Outsourcing has become a popular trend these days for obvious reasons, and I fully support these business decisions; as explained by my blog on outsourcing. As our economy progresses toward a service, R&D and knowledge based economy; we must adapt our economic indicators to accurately represent our underlying economy. Our new "shadow economy" will be the driving force in moving the 1st world's standard of living above and beyond what we experience today.

We as a thriving society cannot afford to resist the natural progression to a more efficient and productive economy. This will be accomplished through allowing outsourcing when it makes economic sense. If it's a more effective use of funds to manufacture in North America, so be it; likewise with Asia and the rest of the world. This new economy at times can be a tough sell as most are not used to a society without significant numbers of people working in the manufacturing sector. Looking back in our history, we see before the industrial revolution we had the vast majority of people working in mills, construction of buildings, mining and of course farming. Today, very few people actually work in these roles; not because people were being fired or put out of work, but because their fields became more efficient and cheaper with trade and automation. If we look at the current status of the US economy, we see the following breakdown of labour; services 34%, retail trade 19%, government 16%, manufacturing 10%, finance/insurance/real estate 6%, wholesale trade 5%, transportation/utilities 5%, construction 5%, mining. This article explains how the US economy may be stronger than most think and how current economic indicators are not representing our new economy accurately. Many firms these days are not increasing capital spending, yet have introduced substantial R&D budget increases and future investment. The top 10 biggest US corporations including ExxonMobil, Proctor & Gamble, GE, Microsoft, and Intel; have increased R&D budgets by 42% since 2000. What we should be benchmarking is corporate investment in future development and R&D accomplishments. As products like the iPod get developed here, the production of these units will be done overseas; skewing true productivity between nations.

Investment in the future isn't just a trend for US corporations, but has been a key focus for the Bush administration. Bush doesn't normally get many praises, but this is one area his policies are having a real positive impact (unfortunately the press doesn't like to look at the positives). This article explains the accomplishments of Bush's education policies; increasing education funding by a staggering 40% and improving scores across the board, including closing the minority gap. If it weren't for September 11th and the Iraq war, Bush's legacy would have been 'the education president', actually you may remember September 11th where he was reading to a group of school children.

There are a lot of great things to come as we continue to progress towards an efficient and productive economy based on education, knowledge, and research and development. The US is indeed making investments for future growth and current economic indicators do not represent the whole economy.

Harper and his cabinet were sworn in the other day; I've felt compelled to give my take as it has attracted some negative attention. The cabinet has been described as "a clear nod toward quite a pragmatic, centrist style government", "the old grassroots Reform party is dead, dead, dead", "a final transition away from the Reform party". Harper has taken back his original Reform party, which had been taken over by social conservatives (caused him to leave the party).

The cabinet represents a highly experienced and talented team of people from all areas of the country. Unlike Martin's cabinet full of no-name leftovers from the Chretien massacre; Harper's people are well known and high profile. It's no wonder Stronach left the party as the talent in this new party is immense and she just wasn't getting time to speak or make any party decisions. I bring up Stronach as people have been quick to compare Stronach to Emerson, the LIberal turned Conservative after the election. There is a clear distinction between Stronach and Emerson; raw ambition vs. collaboration. Emerson was a star candidate, sat as a minister in Martin's cabinet and was proud in waving the Liberal flag. He was obviously not impressed with how the Liberals postioned themselves this election (proposing no new/relevant policy, unjustified smear campaign) and with the void in leadership; it's no wonder he left, I'm surprised more didn't change sides.

This brings us to the other touchy decision; Michael Fortier. This decision was more controversial as he was not elected, yet will represent an elected position. While I think this decision was a short term mistake; on the long term it may become a great move by Harper. The Conservatives are now a formidible force in Quebec, but no representation in Canada's second largest city; Montreal needs a say within the government. This is not much different than Josee Verner who sat in Harper's shadow cabinet, raising her profile and allowing her to break into Quebec with a seat. Michael Fortier will represent Montreal well, will be a talented minister and maintain accountable through his senate nomination. He was the president of the Progressive Conservative party and ran for the leadership of the party.

Great team, now lets get going on these promises!

I watched this documentary on CBC Newsworld the other day where some interesting points were made with regards to global warming and the greenhouse effect.

Many of you are familiar with the hockey-stick curve as it was the model developed and accepted by those who attended the conferences in Rio and Kyoto. This group of well respected scientists have proven this curve as inaccurate and our global temperature increases are a natural trend, nothing different than what had occurred before mankind's consumption of fossil fuels. Through the documentary they explain the earth’s surface temperature is rising, but the atmospheric temperature is not growing close to the rate some indicate. The higher surface temperature is likely due to our growing cities and little to do with the greenhouse effect itself. This is why we see temperatures in cities significantly higher than surrounding rural areas and why surface temperature measurements are so erroneous.

The greenhouse effect while it receives a lot of bad press these days, is actually required for our existence; through water vapour and clouds, and not just CO2. The earth has ways to cool itself in ways no climate model can explain, the earth’s many ice ages for example. Looking at our planet’s historical temperatures and CO2 levels, even in a time where we are consuming fossil fuels like no other, the levels are not out of the ordinary or even close to the highest.

It was interesting to see that all the hype over the greenhouse effect and global warming could be unjustified. I like seeing results like this such that we can focus our energy and resources at reducing smog and other chemicals (things that actually affect people’s health) instead of focusing on reducing a gas which could have no impact on our lives. I am a huge advocate of sustainable growth, but we need to understand what will limit our sustainability; CO2 emissions may not.

If you can get your hands on this documentary; I highly recommend it.

Being an economic optimist, I prefer to focus on the good and not the bad when considering a country's economy. Many elements of the economy are based on consumer confidence, business optimism and the feeling of our governing bodies. This is precisely why most media outlets around the world take a bull stance on the economy, and why stock analyst recommendations are 80-90% buy and hold. Reading the Toronto Star Business section I came across an interesting little article hidden on page 6 and only 5 sentences long. Finally, a small dose of economic reality; these sorts of bearish comments are hard to spot in today's mass media.

The article points out a survey done by Ipsos Ried, and asked 250 of Canada's leading CEOs opinions on the economy. Forty percent (40%) of CEOs fear a "major economic downturn" over the next two years; up from about 15% the last couple years. The CEOs were then asked to identify the most serious issues facing Canadian businesses; 24% said taxes, 21% said the high dollar, 20% said lack of skilled workers. These issues are a difficult pill to swallow as we have been told the Canadian economy is doing great but there is a dark horse we must be aware of moving forward. Time to reduce taxation and maintain competitiveness with our first world counterparts, allow immigrants to use their skills within Canada and finally don't assume surpluses mean economic superiority, all it means is we are either not investing enough in the economy, or we are overtaxed and limiting our growth potential.