Peace, Order, and Not Wiping out the Middle and Working Class.

The Middle Class is an endangered species as is the Working Class, the people who once made things, and were thus the basis of our productive economy. For both groups, the discretionary income which formed the basis of our consumer society is on a curve that not only approaches zero, but with credit and inflation can cross well into negative territory.

It's not an original thought, but the production/manufacturing base of our economy is very likely not going to recover. Of course the Americans have been hit even harder than we have, which will compound our problems. Just saying we'll trade more with the Pacific Rim countries doesn't make it happen since geography does count.

This means a reduced tax base for governments, which means less services and/or more debt. That typically leads to more taxes as they try to wring more blood from the stones, which is a vicious circle of increased costs to businesses and individuals leading to less start-ups and innovation, as well as the flight of talent and capital to less oppressive regulatory locales.

Now, belt tightening and retrenchment can happen with reasonably clever government and there is some sign of that happening in Canada overall, although the power shift from Ontario to Alberta is noticeable. Ontario is a good example of the creeping collapse of the tax base, and here's the worm's eye view of how.

It's a one-two punch of taxes (HST) and energy costs. It can be hard to separate the other two, as anything the government does that costs you money is a tax in my books, but I'll try to maintain some separation.

Like any tax amalgamation (think GST) the price savings that are supposed to come to consumers are never passed on, thus the HST increased the cost of pretty much EVERYTHING in Ontario, gasoline in particular. Besides jacking the cost of personal transportation, this increases the cost of everything that needs to be transported which is, well, everything. So everything costs more, but most people aren't making more. This equals less spending of less disposable income which squeezes businesses, who are facing increased costs of their own.

Now for energy costs (as far as they can be separated from straight taxes), and Ontario will be the case in point. The Provincial government's "Green energy" agenda is hitting below the belt, and it also affects everyone. By subsidizing inefficient wind and solar projects this policy has raised electricity costs across the province.

Some of this is being realized (of course) belatedly by the provincial government, but my crystal ball for the future continues to function best as a paperweight or doorstop. One does not however need a clairvoyant to see unintended secondary and tertiary consequences; it just takes some thinking it through.

Idealists are by nature pretty much incapable of thinking past what they'd like to see happen, with dire consequences for us all. It's not even necessary to pull the precise outcome from something; if you can deduce a point where something bad happens due to "good intentions" you have a grasp of the process.

Going into 2011 I hope to be able to keep my family fed and the lights on, but like a lot of other people there won't be a whole lot else going on. Modest goals are the key to survival, as taking things in bite-sized chunks is sustainable, and should disaster befall a chunk or two, survivable. The idiots I've encountered who wished for $3/L gas may eventually get their wish, and if they do God help us all because the pie-eyed idealists in government will have hell to pay when the former middle class can't afford food.

First though, it'll flatten the working poor who are already being priced out of living space by rapacious condo development in many urban centres as well as ever-rising electricity and fuel costs. Can't have food riots here you say? Tax revolts and overstretched food banks and soup kitchens are more likely in the medium term, but there is still hope to avoid being pushed even that far.

You make your own luck with governments and I have some hope that things can still get better, at least at home. Another key to maintaining some control over your life is knowing that things can almost ALWAYS be worse than they are. We need leaders who can remember their mission statement: Peace, Order, and Good Government. Prosperous citizens are happy citizens, so I hope to see policies that encourage that in the New Year. The best of 2011 to anyone who still reads AotF.