Economy
In the 'Star Wars' Economy, One Thing Doesn't Pay – Financial Post
By Adam Minter
(Bloomberg Opinion) — Junk is surprisingly pervasive in “Star Wars,” playing an understated role in nearly every film in the series. In “The Phantom Menace,” we meet young Anakin Skywalker, the future Darth Vader, working at a small electronics scrap yard and repair shop. In “A New Hope,” Luke Skywalker’s uncle buys R2-D2 and C-3PO from a group of Jawas, a species that drive massive, sand-crawling junk trucks. The recently released “Rise of Skywalker” is largely a coming-of-age story for Rey, the last of the Jedi, who spent her youth scavenging electronic scrap on Jakku, a remote outer planet.As a third-generation descendent of earthbound scrap-metal recyclers, I’ve subjected myself to repeated “Star Wars” viewings (even of the bad films), partly just to spot all the junkyard tidbits. Over the years, I’ve developed a theory or two about the waste and recycling economy in the series, and enjoyed sharing it with (primarily) other junkyard descendants. But in 2018, I realized there might be a larger audience for these insights.That year, China — for decades the world’s biggest importer of recyclables — started imposing stringent restrictions on what recycled stuff it would still accept from overseas. In the aftermath, prices for recyclables dropped steeply, raising costs and reducing profits for businesses around the world.Alas, “Star Wars” doesn’t offer any advice on how to find new markets for used plastic detergent jugs. And no, Rey can’t conjure the Force to boost the price of used cardboard boxes. But if you watch the films carefully, they have a good story to tell about turning waste into something that people might want — and, even better, buy.The “Star Wars” universe generates tons of trash, much of it recyclable. Yet for all the scrap yards and scavengers, you see very little actual recycling. Mostly, the metal, plastic and paper seems to get tossed out with the trash. My favorite example occurs in “The Empire Strikes Back.” At a crucial moment, an Imperial star destroyer dumps stadium-sized chunks of metallic garbage into space before jumping to hyperspace (this, according to Han Solo, is Imperial protocol). From an earthbound perspective, this is commercial suicide: Metals are the world’s most recyclable materials, and even villains know there’s money to be made in selling them.But a similar pattern repeats throughout the series. In “The Force Awakens,” early scenes on Jakku are dominated by the wreckage of an immense star destroyer. It’s reminiscent of the huge seagoing vessels that are run onto the beaches of India, Bangladesh, and Pakistan, then disassembled by hand and recycled in a matter of months — down to the individual screws. Crash a star destroyer in Alang, India, one of the world’s hubs for beaching and recycling ships, and pieces of it will be on sale in local markets by lunchtime.The reason for this seemingly irrational behavior is that the “Star Wars” universe doesn’t suffer from a scarcity of resources. There are dozens of mining outposts mentioned in the series, and there always seems to be another planet waiting to be exploited. In a galaxy that enjoys such surpluses, recycling won’t save much money. And the Empire, with its massive spending on planet-destroying weapons like the Death Star, doesn’t seem overly concerned about the environment.So what, then, is the business model that supports so many junkyards and scavengers? Rey, the Jawas, and everyone else who scavenges in the series recognize that there’s more value in a working gadget or spare part than in the raw materials that constitute them. The value is in the energy, engineering and manufacturing required to make the stuff. So, for example, that crashed star destroyer on Jakku isn’t stripped for metal; instead, we see Rey risk her life to scavenge it for reusable components that she can sell. Characters from Chewbacca to Luke Skywalker later demand her recovered parts for the devices and ships that they’ve learned to repair on their own.That business model wouldn’t work for plastic recyclers here on Earth. But the so-called e-waste industry — a category that includes everything from used smartphones to server racks — is rapidly diversifying into business models that look very similar to those practiced by Rey and the Jawas. At a time when recycling markets are depressed, these businesses need a new revenue stream. So rather than trying to recover raw materials that aren’t financially attractive at the moment, they’re seeking out whole gadgets and the parts within them.Robin Ingenthron, the head of Good Point Recycling, tells me that his company was making about $60 a week selling gadgets for reuse out of its scrap pile in 2015. As commodity prices fell, he reoriented the business to extract parts from old televisions and better identify the reusable gadgets already on offer. Today, sales of reusable stuff account for more than $50,000 a month, and around a third of the company’s revenue. Sims Recycling Solutions Inc., one of the world’s biggest electronics recyclers, has steadily shifted away from its traditional shred-and-recycle model to incorporate more reuse and refurbishment in recent years. Others are going even deeper, recovering specific chips from motherboards for reuse.This might come as a surprise to earthly environmentalists. But in the “Star Wars” universe, it’s the way business has always been done. In this respect, at least, the series may offer a model that works just as well here as it does in a galaxy far, far away.
To contact the author of this story: Adam Minter at aminter@bloomberg.net
Economy
Opinion: Canada's economy has stagnated despite Trudeau government spin – Financial Post
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Growth in gross domestic product (GDP), the total value of all goods and services produced in the economy annually, is one of the most frequently cited indicators of economic performance. To assess Canadian living standards and the current health of the economy, journalists, politicians and analysts often compare Canada’s GDP growth to growth in other countries or in Canada’s past. But GDP is misleading as a measure of living standards when population growth rates vary greatly across countries or over time.
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Federal Finance Minister Chrystia Freeland recently boasted that Canada had experienced the “strongest economic growth in the G7” in 2022. In this she echoes then-prime minister Stephen Harper, who said in 2015 that Canada’s GDP growth was “head and shoulders above all our G7 partners over the long term.”
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Unfortunately, such statements do more to obscure public understanding of Canada’s economic performance than enlighten it. Lately, our aggregate GDP growth has been driven primarily by population and labour force growth, not productivity improvements. It is not mainly the result of Canadians becoming better at producing goods and services and thus generating more real income for their families. Instead, it is a result of there simply being more people working. That increases the total amount of goods and services produced but doesn’t translate into increased living standards.
Let’s look at the numbers. From 2000 to 2023 Canada’s annual average growth in real (i.e., inflation-adjusted) GDP growth was the second highest in the G7 at 1.8 per cent, just behind the United States at 1.9 per cent. That sounds good — until you adjust for population. Then a completely different story emerges.
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Over the same period, the growth rate of Canada’s real per person GDP (0.7 per cent) was meaningfully worse than the G7 average (1.0 per cent). The gap with the U.S. (1.2 per cent) was even larger. Only Italy performed worse than Canada.
Why the inversion of results from good to bad? Because Canada has had by far the fastest population growth rate in the G7, an average of 1.1 per cent per year — more than twice the 0.5 per cent experienced in the G7 as a whole. In aggregate, Canada’s population increased by 29.8 per cent during this period, compared to just 11.5 per cent in the entire G7.
Starting in 2016, sharply higher rates of immigration have led to a pronounced increase in Canada’s population growth. This increase has obscured historically weak economic growth per person over the same period. From 2015 to 2023, under the Trudeau government, real per person economic growth averaged just 0.3 per cent. That compares with 0.8 per cent annually under Brian Mulroney, 2.4 per cent under Jean Chrétien and 2.0 per cent under Paul Martin.
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Canada is neither leading the G7 nor doing well in historical terms when it comes to economic growth measures that make simple adjustments for our rapidly growing population. In reality, we’ve become a growth laggard and our living standards have largely stagnated for the better part of a decade.
Ben Eisen, Milagros Palacios and Lawrence Schembri are analysts at the Fraser Institute.
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Economy
Federal budget is about ensuring fair economy for ‘everyone’: Trudeau – Global News
Delivering remarks to his Liberal cabinet during a caucus meeting on Wednesday, Prime Minister Justin Trudeau emphasized that the newly-announced federal government is intended to help create a fair economy for “everyone” in Canada, particularly those from Millennials and Gen Z.
Economy
Russia to grow faster than all advanced economies says IMF – BBC.com
An influential global body has forecast Russia’s economy will grow faster than all of the world’s advanced economies, including the US, this year.
The International Monetary Fund (IMF) expects Russia to grow 3.2% this year, significantly more than the UK, France and Germany.
Oil exports have “held steady” and government spending has “remained high” contributing to growth, the IMF said.
Overall, it said the world economy had been “remarkably resilient”
“Despite many gloomy predictions, the world avoided a recession, the banking system proved largely resilient, and major emerging market economies did not suffer sudden stops,” the IMF said.
The IMF is an international organisation with 190 member countries. They are used by businesses to help plan where to invest, and by central banks, such as the Bank of England to guide its decisions on interest rates.
The group says that the forecasts it makes for growth the following year in most advanced economies, more often than not, have been within about 1.5 percentage points of what actually happens.
Despite the Kremlin being sanctioned over its invasion of Ukraine, the IMF upgraded its January predictions for the Russian economy this year, and said while growth would be lower in 2025, it would be still be higher than previously expected at 1.8%.
Investments from corporate and state owned enterprises and “robustness in private consumption” within Russia had promoted growth alongside strong exports of oil, according to Petya Koeva Brooks, deputy director at the IMF.
Russia is one of the world’s biggest oil exporters and in February, the BBC revealed millions of barrels of fuel made from Russian oil were still being imported to the UK despite sanctions.
Away from Russia, the IMF downgraded its forecasts across Europe and for the UK this year, predicting 0.5% growth this year, making the UK the second weakest performer across the G7 group of advanced economies, behind Germany.
The G7 also includes France, Italy, Japan, Canada and the US.
Growth is set to improve to 1.5% in 2025, putting the UK among the top three best performers in the G7, according to the IMF.
However, the IMF said that interest rates in the UK will remain higher than other advanced nations, close to 4% until 2029.
The group expects the UK to have the highest inflation of any G7 economy in 2023 and 2024.
Chancellor Jeremy Hunt said the IMF’s figures showed that the UK economy was turning a corner.
“Inflation in 2024 is predicted to be 1.2% lower than before, and over the next six years we are projected to grow faster than large European economies such as Germany or France – both of which have had significantly larger downgrades to short-term growth than the UK,” he said.
Conflict in the Middle East
Economists at the IMF warned that if the Israel-Hamas conflict escalates further in the Middle East it could lead to rising food and energy prices around the world.
Continued attacks on ships in the Red Sea and the ongoing war in Ukraine could also affect the so far “remarkably resilient” global economy, it said.
A potential spike in food, energy and transport costs would see lower-income countries hardest hit, it added.
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