A consumer driven economy is one where economic activity and the exchange and transfer of wealth is primarily generated through the movement of consumer goods and services. When a consumer goes into a Walmart to buy a pair of pants manufactured in Indonesia, the money they spend is redistributed to every person along the supply chain from the producers of the cotton to the kids in the Indonesian sweatshop to the creepy old Walmart greeter at the front door.
The process holds true when a consumer buys a Big Mac at McDonalds, a Starbucks latte (or a Double-Double from Tim Hortons), or an iPhone from a cellular kiosk at their local shopping mall.
The people who are recipients of funds from the consumer cycle within a specific nation then generate tax revenues for their local and national governments.
When a Big Mac flipping teenager gets paid $11/hour in a Calgary McDonalds, she will pay about 25% of her income in combined Federal and Provincial income tax as well as 5% provincial tax on consumer item she purchases with her salary. She also will be paying a myriad of direct and indirect taxes, the most insidious being the NDP carbon tax, which suppliers further up the supply chain pay on her behalf and then add to the final price of any good she purchases (which, with the cherry on the top, the Federal government then charges GST on).
On an unrelated note, she WOULD have paid those taxes, had an NDP mandated $15/hour minimum wage not put her out of a job when the McDonalds she worked for purchased burger flipping robots to replace her job, but I digress.
The most critical component of a consumer driven economy is consumers. Men and women who, for one reason or another, go out and buy stuff.
This is where demography becomes so important.
Without exception, in every society, the people who consume the most are young to middle aged adults. Think about the amount of consumer spending that goes into buying, furnishing, maintaining or providing for houses, cars, and kids.
As a father of 3, I often hear people say “Kids are so expensive!”
People make that claim because children require an enormous amount of consumer goods – groceries, clothing, toys, extracurricular activities, LOTS of gasoline to drive everywhere, as well as common utilities (heat, water, and electricity). At 33 years old, I know that is a significant amount of consumer spending that contributes to my local economy and that I am paying taxes for.
With that, all the benefits of a consumer lead economy depend fundamentally on the 20 – 40 year old bracket of a society going out and buying stuff.
Observe the demographic profile of Canada and note that there is a hollowing out of the 40 year old demographic, followed by a tiny bump in the 20-30 year old demographic, followed by a complete falling off the map of below 20’s. This is a demography that in the long term, cannot replace it’s population through reproduction, and as such can never have consumer driven economic activity as a primary source of economic growth or tax revenue.
Compare that to the United States, and you can observe that problem simply does not exist. There is a hallowing out of the 35-50 year olds, followed by a fairly robust boom of 20-34 year olds and a relatively stable amount of children thereafter. This is a demography that has promise for long term viability as a consumer economy.
This more than anything is the reason why the United States can be selective when it comes to immigration. The United States is already the worlds largest consumer economy and the ability of foreign countries, including Canada, to simply export consumer goods into the United States market is a source of global economy growth.
Incidentally, if the United States restricts foreign consumer imports, as is likely under President Trump, the ones who will suffer the most for it are not the Americans, but rather exporters like Canada who rely on American consumption to prop up their economies. If anything, the Americans will benefit from cutting off global imports, as it would lead to a re-shoring boom that would cause the American economy to be more robust and self sufficient.
Comparing Canada to the United States, it should be evident why Canada scrapes the bottom of the barrel of the worlds worst nation for immigrants whereas the US can (and should) ban immigration from certain countries.
The Canadian consumer economy is completley nonviable in the long term without massive influxes of “new Canadians.” The US consumer economy is self sustaining without mass immigration.
The Canadian Federal government markets it’s efforts as “multiculturalism” and that “diversity is a source of strength,” but the reality is that without new consumers, regions of Canada reliant on domestic consumption would enter into a deflationary depression from which they would never recover.
Where are those regions? Ontario and Quebec, primarily, with their manufacturing industries producing consumer goods.
Unfortunately for Canada, even it’s best efforts to attract the huddled masses of tired and poor have not worked and never will. As a descendant of immigrants myself, I can testify truthfully that one of the primary incentives of new Canadian immigrants to gain Canadian citizenship is that it becomes much easier to immigrate to the United States as a Canadian citizen than as a Chinese, Iraqi, Sudanese, or Syrian citizen.
Objectively speaking, most of rest of the world want to move to the the Land of the Free. Only the desperate and the crazy want to move to a frozen, desolate, socialist wasteland.
As a result, very often, the people who do not understand economics or do not qualify to immigrate to the United States end up staying in Canada. Instead of skilled, high caliber immigrants contributing to the robustness of the Canadian economy, Canada becomes inundated with hungry welfare recipients, consuming goods manufactured in Ontario, who may or may not be culturally compatible with those of us who were born here.
The elites in Ottawa do not care and would not have it any other way.
Not only do unskilled, un-assimilated immigrants serve the interests of the Ontario/Quebec manufacturing complex as recipients of government subsidy, they are a reliable voting block to whichever political party promises them the most welfare. This is how the NDP and Liberal parties even exist today.
Such immigrants may not add anything valuable to the long term sustainability of the country, but that is some future politician as well as future Canadian’s problem.
In addition to consumption, there are two other major drivers of economic activity that are pertinent to the long term future of Canada, with it’s present demography and endowment of resources and industry: Finance and Natural Resources.
As with a Canada’s consumer economy, Canada’s Financial and Natural Resource based economies are similarly bleak for many of the same reasons (although those are topics of future posts).
As a closing thought, recall that in a consumer economy, 20-40 year olds make up the primary sources of both overall economic activity and most importantly for governments: tax revenue.
Have a look at the 2015 demographic profile of Alberta and, as Albertans, remember most of the taxes we pay into Canada, we receive absolutely no benefit for. Your taxes are not paying for services for your community, your people, or your families.
They are paying for a nation that should not exist were it not for institutionalized fraud and extortion.