Unemployment - Improving the state of the Canadian economy

Sometimes even the wisest people among us forget the very basics upon which wisdom is built.  One of the most powerful aspects of the study of economics is the mobility of labor.  The Canadian nation is built on this very principle – the principle of immigration.  All over the world people follow this rule – that is why they leave their place of birth and move across the world.  But once people move to Canada, they become stuck and their mobility evaporates.  What’s behind this phenomenon?

Macroeconomic theory states that if logic prevails people will migrate to places that offer them prosperity.

If the rule of mobility were true then rather than face unemployment Canadians would move to cities and provinces where work could be found.  Why is it that people prefer to endure hardship, unemployment, bankruptcy, anxiety and poor health rather than just make things easy?

Why is moving such a big decision?

Somehow making the move removes the barriers, both real and psychological and get people energized to get results.  When they make such a big move, everything else begins to seem easy.  Not only that, they are more willing to do whatever it takes.  The fact that there is no one around to see them start with small odd jobs and no criticism or judgement makes things easier.  They literally do whatever they must do in order to survive – which is something people don’t do when they are surrounded by well meaning friends and family – they don’t really do whatever it takes because they worry about what others will say.

For Canadians, one factor that creates immobility is home ownership.

The predominant majority of people around the world rent rather than own.  However in Canada, the statistics are the reverse.  Home ownership is relatively high.  One of the reasons people do not move is because this involves the potential selling of the home.  When the economy is bad, they feel that they will not get the right price for the house, or that if they sold they may never be able to own a house again.  This reasoning prevents them from taking the plunge.  What they don’t realize is that there is time value of money.  Everyday that they are unemployed or not realizing the maximum dollar value in the market for their skill set, they are wasting valuable time.  Time does not come back.  It is the same philosophy as airlines have for their seat sales, or hotels for room nights.  If I don’t get the maximum dollars that I can for my time today, then this day is gone for ever and will never come back and I would be a loser.

One last thing.  For some reason Canadians seem to believe in the adage “out of sight, out of mind”, rather than the adage their forefathers believed in “distance makes the heart grow fonder”.  Immigrants to Canada, went through incredible hardships, left their families behind for many years in an age when phones were unaffordable and the internet did not exist, yet those families did not fall apart, in fact they drew closer and pulled together.  Today, breaking up the family in order to achieve greater prosperity and a better life for the long run seem to be secondary objectives for Canadians who will not leave one province to go to another province that offers much more.

Where is the sense in this?  Not only would the economy of our homes improve dramatically but that of the country as well if we could just make rational decisions.

If you know of people who are not maximizing their full value, please encourage them to do so, you will be doing both Canada and them a favor.