Canadians Shouldn't Worry So Much About the Economy

It is absurd, in my opinion, to suggest that Canadians should not worry about the economy. To say that we never had it so good is a misrepresentation designed to cool genuine opposition. The facts show that the standard of living in Canada has declined about fifty percent since 1949-50. There has been about 4000% increase in the cost of housing and the price of gold, while wages and salaries have increased only about 18-2000%. A house costing $10,000 in the Beach in 1949-50, today would cost at least $400,000, while a man earning $5,000 at that time would earn only about $80,000 to $100,000 today. In 1945 there was no significant national debt in Canada. The Second World War was fought with monetary surpluses which were accrued by the governments; even Britain, which has been said to have been bankrupt after the war, fought the war entirely with surpluses, and 'bankruptcy' just meant that the British had spent most of their surpluses. The first issue of Canada Savings Bonds was in 1947. Taxes were lower and people could purchase whatever they wanted without going into serious debt. -- What caused the problem? Government borrowing and government encouragement of industrial borrowing, especially in the U. S. for the purpose of building up military equipment as a result of what Eisenhower warned of as the 'military-industrial complex'. Inflation held back income while prices rose, and national debt forces higher taxes. The governmenal aim at increasing gross domestic product is impoverishing the nation and leading to national bankruptcy and permanent recession -- A person with assets of about $40,000 to $50,000 in 1950 would be a millionaire in real terms today, and thus there were more millionaires, relative to the population, in 1950 than today, probably a lot more. -- Welfare and medicare were a problem but not a major problem; they could be handled by governmental insurances as well as taxes and the churches. So let us not hear any more nonsense about never having had it so good.
Leslie A. Mulholland

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Your are correct in pointing out, Rob, that some prices have gone down or gone down relative to housing prices. Television sets in the early nineteen fifties, for example, cost in the five hundred dollar range,which would be in real terms a few thousand dollars today. This is why I use the figure of fifty percent decline in the standard of living rather than sixty or seventy percent decline, which would be justified if I were to consider only housing prices and the price of gold, and taxation increases -- My figures are correct, not invented as you say. Gold in 1950 was less than $38. an ounce, while today it sells at between $1300 and about $1450 an ounce. -- I do not accept that the increase in housing prices is a consequnce of supply and demand. The increase in inflation and the various sales taxes involved aresufficient to cause the increase. There are a lot of houses available. New houses in the suburbs which are of equivalent quality to a $400,000 house in the Beach (the south east end of Toronto) are priced by developers in the region of $400,000 and above, and developers set their prices largely by reference to costs. The increase in the price of gold signifies a real increase in inflation, and not just supply and demand -- In everyday life, the cost of housing makes far more difference than you acknowledge. Today two incomes are needed in most families to maintain a townhouse, and long term mortgages are normal, while in 1950, short term mortgages were normal and enabled people to own their houses in ten to twenty years. The relative decline in food prices does not balance out the enormous increase in housing prices and taxation -- It is not possible for the government and industry to borrow as they have done without causing major inflation, taxation increases and a decline in the standard of living. The aim after 1945 was to increase GDP in the hope of increasing prosperity. But the evidence is that there is no real profit in increasing GDP especially because of the increases in interest payments on the enormous debts required, and the high costs of trade. Hence Canadians are left with paying the enormous debts creaed by governments and either very high prices or reduced quality in manufactured goods. -- There is the further problem which is real, that governments are reaching the limit of debt and are finding assets to borrow on increasingly scarce. As a result they cannot maintain the phony growth programmes on which they have made the economy of many Western nations depend, and genuinely are facing the problem of permanent recession in the future. -- The relatie reduction in the food prices is actually a sign of depression of the farmers, who constitute about 45 to 50 percent of the labour force, and that also signifies a reduction in the standard of living for farmers. Food prices are normally kept low when there is inflation and a reduction of prosperity. So your figures indirectly support what I am saying.
Leslie A. Mulholland

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Hi Leslie,

Your initial figures are not correct...try plugging them into a CPI calculator based on historical inflation rates in Canada. You can`t use gold as a point of comparison for inflation, that is ridiculous...pre 1973 the American (and hence) the world economy was on a Gold Standard and the price of Gold was fixed...in 1973, gold was $73/ounce in 1980 it was $800....it doesn't follow that an income of 30,000 in 1973 is equivalent to an income of 330,000 in 1980. When you truly investigate this you'll find that your original guesstimate numbers for your post were doubled.

The relative decrease in food prices was a function of government subsidies for production of corn that also began in 1973 to prevent the overall instability of food prices that farmers suffered every year...farmers are not depressed now more than ever before, they have always been pinched at both ends, with high costs of bringing food to market coupled with a demand to keep prices as low as possible...visit other parts of the world, you'll find the same situation everywhere: its a thankless job.

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I also forgot to point out that you are continuing to only use examples in major waterfront regions of major Canadian cities: cherrypicking the data. I could sit here and tell you about home prices Thunder Bay to point out at there has been a deflation in home prices over the past 20 years...but I'm not that biased.

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