Our world is sick, really sick… How Government Deficits, Household Incomes and Climate Change are Interconnected …with two cancers, both having progressed for decades, lots of side effects and if not treated soon will metastasize. prepared by Peter Bruijns 1
Let’s get into it, two cancers … … and a neurological disorder. Metaphors for ominous global forces. prepared by Peter Bruijns 2
Economic Stakeholders and Global Forces. Geo-Political Compromises Government Family All Levels Pays for Everything Unit Agencies (but has little influence) Wealth Siphons Small Independent Businesses Technology Corporations Acceleration & Big Business Impacts prepared by Peter Bruijns 3
What is it? - It is concessions materially below domestic standards embedded in foreign trade agreements that unfairly adjust cost competitiveness in favor of corporations across two or more sovereign countries. Power transfers to corporations from government. Geo-Political Compromise - Foreign worker programs. Inappropriate use of child labour. - Environmental regulations and practices on air, water and soil. - Human and worker rights legislation and practices including OH&S. - Dangerous working conditions. - It is the lack of enforcement commitment when regulations are in place. i.e. China has many regulations but enforces few if any of them, as they are there for WTO optics. What is it? - It is corporate practices that draw wealth out of a corporation for the benefit of a small Wealth group of people who put greed above performance. Siphons - Share buybacks to inflate share prices. - Ultra high executive compensation disproportionate to the organization. - Accumulation of unprecedented wealth transferred from a corporation to individuals. prepared by Peter Bruijns 4
Freedom with NO Responsibility Unfair cost advantage • • Worker rights protected Cheap power provided via dirty coal with no scrubbers • • Union option kept a balance of power Freedom to dump into waterways with no consequences • • Utilities more expensive Using local people with far fewer rights than back at home • • Wages negotiated within strong labour laws Dangerous working conditions • • Powerful environmental regulations No respect for local workers, decrepit housing, no benefits • • Regulatory environment drove technology adoption No emissions control on VOCs, Carcinogens • Product safety issues: lead paints • No social risk of being sued, cost of negligence low • All transportation logistics polluting • No social support systems prepared by Peter Bruijns 5
The US trade deficit exploded once trade opened up. A significant part of these imports represents Geo-Political Compromise. 2018 imports from China are just under $600 billion. Governments Is the Mexico experience any different? NAFTA was brought into effect in the early 1990s. Since then it has grown by a factor of almost 6x. Mexico prepared by Peter Bruijns 6
Corporations Big Business Walmart, Wayfair and Amazon Massive Job Pipelines prepared by Peter Bruijns 7
Companies with few constraints entered China and used it. Governments While back home companies could not compete. prepared by Peter Bruijns 8
How How ma many ma manufac actu turing job obs di disap appeared? How ma How many others di disap sappear ared alon long wi with th the hem? prepared by Peter Bruijns 9
If trade with China grew that much and it drained so many jobs and money out of the US economy, where did it go? It went through here. prepared by Peter Bruijns 10
At end of 2018 US Federal Debt was $21.8 Trillion. Governments Why? The revenue side of Government was weakening as jobs left and wages fell. prepared by Peter Bruijns 11
The Canadian government has not faired well either. Below are Canadian Federal Debt and the Canadian Governments largest province, Ontario Debt. Both have acceleration curves that are not sustainable. prepared by Peter Bruijns 12
So we let companies import almost anything from outside. We didn’t apply any controls on them …. at all. And we thought it would improve our competitiveness? prepared by Peter Bruijns 13
Family Unit A Job obs Gr Grap aph What Households Lost Incomes 50% 100% Population prepared by Peter Bruijns 14
United States Family Unit average household income performance. Over past 30 year period income rose 20% in total and real GDP rose 55%. Family Unit What Households Lost While you were growing up, a lot happened. prepared by Peter Bruijns 15
Ball Park Franks (USA) Family Unit • How much has the Family Unit lost over the past 30 years? (Well from 1985 to 2015). • Total lost household income over the 30 year period was: $ 21.6 Trillion. • This is equivalent to $6,400 per year per household. • Canadian experience likely similar on a per Family Unit basis. prepared by Peter Bruijns 16
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What everyone seems to forget is the Family Unit pays for or absol bsolutely everything ng including the taxation dollars of corporations. Family Unit The impact: • 11.5% of Ontario workers earn minimum wage, up from 1 in 40 over a 20 year period. • Almost 60% earn under a living wage or are in precarious jobs. • Just as we think we might make a gain, one of us loses our job or our costs go up for Victim Impact something like car insurance. • Statement Almost every week it seems the government is offloading a cost or service to us. • I am surprised at how many of us kids, teens, adults have some kind of auto immune illness or a mental health issue. Stress is hard. • We are constantly afraid of losing our jobs and governments cut services every day. • I cannot keep up. • Everything I read warns us of major problems around me. I need to hide. • Whether it is fake news, real news or just too much news, it is all bad. • Everyone disappears into their smartphones. To find what? • I don’t know who to trust for real information. Companies and governments always seem to lie. prepared by Peter Bruijns 18
A Look ok at Just ust One One Wealth Siph phon A company makes an express decision to take cash off its balance sheet to buy down the denominator of its share value and to create trading volumes (momentum) of its shares. The primary intention is to manipulate the share price up so that very few insiders can cash out on stock options issued during periods of low share price. The last 5 years saw $3 Trillion vaporize out of the economy into buybacks. $10,000 per person in the US. Made legal in 1982. prepared by Peter Bruijns 19
• This group of employers cannot ‘benefit’ from Wealth Siphons but are penalized heavily by Geo-Political Compromise. • Small SIBs are forced to, or opt to employ people in lower wage situations because their margins Independent are slim in the vast majority of firms. Business • Their global competitors (i.e. Walmart) take full advantage of Geo-Political Compromise but small firms have no leverage or buying power, nor do they have lobby power even within business associations. • Are subject to all global forces including AI effects. • Tend to serve a local or regional market. prepared by Peter Bruijns 20
Corporations have no o op option n but to o deval alue their weal althier hom ome ma markets s as the pressure to drive down costs and drive out higher cost employees is never ending. Corporations Big Business The he ma main n reaso ason n for or dom omestic job ob creat ation n is the need to protect intellectual property, R&D, legal framework, financial systems and governance along with the minimum staff needed to support the domestic markets. This is to the de detri rimen ent of the Family Unit, Corporation and Government but to the advantage ge of of the few individua duals s who are Wealth Siphon beneficiaries and those individuals that feed off them . Domestic assets of corporations have a difficult time competing with their own foreign assets due primarily to the effect of Geo-Political Compromises built into trade agreements. prepared by Peter Bruijns 21
It may seem odd that this slide show is about Climate Change. It is but you wouldn’t know it. It’s coming but not quite yet! prepared by Peter Bruijns 22
This one is simple. Governments will turn internally to cost and service cuts when fiscal pressures hit. These agencies and extensions of government will become gutted first but yet Public Assets they form the underpinnings of society and their lack of performance is what creates the Health, Education unrest in society in the first place, leading to distrust. Utilities, Roads prepared by Peter Bruijns 23
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