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| Supply and demand | ||||||
| FTLComm - Tisdale - Wednesday, May 3, 2006 | ||||||
If you look closely at the picture at the bottom of this page you will notice that the rain over the last two days have brought about the beginnings of the miraculous change from naked trees to leaves as spring progresses. I point this out because it is important to keep that concept of change always at the forefront of one's awareness. As a school principal most of my life, I had no choice but to embrace change because the passing generation after generation, of children to young adults, is anything but static. Adam Smith was an interesting economists of the eighteenth century just as the whole concept of capital was being developed with English bankers coming into being and the mercantile climate of the trading nation that had pretty much painted the globe red with British colonies. One has to include philosopher John Locke in the business of concept development as it was he who legitimised the whole business of private property being a right of the individual. It is possible that there may actually have been a time when supply of a product or commodity, determined its value, but some how it is much more likely that the idea was just a "plausible" theory. Economists liked to find explanations for the evidence they perceived, but always have been a bit short on research and it was the politicians with their cure-all search for some magic system of government, that would adopt, or foster, an eco-political ideology, which they would harness as their steed to political glory. Friedrich Engels a political philosopher and Karl Marx, were more political than economists, but it was Lenin who saddled them up in his move to active revolution and the achievement of political power. Economic theory is by its nature a realm of argument and debate, of theory and "schools" as it seems economists like to gravitate toward others of similar views of the world, so that the "Chicago school of economics" becomes a point of view in itself. The complexity of economic theory and the fact that is just that, "theory," makes it inordinately easy for politicians, or would-be politicians to say what ever they choose to say about a political theory and the general public is at the mercy of their rhetoric. Quaint parables and story telling paint a picture that can capture the imagination and the understanding of the voter and oddly enough, the real economists have been inordinately bad at making up good stories and parables that capture anyone's imagination. But occasionally there are exceptions. John Maynard Keynes, a British economist was particularly articulate, so much so that he entered public life putting his theories into practice. American Milton Friedman is the champion of the so-called free market system and politicians like those in the American Republican party and in Canada the Alliance/Conservative party pretend to consider him as one of their saints. However, as we have seen, when it comes to the free-market system the Government of The United States of American, lead now by Republicans, only espouse free-market ideals, but they do not believe in them, or practice such policies, as seen with the Mad Cow issue and the softwood lumber dispute. Ultimately, we all must accept the facts of life, and the man who said it best was none other than the leader of the Communist revolution in China, Chairman Mao Tse-tung: "All political power comes from the barrel of a gun. The communist party must command all the guns, that way, no guns can ever be used to command the party." Power, raw naked brutal force is the only thing that determines what happens. There was no evidence of Iraq being involved in the 9-11 attack on the United States but for other reasons and opportunity, it was invaded and the war there continues to this day, despite the fact that the United Nations did not approve of the conflict and the United Nations Secretary General ruled it as an illegal war. To make sense out of a seemingly confusing world that prevailed just before, during and after World War II, an economist born near London Ontario, nailed the source of our troubled world. He was John Kenneth Galbraith and he died last week. He argued that success in business came about not from "getting the price right" but from "getting the price wrong." and consider "consumer sovereignty" a myth. Unlike most economists, Galbraith was a great story teller and parable maker and pretty much captured the attention of American and Canadian politicians who in turn were able to turn his theories into economic success. America's "good years" were when the Whitehouse was occupied by Democratic presidents like John Kennedy who used Galbraith as a speech writer and then appointed him as ambassador to India, others who followed his direction were Jimmy Carter and the man who gave Americans the most successful economy in their country's history, Bill Clinton. Now sports fans let us consider some facts, not theories, but simple facts.
John Kenneth Galbraith pointed out decades ago that while the twentieth century belonged to America the twenty-first century was Canada's time. Self sufficient in all forms of energy, overflowing with mineral riches, agriculturally the most efficient food producer in the world and economically better off than any other country in the G8. While the American economy is positively being sucked under by its debt, both public and personal, its currency is gradually slipping. This has been predicted and well underway for several years, as the Canadian dollar appears to be rising, it is not, the loony is remaining constant ,while the US dollar is on the skids. They are only a quarter away from the "R" word, recession is on the immediate horizon. It is a little disturbing to note that retail prices on imported goods are not following supply and demand, but just like oil prices, they are myth driven. The values of all things are not developed by anything other than the perception of value, facts and demand have really nothing whatever to do with the price of anything. When you have a minority government there is only one objective, get a majority government, nothing else matters. Yesterday's budget was the candy for the voter, cheap candy, but candy. 1% off the GST is really just a joke and when you see the words "tax credits" just remember good ole Brian Mulroney's minister of finance Michael Wilson, now the new ambassador to the United States, who budget after budget was wrestling down the deficit, while spending the Canadian economy into recession and a long dark period of dramatic cut backs to get us out of the hole. The reason there is a GST is because the Mulroney government put the nation into ridiculous debt. If you like this budget, it only shows your memory is going on you. I really do like change, well actually I don't but it is health to say that change is desirable since there is nothing but chang,e so you have to find ways to accept what you can not alter. I also like spring and look forward to summer. The moral of this story is that all things are linked together, there is no present that was not created from a past that we all to often forget. Capitalism does not work any more than communism worked, there is no free market system and when the guys with the guns say take a deal, you have to accept change and take the deal, or parish. The United States illegally stole billions from Canada's lumber industry with tariffs that have been ruled illegal and in violation of trade agreements and NAFTA they have offered a deal of giving our lumber industry 70% of the stolen money back and it looks like the government of Canada has accepted the deal. |
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