The Population Ponzi Scheme

Artificially increasing the population of a country like Canada is a kind of Ponzi scheme in which existing citizens live off the credit created through new family formations. As long as more and more families are formed, more credit created and more homes built and furnished, existing workers can continue to make money at the over-production of common goods.

If the population tap were ever turned off, however, the economy would collapse because the credit creation cycle would be broken. As the economy slowed, existing homeowners would lose their jobs and would default on their mortgages. With new home construction at an end, construction companies would go bust, forest industries would shut down, schools would be closed and municipalities would be hard pressed to find any tax dollars. You would get, on an even larger scale, the same result as the sub-prime mortgage mess in the United States. In short, you would get a depression.

More important for the middle class would be that the annual increase in their home values would end and they would no longer be able to use their home as their primary investment vehicle.

Well, you say, keep priming the pump, keep welcoming hundreds of thousands of newcomers to Canada each year and we can just keep this money-making bubble up in the air.

Well, yes, except for the fact that a) there is an absolute limit to growth, even in Canada and b) no existing infrastructure ever gets fixed or upgraded because all the available funds are used on new construction. Does this ring a bell? Sound familiar?

Try driving from coast-to-coast in Canada on the country's inter-provincial superhighway. You can't; there isn't one. Try driving to Vancouver island on the great bridge-tunnel complex linking Victoria to Vancouver. You can't; hasn't been built. Try taking a high-speed train from the country's largest city to its second largest, or to the nation's capital. Nope. Hasn't been built. The north? Can't get there either.

In fact, every single piece of existing infrastructure in Canada is currently held hostage to population growth. We can't move ahead, because the goal posts keep moving.

Here's another example. In Italy, the government built a sewer system completely around Lake Como and then put an expressway in the mountains above the coast road where it couldn't be seen, or more importantly, heard by existing residents. The cost was prodigious but the result was delightful. Not only were the quaint waterside towns preserved, the water quality of the lake was dramatically improved. Above the towns, tens of thousands of cars passed by noiselessly on their way to Switzerland or Milan.

Now look at the Okanagan, a similar lake, in BC. Not only is there no littoral sewage system, the access highways are all out in the open. Unlike Italy where they are six lanes wide, they are two-lanes wide. So, not only do we pollute the lake with sewage from tile beds, we can't build on the water's edge or have piers and waterside walkways. We have the worst of both, they have the best of both.

How can Italy do what we can't? Because Italy isn't constantly building new homes for new residents, that's why. There are plenty of construction companies and employees in Kelowna, but they're all working in new home construction for new residents. None of them is building water-edge sewage systems. None of them is building expressways blasted inside mountains.

One more example. In 1960 I rode my Triumph T-110 out to BC from Ontario, traveling through Lethbridge, over the Crowsnest Pass, through Trail and up the Rossland hill on the Schofield Highway. It's a remarkable climb from the river valley to Canada's highest city, a great ride on a bike. It's still a remarkable climb because the highway hasn't been improved one bit in 48 years! If anything the pavement is worse now than it was then. So much for progress.

We have our priorities all wrong. We're making the wrong products and building the wrong structures. Only when we dismantle this population Ponzi scheme will we be able to make Canada great.

The Canadian economy should have two goals, a) improving existing infrastructure, including existing homes, schools, hospitals, city centres and b) export. If a product or service doesn't meet those two criteria, it shouldn't get low-cost financing.

Low cost financing? That's credit. That's what we currently give new families who build new homes. It's a stupid policy and it's ruining the country.

But not one political party will call a stop to it. No one will say, the emperor has no clothes.

Of course it will end one day; Ponzi schemes always do.