Part 14 - Mr. Scrooge Can't Fix the Economy

Austerity Policies Don't Work

According to the latest business reports, the Canadian economy "sheds jobs", apparently in an effort to reduce costs and in response to the diminishing consumer demand. This is very bad news, that cannot be excused or ignored as simply a temporary adjustment. This is particularly problematic for this time of year, when peak business activities normally result in nearly full employment.


But, it must be considered as a clear warning that the austerity program, even after many months, is not working. How could it possibly work when, by definition, full employment for all at reasonable living wages is a prerequisite for a well-functioning market economy.  The current modus operandi is instead continuing to further decimate the very fundamentals of a healthy system.  One would expect that Waterloo -- not long ago declared as the most intelligent city in the world, drawing from its three universities, and two highly esteemed private think ­tanks -- should have been able to produce a single "academically validated" proposal on how to resolve this country's unemployment crisis.

That is not to say that there have been no realistic solutions offered before. To the contrary. Throughout the years, there have been many proffers prepared by less famous private think tanks and forwarded to this country's hierarchy. But apparently, none of them have passed the "ideological test" of the establishment.

That is to say that, according to currently enforced protocols, proposals must be acceptable to the social-economic wing of the establishment. This does not normally include "labour", a term management often condescendingly uses to refer to their employees. This latter segment of society doesn't have very much clout, if any, with the decision­ makers. Labour's place is primarily to follow orders, otherwise they could readily be replaced by plenty of other hungry workers. The whole current environment is getting more and more reminiscent of the Dickensian era. And, at this moment, labour is again ordered to tighten its belt and silently endure the hardships, until it becomes debt­ free.

Oddly enough, no one seems to be concerned about the reasons for the high rate of indebtedness among the low­ income segment of society. Are they afraid of facing the truth; i.e. that there might be a direct correlation between poverty line wages and the overuse of credit cards, just to survive?

Another Viable Solution

In this context, one may be tempted to ask, what really is the logic behind the current austerity program? Especially when a few prominent, realistic, corporate executives and others in-the-know, have made it perfectly clear that economic expansion, coupled with full employment is the only way to stop this long, ongoing and self-destructive process. At this point, The Buerger Alliance makes another effort to present one more job-creation program, in addition to two earlier suggested proffers, detailed in our blog in:

• Point 5 under the "Potential Solutions" section of our "A Comprehensive Proposal for Economic Revival" blog article.
• Our solution described in the article, “Full Employment without Any Loss of Income is not a Pipe Dream" 

 In essence this additional proffer is based on the premise that:

1. If the federal government -- applying a small portion of the $20 billion E.I. Budget, parceled out to the unemployed -- would offer a $5,000 to $10,000 tax credit as an incentive to employers for each additional employee they hire, for a minimum of one year period; and 
2. If employers would strategically revise the pay­ rate of low-wage earners of up to $35,000 per annum, as per Table 1 below, such a measure would result in an economic (business) expansion rate of ca. 3.4 %, and generate over 500,000 jobs in the process; plus
3. If provincial governments would introduce our "Full Employment Without Any Loss of Income" Plan, the economy of this country would gain an almost unprecedented level of strength, and would be on the path of resolving most of its crises in short order.

Table 1

Effects of increasing pay-rate for low-wage earners on the Canadian economy 

1	2		3	4		5
Total Income Class	Number of	Percent of	Total income assessed (in millions)	Total pay-rate increase recommended		Effect on the economy
	Taxpayers			in %	in millions
up to $10,000	3,811,740	15.27	$19,657.4	30%	$5,554.6	0.54%
$10,000 - $15,000	2,597,000	10.40	$32,468.4	25%	$8,117.1	0.80%
$15,000 - $20,000	2,443,640	9.79	$42,665.7	20%	$8,553.1	0.83%
$20,000 - $25,000	1,820,630	7.29	$40,733.5	15%	$6,110.0	0.60%
$25,000 - $30,000	1,547,270	6.20	$42,508.4	10%	$4,250.8	0.42%
$30,000 - $35,000	1,579,550	6.33	$51,253.5	5%	$2,562.7	0.25%
Total	13,799,830	55.28	$229,286.9	n/a	$35,128.3	3.44%

Footnote: Data in columns 1, 2, and 3 were sourced from the CRA "Income Statistics 2010 - 2008 tax year".

Interpreting the data: these calculations illustrate that an across the board pay­-rate increase of 30% to 5% for low-wage earners in Canada with incomes of up to $35,000 per year (55.3% of the total taxpayers), would create a 3.4% economic expansion rate, generating over 500,000 new employment.

In Summary

In the opinion of an increasing number of experienced thinkers, the current austerity based socio-econo-fiscal policies in Canada are not working for the benefit of over 50% of society.

These policies are outright punitive, destructive, and must be replaced with an economic program capable of delivering full employment, paying "wages of decent living", having the capacity to gradually minimize and ultimately eliminate (in  3 to 4 years) our country's socio-econo-fiscal crises.

In fact, in terms of effectiveness, the establishment's austerity program is very similar to an allegorical physician giving counsel to an undernourished, weak and underweight patient to go on a lengthy weight-loss diet.

A Few Words of Wisdom

• "To balance budgets, or to run a budget surplus in the public sector makes little sense when an economy is underutilized, but it is the course of wisdom when there are no idle resources to absorb additional expenditures." - Dr. Robert L. Heilbroner, Professor of Economics
• "Capitalism works when there is a large middle class. There is no free market solution to today's problems." - Jonathan Kay, Author, and Columnist
• "Austerity doesn't work." - David Miliband, U. K. Foreign Affairs Minister
• "Where wages are high, we shall always find the workmen more active, diligent, and expeditious, than where they are low." - Adam Smith, Economist and Philosopher, Author of "The Wealth of Nations" and "Theory of Moral Sentiments".
• "And by living wages I mean more than a bare subsistence level, I mean the wages of decent living." - Franklin D. Roosevelt, former U.S. President.

Read More

• Part 13 - Only Management, Labour and the Public Working Together Can Solve Our Country's Socio-Econo-Fiscal Crises

Part 13 - Only Management, Labour and the Public Working Together Can Solve Our Country's Socio-Econo-Fiscal Crises

Inadequate Solutions to the Current Crises

Considering the gravity of the current socio-econo-fiscal crises that are seriously affecting a large segment of the population, the current establishment needs to realize that it's not enough to just:

• Confide in the financial institutions, the stock markets and the investors' good vibes, hoping that they will take care of the financial, and by extension, the economic affairs of our country. Historical evidence totally discredits such belief.
• Seek out only the views of the business class and their proxies, in the course of the decision making process. In a democratic country, the interest of all segments of society should be equally considered.
• Cut the prime interest rate and keep it low for a few years, trusting that entrepreneurs will borrow to expand their operations or invest in new ventures. In this way everything will somehow turn out all right. The reality is, in the absence of significant increase in consumer demand, business has no compelling reasons to expand, let alone hire more employees.
  By the way, the current low interest rate policy runs contrary to earlier calls for reduced spending and increased saving. In fact, this ‘policy’ destroys the value of guaranteed investment certificates, including retirement income and savings plans, and thus impedes economic growth.
• Let the financial institutions practice unreasonably strict ­money-lending policies to a point that they are even refusing to bridge-finance important projects, even when 100% collateral is offered.
• Sit by and claim that there are no precedents to draw applicable lessons from. No valid solutions for how to climb out of the proverbial quagmire. This attitude results in a "wait-and-see" approach.  Let's allow the entrepreneurial class decide on how far a "cut and slash" and outsourcing style of modus operandi will be tolerated by the public. 

Moreover, it sounds incredible that amidst the grim socio-econo-fiscal climate -- evident by increasingly high unemployment, under-employment, poverty, debt, deficit and bankruptcy rates -- the establishment still keeps on defending these hard-line policies. That is to say that:

• Governments, obsessed with decreasing expenditures, are cutting essential social programs, thereby punishing the victims of this fiscal crisis, by selling out major, publicly owned assets and resources, and offering tax havens for internationals whose interest is global, not local.
• Businesses, in pursuit of maximizing their bottom line, keep on reducing their operational costs by laying off personnel and slashing wages and benefits. They are not realizing that lower wages result in less consumer spending, which in turn will decimate sales and revenues. Let alone that this latter process will further increase poverty and the already looming unemployment rate.

Come to think of it, one can only wonder, what is the definition of "enough" in corporate circles? Especially, in terms of top executive compensation vs. the average worker's pay. While most industrial countries may be characterized by a 75 to 1 ratio, this figure is over 400 to 1 in Canada. But apparently, even that is not enough.

The Key to Recovery: Economic Expansion

In view of Canada's very gloomy state of affairs, and in the absence of an effective recovery plan, the Premier of Ontario or the Minister of Finance should urgently call an Economic Conference. They should invite five delegates each from Corporate, Labour and Public Affiliates -- representing all major sectors of the economy -- and seek out their brief solutions to the ever-deepening socio­-econo-fiscal crises.

It's important to keep it mind that, within the framework of the free market economic system, the key to recovery from these periodic crises is economic expansion. This can only be achieved through significant reductions in poverty, caused by low wages and high unemployment/underemployment rates. In doing so:

• Consumer spending will increase and so will the volume of tax revenue; then, automatically
• Governmental expenditure will substantially decrease along with the size of the deficits across the board.

In order to make the conference meaningful at all, delegates should:

• Redefine the meaning of the 'new economy'. Is it "a system of producing and distributing the material needs of society?" Or, is it "a system of transferring goods, produced in low-wage-paying countries to relatively high-income-earning countries, primarily for monetary gains?"
• Prepare and present a series of mathematically proven practical proposals -- along the lines of our analytical summary in the article, "Full Employment Without Any Loss of Income is Not a Pipe Dream"  -- aimed at:
• Creating full employment without any loss of income; and
• Eliminating poverty by:
• Raising the purchasing power of poverty line wage earners
• Providing affordable housing based on home ownership, utilizing the power of volunteerism in the process.
• Keep in mind that paying low wages, and ignoring high unemployment and poverty rates invariably will continue to result in;
• Low purchasing power and diminishing sales revenue, on the one hand, and;
• Decreasing tax revenue, increasing budgetary expenditure, deficit and debt, on the other hand.

Once the summit has reached a consensus, a special legislative procedure should ensure that a series of realistic, remedial proposals will be enacted, without further delay.

In Summary: There is an urgent need for a Comprehensive Economic Expansion Program to counter Canada's Socio-Econo-Fiscal Crises.

Further Food for Thought

• Deloitte Centre for Financial Services on this country's millionaires: "In Canada there are 1.7 million millionaires, whose collective possessions amount to $3.3 trillion, not counting real estate." - The Globe and Mail, Page A15, October 31, 2011
• Dr. Jim Stanford, economist on Canada's Billionaires: "While the average billionaire became $100 million richer in 2010, the average Canadian became $524 richer." - October 14, 2011
• Jeffrey Immelt, CEO of General Electric, and Chairman of U.S. Presidential Job Council, on who we all work for: "We all work for the investors." 
• Federal Reserve Bank chairman Ben Bernanke‘s take on the high U.S. unemployment ratio: "We need to do whatever we can to move toward maximum employment as long as the tools are efficacious."
• Pierre Lassonde, co-founder of Franco-Nevada Mining Corp., on the subject of international competition: "If you try to compete against China on wages, you are gonna be a poor oountry."
• Dr. R. L. Heilbroner, Professor of Economics, regarding the issue of the maldistribution of income: "Incomes paid out to the lower-paid strata of the labour force do, indeed, return to the stream of purchasing power, for the worker tends to spend his or her wages quickly, but profits or high individual compensations may not."
• Christine Legarde, IMF Managing Director, on how to recover from the socio-econo-fiscal crises: "We need growth that produces jobs and that is inclusive." - The Toronto Star, Page N6, November 12, 2011
• Paul Krugman, MIT Professor, on the issue of competitiveness: "Competitiveness is a meaningless word when applied to national economies. And the obsession with competitiveness is both wrong and dangerous."
• Jennifer Granholm, former Governor of Michigan, on lowering taxes for corporations: "I have offered 0% corporate tax for corporations as an incentive to settle in Michigan. They said, we already have that in Mexico along with $1.50 an hour labour cost!" - CNN, GPS, November 13, 2011
• Tom Gorman, MBA, Author and Consultant on poverty and its effects on society: "It's income inequality that creates poverty in an economy. Poverty generates crime, broken families, drug addiction, illness, illiteracy and more poverty."
• Mickey Drexler, CEO of J.Crew in reference to economy and competition: "The economy now is zero sum. The only way you're going to get business today is to take it away from somebody else"

 Recommended Reading

• "Canada has more University Graduates earning very low incomes than any other country in OECD." - The Globe and Mail, Page A4, September 26, 2011
• "The sad demise of the one-income family." - The Globe and Mail, Page B2, October 19, 2011
• "Standard of Living; A generation under pressure" - The Globe and Mail, Page A3, October 19, 2011 
• "ls this the new normal?; Staying on the job" - The Globe and Mail, Page A3, October 27, 2011
• "Canada must address economic threats" - The Globe and Mail, Page B9, October 20, 2011
• "A millionaire's tax is all the rage, but it's another thing to collect." - The Globe and Mail, Page A15, October 31, 2011
• "Full Employment Without Any Loss of Income is Not a Pipe Dream" - Straight Talk About.., August 8, 2011
• "Rescuing the Canadian Economy" - Straight Talk About.., August 8, 2011
• Part 12 - Hope for Upcoming Graduates - The Cooperative Business Model
• Part 14 - Mr. Scrooge Can't Fix the Economy

Part 12 - Hope for Upcoming Graduates - The Cooperative Business Model

For the last few decades higher education has been presented to the young generation of this country  as a "sine qua non" to gain employment within the high tech and the, "so-called", knowledge-based industries. Just in case the message didn't sink in, a materialistic incentive was quickly attached to it. The promise was that those who heeded the former advice would, over a lifetime, earn one million dollars more than their counterparts, who didn't follow this advice. That was enough to convince  some, but it still wasn't enough for the educational authorities who were eager to expand their ‘facilities’ and accommodate their potential ‘customers’ at an exponentially increasing price.

Later on, some college and university administrators came up with quotas and target dates. They  suggested that within just a few years, 70% of all high school graduates will require a college or an university degree, even for entry-level jobs, and the rest will most likely be cast aside as the new class of unemployable.


Curiously enough, this higher education program doesn't seem to follow the pattern of economy of scale. As the cost of education is rising, the 'market' value of a B.A., B.Sc., etc. degree is going down to the point that an increasing number of employers consider only hiring applicants at the level of M.Sc. and PhD. To add insult to injury, according to OECD data, 18.5% of university grads earn incomes at, or below, half the median income of $37,000 per annum in Canada, — as reported by The Globe and Mail recently.

Since the establishment doesn't seem to be able, or willing, to provide employment for the unemployed masses — in particular the young generation of graduates — it's time to consider a somewhat rarely practiced alternative, the Cooperative Business Model.

The Cooperative Business Model operates very much on the principles of a "partnership", but on a larger scale, and in the interest of efficacy and autonomy it may involve a number of participants of several different, complimentary backgrounds.

There are numerous advantages of this model versus others, namely:

• It requires less start up capital;
• It is owned and operated jointly by its members;
• Its modus operandi is based on cooperation, as opposed to competition;
• Its operational costs and proceeds are shared among members of the cooperative.

The Cooperative Business Model is adaptable, able to function proficiently, independently, or jointly with other organizations within any sector of the economy, whether agriculture, art, fishing, forestry, manufacturing, mining, services, and trade or commerce. As to the question of how a group of graduates should approach the task of setting up a cooperative, very briefly, our recommendation is as follows:

1. Assemble a small team of three to four compatible, business-minded friends, dedicated to the cooperative principles; 
2. Develop a business plan;
3. Contact an appropriate professional association, trade association, union, or credit union, and ask for their advice, requesting their mentorship for implementing the business plan;
4. Seek a moderate amount of financial assistance — "seed money" — potentially from family members, friends and/or credit unions;
5. Convert the business plan into a pilot project, initially in a home-based setting;
6. Develop the project into a full-fledged cooperative business and job-creation program;
7. Reach out to leading cooperatives, countrywide and across the globe, that are involved in green energy production and affordable housing construction related projects, to examine the possibility of participating in joint venture operations. 

While it's true that getting involved in a new venture, such as establishing and operating a cooperative business model, is not for the faint-hearted, the risks far outweigh the alternative of:

• Not being able to achieve one's dream for a better life;
• Earning below poverty-line wages; 
• Being subjected to the often erroneous actions of some powerful decision-makers, whose collective ineptitude, irresponsibility and greed have led to this ongoing catastrophic situation; and/or even
• Accepting the prospects of unemployment. 

Working toward and achieving a prosperous future should be worth all the initial hardships.

All considering, since the establishment has for decades expressed its unwillingness to provide equal opportunity for all to achieve an equitable standard of living, it's time to embark on a new business model. It's time to prove to the world that there is life beyond the current profit motivated system. It's time to seriously consider a model that has the built-in capacity to satisfy the needs of the entire population equitably: the Cooperative Business Model.

Read More

•  ‘What's Your Degree Worth?" -- The Globe and Mail, September 26, 2011
• Part 11 - A Review of Popular Current Economic Proposals
• Part 13 - Only Management, Labour and the Public Working Together Can Solve Our Country's Socio-Econo-Fiscal Crises

Part 11 - A Review of Popular Current Economic Proposals

The debate as to what it takes to recuperate from the three year, no end in sight, economic crisis is slowly warming up in intellectual circles. This crisis has engulfed the U.S. and to a lesser extent its trade partner Canada. For a while now, the public has been bombarded with a number of conflicting, if not altogether confusing tenets, presented by some of the North American Illuminati.

In this article, we'll scrutinize four of the most noticeable ones, to see if these were followed through and what could be expected as a result:

1. The first tenet advocates implementing drastic public spending cuts, combined with deep tax reduction for corporations, in order to reduce governmental deficits and create a conducive environment for business investment. In other words, stay on course and hope for the best that everything eventually will pan out. So far it doesn't seem to work. In the meantime, the millions of unemployed, — including those whose Employment Insurance account had run dry — should just hunker down, tighten their belts a notch or two, and line up at a food bank, if that's what it takes. Because, buddy — in accordance with that Darwinian notion, characterized by ruthless competition for survival  — you are on your own.
    
2. The second tenet pushes for more fiscal stimulus to entice the private sector — ‘the job-creators' — to hire more workers. The trouble is, although as a rule, businesses respond to consumer demand only. No demand, no supply! Furthermore, since increased automation is all the rage, there is no need for extra personnel. If anything, most employers are exploring ways and means to reduce labour cost and increase the profit margin. They don't realize that they are directly or indirectly decimating their own and others‘ consumer base in the process.
    
3. The third tenet heralds a new awakening among a few powerful American business executives. These realists are recognizing the need for governments to prepare macroeconomic plans, in order to effectively deal with the current social-economic disaster, and avoid future ones. Apparently, some major international corporations — drawing from their three decades of experience with the Chinese economy — are in favour of shared governmental participation in running the economy.
   
   They say, such a rapport creates certainty and reduces the risks of getting involved in major projects. These projects have the capacity to resolve the economic stagnation, and thus the current unemployment crisis in North America. At this point, it remains to be seen if the majority of U.S. and Canadian businesses are ready to buy into an idea that has been erroneously branded on this continent. An concept that interferes with their right to self-determination and the principles of the free market economy.
    
4. The fourth tenet has to do with a hint from a high level U.S. official who, just days ago, suggested that some corporations have expressed their willingness to repatriate, ‘if the price is right‘. But the offer appears to hinge on labour's acceptance of a general wage range between $15 to $20 per hour.
   
   The reason behind the latter proposal is based on ‘newly discovered‘ statistical data that ranks North American workers three times more productive than their offshore counterparts. Add to this the cost of transportation of these imported products, these repentant companies presently produce elsewhere, plus a few other factors, then it becomes clear that repatriation makes a lot of sense.
   
   Inasmuch as the offer looks tempting — especially if one considers that half a loaf is better then none — it does not seem to address a major issue. The issue is: how are those lucky, future employees able to cope with their financial responsibilities, such as mortgage, car payments, and the huge cost of higher education for their offspring, without cutting back on essential purchases that keeps the neighbourhood businesses operating?

From these few classic examples alone, it's easy to size up the huge divide between intellectuals, as to what to do about the three years old social-economic crisis. A crisis that unnecessarily wrecks the lives of millions and drains the public purse. This divide, of course, paralyzes members of the decision making class who entirely rely on the latter group of masterminds to manage the "people's business".

The task does not involve the deciphering of some kind of an unknowable esoteric subject, requiring supernatural knowledge. Every part of the problem can be identified, measured, calculated, analyzed and using age-old problem-solving techniques to alleviate, and even eliminate the same. Admittedly though, it requires a few experienced, multidisciplinary, out-of-the-box realistic thinkers to do the work.

All the establishment needs to do is: change its current exclusionary protocol and open up the channel of communication and invite the few and far in between no-ax-to-grind, creative elements of society, and the entire country shall equitably harvest the benefits.

Read More

• Part 10 - Political Party-based vs. Social-based Government Systems
• Part 12 - Hope for Upcoming Graduates - The Cooperative Business Model

Part 10 - Political Party-based vs. Social-based Government Systems

Political-Party Based Government

Once again it is provincial election time in Ontario. All political party candidates are geared up to make their case to the electorate as to why they deserve to be elected.

The problem though, is that many promises are made hastily and very often, once in government, some of the most significant ones might not even be kept. Add to this the vagueness of the entire electioneering process, combined with the, “what's the use" and "who cares" attitude of about 40% of the electorate that refuses to vote, then the relevancy of the whole time-honoured practice becomes questionable. Let alone the fact that eventually, the party receiving only about 30% of the eligible electoral votes can create policies that could deeply inconvenience, or even afflict the lives of millions

So, what could be done to make the debates, the election process, and the government system as a whole, more relevant, credible, and responsible to all its citizenry?

Well, for one thing, each Political Party Leader should prepare and present to the electorate a clear, well-defined, comprehensive program at the start of the campaign. Specifically, the program should contain:

• A tabulated summary and prioritized account of all the socio-econo-enviro-fiscal problems of the day; plus 
• A formula as to how, to what degree, when, by what means, and at what cost, these burning problems would be addressed.

This well-defined program could then become a base for a series of serious discussions and debates between the party leaders, as opposed to the current method of engaging in personal attacks, rhetoric, and elusive retorts. Most importantly, this latter format would clarify the party leaders' positions regarding the issues in question, resulting in election campaigns that may even draw more attention and higher participation rates by the voters.

Then, in this era of deep socio-econo-enviro-fiscal crises, disunity, and mistrust, shouldn't the very nature of the current government system be also part of the discussions?

Furthermore. could it be that the current political party-based regime has reached its apogee. That it's too divided to come to a consensus on any issues, due to the leaders' doctrinarian and adversarial mindset? This woeful situation, of course, still leaves Canada with 1.367 million, and Ontario with 541.9 thousand unemployed, plus hundreds of thousands of others who had either withdrawn from the 'labour' market or have joined the 'temps corps'. Not to mention the plight of the many "over qualified," who are unable to find their 'niche'.

Therefore, an independent onlooker might just suggest that the current party-based government system has outlived its usefulness, without anyone within the inner circles even realizing it.

But what about the private enterprise, the other half of the establishment, the 'job-creators', who ran the economy into the quagmire?

Well, they had decided to set up shops, at any place, where the cost of operation is much lower and the profit margin is five to tenfold. So much for solidarity toward the folks of the country in which they reside.

Be that as it may, in this context there is the following food for thought:

Social-Based Government System

Since neither the private enterprise, nor the government has been able to come to grips with society's fundamental problems, due mostly to its “keep out" protocol and a “we know what's the best for the public" platitude, it's probably time to look for options. Options that would allow direct input from concerned, experienced, out-of the box thinkers who are capable in alleviating and even resolving many of today's problems.

One such option is a social-based system -- in essence a Government of the People, by the People, for the People -- wherein government representatives would be elected from all three social entities: Management, Employees (Labour) and the Public. Therein lies the guarantee that everyone's interests are equally represented and dealt with, as opposed to the current practice where the governing party follows the dictates of one segment of society.

In practical terms, citizens of each social entity would form a number of federally/provincially incorporated associations and from their respective membership would, every four years, elect and send into the Parliament/Legislative Assembly an equal number of members, or a total of 90 highly qualified representatives at the federal level, and 60 or less at the provincial level, to manage the country's affairs.

Members of the Cabinet, including the Prime Minister would be elected by, and from, the elected members of the Parliament. The position of the P.M. would be filled on a rotating basis from the elected representatives of the aforementioned three social entities.

Cabinet portfolios would also be equally distributed and would be rotated with each term. Thus, all three entities, Management, Employees, and the Public would each have its own turn.

It is envisaged that this government concept would fulfill most of the qualitative requirements of an ideal system, especially in democratic terms, inasmuch as it would:

• Become the most direct system of representation. Literally, all three social entities would be represented by the best and the brightest, public-spirited elements of the country.
• Replace the current multi-party representation system that does not serve all segments of society equitably, and whose modus operandi is divisionary and adversarial in its nature.
• In all probability, fit a substantial number of countries around the world very well, especially in the view of the recent socio-econo-political developments

This system would provide a more seamless operation of the economy through the new level of cooperation between government and business.

We conclude this topic with the following thoughts:

• "That government is the strongest of which every man feels himself a part" -- Thomas Jefferson, former U.S. President
• "From the beginning, capitalism has been characterized between laissez-faire and intervention. Laissez-faire representing the expression of its economic drive, intervention its democratic orientation. That tension continues today, a deeply embedded part of the historic character of the capitalist system." -- Dr. Robert Heilbroner, Professor of Economics.
• "Never underpay or overcharge, and your business will thrive" - Anonymous

Read More

• Part 9 - The Key to a Thriving Economy: Eliminate Poverty
• Part 11 - A Review of Current Popular Economic Proposals

Part 9 - The Key to a Thriving Economy: Eliminate Poverty

There are many different views out in the public square regarding the origin of poverty, its contemporary definition, the causes and effects of poverty, and whether or not ii can be realistically resolved.

Keenly aware of the dangers in ignoring poverty, former U.S. President John F. Kennedy, about 50 years ago, issued the following stern warning to members of the upper class in his country: "If a free society cannot help the many who are poor, it cannot save the few who are rich."

As to the issue of its origin, in retrospect one might bluntly suggest that poverty is one of the last holdovers from the era of slavery. More than two millennium earlier, an Athenian philosopher, Aristotle, viewed "Poverty (as) the parent of revolution and crime."

Many, especially these days, would like to define poverty as a personal failure. Others, like the late dramaturge Brooks Atkinson, put the blame squarely on "the failure of the economic system". As most critics, Atkinson too was rather short on providing solutions, however at least he cautioned against relying on charity alone, and recommended to take "political and economic action" in order to eliminate poverty.

Mainstream sociologists, having conducted innumerable analyses on this topic time and again, invariably point to lack of higher education as its cause, and high unemployment rate as the effect of pauperism. Clearly, these mostly well-intentioned folks have been ignoring the many aspects of reality. Namely affordability, practicality, and interest, among some other personal issues, by recommending higher education as the magic formula for eliminating poverty.

As always, there are those folks who take solace in the fact that indigence is an age-old problem, therefore, in effect, it's a natural phenomenon that we all have to learn to live with. Moreover, they say that poverty effects just a narrow group of people. Well, not according to "Personal Income Statistics 2010."


Yet, the more sober elements of society urge us all to deal with all manifestations of poverty. And it must be done for ethical, humanitarian, practical, and economic reasons. Moreover, for business‘ sake, it must be done for reasons of self-preservation.

Looking at the current state of affairs in this country, it becomes increasingly evident that the conventional methods applied to curb this grave problem has not worked. In fact, these ‘methods’ — throughout the past few decades — have created a socio-econo-fiscal disaster, inasmuch as:

• Millions of lives have been unnecessarily disrupted, due to: 
• a maldistribution of income at the "lower-paid strata" of the active workforce;
• an underdeveloped and stagnating economy; and
• the unnecessarily high poverty and unemployment rates;
• An over $1 trillion public debt that was accumulated mostly as a result of diminishing tax revenues and financing a meager and dysfunctional ‘social safety net‘.

At this point, once again the familiar question is waiting to be answered:

What should the establishment be doing to effectively resolve the issue of poverty in Canada, — one of the richest country in the world — and, by extension, to create a thriving economy for the benefits of all stakeholders?

To respond to the aforementioned criteria, we offer the following clusters of potential solutions: 

1. Implement our "Full Employment without Any Loss of Income…" program, as described in Part 8 of this "Straight Talk About …" blog.
2. Strategically raise the wage-scale for the lower-paid segment of the active workforce, to the tune of 25% -10%, in order to progressively improve the purchasing power of the estimated 5 million breadwinners in Canada. This approach has an innate advantage over any other methods, inasmuch as its push-pull effects on the economy is almost instantaneous, since consumers tend to spend their newly gained purchasing power faster than any other income group, according to the experts.
3. Develop an Affordable Housing Construction Program, supplemented by the power of volunteerism that could be financed by federal budget-savings gained from the nearly $20 billion El funds, allocated for the current fiscal year. It is envisaged that the implementation of such a program would have significant benefits for:
• First home buyers with limited, but relatively stable financial resources; 
• Retirees who are ready to trade down for a smaller condominium; and 
• The unemployed and untrained/unemployable school-dropouts.
4. Diversify this country's economy, in the interest of avoiding a socio-econo-fiscal calamity in case the current economy, supported by the automotive, financial and IT sectors, fractures.
5. The Government of Canada should subsidize the currently low RSP payment rates. These rates should not be set to less than 5% per annum, otherwise many retirees will join the millions of welfare recipients.
6. Welfare payments should be increased to ensure that disabled recipients can provide for themselves the basic necessities of life, just like in Denmark, Germany and Switzerland.

In conclusion: Let us suggest that it's time to put realistic, affordable and — one might even suggest — profitable solutions, that have the built-in capacity to painlessly and seamlessly resolve six very serious socio-econo-fiscal problems, i.e.: Poverty, Unemployment, the Economic Stagnation, Deficits, Debts, and the Welfare of the Disabled, in a comprehensive manner.

Read More

• Part 8 - Full Employment without Any Loss of Income is not a Pipe Dream
• Part 10 - Political Party-based vs. Social-based Government Systems
• The Economic Problem, by Dr. Robert L. Heilbroner
  
• Titans, by Peter C. Newman 
• Third World America, by Arianna Huffington

Part 8 - Full Employment without Any Loss of Income is not a Pipe Dream

Fifty years ago, in order to calm Labour's fear of automation, the then U.S. President J. F. Kennedy made the following statement: "We believe that if men have the talent to invent new machines that put men out of work, they have the talent to put those men back to work."

Well, in Canada, Prime Ministers apparently have shied away from making such a bold pledge. Nevertheless, the grim reality is though that ‘men’ apparently don't have what it takes to deal with the unemployment crisis here, or elsewhere in the world, for that matter.

In the views of many observers of the North American economy, the events of the late 1960s started a new era that could be characterized by simultaneous unemployment and inflation rates running amok. A phenomenon that appears to have contradicted the revered Economist J. M. Keynes‘ "General Theory of Employment, Interest and Money".

Leading Canadian economist, Dr. John Kruger, summed up the narratives of that period as follows: "The world has changed but the economists have not caught up with it. It's like a technician walking around with a standard manual on repair and maintenance and all of a sudden he finds the machinery, he was accustomed to repairing, has been replaced and his book does not give the proper answers anymore. So he is lost." Since then nothing has really changed.

However, a few nonpartisan, interdisciplinary thinkers suggest that anyone, seriously concerned about the socio-econo-fiscal state of this country, should focus on reducing the high rate of unemployment. They recommend that approach of scrutinizing the relations between three basic economic factors: Productivity, Consumption and the Average Number of Hours Worked per Week.

In the collective view of the latter group, unemployment is a totally unwarranted phenomenon. It could have been entirely avoided had government, business and labour leaders recognized the need for adjusting the duration of the workweek, to compensate for the high productivity rate and the saturated market conditions that have been so prevalent for the past 40 years, or so.

In a recent interview, Dan Akerson, -- CEO and Chairman of General Motors -- was asked how to deal with the ongoing economic stagnation. In essence his response was: Corporations should invest in innovation and R&D activities. That should eventually lead to economic expansion and job creation, but it could take a few years to see the results.

The trouble though is that, business consultants had already found a way to increase the GDP, without creating new jobs. And they even dubbed the highly profitable process "jobless recovery", to the delight of business owners and stockholders. At this point in time, the responsible approach is not to manipulate, but to solve the age-old unemployment problem. A problem that has, throughout the decades, grown into a gigantic socio-econo-fiscal crises.

Indeed, the solution could be based on the need to harmonize the aforementioned three basic economic factors: Productivity, Consumption and the Average Number of Hours Worked per Week, in order to maximize the size of the country's Active Labour, and Consumer Force.

The table below, -- detailing step by step this job creation process, -- was originally designed to address this country's 1992 unemployment enigma, the same premise could serve as a viable formula to deal with the current problem of crisis proportions, as well.

Analytical Summary

Canadian Unemployment Related Economic Indicators

Economic Indicators	Economic Indicators Viewed from
	The 1992 Unemployment Rate of 11.3%	An Unemployment Rate of
		8%	5%
		and an Economic Expansion Rate of
		2%	4%
1. Population	27,402,200	assumed static	assumed static
2. Labour Force 2.1 Total 2.2 Employed 2.3 Unemployed	13,797,000 12,240,000 1,556,000	assumed static 12,693,200 1,103,800	assumed static 13,107,200 689,900
3. Gross National Product 3.1 Total 3.2 Per Capita	$664,092,000,000 $24,328	$667,373,840,000 $24,815	$690,655,680,000 $25,301
4. Personal Income 4.1 Total 4.2 Per Capita	$619,293,000,000 $22,687	$631,670,860,000 $23,140	$644,064,720,000 $23,595
5. Wages and Salaries 5.1 Total 5.2 Per Person (Employed)	$390,741,000,000 $31,923	$398,555,820,000 $31,399	$406,000,370,640 $31,004
6. Income Tax Paid by All Employed Persons 6.1 Total 6.2 Per Person	$83,893,600,000 $6,854	$85,571,472,000 $6,742	$87,249,344,000 $6,657
7. EI Benefits Received by All Unemployed Persons 7.1 Total 7.2 Per Person	$17,599,441,000 $11,311	$12,485,081,800 assumed static	$7,803,458,900 assumed static
8. Average Wage and Salary Net (After Income Tax) (line 5.2 minus line 6.2)	$25,069	$24,657	$24,347
9. Average Number of Hours Worked per Week	37.7	37.1	36.6
10. Tentative Average Wage Loss Due to Shorter Work Week (line 8)	N/A	$412	$722
11. Reduction in Government Expenditure Due to Decrease in EI Benefit Payments (line 7.1)	N/A	$5,114,359,200	$9,795,982,100
12. Tax Credit Payable to All Employed Persons Due to Reduction in Government Expenditure (line 11 divided by line 2.2)	N/A	$403	$747
13. Increase in Government Revenue Due to Rise in Total Income Tax Paid by All Employed Persons (line 6.1)	N/A	$1,677,872,000	$3,355,744,000
14. Tax Credit Payable to All Employed Persons Due to Increase in Government Revenue/b> (line 13 divided by line 2.2)	N/A	$132	$256
15. Actual Net Income Gain for All Employed Persons per Year (line 12 plus line 14 minus line 10)	N/A	$123	$281
16. Increase in Government Revenue Due to Rise in GST/PST	N/A	$1,004,000,000	$2,008,000,000
17. Potential Gross Budgetary Saving (line 11 plus line 13 plus line 16)	N/A	$7,796,231,200	$15,159,726,100
18. Total Tax Credit Payable as a Compensation for Wage Loss Due to Shorter Work Week (line 10 multiplied by line 2.2)	N/A	$5,229,598,400	$9,463,398,400
19. Potential Net Budgetary Saving (117 minus line 18)	N/A	$2,566,632,800	$5,696,327,700

For further details as to how the aforesaid objective could have been fulfilled earlier, let's refer to Analytical Summary above, line by line with the ultimate aim of:

• Either, reducing the 11.3% unemployment rate to 8% or preferably to 5%, and accepting a corresponding "average yearly wage loss“ of $412 or $722 respectively (line 10). In doing so, the government of the day would have had access to a potential gross budgetary saving of either $7.796 billion, or $15.159 billion (line 17).
• Or, decreasing the 11.3% unemployment rate to 8% or 5% and compensating for the "average yearly wage loss" (line 10) by the "actual net income gain" per year of $123 or $281 (line 15). In the latter instance the government would had ended up with a "potential net budgetary saving" of $2.566 billion, or $5.696 billion (line 19).

In a nutshell, this brief presentation clearly illustrates that the 1992 Canadian unemployment problem could have been eliminated by simply reducing the average number of hours worked per week from 37.7 to 37.1 or 36.6 (line 9) with a slight gain in yearly income.

Now, that the establishment has seemingly no more plans in reserve to revive the long ailing economy, it's time to resort to the aforementioned scientifically proven formula to resolve what has become a socio-econo-fiscal crisis, for the following reasons:

• Employers cannot be expected to hire new employees, unless there is a significant, specific and long term demand for some products or services. And it's difficult to argue such position.
• Governments are unable to balance their budgets due to a rapidly shrinking tax base and the ever increasing demand for unemployment and welfare benefits. Therefore, in the interest of all stakeholders, provincial governments -- in consultation with business and labour leaders -- would be wise to sensibly reduce the average number of hours worked per week, via legislative means. This would lay a foundation for a socio-econo-fiscal system that is noted for its ability to provide full employment without any loss of income along with a balanced budget.

Sources:

• Revenue Canada 1994 Taxation Statistics
• Statistics Canada 1995 Canadian Economic Observer, January Issue.

Read More

• Part 7 - Rescuing the Canadian Economy
• Part 9 - The Key to a Thriving Economy: Eliminate Poverty

Part 7 - Rescuing the Canadian Economy

Clearly, in order to effectively deal with the current socio-econo-fiscal crises, there are four distinct options available for the socio-econo-political establishment:

Option One - Status Quo 

This "do nothing" course offers the same-old, same-old, waiting for and relying on the U.S. economy to recover. Hoping against all odds that such a recovery would result in some degree of short-term economic opportunities for Canada to ride on.

Option Two - Belt-Tightening

A belt tightening ‘strategy’, that translates into slashing wages, reducing the size of the workforce, and cutting back or even eliminating some of the essential social services. This strategy is erroneously percieved by some policy-makers as the only path to getting rid of the red ink and becoming globally competitive. These methods of course will inevitably lead to further economic contraction, more poverty, higher unemployment rate, lesser tax revenue. This comes at a juncture when economic expansion is an absolute necessity for survival. Let alone the fact that, it's not possible to compete in a race where the competition has vis-a-vis this country:

• A substantial scientific and technological superiority; and
• A 10:1 guaranteed advantage, due to its unfair wage structure.

Option Three  - Our Proposal

Our proposal provides a set of realistic actions, -- as described earlier in our previous post, "Part 6 - A Comprehensive Proposal for Economic Revival" -- aimed at advising governments to:

1. Seek out the advice of non-ideological, independent, interdisciplinary thinkers and well-qualified problem-solvers to help revive the economy.
2. Implement an Affordable Housing Construction Program, utilizing the Power of Volunteerism for the benefits of:
• First home buyers, and retirees ready to trade down for a smaller condominium; and
• The currently untrained, school-dropouts.
3. Explore the possibility of partnering with technologically well-advanced foreign companies, of fair wage-structure, interested in setting up shop here to serve this continent's Green Energy Market.
4. Provide grants, and forgivable loans for promising independent, private innovators and inventors to enable them to convert their concepts into saleable products, services and employment opportunities.
5. Offer tax credits, the so-called "patriotic card", and temporary “payroll tax" exemption, using the near $20 billion El in the process, to alleviate the unemployment crisis.
6. Propagate the partnership and cooperative system as a ways and means of creating alternative business models and employment opportunities.  Apply a proven program for eliminating unemployment altogether, without any loss of income;
7. Recommend to strategically raise wages of low income earners, to boost the economy.
8. Legalize the right to form employees’ associations, for all members of the workforce. It‘s demonstrable that such a province-wide system of employee representation would create a much needed stable business and work environment between employers and employees.

Option Four - Emergency Program

This option amounts to a simple realization of the fact, that neither the private sector, nor the government on its own power seems to be able to deal with the current economic recession. Therefore, in order to put an end to further personal and social distress, material and financial destruction, leaders of the socio-econo-political establishment should merge their power and work out an emergency program to re-energize the economy of this country, for the benefit of all its citizenry, applying the proposals outlined in Option Three above.


Summary

In a nutshell, the establishment has four clear alternatives. It appears that in order to successfully deal with this country's problems of major public concerns, the combination of the third and fourth options provide the most viable choice.

So, let's not waste any more time and aim for the best available option. The action that has the innate capacity to provide a reasonable standard of living for this country's entire citizenry, utilizing local natural and human resources, combined with the latest in-house or external technology available, and the most effective management methods required to attain these goals.

It’s not an utopian dream, the citizenry of other countries have have been able to attain it under much less favourable conditions, by applying the proper socio-econo-political policies the people of Canada can realize these same results!

Read More

• Part 6 - A Comprehensive Proposal for Economic Revival
• Part 8 - Full Employment without Any Loss of Income is not a Pipe Dream

Part 6 - A Comprehensive Proposal for Economic Revival

In order to gain a complete insight into this country's current socio-econo-fiscal standing, it appears to be necessary to review a few additional statistics:

• Current (June 2011) Federal Government Deficit: $36.2 billion
• Current (April 2011) Provincial Government Deficit: $16.7 billion
• Current (April 2011) Federal Government Debt: $563.3 billion
• Current (April 2011) Provincial Government Debt: $236 billion
• Unemployment Rate in Canada: 8.1%, or 1.488 million (3 month average ending April 2011). Note: In more than a handful of countries the jobless rate is less than five per cent. 
• Unemployment Rate in Ontario: 7.9%, or 580.8 thousand (3 month average ending April 2011)
• 2010-2011 Canada EI Account, Planned Spending: $19.75 billion.

A close review of the above-listed data leads to several conclusions:

• First is the enormity of the socio-econo-fiscal problems that Canada is faced with. This becomes even more evident and begs for equitable, rational policies, and immediate corrective actions.
• Second is that, much of the stimulus programs initiated by the federal and provincial governments have produced negligible results.
• Third is that, in the absence of a foreseeable marked increase in consumer demand, business has no realistic reason to expand operations, let alone to hire new employees.
• Fourth is that, there are more than a handful of countries around the world, where the jobless rate is less than five per cent; hence one might ask, why doesn't someone study those country's MOs'? -- and
• Fifth is that, the establishment doesn't seem to have an effective plan to deal with the crucial unemployment problem, and the government appears to be resigned to spend ca. $20 billion this year on the El program, essentially keeping the unemployed off the active workforce.

Potential Solutions

Unfortunately there are many within the intellectual circles who regard the citizenry as mere subjects, whose role is to abide by the decisions of the establishment, as their trustees, no matter what the consequences are. However, since there is more than enough proof to conclude that, in order to reduce the unnecessary human suffering and effectively deal with this country's socio-econo-fiscal problems, the establishment must:

1. Set aside its decade old exclusionary “keep-out" protocol and seek out the advice of the few and far between realistic, interdisciplinary thinkers and experienced problem-solvers, who are in the know.
2. Initiate an Affordable Housing Construction Program aided by the power of volunteerism. This has already proven to be very effective, mostly in the fields of education, health care, politics, and sports. Such a program, if introduced, would fill the needs of a significant segment of the public, particularly: 
• The young singles and couples with limited, but relatively stable financial resources, who would like to create their own nest egg, i.e. buy a home and join the middle class. Or the retirees who are ready to trade down their home for a smaller, yet functional condominium, and gain access to a certain amount of spending money in the process.
• The unemployable school dropouts, who are willing to participate in various construction related job training programs, and are eager to find gainful employment in the industry. 
3. Contact foreign companies, involved in the development and production of advanced, clean electric power generation equipment, energy saving appliances. Offer such companies, interested in serving the North American market, the opportunity to set up manufacturing and distribution facilities in Canada.
4. Provide grants and forgivable loans for promising, independent innovators and inventors,  enabling them to convert their concepts into saleable products, services and employment opportunities.
5. Create a much needed economic expansion plan, to considerably reduce the perpetual unemployment and poverty crises by taking the following steps:
• Grant a $5,000 - $10,000 tax credit to reliable employers for each additional employee they hire for a minimum of a one year period. The introduction of such a tax credit could be financed from the EI budget and would save the federal government a $7,000 - $12,000 per each unemployed individual hired. That is to say that by creating l million jobs, the federal government could save $7 billion - $12 billion a year on El payments, not counting the new peripheral employment opportunities, and the additional tax revenue gained in the process.
• Replace the fixed corporate business tax with one that is prorated to a given company's contribution to reduce unemployment.
• Use the "patriotic card" by asking the business establishment to increase the size of their workforce, in lieu of temporary payroll tax exemption and for other sound fiscal incentives.
6. Diversify the Canadian economy in order to minimize the devastating effects of a potential saturation or even collapse of the IT market.
7. Widen the scope of the age-old concept of partnership and co-op system, whereby individuals with all types of occupational backgrounds could form an alliance, working together to provide marketable services, share the cost of operations, and apportion their revenue according to the rate of their respective input.
8. Apply a mathematically and theoretically proven program for literally eliminating unemployment, without any loss whatsoever in personal income.
9. Raise wages of low income earners strategically, with incalculable positive socio-econo-political results, to boost the economy, create nearly full employment and generate tax revenue for all levels of governments, and yes, even to increase the bottom-line.
10. Legalize the right to form and join employees‘ associations for all members of the workforce, -- just like business is accorded with organizations like the Canadian Federation of Independent Businesses, Chamber of Commerce, Employers‘ Advocacy Council, Home Builders‘ Association and many others -- to promote the interests of its members. It is expected that the legalization of such a right would create a much needed balance of power between employers and employees, just like in many other developed countries and would create a more stable working environment based on mutual trust and respect.
11. Dispose of the age-old myth, and vestige of the era of slavery, that suggests that labour cost and benefits should be minimized in order to make a business operation more profitable. Those who espouse such views should remember Henry Ford's discovery: employers are not only workers but also consumers. That is to say that low wage earning employees will automatically become meagre consumers. A situation that's not in the best interest of business, let alone the economy.

Read More

• Part 5 - A Brief Cause and Effect Analysis
• Part 7 - Rescuing the Canadian Economy

Part 5 - A Brief Cause and Effect Analysis

At the outset of its research, The Buerger Alliance raised an important question: Why does Canada, and particularly Ontario, have so many unresolved socio-econo-fiscal problems?

It sounds incredible that, for example, in this day and age of innumerable awe-inspiring scientific breakthroughs, no one has been able to figure out how to put adequate food on the table and a proper roof over the heads of every person living in this, said to be the richest and best country in the world.

Come to think of it, isn't it the role of the establishment to provide the best possible standard of living for its entire citizenry? Should they not be utilizing the local natural and human resources, combined with the latest technology on hand, and the most effective management methods required to attain this goal? If that's not the minimum one would expect in forming a community of communities, a.k.a. nationhood, than what is it? So what‘s holding us back? -- one might ask.

Regardless of their ideological standing, all levels of governments are always more than ready to please the private sector by cutting red tape, cutting social services and taxes, providing massive fiscal incentives and concessions, and hoping that in tum, the economy will get better. However, nothing seems to be working.

And now, in order to get answers to the aforementioned questions, let's scrutinize each of the formerly identified problem areas. Areas that affect every constituent of this country, such as the economic, education, energy, health care, housing, pollution, poverty, transit, the unemployment and underemployment crises.

The Economic Crisis

First, let's take a quick glance at the Canadian economy, and see what are the basic causes of its failure to perform to its full potential.

In this context, it must be stated that to no fault of its own, and for reasons rooted in its past, Canada as a country has never really had a chance to develop its own, independent, all inclusive, and well balanced economy. Due to the ensuing lack of proper managerial culture and experience to organize and operate an autonomous economy, it's no wonder that former and present leaders have been so enthusiastic to hand over the country's economic management to the internationals. In this way they could in effect disown any responsibility for the ultimate outcome.

But let's stop for a moment or two, and see what has been happening under the aegis of the so-called "technology transfer" program. Was it a strictly honest to goodness, humanitarian act to enable the underdeveloped parts of the world to catch up with the industrialized world — a kind of 'let them share our wealth undertaking‘ -- or were there some nefarious aspects to the deal?

Well, actually the latter puzzle was settled by Premier Wen Jiabao, in the course of a U.S. TV interview last year, when he was asked the question: "When will the Chinese government be ready to raise the artificially kept low value of the Renminbi, in order to level the playing field between the two countries?" In response, the Premier suggested that, "importers shouldn't be too greedy, after all his country's manufacturers sell cellphones at $4 each, that U.S. Consumers buy for $299.99."

Since there are many in high places who swear that this country's road to salvation is in further expanding trade, hence the next question is: How can Canadian companies compete with low wage paying countries? The honest answer is that they cannot. Simply because this country's employees hardly could pay a fraction of their bills when earning an average wage of $2 an hour. After all, even a year-in, year-out full time employment, paying a minimum hourly wage of $10.25 in Ontario, is not enough to cover the cost of living for a single person, let alone a family of four.

But, there are always some super-CEOs who believe that they are able to draw blood from granite.  The latest example of this talent was demonstrated in a newspaper column by an executive who -- in his attempt to beat the 10:1 production cost advantage of foreign competitors -- suggested to automate the engineering process.  Thereby, plausibly cutting 30% of the manufacturing cost.  Admittedly, he is willing to do this, even at the cost of eliminating jobs.  Although it's not clear how he is going to deal with the remaining sevenfold cost imbalance.

On the issue of cost of employment, this country's econo-political policy advisers would tremendously benefit from studying the findings of the late Henry Ford, the founder of Ford Motor Company, along with the cogent views of William Weisz, the former CEO and Chairman of Motorola Inc.

History books indicate that many decades ago, Henry Ford made an unprecedented discovery by recognizing and appreciating the fact that every employee has two basic, parallel roles to play in any economic system; being both a worker and a consumer.

As a practical thinker and employer, in 1914 Ford announced his famous profit sharing plan, and within one week raised the minimum wage in his factories from $1 per day to $5. In this way he enticed, and more importantly empowered his employees to purchase the products of their own making. Since the price of a car was at about $650, practically every employee within a year was able "own" a new vehicle and live better than ever before.

Building on Ford's theories, Weisz in 1986, at a management conference in Chicago, rebuked his fellow executives for focusing on cutting wages. "You fellows ignore the fact that, on the average, burden comes to 45%, materials about 44%, and direct labour cost generally amounts to only 11% of the manufacturing expenses. Therefore, it does not make sense to reduce wages, but strategically raising wages of low income earners does, with incalculable positive socio-econo-political results",  concluded the highly regarded, then Motorola Chairman

Incidentally, in Ontario and Quebec, currently the average labour cost is just about 10% of the total manufacturing expenses; the automotive industry has a ca. 5% to 10% labour cost component. The fast-food industries‘ labour cost is said to be one of the highest of all, at about 20%.

More recently in the U.S., according to a documentary produced and televised by CBS, more and more corporate executives go undercover and seek out the views of their employees regarding the state of the economy. Upon returning to their offices, they formulate new corporate policies to counteract the effects of the current social-economic crises. On the whole, the employees say that these bosses not only listen, but are making important changes.

Meanwhile in Europe, more companies appear to adopt Henry Ford‘s profit sharing plans. And according to DW-TV Berlin reports, in 2011 already a number of firms have paid bonuses between 2,000 to 8,000 euros each, to their low level employees. Not mentioning the fact that in a handful of European countries, the minimum yearly paid vacation is four weeks by law, and employees receive 13 month salaries each year.

Read More

• Part 4 - General Observations on Canada's Economic Performance
• Part 6 - A Comprehensive Proposal for Economic Revival

Part 4 - General Observations on Canada's Economic Performance

Having monitored the economic performance of this country, for many years, The Buerger Alliance has noticed that, in spite of many massive fiscal incentives and concessions provided by subsequent governments to create optimal operational conditions for medium and large corporations, the economy has continued to decline.

One might further infer that, such incentives should have produced a highly efficient, well-balanced, stable and socially responsible market economy. An economy where employees, taxpayers and corporations are partners, working together for the benefits of all segments of society. Performing like Denmark, Finland, Germany, Norway, Sweden, Switzerland and a few other countries that have been successful for decades.

Instead of emulating these countries‘ management style, in North America a new, semi-nomadic business model was introduced over the years, wherein near poverty line wages, reduced social benefits (if any), and high unemployment rates have become the norm. This new norm was adopted to gain a "competitive edge" on the global market and to attract more new business investments for Canada.

As a result of such policies, many companies settled for a while, enjoyed the benefits of grants, interest free loans, and access to low-cost utility rates, etc.. However, most of them eventually either sold out, closed down their operations, or even declared bankruptcy, leaving behind socio-econo-fiscal calamity.

Having learned from this cyclic experience, socially conscious governments in some parts of the world (many, many decades ago) decided to implement and maintain social security and welfare programs to ease the plight of the unemployed and low-income earning masses. While the establishment still prefers to refer to, “Small Business as the engine that drives the Canadian Economy", the reality is that most businesses find it impossible to compete with their foreign counterparts, whose manufacturing cost is 90% lower. Obviously, the officialdom hasn't been listening to the late Mary Kay, former CEO of Mary Kay Cosmetics, who on a few occasions expressed her views on this topic in the following manner, "In competition there are always winners and losers."  And one might add that Canada, as a whole, is certainly not on the winning side.

Anna Zecconi, V.P. and owner of Galt Furniture in Cambridge, Ontario, expressed her sentiments a few years ago in the media by saying that, "We are an extinct species. Furniture manufacturers are closing every day. My company employs 15 people, down from 40, and it's hard for small businesses to compete with foreign companies that dump mass produced furnishings at discounted prices."

Small commercial businesses have similar problems; inasmuch as they also cannot compete with the so-called supermarkets’ operational costs. However, even supermarkets such as Zehrs and Loblaws are also losing out to the even larger, big box stores, like Wal-Mart.

In a "one on one" conversation, employees of these new superstores are complaining that, when these buy-outs and conversions take place, they always lose seniority, get less wages, and less benefits.

Generally speaking, employers and employees are literally in a deadlock situation. Employers claim, they cannot afford to pay "living wages", and employees, earning substandard wages, are shut out of the marketplace. When that happens, in the absence of a reasonable volume of consumer base, employers are advised that they can manage with less staff, which results in a higher rate of unemployment and even less consumption. Some say, it's a road to economic self-destruction.

Yet, according to news reports, many companies are engaging in a "cost optimization program", a.k.a a "headcount reduction", in the interest of improving the bottom line.  There are even business consultants that are advising corporations on how to "manage human capital and technology more effectively in order to become more competitive." 

So the question one might raise at this point, is this: All considering, is this really the best that the establishment can provide for all the stakeholders of this country? There is plenty of evidence to suggest that by applying the appropriate policies, this country's economic performance can be substantially improved for the benefit of all.

Read More

• Part 3 - Some Views on the Economy from Prominent Thinkers
• Part 5 - A Brief Cause and Effect Analysis

Part 3 - Some Views on the Economy from Prominent Thinkers

The number of prominent thinkers who are very concerned about this country's sad state of affairs is also on the rise. Here is a small sample of their views — as reported by the media:

• Ten Canadian leading economists, some years ago, in a joint communique — responding to the question of why this country's economy, given all its vast resources, hasn't been able to function at a higher efficiency rate — finally conceded that, "The theories of John M. Keynes, John K. Galbraith and other prominent theoreticians no longer work. Furthermore, there appear to be no new realistic economic theories in the making."
• Visiting U.K. Professor Ray Monk, lecturing at the Perimeter Institute, in Waterloo, Ontario, earlier talked about a huge "solution shortage" phenomenon, implying that, "we live in a society of experts, but today's intellectual climate is very fragmented and experts are isolated, but an interdisciplinary exchange, if initiated, could lead to many new practical ideas." 
• Glen Hodgson, Chief Economist with the Conference Board of Canada: "We need to reform our balkanized economy." 
• Gord Nixon, Chief Executive of Royal Bank: "The takeover frenzy is scary and it's time that Ottawa drew the line in the sand." 
• Robert Brown, CEO of CAE Inc., went even further by bluntly stating that, "A country must be in charge of its own destiny and can‘t have key decisions made outside."
• Allan S. Binder, Professor of Economics and Vice Chairman of the G7 Group, has warned the North American Leadership about stubbornly chanting, "Free trade is good for you, to people who know it is not. These leaders will quickly become irrelevant to the public debate." 
• Lynton (Red) Wilson, former Deputy Minister of Industry:  "Canadians have witnessed the sale to foreigners of major national icons, such as mining companies Falconbridge, lnco and Alcan. This includes steel firms like Algorna, Dofasco and Stelco, and retailers like the Hudson Bay Company. These sales have raised questions about the effectiveness of the government's assessment of such foreign investment."
• Frank McKenna, TD Vice President and former New Brunswick Premier warns Canadians: "We are facing all of the classic symptoms of the Dutch disease, where we are getting hollowed out as a manufacturing country because we are uncompetitive. Yet we have the illusion of wealth because we have a small part of our economy that is producing revenue."
• Professor Dennis Raphael of York University, Author of Poverty in Canada, blames Ontario's problems on the establishment's mistaken social-economic policies. In his book, he demonstrates "how organizations of the economic and political system causes poverty." He also argues that, "reducing poverty requires recognizing and confronting the interests that benefit from poverty."
• Quebec Premier Jean Charest a few years earlier appealed to Prime Minister Harper by stating that, "A struggling manufacturing sector has repercussions for the entire Canadian economy." 
• Ontario Premier Dalton McGuinty some time ago reminded the federal government that, "It's no longer acceptable to say, all you need to do is cut taxes and stand back and the economic evolutionary forces are going to play themselves out."

Views of Other Prominent Thinkers on Global Issues

• Vaclav Havel, former Czech President: "Civilization is on the bring of collapse, because the best thinkers have been excluded, for too long by governments everywhere."
• Steven Hill, Director of the New American Foundation, — upon his return from his transatlantic investigative tour a few years ago, — provided the media with the following account of his trip: "Europe's economy and social system are two halves of a well-designed social capitalism. An ingenious framework in which the economy finances the social system to support families and employees in an age of globalized capitalism that threatens to turn us all into internationally disposable workers."
• Paul Krugman, the prominent U.S. economist, — in an article published in the New York Times, in early May 2011 — analyzing the present state of the global economy, blames the policy elites for concentrating on reducing the budget deficits instead of focusing on major job creation programs. 
• Paul Krugman, in an other New York Times article few weeks later writes, "Textbook economics and experience say that slashing spending when you're still suffering from high unemployment is a really bad idea, because much of‘ what governments save by spending less, they lose as a weaker economy depresses tax receipts." It must be added that his views should be heeded by this country's policy-makers. 
• Jack Welsh, former CEO of General Electric Co. — in a TV interview on June 8, 2011 — in reference to the ongoing economic crisis, made two important suggestions:
• "We need many job-creators in North America"
• "We have to bake a bigger pie and everybody will have a bigger slice"
• Harold Meyerson, editor-at-large of American Prospect, in a recent article published in the Washington Post, praised the German social-economic model and attibuted its success to the fact that, "corporate boards are required by law to have an equal number of management and employee representatives."
• Charles H. Percy, former U.S. Senator: "Home ownership gives a sense of pride and dignity to people; it helps them integrate into the community."
• F.D. Roosevelt, former U.S. President: "We must lay hold of the fact that economic laws are not made by nature. They are made by human beings."
• Percy B. Shelley, English poet: "There is no real wealth but the labour of man."
• James J. Davis, former U.S. Senator and Labour Secretary: "The worker buys back from those who finance him the goods that he himself produces. Pay him a wage that enables him to buy, and you fill your market with ready customers."

 Read More

• Part 2 -  Some Indicators on Canada's Socio-Economic Health
• Part 4 - General Observations on Canada's Economic Performance