Justin Trudeau to unveil details of $1 billion in regional aid for small businesses while raising the cost to do business in Canada – May 13, 2020,
I do have a life outside writing blog posts, so there are times when I rush through writing these posts. The sad thing I’m beginning to notice with Justin Trudeau is his cabinet doesn’t appear to comprehend that the cost to do business is much more important than the money a company makes.
When governments via central banks loan or give away money for any reason, it’s important to understand the cost of doing business. The government usually doesn’t have to worry about the cost to make the public sector more expensive, because in the government’s mind especially in a country like Canada with pretty good infrastructure, if the costs are too high, the government can simply, print, tax and borrow.
When the government dilutes the purchasing power of the Canadian dollar the Federal government isn’t that concerned because they get the money first, however when the government redistributed money to its population namely it’s small business private sector, small businesses do have o be concerned with depreciated dollars, because when costs go up, so do price and when customers see higher prices customers might stop showing up.
Furthermore, small businesses are usually on the front lines, they can’t hide behind the mainstream media, in fact the mainstream media is usually there to destroy or discredit a small business. So in event prices rise, the private sector politically often gets the blame for something the government started.
Commercial real estate, carbon taxes, other regulations, and small businesses
A reminder that the Canadian economy was in decline prior to COVID-19, Trudeau was deficit spending to revive the economy he created when he took office prior to COVID-19. Clearly Trudeau’s cabinet wants to destroy the oil patch which provides the federal government with a lot of money and I personally think that when or if there’s a downturn, Trudeau will have all the excuses in the world as to why the economy is bad under his watch.
If there’s an economic downturn in Canada, my worry is that Canadians will not comprehend the root cause of the downturn, which is policy. I also do not think the Conservatives can necessarily even fix the problem, as the Conservative Party of Canada, often throws out the idea of Austerity measures, which basically assists in making the problem worse.
But there’s a cost of doing business problem in Canada, which only devaluing the loonie can solve and devaluing the loonie hurts the poor the most. The BoC and the CMHC are fighting to make are the real estate market doesn’t crash. In Capitalism prices fall, Capitalism revolves around bringing prices and costs down, which is called efficiency!
Socialism revolves around keeping prices up, which hurts the poor the most, because again the reason why capitalism works is that the competition drives the costs of doing business down. It’s only when the government steps in and intervenes via regulations, like the carbon tax, and propping up real estate prices and offering more welfare to unproductive people, this is what makes prices and costs go up. Inefficiency breeds more inefficiency and eventually, this creates the culture of entitlement!
Now, my problem with Trudeau’s strategy is he is giving away money while at the same time making the cost of doing business more expensive. As unperfect as Trump’s money printing is, Trump has been driving the cost of doing business down and again I like to remind people, that Trump is one of the main contributors to the price of oil being at historic lows, it’s not a guarantee that the price of oil will remain as low as it is now and if the market price of oil starts to rise especially with Trudeau’s carbon taxes and other regulations he’s imposing on the Canadian economy, it could be quite the challenge to get the Canadian economy to a sustainable level.
Anyway, I could go on and on about what is wrong with how Trudeau’s cabinet is approaching this, but I don’t want to sound all doom and gloomy! So hopefully things will work out fine!
Manufacturers often shrink
Feds to unveil details of $1B in regional aid for small businesses | ctvnews.ca
Interesting times ahead!