Canadians are staying home this summer in record numbers as our sagging dollar makes travel too expensive.
The low value of our dollar is a direct result of economic mismanagement in Ottawa for more than 30 years. A currency's value is a quantification of the world's opinion about a country based on its economic situation.
And it's more than coincidence that the very last time that the Canadian dollar traded at par with the American dollar was the night before Rene Levesque became the first secessionist premier of Quebec. Ever since it's been in decline.
The dollar's deterioration can be blamed on Pierre Trudeau, Brian Mulroney and Jean Chretien.
These prime ministers - all lawyers from Quebec - have been overly preoccupied with the Quebec situation, thus allowing our country to be held hostage to a bunch of secessionist fraudsters who have never proven that they have a mandate from Quebecers to secede.
They failed to protect the civil rights of anglophones in Quebec to appease secessionists, then squandered this country's economic wealth buying votes to stay in power. They pandered to, and financed with tax dollars, every wonky special-interest group, premier, corporate lobbyist and union leader with vocal chords.
180 Different Currencies
Our dollar is low because currency markets, by the way, are no different from stock markets. There are roughly 180 different currencies around the world and their trading value is based on the same fundamentals that investors use when evaluating what to pay for a corporation's stock. Is this company/country profitable? Is it competitive and innovative? How much debt is it carrying? What's the management like? Is its long-term strategic plan a good one? What's the value of its assets? What's the quality and cost of its workforce? What are the overheads?
So here's what Canada Incorporated would look like to an investor:
Profits: Canada enjoys a slight surplus over-all but it's small. For most of the past 30 years, the losses (called current account deficit) have been enormous, mostly because of government debt payments.
Competitiveness and innovation: We are losing ground here for a variety of reasons. Taxes are too high. Research is too low. Brains move south to higher paying jobs at lower taxation rates.
Work force: This is a plus. We have top-quality people who are paid less on average than their U.S. counterparts, mostly because our dollar is so low. But jobs don't move north because taxes are too high.
Debts: This is the single biggest reason for our lagging currency. Governments have overspent for a generation at all levels with the result that each Canadian carries twice the debt load of his American counterpart.
Trudeau took a debt-free country and turned Ottawa into an unaffordable pork barrel. Mulroney added $2.8 billion a month to the national debt. He took our debt from $168 billion in March 1984 to $466 billion by March 1993. This represented an increase of $298 billion over nine years, or a jump of 177 per cent.
Tax-Revenue Windfall
Chretien may be the worst culprit because - during a time of unprecedented prosperity, low inflation and interest rates, and a tax-revenue windfall - he has managed to hike the national debt by a staggering $144 billion, or 40 per cent. In March 1993, just months before Chretien's first election victory, the federal debt stood at $466.2 billion. The debt is now declining slightly but remains at $579 billion, representing an increase of $112.8 billion, or 24 per cent.
Overheads: Excessive taxation. Some 29 per cent of the U.S. gross national product is taxes of all kinds. Canada's is roughly 36 per cent. Another huge cost is that we have twice the rate of unemployment. We're at 8 per cent and the Yanks are at only 4 per cent. Unemployment is a huge burden on our society.
Management: Canada has mediocre politicians, for the most part.
Strategic plans: There is no vision. All our prime ministers ever worry about is getting re-elected and fighting Quebec secessionists.
Even more depressing, the Canadian dollar would be worth less if it was not artificially propped up by foreign-investment restrictions imposed on gigantic pension funds and individual pension funds, or registered retirement savings plans.
This country could be more successful than it is if it had had decent management. Instead, we had three lawyers who, like lawyers always do, talked too much, overspent client money and tinkered unnecessarily and endlessly with the fine print.
Canadians expect loonie to disappear
Joint currency within 20 years, most say
Murray Campbell
The Globe and Mail
Tuesday, August 3, 1999
Most Canadians believe there will be a common North American currency within a generation -- even though they think it would not be good for Canada -- according to a new opinion poll.
Approximately 77 per cent think a common currency is likely in the next 20 years and one of every two people surveyed think it will occur within the next 10 years.
The poll by Angus Reid Group released to The Globe and Mail and CTV found that a majority of Canadians have serious misgivings about the prospect of a common North American currency, with 58 per cent of those surveyed saying they think it would be a "bad thing."
The survey also provides troubling news for nationalists, with signs that Canadians have largely dropped their resistance to closer economic ties with the United States since a bilateral free-trade agreement was implemented 10 years ago.
For a start, 37 per cent said that abolition of the loonie would help Canada. As well, Angus Reid Group found that just 16 per cent believe Canada should reduce its economic ties with the United States while 82 per cent suggested keeping the relationship the way it is now or developing stronger links.
The Angus Reid Group surveyed 1,500 Canadian adults by telephone between July 8 and 14. The results are considered accurate within a margin of error of 2.5 percentage points, 19 times out of 20.
Darrell Bricker, Angus Reid Group's executive vice-president, said the survey indicates there is momentum for closer U.S.-Canadian economic ties.
Mr. Bricker said that this is a profound shift in public opinion in the past 10 years.
A decade ago, he said, Canadians were split over the issue of free trade, and support for liberalized trade plummeted dramatically in the first year of the bilateral trade agreement implemented in 1989.
"There is a sense that integration is proceeding apace," Mr. Bricker said. He said Canadian politicians largely believe it is heretical to propose abandoning the Canadian dollar but "what all this shows is that the move to integration is far stronger than most people understand."
Discussion of a common currency in North America has intensified this year in the wake of the move in January by 11 European nations to merge their currencies into the euro. At the same time, some Canadian economists have argued that the floating exchange rate between the Canadian and U.S. dollars is not working well and that the Canadian government should work toward some sort of North American currency union.
There have also been reports that the Latin American trading bloc, Mercosur, has agreed to work toward adopting a common currency. Prime Minister Jean Chrétien, Finance Minister Paul Martin and Bank of Canada governor Gordon Thiessen have all rejected the concept of adopting the U.S. dollar or seeking a currency union with the United States.
They argue that such a move would represent an unacceptable loss of sovereignty for Canada and take away an important tool -- the flexible exchange rate -- for sheltering the country from external economic shocks.
The Liberal government denied the issue was discussed during a cabinet retreat in June but commentators have noted that the Liberals, who opposed the U.S.-Canadian free-trade pact a decade ago, are now ardent supporters of liberalized trade rules.
They have also noted that Raymond Chrétien, Canada's ambassador to the United States and a nephew of the Prime Minister, raised the issues of customs and monetary union in a speech in Washington in April.
Mr. Bricker speculated that there may be several different reasons that a strong majority of Canadians foresee the loss of their domestic currency within 20 years but are much more divided about whether this is a good thing for the country.
It may be, he said, that they understand the relentless momentum of globalization and have concluded that the traditional protectionist stand of economic nationalists is outmoded and ineffective in combatting the inevitable.
Mr. Bricker suggested as well that Canadians may have taken note of the fact that the Liberals switched from opposing free trade to being ardent promoters of it and have resigned themselves to a common currency regardless of what the politicians are saying now.
Or it may be, he speculated, that Canadians have concluded that they do not need the traditional symbols of nationalism in order to maintain their identity.
"We may be uncovering a new sense of secure nationalism where people are saying 'Okay, we can compete with these guys.' "
The view that a common currency will be implemented in North America within 20 years is widely held across Canada. Residents of Saskatchewan and Manitoba are most likely to predict it while residents of British Columbia and Quebec are least likely.
Quebeckers are most likely to suggest, however, that a common currency would be a good thing for Canada -- 51 per cent, compared with the national average of 37 per cent. Significantly, 63 per cent of the supporters of the federal Bloc Québécois believe a common currency would be a good thing for Canada.
Mr. Bricker suggested these findings are tied in with the promotion of a common currency among Quebec sovereigntists as a means of defusing the argument that an independent Quebec would have to give up the Canadian dollar. Quebec Finance Minister Bernard Landry came out in favour of a common currency in June.
Residents of Saskatchewan, Manitoba and Alberta are the most likely to suggest a common currency would be a bad thing for Canada.
Support for a closer economic relationship with the United States is stronger among men and among high-income earners. About 45 per cent of those earning $60,000 a year or more supported closer ties, compared with just 31 per cent of those earning $30,000 or less. Two of every 10 low-income respondents suggested Canada reduce its economic ties with the United States, compared with 14 per cent among high-income earners.
Mr. Bricker said this finding reflects the insecurity of blue-collar workers who know that jobs can easily be shifted from one country to another under liberalized trade regimes. "Globalization and technology -- these are not great words for these people."
Support for stronger links is four percentage points higher among those under 35 years of age.
The most commonly offered reasons for suggesting that Canada should strengthen its economic ties to the United States are that it is this country's biggest trading partner and that its economy is stronger.
Among the small minority advocating reduced links with the United States, the most frequently cited reasons are fear of losing sovereignty and the Americanization of Canadian culture.
CLOSER TIES WITH THE UNITED STATES?
Generally speaking, do you think:
1 2 3 4
TOTAL 37% 45% 16% 2%
B.C 40 37 21 2
Alberta 35 46 17 2
Sask./Man 34 42 20 4
Ontario 35 48 16 1
Quebec 41 45 13 1
Atlantic 34 46 18 2
- 1: Canada should develop closer economic ties with the U.S.;
2: Canada should keep its economic ties with the U.S. the way they are now;
3: Canada should reduce its economic ties with the U.S.;
4: Don't know/would not say
-**
All things considered, do you, yourself, think that a common currency for North America would be a good thing or a bad thing for Canada?
Good thing Bad thing Don't know/would not say
TOTAL 37% 58% 5
B.C 33 61 6
Alberta 30 66 4
Sask./Man 29 69 3
Ontario 33 62 5
Quebec 51 45 4
Atlantic 35 61 4
-**
Now, regardless of whether you think this would be a good or bad thing for Canada, how likely do you think it is that there will be a common currency in North America within the next 10 years?
Very Somewhat.Not very Not at Don't know/
likely likely likely all likely would not say
TOTAL 18% 32% 34% 15% 1%And how about within the next 20 years?
41% 36% 15% 7% 2%
Note: Figures may not add up to 100 due to rounding.
Source: Angus Reid Group
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