Democracy matters in and of itself. I believe this deeply. But I also believe deeply that a strong democracy is critical to building and sustaining a strong economy.
My conviction is rooted in the United States. I believe our democratic system, however imperfect, is central to our economic strength as the largest economy in the world, with the deepest and most liquid capital markets and the global reserve currency.
My conviction is bolstered by economic research, including a recent study finding that democratization increases gross domestic product per capita by about 20% in the long run, and by what I have observed and studied throughout my life.
But democracy is now under threat. At home, years of attacks on our democratic norms and institutions reached an unprecedented extreme on Jan. 6, 2021, with the attempt to block the peaceful transition of power that is at the heart of our (and any other) democracy.
Russian President Vladimir Putin’s authoritarian regime continues to devastate Ukraine’s future and undermine the rules-based international order. We see democratic backsliding and repression increasing around the world.
Weakening democracy undercuts economic strength
Many question whether democracy can deliver. Some even go so far as to argue that chipping away at democracy is a fair or even necessary trade for prosperity.
Let me be crystal clear: They are wrong. Undercutting democracy undercuts a key foundation of sustainable and inclusive growth.
In robust democracies, free speech and free elections means of voicing demands between elections – from public comments to protests and the free press – hold government accountable. This can help government drive economic policymaking that meets people’s needs, such as investments in public goods like health and education, and correct course over time.
Freedom to participate in the labor force drives growth by bringing more people into the economy, while the free flow of knowledge and ideas drives entrepreneurship and innovation.
And the rule of law, upheld by strong and independent institutions, gives individuals and firms the predictability and confidence they need to invest and grow their businesses.
In authoritarian regimes, the absence of these democratic pillars undercuts economic growth.
In Russia, repression over decades has driven highly educated workers from the country, taking their skills, ideas and capital with them to launch some of the world’s leading startups not from Russia but from the United States and other jurisdictions.
China and Russia struggle because of authoritarian rule
Now, Russia’s brutal and unjust war against Ukraine is further damaging its economic outlook, with its people and businesses bearing the economic costs.
As for China, there is no denying that it has achieved a massive economic rise over the past few decades. However, the absence of the pillars I have described, including censorship and limits on transparency and coercive actions against firms, will continue to pose challenges as it navigates transitioning to an advanced economy.
This is not to say that any country fully lives up to the promise of democracy, and ours is no exception.
America’s working families have faced challenges for far too long − from communities hollowed out by deindustrialization to stagnating real wages. We have seen a rise in deaths of despair. This has led some to question whether our system of government still works for them and their communities.
Since the start of this administration, President Joe Biden and I have worked to show that democracy can, in fact, deliver. We took office in the depth of the recession brought on by the pandemic and responded by providing funding unprecedented in its scale and in its flexibility, designed to reach every city and town and meet the needs of every American.
Our intervention saved lives, kept people at their jobs and in their homes, and allowed businesses to stay open. America bounced back quickly, with a recovery that was both historically fast and historically inclusive, reaching communities that for too long had been left out of America’s economic success.
Now, we are designing and implementing President Biden’s Investing in America agenda so that no community or worker is left out or left behind. This means spreading economic opportunity beyond the coasts and wealthy enclaves and making sure that workers without college degrees can get ahead.
Though we have much more to do, the results are promising − from infrastructure funding disproportionately benefitting lower-income states to the vast majority of clean energy investments since the passage of the Inflation Reduction Act being announced in counties with lower college graduation rates and lower median incomes.
And that same commitment to democracies that deliver has shaped our diplomacy and foreign assistance around the world.
I feel immensely fortunate to have been born and spent my life in America and to have benefited from the opportunities American democracy provided me. But there are too many people across this country and around the world who have not had such opportunities. That is not reason to question the value of democracy.
At this critical moment, I believe we have no choice but to do everything we can to protect it so that it can deliver, for Americans and for people elsewhere.
TORONTO – Canada’s main stock index was higher in late-morning trading, helped by strength in energy stocks, while U.S. stock markets also moved up.
The S&P/TSX composite index was up 34.91 points at 23,736.98.
In New York, the Dow Jones industrial average was up 178.05 points at 41,800.13. The S&P 500 index was up 28.38 points at 5,661.47, while the Nasdaq composite was up 133.17 points at 17,725.30.
The Canadian dollar traded for 73.56 cents US compared with 73.57 cents US on Monday.
The November crude oil contract was up 68 cents at US$69.70 per barrel and the October natural gas contract was up three cents at US$2.40 per mmBTU.
The December gold contract was down US$7.80 at US$2,601.10 an ounce and the December copper contract was up a penny at US$4.28 a pound.
This report by The Canadian Press was first published Sept. 17, 2024.
OTTAWA – Canada’s inflation rate fell to two per cent last month, finally hitting the Bank of Canada’s target after a tumultuous battle with skyrocketing price growth.
The annual inflation rate fell from 2.5 per cent in July to reach the lowest level since February 2021.
Statistics Canada’s consumer price index report on Tuesday attributed the slowdown in part to lower gasoline prices.
Clothing and footwear prices also decreased on a month-over-month basis, marking the first decline in the month of August since 1971 as retailers offered larger discounts to entice shoppers amid slowing demand.
The Bank of Canada’s preferred core measures of inflation, which strip out volatility in prices, also edged down in August.
The marked slowdown in price growth last month was steeper than the 2.1 per cent annual increase forecasters were expecting ahead of Tuesday’s release and will likely spark speculation of a larger interest rate cut next month from the Bank of Canada.
“Inflation remains unthreatening and the Bank of Canada should now focus on trying to stimulate the economy and halting the upward climb in the unemployment rate,” wrote CIBC senior economist Andrew Grantham.
Benjamin Reitzes, managing director of Canadian rates and macro strategist at BMO, said Tuesday’s figures “tilt the scales” slightly in favour of more aggressive cuts, though he noted the Bank of Canada will have one more inflation reading before its October rate announcement.
“If we get another big downside surprise, calls for a 50 basis-point cut will only grow louder,” wrote Reitzes in a client note.
The central bank began rapidly hiking interest rates in March 2022 in response to runaway inflation, which peaked at a whopping 8.1 per cent that summer.
The central bank increased its key lending rate to five per cent and held it at that level until June 2024, when it delivered its first rate cut in four years.
A combination of recovered global supply chains and high interest rates have helped cool price growth in Canada and around the world.
Bank of Canada governor Tiff Macklem recently signalled that the central bank is ready to increase the size of its interest rate cuts, if inflation or the economy slow by more than expected.
Its key lending rate currently stands at 4.25 per cent.
CIBC is forecasting the central bank will cut its key rate by two percentage points between now and the middle of next year.
The U.S. Federal Reserve is also expected on Wednesday to deliver its first interest rate cut in four years.
This report by The Canadian Press was first published Sept. 17, 2024.
FREDERICTON – New Brunswick‘s finance minister says the province recorded a surplus of $500.8 million for the fiscal year that ended in March.
Ernie Steeves says the amount — more than 10 times higher than the province’s original $40.3-million budget projection for the 2023-24 fiscal year — was largely the result of a strong economy and population growth.
The report of a big surplus comes as the province prepares for an election campaign, which will officially start on Thursday and end with a vote on Oct. 21.
Steeves says growth of the surplus was fed by revenue from the Harmonized Sales Tax and federal money, especially for health-care funding.
Progressive Conservative Premier Blaine Higgs has promised to reduce the HST by two percentage points to 13 per cent if the party is elected to govern next month.
Meanwhile, the province’s net debt, according to the audited consolidated financial statements, has dropped from $12.3 billion in 2022-23 to $11.8 billion in the most recent fiscal year.
Liberal critic René Legacy says having a stronger balance sheet does not eliminate issues in health care, housing and education.
This report by The Canadian Press was first published Sept. 16, 2024.
