Economics Journal 11
In Canada’s near future as individual citizens and as a country we will face a number of economics challenges that if not handled to appropriate way will severely impact the economy that we rely on to sustain our current way of life.
While many toils can be predicted to arise in the near future, in my opinion the ones that concern us the most deal with our employment and our resources.
Canada is a capitalistic country, and because of this our society functions based on how stable our economy is. If the economy is doing badly, then arguably the quality of life is declining because luxuries are scarcer, and basic necessities become harder to obtain for a lot of people.
Economies are fuelled off demand, and most demand (demand for non-essential items) only exists when consumers have disposable income. In order for consumers to have disposable income they must be employed and have a salary that is sufficient enough for them to pay off all their expenses and have left over money to spend. This is essential for an economy on a larger level because if purchasing stops then manufacturing or servicing stops, then more people lose jobs, which leads to even less consumer’s with disposable income. So this cycle continues downwards in what is known as the multiplier effect.
Many years ago developed countries realized the massive fiscal benefits of producing outside of the country because often work laws, such as minimum wage and work environment regulations, are far more relaxed in these foreign countries. Unfortunately this has caused the death of a large part of the manufacturing industries- seeing almost 1/7 jobs in this industry being lost between 2004 and 2008. This is known as structural unemployment, because the economy no longer has need for workers with these skills. Those who do not lose their job will most likely see a significant wage cut because the company need to cut expenses in order to make it worth their while to continue operations in Canada, and with most of the jobs being outsourced workers will have nowhere else to work if they become unemployed or are dissatisfied with their wage; also often the education of a worker in manufacturing is not very high, so they are automatically excluded from many job markets. A very significant wage cut that recently happened is at Caterpillar, where worker’s salaries were cut in half.
If trend continues many people are likely to see their job lost or their salary severely cut and because workers in these jobs often do not have a high education finding a new job is difficult. It is important for the well-being of our economy that some intervention be had. There are effective ways the government can deal with the decline of manufacturing jobs and all the people left unemployed by this, they simply must retrain them so they are suited for jobs that are still available in Canada, and make sure people entering the work force receive the
education they need so they can enter a field that has demand. By offering programs such as Second Careers to train workers how to apply their skills to different careers that are in demand. The government needs to open more programs like this, and promote them so those who become structurally unemployed have to opportunity to continue making a living. It is also possible for the governments on both a provincial and federal level to offer a tax benefit to company that manufacture in Canada in order to encourage production to stay in Canada- this could be a useful step to preserving these jobs. Manufacturing makes up 11.5% a massive drop from 14.9% ten years ago, and this is a trend that will likely continue if no action is taken.
Having this huge number of jobs these disappear without replacement would put a huge strain on the economy but it can be avoided if the right moves are made by individuals and the government.
Canada consumes 2.209 million barrel of oil each day this goes towards supplying us with electricity, fuelling ours cars, planes, factories, and many more uses. We rely on oil to live our daily lives, but unfortunately it is not an unlimited resource, and recently there has been speculation that our supply will become limited in the near future- this is called peak oil.
Peak oil is the point where maximum oil output is reached, and after this point has been passed oil output will decline. The world reached its peak in 2008. When oil supply declines, as the projections say it will, but demand continues to rise (projections agree with this as well), there will be a huge price rise, as can be seen on a supply and demand graph. Even Canada’s massive oil supplies will not last forever or save it from this crisis, and much of these are sold to the US and other countries, a rise in the global price in oil will affect the price in Canada regardless of the product being domestically produced. This will cause the price of electricity and gas to skyrocket, and anything that relies on electricity or gas will become near unaffordable for the average Canadian to use. If every factory shut down, and citizens could no longer afford to transport themselves to work and back, and shipping goods became too expensive for importing and exporting then it would not take long for the country to effectively shut down.
There are a number of ways both individuals can prepare themselves for the future and help sustain the environment at the same time. Becoming less reliant on energy produced by oil (practically all electricity) is the only way to avoid this crisis. Average homeowners or landlords can install solar panels on houses or buildings (residential or commercial) to produce energy, and save on energy costs in the future. For individuals this can be an investment that will save money in the long-run and lead to a cleaner environment.
It is important for the government to take action and start paving the way to an less oil dependant future, because our supplies are running out and they will not replenish quickly. The government should restart programs such as the Solar Energy System Rebate Program that was closed in 2007 to encourage citizens to install alternative energy sources. The government invests money every year into grants for researchers; it can start putting a lot of this into research for alternative ways to power cars. There are also projections that if the government begins investing into wind energy by 2025 20% of Canada’s electricity can come from this source, if the government were to also start investing into solar panels to cover vast areas of Canada that are uninhabited. If the Federal and provincial governments can create sufficient energy sources before we start to heavily feel the effects of peak oil then Canada could have a much smoother transition than other countries into the far less oil dependant existences countries will soon need to lead.
These two economic issues are ones Canada will have to overcome in the near future. If the proper pre-emptive actions are taken we can save ourselves a lot of damage to our economy in the future. It is both the individual and governments responsibility to educate themselves and take action on these to prevent or solve these problems.