Recession Economics 101

Alberta is one of the few places you can go from the bottom to the top.

Arrival

Before arrival in 2006  I examined the austere government under Ralph Klein and I decided this is where I will engineer my place towards the top of Alberta’s trickle: oil and gas.  Over the years, I have watched fiscal policy tilt left each year, and when the oil crash happened –  human nature dictates self-preservation.  The only way politicians are elected is if they pander to the majority.
Lesson in that.

Don’t be at the end of of the trickle

Not everyone can be a producer or service producers. It is easier to be a net consumer – but this does nothing to improve our real-world production. On a micro level, my business produces units of processed accounting. Whatever I spend that does not directly allow me to produce more, is consumption.  Similarly, on a macro level real tangible production that grows the economy is producing something that others want – for Alberta it has been oil, for Switzerland: pharmaceuticals, watches etc. Ultimately, everything else only exists because SOMEONE somewhere is producing something.  While consumption in Alberta continues to overtake production, we will continue this downward spiral.  Increases in government spending which our governments borrows from future generations keeps the majority from the pain of living beyond their means – the piper will be paid.  The more government interferes the longer the inevitable outcome will be. For most, it will get worst before it gets better.  Lesson: don’t rely on things you can not control.

The recovery

By sacrificing productivity for a period of time, time and resources  can be invested.  Innovation exponential increases my end productivity.  This is only possible by under-consumption. By under-consuming one can still feed themselves while they are not directly producing. Here is how the government does the opposite: Artificially low-interest rates make the housing market seem stable (fake accomplishment) – keeping overpriced houses seem affordable.  Over consumption of buying more than what you need, will keep you from being able to invest your precious time/resources (now being consumed to service bigger mortgage, lifestyle, etc.) from opening your own business.  The only way real economic improvement will happen is if this happens on a macroeconomic level.  It is a mistake to think that logic changes from simple household economics.

Which one are you?

  1. Pessimist = Complain about no jobs.
  2. Optimist = Hope the job market improves.
  3. Winner = Creates jobs – or at least one for yourself – follow framework below and throughout blog.

Fun facts

  • Alberta is a monster economy and even during a recession Alberta’s per capita GDP exceeds $80K – on par with Switzerland’s and nearly DOUBLE the rest of Canada and Europe. It takes a million more Norwegians to generate the same money as Albertans.
  • If you live in Edmonton there is money everywhere. PCL Construction generated record revenues of $8.5 billion in 2015 and is on track to reach $9 billion this year.
  • The Swiss have a wealth-based taxation system that is easier on the average worker. While the Alberta system is supposed to be progressive – up to 48% for the highest bracket, business owners can escape these taxes with strategic planning. For example, in 2016, a well executed strategy would have someone pay $16,000 in taxes net of Canada Child Benefits on a $260,000 income, or a tax rate of 6%.  This is a 10% less than what a single income family with 2 children would have to pay on a $50,000 wage.
  • Prior to 2015- 90% of my income came from oilfield.
  • I proudly can say I have never had to axe any employees in this recession and I have rejected all the requests to outsource bookkeeping to India. In my tradition of doing the opposite, I continue to give raises and bonuses.
  • Most people have no political pull so speaking of politics this far from election does nothing.
  • No government can save you. The only way to improve your life is the harder task of honing your skills.
  • Understand that big government will always have inefficiencies, no big deal, business as usual.  Smart ones are taking the money and laughing.

Recommended Framework

  1. Develop and exercise your rare and valuable skills.
  2. When you are ready “productify” your service. Don’t charge per hour, make clear-cut product offerings or sell something you know better than most.
  3. Sell either business to business or online or both. If you sell direct to consumers, remember who spends the money *hint: it’s not necessarily the people who earn it.
  4. Ritualize everything to focus on what’s important
  5. Prioritize efficiency = value created/time spent creating value
  6. Get the right people on board and the wrong ones out.
  7. Hire 2, work them like 4 and pay them like 3.
  8. Don’t try to please everyone. Most people are not worth it. I lose bad customers and obtain good ones. To be polarizing is a good problem to have.
  9. Buy fixer-uppers if you can realistically expect to double or triple your investment (do not count on capital appreciation if you are borrowing money!)

Pour Conclure

Control what you can control and ignore the rest. Manipulate the system to suit your needs. Our new government wants to spend billions on infrastructure, so get your self a piece of the pie, and employ our services so will let you hold on to as much of your hard-earned money as possible.  The smaller percentage of taxes we pay is still our wonderful contribution to a great place I am proud to call home!

The triangle gets smaller on the way up so sooner or later we will meet!

You will receive a gift card equal to 1 month of service of your referral. Up to to $600 for every successful sign up through your share or like. Save a business taxes today.
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http://www.christianthut.com/

As a result of improved efficiency – made possible by savings, innovation and investment – our prices are down and the benefits of THUT are available to a wider pool of entrepreneurs.

What was once a luxury for Edmonton’s elite is now available to all. Quality, reliability, and precision: THUT is a reflection of 21st-century Switzerland. Like all things Swiss, our customers rely on us in the long-term. Generations ago we decided that it would be easier to explain price one time than it would be to apologize for mistakes forever.Our offerings are worth what it can do for you and not what you have to pay for it. It is better to pay a little more than you expected than less than you should when dealing with something as serious as taxes. Another Edmonton accountant could cost you millions of dollars more.
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