“Does
dividing middle class into “upper” and “lower” segments contradict the concept?
…..like
having hips and a chest without a waist.”
A recent newspaper article
by a learned academic (pun intended) dwelt on the concept of “middle class” in
Canada and probed the apparent growing separation of such into an “upper”
minority and what amounted to a fading but growing “lower” variety.
Employing a plethora of
statistical data, the article’s intent appeared to be to locate the new
“centre” of the middle class under a trend whereby growth of income in the
upper middle class has exceeded that of both the lower middle class and the
very rich “one percenters.” The premise of the article, aside from tax
considerations, appears to have been that what was normally a unified middle
class is under separation and that the majority of that class are falling
farther and farther behind their upper middle class cousins.
Nowhere were any
explanations proffered to explain this growing trend of income inequality
although the author states that “there’s more to this story” and promises to
explore the subject in the future.
Indeed a subsequent article
spent many words linking the designation of “middle class”, and in particular
the “upper middle class” socio-economic status, to it all coming down to “income.”
Wow! Who could have known?
In the meantime, here are
the offerings of a much less learned non-academic senior citizen, but one who
has spent considerable time in the real world. Admitting that the title of this
muse might be slightly misleading in that the simplicity noted may be more
complicated than inferred, there is nonetheless a very basic concept to explain
the trend to lower general income growth in Canada and the fading of what once
was a solid middle class that did not require separate sub-divisions within it.
Under the premise that only
business can create the wealth required to finance the growth of a prosperous
and secure democratic society whereby the majority of its citizens can be designated
as middle class, is the presumption that only two factors are at play in this
regard. Instantly dispensed with is the concept of government creating anything
of enduring value. While governments know how to spend, they do not know how to
create. Governments appropriate varying amounts of creatively earned wealth in
order to foster their ongoing existence and build a growing related influence on
society; otherwise known as a heavily bureaucratic and oppressive nanny state.
Beyond the areas of spending on national infrastructure, primary education,
defense of country, and now in a modern western society a national health care
program, government spending can principally defined as waste; and unlike
modern garbage, is generally not recyclable. Even the spending by governments
on the foregoing important sectors most often involves costing more for getting
less. Reference to efficiency does not reside in any government operating
manual.
In Canada of course our
“national health care” program is separately run by ten provinces and three
territories, each according to their own will and where the only aspect of
“national” is the nation’s capital dispensing money to the thirteen
administrations. The unknown redundancies and inefficiencies within this type
of over-administered setup are probably best hidden, in that their revelations
might add to the definition of “obscene.” Unlike private enterprise where an
organizational profile would be essentially one of a equilateral triangle, its
peak and subsequent descending profile representing different levels of
administration leading down to a broad base of beneficiaries, the classic
profile of any government organization and program is typically also an
equilateral triangle, but in this case an inverted one in which a precariously
upside down and teetering triangle with a small base of benefactors is heavily
over weighted by a considerably greater volume of administration. As the
population, especially the aging portion, continues to grow, and as the
governments’ primary application of revenues are applied to administration, the
beneficiary portion of the triangle accordingly shrinks, whether it be funding
for necessary and modern medical equipment, lengthening wait times, shortage of
nurses and doctors, services offered, or all of the above.
Would the formation of a
national public/private medical services plan be an intelligent alternative;
where people that can pay do, and those that can’t don’t, plus a system for in
between? Careful now. In “gimme something for nothing” Canada, you might barely
escape a jail sentence for having such thoughts.
One need only spend a small
time in research to determine that while not in the same league as say Sweden,
Canada is amongst the most over-governed countries in the western world, with
public sector employees comprising well over 20% of total employment in Canada.
Our neighbour the USA, by way of comparison, and as a smaller geographic entity
but with a population ten times that of our own, has less than 15% of its
population employed in the public sector. While productivity comparisons can be
difficult and overly simplistic, it is equally difficult to consider the
efficiency of the public sector as going much beyond the creation of greater
red tape and paperwork designed to preserve the status of well-protected
employment, above average wages and generous benefits not always enjoyed by
private enterprise. As the quality of a productive economy recedes, so too does
the maintenance and growth of the public sector require more and more taxpayer
funding. As the productivity and wages of the private sector of an economy decrease,
so must people find alternative sources of employment, largely in the minimum
wage or public sector of the economy. In both cases, productivity and middle
class wealth generation will be negatively affected. Notable in 2016 was
Canada’s GDP per capita which while well ahead of some centres of free enterprise
like North Korea and Somalia, was nevertheless at 34th place, well behind the
USA’s 20th ranking and even over-governed Sweden’s 26th ranking.
Only by creating something
from nothing, or at least from lesser worth to higher worth, is value itself
created and a growing base of such able to finance a productive and prosperous
society where the principles of democracy can be optimized. There are only two
practical ways to create broad values, namely, manufacturing and resource
extraction. The former employs raw materials to create primary or secondary objects
that can be turned into higher level objects of publically saleable worth; like
cars, airplanes, televisions, dish pans and even Millennial playthings like
mobile phones. To do such requires a population that is sufficient to create a
marketing density for said products, and/or products that can compete in the export
world to other countries. Canada, as the second largest geographic country in
the world, has a population considerably less than the state of California.
Metaphorically analysing
this country’s population would be analogous to stretching a string with a
number of knots in it along almost the edge of a large rectangular dining
table. The knots, be they in clusters of one , two, or three, and representing
the populations of our major urban centres, are obviously of such a widely
separated nature as to make the distribution of domestic manufacturing uncompetitive.
This of course presupposes that inter-provincial trade is legal in Canada,
which it largely is not. Add to this logistical uncompetitiveness is that of
labour costs, our manufacturing industries being largely dominated by unionism
as they are. The result of course is that Canadian manufacturing is largely a
taxpayer subsidized entity that creates little real wealth for the country
other than in effect, subsidized jobs.
The Quebec company
Bombardier Inc. that exists as a manufacturer of aerospace and mass
transportation equipment is a classic, perhaps the classic example of a company that essentially survives on
federal and Quebec provincial government subsidies rather than operating under
the normal business premises of survival and growth through “revenue minus
costs equal profit.” One might argue that Quebec votes and the threat of
separation of that province from the rest of Canada if Bombardier is not kept
alive by taxpayers, comprise the essential ingredients that permit that company
to continue its operations. Lately, Canada’s Prime Minister has analogized
Bombardier as being in effect an arm of the federal government by threatening
to not purchase fighter jets that are an essential element of the country’s
defense unless the company selling those jets ceases to legally pursue a trade
complaint against Bombardier. Who knew that Bombardier Inc. and the Liberal
government of Canada were one in the same?
An additional form of
political blackmail is performed by Canada’s federal government on the Canadian
populace in the form of supply management. Under this system, the Canadian
taxpayer and consumer is forced to pay exorbitantly high prices for dairy,
poultry and egg products so that a small minority of Canadians, namely the farm
producers of said products are guaranteed a profit no matter how inefficient
and unproductive they might be. Again, many of these producers are based in
Quebec, a centre of considerable voting power and separation threats.
A recent news item focused on the concern that
automation and the use of robots in the manufacturing sector is costing
Canadian jobs, and will continue to do so. Ironically, it may be the only way
Canadian manufacturing can become competitive with other manufacturing nations.
That is to say, devoid of unproductive unionized labour and taxpayer subsidies,
Canadian manufacturing may have a chance to compete with other manufacturers. Robots
also normally do not go on strike either!
The only other alternative
for wealth creation, and one in which at one time Canada was a world leader
with a corresponding solid middle class, is natural resource extraction. With
unparalleled geology and a climate also conducive to so-called soft resources
of wood and agriculture products, Canada occupied, and still could, a position
of predominance in the western world for supplying manufacturing facilities
around the world with the necessary raw materials required to produce the
higher level products noted above. This it did within a climate of political
stability and a world class screening agency called the National Energy Board.
The latter, world renowned for its arm’s length and science based procedural
and screening processes, has now become a government pawn, used as a vehicle to
promote government political and ideological agendas at the expense of the
economic growth and well-being of Canadian society.
Technology plays an
important role in fostering the more efficient use of prevailing resource and
manufacturing equipment, as well as developing new high tech equipment for
resource extraction, end-use manufacturing, or as end-use products themselves.
In the face of declining
resource development in Canada, we have a country with a growing and
unproductive bureaucracy; more bureaucracy administering less and less
business. Leading this trend is the public sector whose employees are generally
paid some 20% more than the private sector and with superior benefits and
little accountability. Recent job increase announcements by various Canadian
governments often fail to note that the majority of hirings are either for an
expanded civil service or are for part time jobs.
Raising minimum wages to as
high as $15 an hour as is being promoted in some provinces, is a head in the
sand approach and will fail as fast as small businesses forced to implement
these wage increases will fail. The objective should be to get rid of the need
for a minimum wage increase by allowing the creation of better jobs through
economic development by industry, the resource sector, and both domestic and
foreign investment. Insofar as the latter is concerned, Canada is fast losing
its attractiveness as a politically stable and forward looking investment
environment; except of course for its attractiveness as a centre for money
laundering…………. sorry…..….investment, from abroad. When the construction jobs
associated with those “investments” peak and start to wane, and the costs of
living and taxes keep rising………beware!
What follows are five
incredibly accurate philosophies and that are applicable to the growing
political trends in Canada. Despite strenuous efforts to do so, the origins or
originator(s) of the five thoughts could not be accurately sourced; with
conflicting attributes being the norm. Therefore, despite being in full
agreement with them, it can only be said that these philosophies sadly did not
originate from this writer."
1. "You cannot legislate the poor into prosperity by legislating the wealthy out of
prosperity.
2."What one person receives without working for, another person must work for
without receiving."
3. "The government cannot give to anybody anything that the government does not
first take from somebody else."
4. "You cannot multiply wealth by dividing it!"
5. "When half of the people get the idea that they do not have to work because the
other half is going to take care of them, and when the other half gets the idea
that it does no good to work because somebody else is going to get what they
work for, that is the beginning of the end of any nation."
While there are exceptions
to, and abuses of all trends and states of being, those that are “wealthy”,
inheritances notwithstanding, have normally become so from the results of hard
work, risk-taking, sound decision-making, and far-sighted business strategies.
In enriching themselves they have normally enriched others by way of
employment, public investment in related companies, charitable foundations, new
technologies, and taxes to governments. How ironic and very Canadian that such
people become the target of resentment and envy when a country without successful,
wealthy people would be a country in deep social distress. Such are the
characteristics of socialists and many of the new generations steeped in
entitlement, where sloth and envy override energy, ambition and self-reliance.
While governments spend money they do not own and that is derived from debt
that necessarily must be repaid by the taxpayer, present or future, wealthy
people must continue to live by their wits and abilities. On the other hand,
governments must continually plot to extract more taxes from the populace to
replace the moneys they waste, much of which has little or no accountability.
One disturbing trend in
Canada at least, has been the ever growing popularity and propensity of
politics to become a profession. For most of the modern era, for these purposes
being the writer’s life within the twentieth century and beyond, people who
entered politics had usually accomplished something of value in the real world
outside politics. While not necessary a guarantee of good government, at least
some experience with accountable achievement provided at the very least a basis
for a subsequent entry into politics as a service rather than as a profession;
the latter having already been acquired. In today’s world, more people are
being elected who have neither any experience with governing but more
importantly, any experience with achievement. What propels such people of
course may in some cases be the taste of power, especially for those unequipped
with any resolve to succeed in the real world. For others, the appeal of an
attractive and guaranteed life pension after perhaps only even one term in office
is too inviting to resist; not withstanding any elements of self-respect they
might possess……… or not!
Then too in Canada at least,
under the leadership of the present Prime Minister is the paramount importance
of “diversity” and “inclusion” within Cabinet and other appointed positions no
matter how unqualified might be the candidates/appointees. While I personally
could care less if the entire government was made up of women, gays, people of
colour, or even stray cats, as long as they were qualified for their positions
and had some related experience, those would be the most important parameters defining
their political positions. Led by a Prime Minister who himself has so few
credentials for anything other than snowboarding and drama school, it should
therefore not be too surprising that diversity and inclusion appear to have become
more important factors than qualifications and competence.
It would be amusing if not
so sickening that Canada’s present Prime Minister should pick a fight with the
“wealthy” and wage a tax war to protect the “middle class” when as a person who
has never had a job of consequence in his life, living instead as a moneyed, elitist
parasite off his father’s name and wealth, should profess to understand
anything about tax fairness and the “middle class.”
The Prime Minister and his
Finance Minister give new weighting to the term hypocrisy. If they wish to “go
after the wealthy” their first target should be themselves and their personal and
largely unearned wealth ensconced in their family trusts, the structures of
which are being ignored in the newly proposed “tax reforms.”
The hypocrisy is palpable!
Much is made of the
discounted dollar and its alleged benefit for Canadians. Granted there is some
attraction to Canada from the filming and high tech industries based on our
weak currency but its overall effect is far outweighed by weight and cost of our
imports, our rapidly declining exports and the current wave of indiscriminate
deficit spending by our present federal government.
Excessively increasing taxes
quickly lowers tax revenues and economic growth as those being ripped off by
government leave for other more receptive tax environments. The result is
inevitably the growth of a larger, well-protected if unproductive government bureaucratic
component within and at the expense of an expanding entrepreneurial and
productive economic base.
Higher income taxes,
property taxes, employment insurance premiums, carbon taxes minimum wages, Canada
Pension Plan contributions and regulatory hurdles, while governments spend
money at increasing rates to produce rapidly growing and dangerous deficits
will if not kept in check, eventually result in social breakdown if not
anarchy.
Copyright © 2017 Ian de W. Semple
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