The Current Economic Morass - Could it be avoided? - Part 4

OK.  This is the last entry on this subject.  There is a lot more to say but we shall change the channel following this - Part 4.

Let's talk about the amount of government that we suffer under in Canada.  Back in 2002 I wrote a thesis examining the roles of our three main levels of government - federal, provincial and municipal.  As I developed the thesis it became more and more clear to me that Canadians were over-governed.  My analysis led to the conclusion that we had one level of government too many.  I then turned the thesis into a book entitled,"The Provinces Must Go!"

The logic in the book was simple.  Provinces were created at the time of confederation to do the work of the people while the feds looked after the country.  One read of the BNA confirms this hypothesis.  However, in 1867 people did not live to any great extent in cities.  In 2002 a full 70% of Canada's population were urban dwellers with many of our cities more populous than most of our provinces.  Cities by and large became responsible for the welfare of the people.  But cities, since confederation, have been surfs to the provinces.  The result is we have city infrastructure falling apart, homelessness and many other social problems laid at the feet of cities without the political or economic clout to address them.  Is that the way it should be?

The book showed how easy it would be to eliminate the national and provincial debts, improve both urban and rural situations and a host of other problems without raising a single cent of new tax.  The book is available on Mysteriesofcanada.com.

By the way, the book has caused me a fair amount of grief since being published.  The ultimate insult came at the hands of the geniuses at the headquarters of the Liberal Party of Canada Ontario - LPCO (not to be confused with the Liberal Party of Ontario).  The political experts at LPCO disqualified me from contesting a nomination for the last election based on their belief that my thesis and book were not in keeping with the policies of the party.  When challenged to show me the policy that my ideas were contravening, the conversation just stopped on their part.  I guess that the 2011 federal election kinda showed the folks at LPCO that maybe their policies were not so much the policies of mainstream Canadians or Ontarians.

Political parties stagnate with time.  They get so beefed up with their self-importance that they refuse to grow.  They refuse to challenge themselves to reach higher plateaus and debate new issues.  But do not think that this is a problem only of the Liberals.  It affects them all, including the Grande Orange party of (the late) Jack Layton.

Until our political class loses their snootiness and begins to really listen to Canadians, this country will never be a place for progress.

'Nuff said.

The Current Economic Morass - Could it be avoided? - Part 3

We have touched on subsidies and taxes; now let's talk about productivity.

I talked with a retired Canadian Ambassador the other night at a get together.  I asked him about an issue that recently came to my attention.  Apparently there are tens of diplomats at Foreign Affairs that are on the payroll while they sit at home.  The government calls it "waiting for reassignment".  I asked my colleague about it.  He told me that it was a rare occurrence during his time (he retired in 1992) but it did happen.   Seems that when a diplomat turns 60 he/she is told that their career is dead-ended (ie.  no more postings for you, chum).  The dips return to Ottawa and sit at an empty desk until they decide that they have had enough and retire voluntarily.  (Great way to end your career, eh?)

But he did not stop there.  He went on to tell me that, in his opinion, 30% of people who work at Foreign Affairs are working like they like their jobs while the remainder are coasting towards retirement (some 3-30 years from now).

If we could cull the civil service down towards that 30% who do all the work, we could save a bundle.

Just so you don't think I am singling out civil servants, the same can be said for private industry.  I used to tell people that you can always tell when a company becomes mature.  At that point you can shoot a cannon through the offices and not hit a sole.  Everyone goes home to try to forget their day.  Oh sure there is that core group working hard into the evening - they make up the 30%.

Productivity is not a bad word.

The Current Economic Morass - Could it be avoided? - Part 2

There is an interesting debate going on in North America.  In the US Gadzillionaire, Warren Buffet, says that he pays only 17.5% tax rate on his earnings while the average American Joe pays 30%.  Is that fair and equitable?   No says Buffet and yes says the Tea Party.  Buffet wants millionaires to pay more and Tea Party-ers says no way?

In Canada there was an exchange on the CBC TV that was worth watching.  On the Lang and O'Leary Exchange, featuring Amanda Lang and Kevin O'Leary,  O'Leary claimed he was paying over 50% in income taxes and demanded that he, as a job creator (prove it Kevin), should not be penalized for creating those jobs.  Lang, in one her best cool shots yet, commented that investors, such as O'Leary, had more ways to hide their income from taxes than anyone.  She wanted to talk to his accountants.  Caught by surprise, O'Leary tripped over his own tongue trying to change the channel on the discussion.

Canada's tax code contains over 2 million words.  How many of them are loopholes designed for Kevin O'Leary?  The code was written by tax lawyers and accountants for tax lawyers and accountants.  The average Canadian Joe has less knowledge about the tax code than he does about catalytic convertors.  Is that right?

The economic morass could have been avoided if there was equitable tax laws for all.  If you make $30,000 or $30,000,000 per year you should pay the same tax percentage to the government.   By flattening the tax rate and eliminating loopholes, you can also streamline Canada Revenue Agency, and thus save money.

Up next in Part 3 - Making the money Canadians pay; work for Canadians.

The Current Economic Morass - Could it be avoided? - Part 1

Yes and No is the easy answer.  Let's take the No first.

Taxes, as we know them, were first imposed in the early 20th century to fund the government during the First World War.  They were supposed to be a temporary measure but, as with most thing government touches, temporary become permanent.  Take for example the temporary building erected for National Defense in 1939 near the Parliament Building.  At the time, C.D Howe, stated that, "two years after the War nobody would know the temporary buildings had existed".  Take a walk up by the Supreme Court if you want to see the temporary building today.

Back to taxes.  When government gets money, they spend money.  Some would say it is their job while others say that it is their obsession.  Spending money is like a drug for some, not just government, so I lean towards obsession.  If government wanted to avoid this economic morass, one thing they could have done was spend less.  Do we really need to be dropping million dollar bombs in Libya?  Do we really need to subsidize the Oil Sands to the tune of $2 billion per year?

But there is another side to taxes and that is the collection of them to feed the obsession.  It is estimated that the Canadian tax code, with regulations, contains over 2 million words.  Compare that to the bible with just over 774,000 words.  It takes scholars a lifetime to memorize the bible.  What does that say for us mortal taxpayers?  Get rid of the loopholes and flatten the tax to a single rate, please.

In Part 2 we will explore other issues affecting the Current Economic Morass.