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Path: utzoo!watmath!watnot!watcgl!jchapman
From: jchapman@watcgl.UUCP (john chapman)
Newsgroups: can.politics
Subject: Re: free trade
Message-ID: <2559@watcgl.UUCP>
Date: Wed, 25-Sep-85 10:23:34 EDT
Article-I.D.: watcgl.2559
Posted: Wed Sep 25 10:23:34 1985
Date-Received: Thu, 26-Sep-85 07:16:36 EDT
References: <2518@watcgl.UUCP> <13@ubc-cs.UUCP> <2530@watcgl.UUCP> <19@ubc-cs.UUCP>
Distribution: can
Organization: U of Waterloo, Ontario
Lines: 195

> 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.

 Is that true? I don't have figures handy but I know the US senate is
 lambasting reagan for doubling the national debt in the last (approx.)
 4 years - may be wrong but it seems to me that our debt took a lot
 longer to double.
> 
> 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)
 
 You may be right but the analyses given in the papers out here are along
 the lines that (although we should be insulted that our "good friends"
 with whom we have this "special" relationship ignored us) this will
 acutally be a good thing for Canada.  It makes the european currencies
 relatively stronger against ours thus opening up greater market 
 opportunities for Canada.  It doesn't seem to have had much impact
 on our dollar relative to the american buck (although it has been only
 three days) so our trading position with the US should be relatively
 unchanged.

> 
> 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.

 Comparison of a single individuals tax rates won't tell us much but
 a list of the marginal rates, available deductions and distribution
 of income in the states might be helpful.  Of course in order to
 fairly assess the burden of tax one would also have to consider what
 is recieved in return by society in general.

> 
> 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)

 On the other hand he could have avoided giving to billion to the
 oil industry and maybe fulfilled his election promise to place a
 minimum tax on the rich.  There are a lot of alternatives other than
 simple across the board tax increase or spending reductions.  He
 wants to sell crown corporations which are making money - it seems
to me that liquidating capital assets in order to reduce debt load
is generally seen as a poor idea in business.

> 
> 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 

Well yes it is true that our prime minister just hasn't tried to fulfill
"jobs jobs jobs!"

> 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.
Well one big reason for our unemployment situation is precisely that
we are too dependent on the US for trade, so when their economy took
a dip it meant a lot of unemployment in Canada.  This is one very good 
reason why we should diversify our trade rather than intensify our
reliance on the US.

> 
> 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 

Logic would dictate looking at how the debt was accumulated.  Reagan
pumped a huge amount of money into an economic system over a short
period of time; we ran up our debt over a significantly longer period
of time.  We got long term support of the economy they got a huge
impulse.  It remains to be seen which will prove to be the superior.



> 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)

Well, since we are doing it relatively slowly, probably for some time
to come. How often can the US double it's debt?
> 
> >> 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.
Well I can tell you from travelling in major US and Canadian cities that
it sure looks like there are a lot more poor people (as a percentage)
in the states than in canada.


> [Note that approximately the same percentage of Americans live below
> the poverty line as do Canadians - about 13-15%]
I've heard a lot higher figures (for both countries); where do you get
your's from?
> 
> 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.
Well I'd certainly like to see that applied in some cases: e.g. instead
of cutting the science council's budget in half (by $5million) and
spending $75million on military uniforms it would have made a lot more
sense to leave the council alone  and spend "only" $70 million on
uniforms.

> 
> [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. ]

I know. Thats why I watch the CBC, the Canadian made programs generally
give a much more realistic picture of things.

> 
> 
> J.B. Robinson
-- 

	John Chapman
	...!watmath!watcgl!jchapman

	Disclaimer : These are not the opinions of anyone but me
		     and they may not even be mine.