Comment 75250

By A Smith (anonymous) | Posted March 16, 2012 at 12:21:54

>> The national unemployment rate in Jamaica is around 12.4%; in Canada, it's 7.4%.

Jamaica's large current account deficit (average 7% for the last twenty years) is the culprit. When this cash leaves the country, it isn't available to be spent creating jobs in Jamaica.

To counter this cash exodus, the Jamaican government needs to add net savings to the economy. They could do this by encouraging more exports/trade and/or they could run larger deficits.

If the savings level of the Jamaican private sector gets big enough, it will eventually be spent and this will create lots of jobs.

>> And also, a lot of those countries are doing just great. Example:

Netherlands: 226,503
Switzerland: 154,063
United Kingdom: 144,338
Norway: 131,220

Netherlands, Switzerland and Norway all run large current account surpluses. That means that cash is flowing into their economies, creating higher incomes, spending levels and job creation.

As for the UK, the opposite has happened. Cash is flowing out of the country, driving incomes down, driving tax collections down and increasing the national debt from 44.5% to 80%, since 2008.

Canada is also running a current account deficit (avg 3% last two years), which is draining savings from the economy. So far this hasn't killed demand, because people are using their homes as ATM's.
However, because these debts have to be paid back, this will end as rates get close to zero.

If the feds were smart, they would recognize this and add savings to the Canadian economy before we get a spike in unemployment. The ONLY way to do this is to run much larger deficits, either through increased spending and/or lower taxes. Unfortunately, our leaders are more focused on the imaginary federal deficit (can print money) than the real household deficit (can't print money).

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