it.

But it is Orwellian truespeak to try to solve the problem of the economy and jobs by hiding, and censoring mention of, our lethally high level of imports relative to exports.  

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