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Reflections In A Cup: To Change Or Not To Change

Change is one of today’s most overused words


October 2, 2008
By Stuart Daw

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Change is one of today’s most
overused words, probably stemming from the amount of coverage by the
world press given to U.S. presidential candidate Barack Obama.

Change is one of today’s most overused words, probably stemming from the amount of coverage by the world press given to U.S. presidential candidate Barack Obama. While his speeches are long on abstract images and short on specific content, he nonetheless has achieved rock star status, wowing a lot of fans by touting change without specifying what he means, as in “change from what to what?”

The Canadian economy, and indeed our entire social system, is so closely related to that of our U.S. neighbours that a review of the past 40 years might be considered applicable to Canada as well. A politician running on a platform of change in either country implies we have become stagnant, and have a dire need to change a social system that has become stuck and mired in the past.

But what is the reality? Has nothing existentially changed for our citizens between this generation and the last? And are our children even aware of how things so recently used to be or, as the Barbra Streisand song title of the 1970s put it, The Way We Were?

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Let us review the recent comparative statistical data available regarding life in the U.S., which might be taken as indicative of development in Canada in the same time frame. The following figures are stated in constant Year 2000 American dollars.

National output in 1982 was $5.1 trillion. In 2006, it was $11.3 trillion.

Per capita Economic Output was $22,400 in 1982. In 2006 it was $37,807.

The output in the service sector of the U.S. economy was $1 trillion in 1982; in 2006 it was $5.5 trillion.

The Dow Jones Average in 1980 was 825. In 2006 it was over 12,000 (having risen well above that number by 2007, it has since fallen back, but is still above 12,000 as of this writing).

Unemployment in the 1970’s averaged seven per cent. In 2006 it was under five per cent (In June, 2008 it had risen to 5.5 per cent in the U.S., and somewhat higher than that in Canada).

The percentage of Americans owning stock in 1983 was 19 per cent. In 2006 it was 50 per cent.

Personal family net worth in 1989 was $69,000. In 2004 it was $93,000.

One thing that might safely be concluded by a reasonable person from all of the above is that there has been a great deal of change.

So what’s with Obama and his evasion of reality in this matter of the phenomenal rise in living standards? Has he never had a lecture in Capitalism 101? Does he not see the correlation between the explosive growth in the wonderful things we now take for granted, and the (relatively) free market that made it all possible?

Maybe he really means he wants to change from change, meaning he wants no change at all. Or maybe he means change back to pre-capitalist times, to all those centuries of very little change.

Seriously, what makes all progress possible is the level of industrialization in any country. On one hand, in the long run, it is contingent upon the capital available for investment in the assets needed for production, and the freedom granted by governments to those willing to take risks in investing their capital in those assets. What capital is available depends on the level of money remaining after the taxes are extracted by governments. And the freedom to invest in productive assets depends on politicians being rational in their drive for personal power, and not trying to climb upward over the broken bones of the real producers of a national wealth that benefits everyone.

But a new, scary thing has been gradually taking place beyond the issue of confiscatory taxes and government controls that make it hard to run a business as such. And that is government edicts that can even destroy entire industries. Business administrators have to be wary of what new edicts will emanate from Ottawa or Washington that could make successful management impossible.

As a coffee man, I have always been fearful of waking up some morning to hear of new medical research, valid or not, that would harm the coffee business. Luckily, the last few years have been kinder to us in terms of the benefits attributed to coffee.

But now we have to be concerned about a relatively new phenomenon, the lobbying by pressure groups trying to get governments to enact irrational laws that can have drastic results.

A prime example is the current attack on bottled water in both countries, and the  environmentalist-fomented ban on drilling for oil in the U.S., which is sitting on more oil in the Rocky Mountain Tar Sands than is in the total reserves of Saudi Arabia, but can’t touch it because it might do harm to the gopher (or some other animal).

And, of course, Canada and the U.S. have the world’s largest supply of coal that could be liquefied for power. Fortunately, Canada got into Athabaska Tar Sands production before some weird prohibition was enacted to protect other “endangered” species.

The intelligent application of economics would tell us that as long as oil is plentiful, and as long as it is the most economical way of meeting our needs for energy, it will be the best way of doing so. If oil ever became really scarce and its price rose naturally above the next most efficient way of generating energy to meet the world’s need for power, it would gradually have to bow to that other source.

Whether that turns out to be atomic power, liquefied coal, wind power, some other source, or a combination of means, the free market would determine the order of priority, not politicians making guesses on the half baked demands of pressure groups using pseudo-science (see Al Gore) with mystical chanting about the future of the “globe.”

Given the chance, the great gains in the human condition over the past 50 years will continue, with coffee remaining one of our greatest continuing sources of happiness, happiness being the proper condition for mankind (“mankind” meaning men and women) right here on earth. And it comes from seeking and achieving one’s rational values, and one achieves those values through a process of thought, and action based upon that thought.

But there is one important caveat. One can think and achieve one’s values only if one is free to do so, and not inhibited by the power of the government, living in a socialist regime or any of its variants. For proof one only needs to cite the empirical evidence of the failure of socialism wherever it has been tried, and the sensational achievements of the Western world, especially in Canada and the U.S., where we have been allowed to be relatively free in a semi-capitalist mode.

In the upcoming U.S. presidential election, a new leader may be elected on emotion instead of reason. Obama and his party are bent on levying confiscatory taxes and seeking more and more control over citizens’ lives. The results could be most troublesome, for the entire nation, for companies, and for individual people.

Canada too is facing a possible federal election with the same, continuing choices about just how much more government control is to follow.

We see mounting evidences of the drift into the stagnation of a dictatorial welfare state in both countries: 400 people laid off at Corning Glass in Toronto because the government, egged on by environmentalists, ruled glass is too heavy to be used as containers (milk, beer, etc.)

Is it possible that it’s time for “the people” to say, “Enough, already?”