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ON THE 11th HOUR: when the war went quiet
For all the opportunities afforded our western economy, the pressure of materialism expands with our economic wealth.
Interest rates are at unprecedented suppressed levels and access to capital make purchasing, things we may not even need, too easy. Credit card companies expanding credit and online retailers delivering goods to our door by verbally requesting a digital assistant order.
Consumerism has maintained our economy since our last recession over a decade ago. But the elastic boundaries are being stretched. Canadians are holding about $2.3 trillion in total debt, for every dollar of income Canadians have about $1.78 is owed. A survey by MNP indicates 47 per cent of Canadians don't believe they will be able to cover their expenses in the next twelve months.
Debt, if managed, is a powerful tool. Governments finance investment on debt and virtually all Canadians use mortgages to purchase homes. Debt financing is an important instrument of a functioning economy. However, fear of debt is also increasing. A survey in October by Qualtrics, suggested debt was Canadians greatest fear next to death and 43 per cent of respondents lose sleep over finances.
According to MNP, P.E.I. bankruptcies grew by 5.7 per cent; concerning considering the low cost of financing. Despite low interest rates we continue to experience inflation where goods and services increase in price; generally faster than wages. These pressures result in predictable behaviors.
Provincial government wages have grown at generally the same rate as inflation. (private sector wage growth has been faster, specifically minimum wage which has increased 46 per cent since 2008 compared to inflation of 11% over the same time.) The pressure is compression at mid-wage ranges which have stalled, while wages apply pressure from the bottom.
The impact: “side hustles”. We are in the era of the “gig-economy” a time where businesses are disintermediated, and small vendors can pick up direct work "on the side" without the structures of a business. It is a great time to pick up independent projects and augment a salary – but it does displace the economic drivers of business.
The public hustle occurs when civil servants are pressured in low growth environments to capture additional income. Through childcare, tutoring, consulting, investing in companies, property ownership or full-fledged business sidelines.
Prince Edward Island has no legislation to address this public conflict of interest, outside elected officials. MLA’s must place assets in a blind trust; but there is nothing preventing senior bureaucrats or their spouses from engaging in the open marketplace or competing with Industry. Should there be, a subject for public discourse.
Behaviour is predictable. Small impacts to public policy are only measured in the synapse of an election cycle, but consequences have "longer legs." From public sector side hustles to low income housing to foreign economic inflows; we need or governance engines to consider a longer view on impacts, and ensure our economic foundations are sustainable and productive.
Blake Doyle is The Guardian’s small business columnist.