Address
111 Waterloo Street, Suite 310
London, ON N6B 2M4

THE ECONOMY AND CONSUMER DEBT

September 5, 2017

Interesting economic data is available from Statistics Canada – let’s have some fun and imagine how much better off we were 45 years ago.

In 1970 approximately 30% of women were employed on a full time basis by 2015 that percentage has increased to about 68%.  What we can reasonably conclude from that is that on a percentage basis more women are now actively engaged in the workforce than 45 years ago.

In 1970 Tax Freedom Day – the day on which all of the money you have earned for the year will be sufficient to pay all of your taxes – was April 19th.  By 2015 Tax Freedom day was either on June 10th or June 26th depending on which statistics you rely.  In other words we paid all of our incomes in some form of taxation for an increased term of either 52 or 68 days.  The result is either a 48% or 62% increase in taxes paid over the 45 year period.

Average Canadian family incomes have declined substantially since 1970 after the top 2% of income earners are removed from the statistical averages provided by Statistics Canada reports.   This effect is compounded by two further factors 1, adjusting for inflation; and 2, adjusting for increased taxation.  It would not be unreasonable to estimate that average net family incomes have actually declined by 40% or more even though the participation of women in the workforce has more than doubled during the last 45 years.

Consumer debt has exploded since 1970 with more and more Canadian families not only relying on debt to finance major purchases but reliant on debt to make up for the shortfall left from dwindling wages and soaring taxation.  The media is rife with reports of working people using foodbanks to help them get from paycheque to paycheque and from credit card to credit card.

According to Wikipedia there is only about $4 trillion of currency in circulation in the world.  In other words if you collected all of the legally printed money in the entire world the total would be a mere $4 trillion.  Yet, Canadian Consumers alone owe more than $1.8 trillion in debts.  The governments of Canada and the United States collectively owe about $20 trillion in debt.  Now, admittedly I am no mathematician but if there are only four apples in the entire world it is hard to imagine how anyone could actually borrow 22 apples.