For Chapter 6, I commented on Winnie Chiu (Block F).

CHAPTER 6 Media Article
Saving is painless and it pays off,
The Telegram, January 21, 2007


This article stresses the importance of saving money. People are not realizing that even saving a few dollars from every pay cheque can make a real difference in one‘s financial health. In Canada, “personal debt . . . [is at] a record high” and it consumes 109 per cent of a person’s disposable income. Starting small in the amount to save and then spending only what you have saved, and nothing, more is key. A little can go a long way in regaining financial control. People who need help can seek advice from financial planners or even from non profit agencies such as the Credit Counseling Society of B.C. Saving for long term goals and short term goals are different, yet equally vital.


Connection to Chapter 6- dissaving, disposable income, (expenditure) multiplier

This article is related to chapter 6 through the topics of dissaving, disposable income, and to a lesser extent the expenditure multiplier. This article informs us that a lot of people need to start saving in Canada. This leads to the topic of dissaving. People in Canada spend so much that “personal debt has hit a record high.” Canadians are spending way more than they can afford. Consequently, their disposable income is being eaten away through debt repayments. However, from what I learned in Chapter 6 all this economic activity caused by so much spending will have multiplied effect on our GDP, and the expenditure multiplier calculates the effect of changes in spending on the economy. Thus, by dissaving Canadians are getting into a lot of debt that‘s consuming almost all, if not all, of their disposable income; consequently, their spending like any spending has a multiplier effect on our economy.


Personal Reflection

Living a "paycheque-to-paycheque lifestyle" is not a good idea. By not saving money these Canadians are only hurting their own financial well being; however, at the same time they are helping our economy by spending. If the opposite were to happen it would be detrimental to us all as the Paradox of Thrift might come into play. When people do not spend, businesses receive make less revenue and since they always aim to make as much profit as possible they will begin to cut expenses and people will get laid off. Consequently, if we want our economy to flourish, like now, does it mean that these people need to remain living on debt? What will happen when a majority of these people smarten up? Can our economy remain stable or will it cause a downturn?


http://elibrary.bigchalk.com/libweb/canada/do/document?set=search&groupid=1&requestid=lib_canada&resultid=15&edition=&ts=B1E5B3CBAF0B8423ADBDF4C64D7A43E7_1177382619613&urn=urn%3Abigchalk%3AUS%3BBCLib%3Bdocument%3B134496796#bestPart

CHAPTER 5 Media Article

Weak output, strong hiring puzzle StatsCan Establishes task force,

National Post, Thursday, February 01, 2007

In summary, this article states that a task force has been created by Statistics Canada to investigate on the odd relationship between the lack of gross domestic product (GDP) growth that should be correspondingly growing as employment has been. However, governor of the Bank of Canada, David Dodge, suggested that this may be because the GDP might not be accurately reflecting economic growth in Canada, seeing as growth is difficult to measure as prices fluctuate. Large employment growth has been seen in the health care, energy, natural resources sectors, but in these sectors output difficult to measure, or productivity is inhibited because of a shortage of skilled employees, or output takes time to become significant, among other problems. Philip Cross, the director of current analysis at Statistics Canada, is puzzled about the reasons for these results; the task force is going to look at the GDP’s “measurement of output, employment and productivity across the economy.”

Connection to Chapter 5- Macroeconomics, Gross Domestic Product (GDP), employment, employment rate, unemployment rate

This article deals with the chapter 5 concept of macroeconomics. Macroeconomics looks at the overall view of an economy instead of individual markets, which, in a way, is what the Gross Domestic Product (GDP) measure does for a country. GDP measures economic activity. In this article, figures for different months in Canadawere mentioned, as they discussed about Canada’s low GDP growth. Moreover, this article also focused on employment, the employment rate, and it briefly mentioned the unemployment rate. On employment, they discussed the sectors where employment has been increasing, and the effect it had on GDP. For example, the article pointed out that the employment was “up 10.9% year-over year in December” in the natural resources sector, “while productivity in . . . new oil and gas wells” has declined, affecting GDP negatively. Furthermore, the article also stated that the employment rate grew to 2.2% last year, while specifically in December, of last year, the unemployment rate declined to 6.1%, the lowest in 30 years.

Personal Reflection

As long as inflation is occurring, a country’s GDP rate should increase at least as much as the inflation rate or the country’s GDP would be decreasing. A low GDP rate isn’t good for the country or even to me, personally. A low GDP discourages investment in current businesses, and the start up of new businesses. This would lead to fewer new job positions, and maybe even to layoffs. In turn, people would spend less which isn‘t good for the economy either. Although employment is high (and unemployment is considered low) now, it could easily turn the other way around if company’s feel that they aren’t going to make enough profits to exceed their wages expenses. Businesses take GDP into account when making decisions. Moreover, if job growth is hindered there will be fewer opportunities for people like me who have very little experience. Will the task force be able to find out the reason for low growth rate of Canada's GDP and be able to correct it? Or has it just been a bad year, and the task force is just a waste of money which could have been spent on health care and the like?

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CHAPTER 4 Media Article
Government debt totals $171,032 per person, group warns,
Canada.com, November 15, 2006


This article provides insight on a report done by the Fraser Institute about Canada’s federal, provincial, and local government debts. The debt is increasing. Budget surpluses deplete quickly as expenses that result from government provided social services and other financial obligations continue to grow. The government relied on the population, economy and wages to grow like it did in the 1960s but the opposite occurred and it is expected that social programs will be inhibited from their intended level of benefit as a result. Nonetheless, Canada is not the industrialized country holding the highest debt.


Connection to Chapter4- Wagner’s Law, Gross Public Debt

This article is connected to Chapter Four through the topics of Wagner’s Law of Increasing State Activity, Gross Public Debt. Wagner’s Law describes that government spending will increase at a greater rate that economic output in industrialized economics. The reason that could be applied here is promises from political campaigns. These promises have led to the existence of various social programs that are very costly to the government. Moreover, Gross Public Debt is applicable here because all of Canada’s different types of debts are summed up as this one in the figure given by the article to be $2.7 trillion, which is probably even higher now. Gross Public Debt includes immature bonds, treasury bills, notes and other liabilities. Specifically, this article focused on net direct debt, which is their total liabilities less financial assets, but it did mention others very briefly.

Personal Reflection

Canada’s debt will likely be a liability for a long time. $171 032 per Canadian is a lot of money. However, in my opinion, social programs such as Medicare, Old Age Security and the Canadian Pension Plan, are all necessary for country that wants their economy to grow and flourish. These services help keep their citizens working and/or spending. Medicare is needed to make people more productive and to help prevent outbreaks of diseases. Accessible pension to all is necessary to keep the retired people spending and healthy. Not everyone has a good pension plan, if they have one at all; so it would not be fair to make people retire and not help them survive by giving them some kind of income. Yet, as mentioned in the article, the aging population is going to very hard to support pensions to as the tax base decreases. The number of retirees is going to exceed the percent of the population that is still working. Consequently, the government is either going to obtain new debts or increase taxes to generate the much needed revenue, meaning I am going to be paying either very high taxes if the government chooses the latter. Even with the first decision, I am not very happy since getting into more debts will probably mean that programs will most likely still be cut in the future or taxes are going to be raise even higher to pay it off. The government should clean up their act. It’s not smart promise lower taxes now just to get into office, since it’s better spread out the burden than suddenly increase taxes or cut important social programs to attempt to meet the budget in the future.


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CHAPTER 3 Media Article
Liberal leader wants penalties for companies that don't lower emissions,
News 1130, January 12, 2007

In this article, Stephane Dion, Leader of the Liberals, explains that there should be penalties and incentives to prompt oil patch companies to “lower their greenhouse gas emissions and water use. This change will encourage companies to improve their technologies and industrial processes, which will even benefit these companies in the long run. However, Pierre Alvarez, president of the Canadian Association of Petroleum Producers, thinks other sectors, “not only oil and gas” should be targeted also. Similarly, Prime Minister Stephen Harper isn’t very keen on this idea of “imposing drastic reductions” either. However, environmental groups criticize that the Conservatives’ approach to this situation is too long-term.


Connection to Chapter 3- excise tax, and negative third party effects

Setting penalties to lower greenhouse gas emissions and water use is an example of how the government can help lower negative third party effects. As discussed in chapter three, excise taxes may be government charges on a good to discourage consumption. Some of the penalties Stephane Dion is thinking about will probably take this form. Yet, in this way the consumer ultimately pays the tax since oil is inelastic, meaning the producer can increase the price and the consumers will only be a little discouraged to decrease consumption. As a result, these excise taxes will generate revenue for the government. Moreover, these penalties are still a possible solution to reduce the negative third party effects of the increasing pollution. Third party effects exist when a third party other than the buyer or seller is affected either positively or negatively. Here, the situation involves government action to decrease the negative third party effects caused by oil patch companies. The pollution created by these companies is harmful to both humans and the environment. Many, if not all, industries use inefficient technology simply because it is cheaper; but with government incentives and penalties companies will more readily change their habits. Less pollution creates a healthier and more productive society bringing about a better economy.

Personal Reflection

Pollution and greenhouse gases are becoming a bigger and bigger problem for our environment and, sequentially, for us too. Giving incentives and setting fines on big polluters are a good start to convince them to use less polluting methods and technologies. What’s more, according to this article, the former Liberal government has signed the Kyoto protocol yet “emissions actually increased 25 per cent” during their period in office. If we don’t start looking after the environment now, global warming is only going to get worse. The weird wind and snowstorm we experienced recently are likely an example of how global warming is changing the world. How much time do we really have until it’s too late? What will happen to us if we don’t change our habits? Will industries ever become bighearted enough to put the welfare of the Earth ahead of making profit? I think the government has to intervene before any industry or corporation will think more about the environment and the ultimate consequences of being a polluter.

http://www.news1130.com/news/business/article.jsp?content=b011297A

CHAPTER 2 Media Article
Oilpatch Drillers Expect Layoffs in 2007,
National Post November 1, 2006


This article is indicating that low natural gas prices and rising costs are subduing Canadian oil companies. As a result, programs are expected to be cut along with lay offs of almost 2000 workers, mostly in the summer. However, winter drilling should not be affected much since some areas “can only be accessed when the ground is frozen”. Unprofitable "programs such as shallow gas and coal bed methane” will likely be cut. In addition, “a warm winter will keep gas inventories overstocked," further “continuing the year-old price slump“. Chris Theal, an analyst at Tristone Capital Inc. predicts, “pull back in drilling should reduce natural-gas supplies and push prices up again”.


Connection to Chapter 2- supply, elasticity, and the total revenue approach to price elasticity of demand

This news report is related to chapter 2 through the topic of supply, inelasticity and of the total revenue approach to price elasticity of demand. It provides an example of how low prices decrease the amount suppliers are willing to produce, since low natural gas prices are the main reason these oil and gas-drilling contractors are being reluctant to spend money on exploration. In addition, this article also shows us that production costs are indeed a factor of supply because rising costs are another reason oil companies have for decreasing activity. Furthermore, weather conditions also affect the supply of this good. Oil companies prefer colder weather. Not only can some areas only be “accessed when the ground is frozen”, warm weather increases “storage levels of natural gas,” decreasing its price. Finally, the total revenue approach to price elasticity of demand is another concept in chapter 2 that appears in this article. These companies know that they have an inelastic product. Price decreases do not benefit inelastic goods. To suppliers of oil, price decreases just decrease their total revenue. In order for them to increase production prices need to increase first.

Personal Reflection

I am divided on this issue. I think the actions of these companies are understandable but laying off 2000 workers is harsh. As a consumer, I do not want gas prices to rise, since that would increase home heating costs, among other things. However, a lot of people will lose their job, if gas and oil prices do not rise. A compromise must be reached. If only gas and oil prices would not fluctuate up and down, but instead remain constant, at a reasonable price. There wouldn’t be much to complain about then.


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CHAPTER 1 Media Article
"Fisheries Minister Insists Canada on Right Track in Protecting Marine Species",

NEWS 1130 November 3, 2006

There are varied reactions to the prediction that world fish supply will cease by 2048. Some say its “alarmist”; others say it “provides important warnings.” In Canada, Loyola Hearn, the federal fisheries minister, claims that he has been responding appropriately to counteract mistakes of the past that has caused the decreased fish stocks. For example, he is “trying to shift the government’s approach to fisheries management to one that considers the whole ecosystem, rather than focusing on single species,” to protect this resource. However, ecologists think the government is not doing enough. Bob Rangeley, a director for the World Wildlife Fund, even accuses the government of inaction, including doing nothing about countries that violate fishing laws. The diverse species in the world’s oceans are disappearing with over fishing and pollution. “Thirty per cent of commercially fished species have already collapsed.”

Connection to Chapter 1- scarcity, and resource ownership

This article is about a scarce resource, fish, and how the Canadian government, with power over our resources, can make a difference. As I have learned from chapter one, a scarce resource is a resource, which is limited in supply. Fish is a renewable resource but over fishing is causing it to become increasingly scarce. The depletion of fish is becoming so critical that a prediction has been made that by 2048 there will be practically no more available. From what I leaned in chapter one, I can conclude that as world fish stocks continue to decrease the price for fish will increase. If fish are disappearing at the rate this study is implying, the price of fish will probably quadruple in 5 to 10 years, since scarcity is a determinant of price, and prices increase as an item becomes more scarce. Resource ownership is another concept, which applies to this article. The government can apply regulations on fishing because they are active in a certain way in out economy. They could help conserve Canada’s and the world’s supply of fish, as argued by these ecologists, if they took action. However, since the amount of fish available to be caught would probably then be regulated, the scarcity of fish would still increase, and prices still rise. This article is related to chapter one through the concept of scarcity and resource ownership.

Personal Reflection

I am unhappy about the state of our oceans. Not only is fish an important source of nutrients, its a very depressing consideration to think of all the diverse sea life disappear. 2048 is not a long ways away and I have to admit that I will miss eating seafood. If nothing is done about this problem, fish will increase in scarceness and, soon, I will not be able to afford to eat fish anymore. I agree with the economists, the government should be doing more. They should be putting money into solving this problem not the war. Moreover, contaminated oceans do us, humans, harm too since all the water on Earth is the same water “recycled” over and over again. Pollution is getting out of hand, the fish are suffering, and we will be too.

http://www.news1130.com/news/national/article.jsp?content=n110353A