The Pulsefront light show seen from Toronto Is...
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We are presently faced with yet another federal election here in Canada.  According to recent polls voters have expressed a strong sense of frustration, overwhelming cynicism, and mistrust.  While I can appreciate the well-intentioned platforms of each of the respective parties, I am reminded that these programs and promises must be funded by an ever-growing shortfall of our tax dollars.

Our ability to sustain and grow our economy is continually compromised by new fees, regulations, increasing taxes, new taxes, rising prices on essential goods and services (utilities, food, gas), erosion of current services, and an aging work force nearing or entering into retirement.

Economies in other parts of the world such as Ireland and Greece have collapsed, governments have fallen, and social-political unrest has ensued.  According to a recent article published in the Toronto Star titled “An ailing Ireland’s lessons for Canada“, our finance minister, Joe Flaherty, stated in 2006 that our economy “will look more like Ireland.”

At the time this statement was made, we would have considered it to be a complement. Today, however, it is a major cause for concern as Ireland, like many other countries, is virtually insolvent and on the verge of bankruptcy.

Our primary concern is whether an already fragile economy can sustain existing programs and whether our current path to recovery is in jeopardy or at risk of being compromised. More specifically in Canada and North America in general, the manufacturing sector, once considered a key contributor to the economy, continues to decline at shocking rates as evidenced by numerous plant closings, thousands of job losses, and increased globalization and sourcing of goods and services to low-cost labour countries.

Rather than reiterate my thoughts yet again, I encourage you to view this presentation, “Re-Manufacture our America“, by Perform Analysis for some excellent insights on the current state of manufacturing in America.  I received a tweet from PerformAnalysis and have been assured that the intent was to include all of North America (including Canada).

Performance AnalysisPerformAnalysis Performance Analysis
@Versalytics by the way, I meant to include all of North America, Canada too

Note that Performance Analysis can be found on Twitter @PerformAnalysis.  You may also be interested in visiting the Performance Analysis blog and their web site.  As a reminder, we can be reached on twitter @Versalytics.

The Breaking Point

All levels of government have grown at a rate that far exceeds that of the private sector and our ability to support and pay for them has all but been exhausted.  The exodus of business to lower cost countries is evidence that we can no longer afford to support the higher wages demanded by our current cost of living or the increased burden of government.

Since the government is either unable or unwilling to balance the budget, control costs, and part with self serving entitlements, voters have reached a breaking point where our current cost of living has forced many of us to consider radical lifestyle changes.  As disposable income continues to diminish, consumers are forced to prioritize choices and curb spending to offset the rising costs of the basic necessities of life.  The backlash of these choices is certain to ripple through the economy to even greater detriment.

Knowing that manufacturers in other countries use essentially the same technologies and share similar concerns for efficiency and effectiveness, it becomes clear that the companies that operate there benefit from lower or reduced infrastructure costs either through lower wages, benefits, operating expenses, taxes, and smaller government.

In conclusion:

The view of our fine city of Toronto, as seen from the harbor front / Toronto Island pictured above, is a beautiful sight at night.  I still contend that opportunities exist where efficiencies can be gained without having to cut services and the same is true for business.  However, unless things change, this beautiful picture will be all but a distant memory when the lights go out!

Until Next Time – STAY lean!

Vergence Analytics
Twitter: @Versalytics

1 thought on “Rebuilding our Economy: Fragile – Handle with Care

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