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From: robinson@ubc-cs.UUCP (Jim Robinson)
Newsgroups: can.politics
Subject: Re: free trade
Message-ID: <19@ubc-cs.UUCP>
Date: Tue, 24-Sep-85 00:17:27 EDT
Article-I.D.: ubc-cs.19
Posted: Tue Sep 24 00:17:27 1985
Date-Received: Tue, 24-Sep-85 10:17:27 EDT
References: <2518@watcgl.UUCP> <13@ubc-cs.UUCP> <2530@watcgl.UUCP>
Reply-To: robinson@ubc-cs.UUCP (Jim Robinson)
Distribution: can
Organization: UBC Department of Computer Science, Vancouver, B.C., Canada
Lines: 117
Summary: 

In article <2530@watcgl.UUCP> jchapman@watcgl.UUCP (john chapman) writes:
> Well I know the two trillion $ figure is in US funds so I assume
> the rest of your figures for the US are also in US funds.  Similarily
> the canadian figures seem to be in canadian funds.  Lets be fair
> and use the same currency for comparisons. Current exchange rates
> seem to be about 1.38 Can. per US $ which gives:
>
>budget deficit -	US $276 billion 	CDN $36 billion
>national debt  -	US ~2.76 trillion	CDN ~240 billion
>trade deficit  - 	US >$138 billion	CDN $20 billion surplus
>inflation -	        US ????		        CDN ~4%
>taxes? who knows
>
>Seems to me that when you adjust these figures for the approx.. 10:1
>population ratio we come off looking just as good or better than the US.

Actually, what is really important is the ratio of deficit (or debt) to
GNP. Since our GNP is approximately one tenth the US's (1983 - US: $3304.8
billion (US) vs CDN: $315.4 billion (US) ) comparisons based on a per
capita basis are (flukily) meaningful (assuming pop. ratios of 10:1).

So getting back to the above figures we note that our deficit is 30% 
greater than the US's, on a per capita basis. Not good I'd say.

Our debt is 14% lower, on a per capita basis. Not bad, but since we're
accumulating debt faster than the US this is only temporary.

The US's trade deficit is actually ~$150 billion (US) or $207 billion (CDN).
We're blowing them away on this one. However, if the Big 5 (remember when it 
was Big 7 - did we get booted out when I wasn't looking?) have their way
the US dollar will be going down and so will their trade deficit and *our*
trade *surplus*. (This is in reference to the meeting that took place
over the weekend where the US, West Germany, France, G.B., and Japan mutually
agreed to work towards a devaluation of the US dollar)

Today's Globe and Wail's statistical index reported inflation rates of 4.0% 
and 3.6% for Canada and the US, resp. No big difference.

Taxes get a bit more complicated and if I have the time I'll dig out
my old US tax returns to demonstrate the lighter tax load borne by
US citizens.

Let's now consider deficits as a percentage of budgets. The US budget
is ~ $1 trillion (US). Hence their deficit is 20% of their total
budget. On the other hand, Canada's deficit accounts for 35% of its
budget. Thus, in order to achieve a balanced budget the US would
have to increase revenues by 25% whereas Canada would have to 
increase same by *50%*. Alternatively, the US could decrease expenditures
by 20% and Canada by 35% (or some combination of the two could be
employed). At any rate, I think it's obvious which country has the
easier job. (I imagine that if Brian announced a tax hike of 50% he'd
be kissing off any chances his party has of forming the Gov't in '88)

Mr. Chapman fails to comment on the unemployment figures I posted.
Since this is one of the two components of the "misery" index  and
taking into account that our unemployment rate is ***47%*** HIGHER than the
US's ( 10.3 vs 7.0 ) I fail to see how one can omit any consideration
of these numbers when comparing the two economies. It would also help
to remember that when RR was elected the US's unemployment rate was very
close to Canada's. They took a radical new course and we continued with 
the status quo; now they've got 7.0% and we've got 10.3% - coincidence?
I don't think so. I think RR's economic policies are directly responsible
for the US's drop in unemployment.

While I'm at it, I might also point out that 49 of  the 50 states are 
required by their constitutions to have balanced budgets. I don't think 
you'll find any of the provinces in this happy situation. In fact, if I 
remember correctly provincial deficits total about $8 billion.

>According to the news a few nights ago the US deficit doubled during
>Reagans term(s) as president - you sure can make an economy look
>good (temporarily) when you *borrow* $1 trillion US dollars to pump
>into it.  How long can they keep inflating the balloon before it
>collapses?

Since our deficit has been consistently higher that the US's, on a per 
capita basis, the logic used above would dictate that out economy should 
look better than the American's. One only has to consider the unemployment 
rate  to see that this is not the case. The obvious reason for this 
apparent anomaly is that Reagan's deficit is financing a 25% tax cut 
whereas our deficit is financing  (often counter-productive) government 
programs. 

The question I'd like to ask is how long can *we* continue inflating
the balloon? (And ours, unlike the US's, doesn't even get any bigger)

>> Due to the fact that the US is a country of extremes, comparing a 
>> Harlem to an East Vancouver makes as much sense as comparing Beverly
>> Hills to The British Properties. I.e. the variation found in the States
>> is undoubtedly higher, but that says nothing about the mean or median.
>
>It sures does make sense; it says that our economic and social system does
>not allow the type and extent of grinding poverty that the US does.
>This seems to me to be something we ought to be proud of and willing
>to protect - it sure sounds a lot more civilized to me.

Again nothing is mentioned about what percentage of people live in 
this type of poverty. Is it 10%  or is it 0.1%? Until I see figures
I will maintain that it is pointless to make such informal comparisons.
[Note that approximately the same percentage of Americans live below
the poverty line as do Canadians - about 13-15%]

One should also take into account the law of diminishing returns.  
Given that a government (the taxpayers)  has only a finite amount of 
resources (money), should it use a large portion of those resources to 
eliminate the last vestiges of grinding poverty, or should it take that 
money and "invest" it in numerous other programs which will yield far 
greater "dividends" due to the said law? The latter seems to make more 
sense to me given our "imperfect" world.

[BTW: TV programs such as Hill Street Blues and Dynasty do nothing 
      towards promoting an accurate image of the average US city.
      Unfortunately, these images are the ones that most quickly
      come to mind when thinking about the US. ]


J.B. Robinson