Canada gets less than 1% Capital Investment Amongst OECD Countries Prepandemic Which Could Force The Bank of Canada To Raise Interest Rates and force Austerity Measures – October 29, 2021
Canada gets less than 1% capital investment amongst countries in the Organisation for Economic Co-operation and Development (OECD). This is due in large part because Canada enjoys the privilege of being a developed nation that borders with the United States. From an economics perspective, Canada has the ability to be anti-free-markets in a number of areas in its economy, because about 75% of what Canada manufactures is sent to the biggest economy in the world the United States.
Other developed nations don’t have this privilege, in most countries even if they have Left-Wing spirations, they still must compete in the marketplace, meaning that their regulatory policies as well as their government spending, must be aligned with attracting ENTREPRENEURS. In Canada, small businesses can almost appear to be extinct at times as the Canadian economy is catered to appealing to Big Corporations.
Where basic manufacturing exists in most OECD countries, Canada is reliant on imports, adding fuel to the fire are the taxes Canada often charges to medium and small businesses for importing goods that aren’t available in Canada. In most OECD countries, the playing field is often leveled for small, medium, and large businesses, I’ve been arguing for years that Canada’s union culture needs some reforming.
A lot of the labour unions are involved in writing the laws in Canada, in America only recently have unions thrown their entire lot into lobbying government, because obviously in America, in a number of major cities, not only are pensions bankrupt, people are also emigrating from cities in which the cost of living is unbearable.
Although America does have a transfer payments mechanism, it fails in comparison to Canada’s transfer payments system. Canada’s transfer payments system disincentivizes have not provinces from being competitive. Why should Eastern Canada, which has seen manufacturing shrink and investment dry up consider changing failing policies when it will be rewarded via transfer payments for doing what it imagines has been working decades?
If I’m a voter and my standard of living appears to be static based on current policies from the government, why would I vote for change? This is where the Bank of Canada might be forced to step in, because you have to understand that if your country is dependent on IMPORTS, you have attract capital investment somehow because even if the Forex markets reward your currency if you can get the products you need to satisfy industry demand, that has never-ending red hot inflation written all over it.
Furthermore, the political sphere in Canada has no incentive to change course or be fiscally responsible, so as these economic problems compound, the Canadian Federal government ignorant to the specifics of what’s happening might want to spend more. Being that Trudeau won the last election very convincingly, his voters are trapped, and it’s not like Trudeau didn’t deliver for them, many of them got a 1+ year stay-at-home vacation WITH PAY!
Bank of Canada Governor Tiff Macklem has to know that Canada’s current Federal government, probably imagines that we’ve entered into a period in which deficits no longer matter. Although Canada isn’t as bad off as say Venezuela, Canada is becoming more and more reliant on imports and if our finances aren’t in order, that will trigger serious inflationary problems.
Printing money doesn’t make stuff, the Bank of Canada knows this, and although Canada wants to meet its carbon change goals it shouldn’t come at the expense of the economy. France as an example made the decision that until renewables can exist without fossil fuels it will remain invested in Nuclear energy, the Canadian government will have to rethink its approach to economics.
Interesting times ahead!