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When political pronouncements go against economic realities

August 2023

The Barrie Advance recently reported that a proposed affordable housing complex, located municipally at 115 Bayfield Street, has been put on hold, citing “rapid increases in construction costs and interest rates,” along with difficulty in securing additional financing to cover the current shortfall (“Proposed affordable housing complex on hold,” Chris Simon, Barrie Advance, 24 August). This highlights a harsh reality for all the politicians, of all political stripes, that their declarations that they will get houses built, particularly “affordable” housing, are subject to the reality of economics.

Capitalism, for all its faults, has incredible benefits that allow societies to grow and prosper, socially, economically and intellectually. Profit isn’t a dirty word. When a business makes money, the owners make money too, along with providing capital for the business to upgrade and expand their operations, creating more jobs and spin-off benefits. What critics of profits going to business owners fail to acknowledge is that those owners aren’t always an uber-rich, top-hat wearing, cigar-smoking person. Frequently, the owners are shareholders from a wide variety of economic backgrounds, including financial institutions overseeing pension funds, education savings plans, retirement savings plans and so on. So, when businesses make money, even the average citizen can make money.

As we’ve all seen lately, the economic down-turn can have the opposite effect on those investments. Like many people, I have lost several thousands of dollars in both my RRSPs and in my daughter’s RESPs. Luckily, I don’t need either right now, so there is time for them to rebound. It’s normal that markets will go up and down, same with business profits, but continually losing money, year after year, is never good for anyone.

The point is that no business is going to involve themselves in a venture if they aren’t able to raise the capital to proceed, and they certainly won’t proceed if they don’t think they can make a profit, regardless of whether they are a for-profit or a not-for-profit business. For those who don’t know the difference, not-for-profit simply means that any profits generated by the business are automatically re-invested into the business, rather than paid to shareholders. They still need to generate a profit to stay operational, though. I’m not an economist, nor business savvy (I’m a creative type), but even I understand that much about economics and business.

Unless the governments get into the home construction business, something that we all know current governments would turn into a corruption-riddled, money-eating blast furnace of a financial disaster, all the pronouncements of “houses, houses, houses” will not see one additional family with a roof over their heads if the economic realities go against it.

While Trudeau’s fiscal and immigration policies aren’t the only reason for inflation and the housing shortage, they certainly haven’t helped.

Sources: Cost hikes put planned Barrie affordable housing complex on hold (simcoe.com).

About the author

Bruce Forsyth

Bruce Forsyth served in the Royal Canadian Navy Reserve for 13 years (1987-2000). He served with units in Toronto, Hamilton & Windsor and worked or trained at CFB Esquimalt, CFB Halifax, CFB Petawawa, CFB Kingston, CFB Toronto, Camp Borden, The Burwash Training Area and LFCA Training Centre Meaford.

Permanent link to this article: https://militarybruce.com/when-political-pronouncements-go-against-economic-realities/

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