National Economy

[Curmudgeon]

Originally Posted by Acajack

I don't care too much about corporate investment (at least not in isolation) unless it has a tangible impact on people's standard of living.

Even GDP per capita isn't always a good metric but nonetheless when I look at Australia's it's a good 10 000 USD above Canada's. Generally 64 000 whereas we are at 54 000.

Their jobless rate is about 1.5% lower than ours but their poverty rate is slightly higher than ours.

Housing prices in Sydney are at Toronto and Vancouver levels of insanity but after that it drops off and even Melbourne is in the range of Montreal, Ottawa and Calgary.

Using nominal GDP and per capital income does not consider cost of living. Using purchasing power parity (PPP) is more reflective of living standards.

New numbers have just been released. Australia's GDP (PPP) in Intl. Dollars (USD) is $1.780 trillion compared with Canada's $2.472 trillion.

The population of Australia is 26.6 million compared with 40.8 million for Canada.

This gives a GDP per capita (PPP) of $66,900 for Australia and $60,600 for Canada, a difference of about 10%. This would imply that living standards are relatively similar in both countries but what exemplifies Canada's relative economic decline is that in 1970 Canada had more than twice the economic output of Australia and a per capita product about 25% higher. The only advanced economy against which Canada has relatively improved is Argentina, which is the only country to have achieved developed
status and slipped back to developing.

Generally, prices co-relate to wages, except where there is an abnormality in the local economy, such as in a location with an economy dominated by tourism. Australia has a slightly higher cost of living than Canada but wages are correspondingly higher. Items that tend to be more expensive are clothing, beer, tobacco, transport and energy, items less costly are wine, internet service, cel phone service and dairy products. Housing prices are similar to slightly higher in Australia depending on location. Keep in mind that Australia has a more concentrated population, with close to 65% of the population in the five largest cities, the corresponding figure for Canad is about 40%. Australia has 19 urban areas with >100,000 population compared with 42 in Canada.

[Curmudgeon]

The numbers are quite dire really and infuriatingly are largely ignored not only by the national media but by the politicians (even the official opposition). Canada has moved from relative decline to absolute decline at this point, and whatever the media might say, five consecutive quarters of decline in per capita product is a recession.

The U.K. ($58,700) and France ($58,600) have really narrowed the gap and at current economic and population growth rates will overtake Canada by 2026, and neither can be described as a high growth economy. Also both were economically devastated by two World Wars, particularly the U.K. which in 1945 was largely bankrupt.

Spain has overtaken Canada in total output (PPP). It had an economy less than half the size in 1970. As another poster stated, In 1981 Canada was 6th in the world in per capita income, in 1970 it was 4th, behind only the United States, Sweden and Luxembourg.

At what point does this become something that causes people concern? There are implications for national unity as well. A relationship enduring economic struggles is much more likely to dissolve esp. when the raison d'être for the union is no longer quite as apparent, and as it might apply to Canada, most especially as the country slips further and further behind the United States, always the national obsession.

[theman23]

Originally Posted by Curmudgeon

The numbers are quite dire really and infuriatingly are largely ignored not only by the national media but by the politicians (even the official opposition). Canada has moved from relative decline to absolute decline at this point, and whatever the media might say, five consecutive quarters of decline in per capita product is a recession.

The U.K. ($58,700) and France ($58,600) have really narrowed the gap and at current economic and population growth rates will overtake Canada by 2026, and neither can be described as a high growth economy. Also both were economically devastated by two World Wars, particularly the U.K. which in 1945 was largely bankrupt.

Spain has overtaken Canada in total output (PPP). It had an economy less than half the size in 1970. As another poster stated, In 1981 Canada was 6th in the world in per capita income, in 1970 it was 4th, behind only the United States, Sweden and Luxembourg.

At what point does this become something that causes people concern? There are implications for national unity as well. A relationship enduring economic struggles is much more likely to dissolve esp. when the raison d'être for the union is no longer quite as apparent, and as it might apply to Canada, most especially as the country slips further and further behind the United States, always the national obsession.

I feel like top bank economists and talking heads have been sounding the alarm over this for a few years at this point, but political apathy likely stems from the fact that most voters care can’t reconcile these facts with their own personal net worth having ballooned due to the housing/asset bubble. It’s all esoteric as long as we’re all paper millionaires.

[thewave46]

Originally Posted by Acajack

I was gonna say. Australia simply makes decisions that are different from ours.

A better question is: what's preventing Canada from being more like Australia, and if we could, would doing that come at too high a price in terms of downsides?

This is an interesting question.

Australia seems to be more 'free market' in its economic orientation. Which can produce benefits in terms of nominal output. One sheds industries that require subsidies, or that have low value-add.

Australia is far away from manufacturing supply chains and has a limited population to draw from. Manufacturing and technology development require much more investment in a remote (relatively speaking) region. It's easier to move tech-inclined Aussies to Silicon Valley than start Silicon Valley in Australia. Even relatively mature industries like automaking couldn't cope with the extreme supply chain distance. Once Holden (GM) announced their intent to cease automobile manufacture in Australia after being unsuccessful in petitioning government for more funding, the whole house of cards collapsed. The automaking supply chain there failed as the critical mass needed to support it fell apart. Ford and Toyota closed their assembly sites soon after.

In the short-term, there was a benefit as loss-making enterprises were removed from the Australian economy. No more government support needed for automakers. In a country riding high on resource prices, the inflated Aussie dollar made auto exports a non starter. Labour could be repurposed to the high-flying resource industries.

The risk of this? Australia is dependent on non-renewable resource export (iron, coal, gold, petroleum) to a degree that makes Canada look downright tame comparatively. Nobody thinks the Qataris are geniuses - it's a small population sitting on a pile of easily obtained oil. To somehow not make money under those circumstances is more the accomplishment.

When one thinks of value-added Australian companies or products, it's a short list. A handful of Holden-GM developed cars that made it overseas. The Boeing E-7 Wedgetail - a product of Australia's defence industry. Some mining conglomerates.

Canada's historical value-add industrial legacy is much larger and wasn't always a product of free-market enterprise. Much of it is, but there were substantial sectors that were defined by government intervention during our history. Canada has the advantage of retaining more manufacturing due to our proximity to North American supply and talent chains.

Can Canada emulate Australia moreso? We're certainly trying, but our cultural complexity and location in the world probably fate us to being part of the North American supply chain with its various regional quirks. Investissement Québec retains stakes in Québec-based companies for cultural reasons. Ontario and the federal government have retained a political interest in automaking. Our strongest 'free market' drives come from our most resource-oriented provinces. It's part of the tension of our federation.

Strategically, the advantage of a more well-rounded rounded economy should mitigate the up-and-down cycles of resource-based industries.

IMO: The Aussies are choosing a higher risk, higher short-term reward strategy. Admittedly, not necessarily completely by choice due to the sheer effort needed to go against the grain for them. I do not think Canada should pursue such a strategy, but it likely will moreso in the long-term due to a strategic disinclination to develop an industrial policy that can survive government change. About the only thing we can really learn from the Aussies is how to more seriously position ourselves as a strategic defense partner in a more tense world.

[MonkeyRonin]

More Canadian businesses are closing than being started: https://betterdwelling.com/canadian-...pace-startups/

[WarrenC12]

Originally Posted by MonkeyRonin

More Canadian businesses are closing than being started: https://betterdwelling.com/canadian-...pace-startups/

Recessions cleaning out the crap. Capitalism at work.

[Build.It]

Very long overdue recession.

[whatnext]

Originally Posted by WarrenC12

Recessions cleaning out the crap. Capitalism at work.

A lot probably were able to stagger on for the last few years thanks to Covid programs.

[Build.It]

Spent a couple days researching this, here my findings. (Not trying call you out acottawa, just responding to these articles, and sharing some additional findings of my own.)

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.

This one makes sense. Europe's economy is much more directly tied to both Ukraine and Russia.

Originally Posted by acottawa

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/

There is one single sentence in that entire article that mentions Ukraine, and they don't share any data about the war in this article. Also, the Bank of Canada printed $600B over two years (adding 30% to our money supply), which is the obvious source of most of our inflation. They would never admit that they caused the inflation, and have every incentive to point to any other source that could've contributed to inflation to make themselves look less guilty. So this one I don't agree with.

Originally Posted by acottawa

Or the fed.

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

In this article they shared this map, which shows how exposed each country's economy is to the war in Ukraine. As you can see Canada is quite low - appears to be around 5-10%, vs Europe which is 80-100%. Here is their description of what this chart represents:

"This chart depicts the exposure of a country to the Russia-Ukraine war, calculated using the share of firms’ earnings calls mentioning the Russia–Ukraine war, based on the country where the firm is headquartered. Earnings calls’ share is calculated for countries with at least 10 earnings calls between March 1, 2022, and May 13, 2022. Countries with no earnings calls or with less than 10 earnings calls are shown in gray. White indicates that no firm mentions concerns related to the conflict, while deep red indicates 100 percent of firms mentioning concerns related to the conflict."

Originally Posted by acottawa

Or the IMF

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

This article was published on March 15, 2022 and is entirely forward looking / speculative. All their language is about what they thought the war will do, rather than studying what happened afterwards.

---------

Finally, we must look at the global commodity bubble of late 2021-2022. This was pretty universal across the globe and industries, especially food products. This included both food that is grown in Ukraine/Russia, and food that isn't grown in Ukraine/Russia.

The general trend is that there was a massive runup in 2021 across the board, and it peaked in 2022.

Here are some interesting examples.

Canola - Canada is the top producer, Ukraine is about 4%. Peak came in the winter.



Rapeseed - this is related to canola, Canada is again the top producer, and Canada has virtually all the rapeseed reserves. Not sure why, but other countries ship their rapeseed to Canada, and Canada stores it. Seeing as the peak came in the winter, I don't think this had anythign to do with Ukraine.



Coffee - also peaked in early 2022 after a long runup. Coffee is not grown in Ukraine/Russia.



Corn - Ukraine produces around 3.5% of the world's corn. Not the leader, but not nothing either. However compared to how much other commodities went up over this stretch, it doesn't stand out that much. In fact the peak in 2021 reached a similar height.



Lumber - this was a classic bullwhip effect from the pandemic. Nothing t odo with Ukraine. Peak happened at the exact same time as others though.



Wheat - this one is interesting, and might have something to do with the war. Ukraine only produces 2.5% of the world's wheat, but the peak is eerily close to when access to the sea returned.



Oat - Russia is the biggest oat producer in the world.



Steel - this is more of a Russia comment, since Russia is a big producer of steel. However, steel actually peaked in mid 2021. There was a runup in steel in 2022, but as far as I can tell, the biggest cause of that was China's lockdowns that they were still carrying out during that time. Russia probably did have an effect on that though.



Potatoes - this one I think is being caused by the war. Ukraine and Russia are the 3rd and 4th largest producers in the world. The curve is completely different than all the other charts.

[acottawa]

So a whole bunch of commodities where Ukraine is a major exporter shot up after the start of the war, and went down once Russias were pushed out large parts of Ukrainian territory and was able to resume exports.

So what do you think happens if Putin conquers the rest of Ukraine, which seems to be the outcome you want.

[Changing City]

The impact of the war in Ukraine was studied by the economists at the Conference Board of Canada. They calculated that for the economy of the country, the war didn't have an overall impact one way or another. Canada produces some of the same goods as Ukraine and Russia (they produce 30% of the world's wheat, we grow 12% for example), so the price of some imports went up, but the economy here benefited from higher prices. Alberta went from a deficit budget to a surplus as government revenue from oil went from $3bn to $16bn in a year.

However, it did add to inflation in 2022. "Overall, the Conference Board of Canada estimates the war in Ukraine accounted for a 1.2-per-cent rise in the inflation rate" [Montreal Gazette]

[goodgrowth]

Nothing will cause the political left in this country to self-combust more than if First Nations start rejecting degrowth and become participating industrialists.

B.C. First Nation and Western LNG partner to purchase natural gas pipeline project
https://www.msn.com/en-ca/news/canad...id=socialshare

If they ever give the OK to harvest an old growth forest David Suzuki might implode.

[whatnext]

Originally Posted by goodgrowth

Nothing will cause the political left in this country to self-combust more than if First Nations start rejecting degrowth and become participating industrialists.

B.C. First Nation and Western LNG partner to purchase natural gas pipeline project
https://www.msn.com/en-ca/news/canad...id=socialshare

If they ever give the OK to harvest an old growth forest David Suzuki might implode.

The enviro-weenies did such an implosion on Vancouver Island at Fairey Creek.

....There’s just one problem, and it’s creating what Jones calls a “very uncomfortable” situation. The Pacheedaht First Nation’s elected leadership — and Frank Queesto Jones, the Hereditary Chief recognized by the Nation — have asked, several times, for the protesters to leave, saying the nation does not welcome or support unsolicited involvement or interference by others. On June 28, as a heat dome settled over the Pacific Northwest and temperatures near Fairy Creek soared to 40 degrees Celsius, the Nation again called on protesters to leave, citing the increased risk of human-caused wildfire that could threaten the Pacheedaht First Nation community. The neighbouring Ditidaht and Huu-ay-aht First Nations which, together with the Pacheedaht, form the most southern branch of the Nuu-chah-nulth people, support the Pacheedaht. They, too, have requested that anyone interfering with legally authorized forestry operations leave their territories.....

https://thenarwhal.ca/pacheedaht-fai...ek-bc-logging/