I'm currently living in Tunisia, which does not allow currency to leave the country in any meaningful way. You can change a maximum of 10,000 TD at a time, equivalent to ~$5,000 USD, and if you did it many times, they'd probably stop letting you do so.
As the Tunisian economy reels from the crash of the tourism industry due to terrorism, all of the new startups are starting to cater to entrenched upper middle class Tunisians who's family money is stuck here. The policy kind of enforces saving money, and buys a bit of time for the economy if things go awry. It also creates a lot of animosity for the Tunisians who'd much rather have Euros to invest properly.
Economic policy is fascinating stuff. Any other fun stories out there?
The same on Morocco and politicians say so people who got money by corruption will not get them out, since here it's legally to not justify where you got your money from. So no need for money laundry.
The real reasons is just because it's not healthy for a developed economy who can't compete with the world to not monitor the ins and outs... Also we don't have a real currency but our is called Dirham and it's basically 40% USD and 60% EURO, They adjust it by time to time and change those values depends on how EU or US doing so if one of those currency crushed hard ours don't (It was 20% USD, and 80% EURO so relax my US fellas you're doing fine :P). And if you got caught trying to speak even like DH10 ($1) out of Morocco it's a serious crime (while you can take it in another currency, that's why you find Dirham only on Morocco).
Years ago I got my first credit card that world internationally (I tried 4 banks, it was just released, and they had too much technical issue AKA it's not working at all only one of them worked for me...) and it's capped at $1000 a year... you my think is nothing but it's like a dream for me... being able to get a couple of domains and servers is the dream.
You don't need it, you can do it legally on any bank or exchange office. Since getting money out is the illegal thing and not using another currency inside Morocco.
If you're a politician or with a bit of power you can get money out of Morocco easily. Even when politicians caught doing that (no foreign nationality but owning stuff outside of Morocco) newspaper write about them and they respond with stuff like I really needed that since I have to send my son to study there... TL;DR: law don't apply on them...
I think what he's asking is if there is some unofficial way to get money out.
If someone who is very affluent wishes to visit Paris or New York for two weeks, how would he or she go about taking enough money to rent a room in a luxury hotel?
One of the ways that there's also is money exchange, like someone who want to send money to Morocco and he is outside of Morocco.
Or you can just walk into a Spanish/Moroccan city (there's 2 on, on Africa... governed by Spain but both countries claim its their own) and deposit the money to a bank or something.
It's not like they are making it impossible for you, it's just impossible to do with on the way you are comfort with...
This situation is pretty much exactly how I can see cryptocurrencies continuing to exist, at least as a niche money movement option to dodge currency controls.
The UK had capital controls until the 1970s. I see the GBP far up there on the opposite side of the chart; presumably that represents all the money rushing into the property bubble.
I'm coming round to the belief that the big downside of free movement of goods/people/capital is the possibility of "sloshing": rapid change that capsizes the economy. Entire areas can dry up or become booms overnight. And because there isn't and can't be free movement of real estate to compensate, we get craziness in the property market.
Excess isolationism also makes the economy more vulnerable. For example, primary industries are more exposed by gluts in production flooding the market and driving down the value of goods, and shortages of domestically produced goods will obviously have a more severe impact on consumers.
Obviously no protectionist scheme is going to tax goods that it's market cannot produce, but there is always a tendency to put industry above consumer, and assymetric/mercantile style protections in place.
People often have intellectual debates about ideology/philosophy here, but nationalism is the real political force. If a government can be seen to steer its economy in the right direction, and its people feel well off compared to their neighbours, it will be popular, regardless of ideology, and regardless of how fairly it has treated other nations in trade negotiations.
Likewise, a state will inevitably favor free trade when it will profit over other states, and protectionism when it won't.
In the rare case when both states will benefit from an arrangement, there's usually some third party getting screwed, i.e.
I'm conflating capital controls with trade, but my point is more that they are often negotiated at the same time, and in the with the same ultimately selfish and unideological outlook.
How much damping is needed to stop the sloshing but still allow 'organic' free trade, the kind of free trade that lets industries build up but without the short term bubbles?
An aside UK property at the low end: the move from HA/Council rents to private rents (i.e. from around 350 to 750 per month outside the Great Wen) is going to make the current debate about livable wage interesting. Some Tories already coming round to rent cap/build for controlled rent.
This is why poorer countries tend to enact capital controls. Foreign capital has a tendency to flee all at the same time (for a safe haven like America), which is ruinous for the economy. There's something of a feedback loop there.
This is why some investors describe emerging markets as markets from which it is difficult to emerge in an emergency.
I've seen this article repeated in the NatPo[0], and more-or-less copied in the HuffPo[1], but no where else. I suspect this is mostly fearmongering. The US market is so much bigger than Canada's that most investment portfolio recommendations for Canadians include double-digit proportions of US equities and bonds. And if they are weighted towards energy, I can see why they'd shift south of the border.
Where would the UK be without selling off large swathes of our land which is impoverishing our people? What will they do when we have no more of interest to sell?
In Israel, Rabin was actually Prime Minister twice; the first time was in the 1970s, when similar currency controls were in effect, including a ban on Israelis holding foreign bank accounts. He resigned after a journalist caught his wife withdrawing from an (illegal) US dollar account in Washington, DC.
Well, he had the grace to accept responsibility and resign, even though it seems to have been purely his wife's initiative, so in the end the affair only increased the Israeli public's faith in his integrity.
The purpose of currency controls is so you can inflate the currency and not suffer the consequences. Of course, the piper gets paid sooner or later, and a sharp and ugly correction becomes inevitable.
I was living in Algeria, now I live in France, and things there are worst comparing to Tunisa in term of economy freedom, we can exchange maximum of 15000DA the equivalent of 130 euro per year, so if you want to leave the country for holidays, you will for sure ends up in the black market.
Thankfully I had my money in HKD and Euros for several years now...
Seriously though, this is what happens when you base your economy on primary industries (aka. resource extraction) and commodities take a huge hit.
Canada has a major infrastructure deficit, no competitive industries, major brain drain (and why not, you can go to the US or Europe and get paid way more, and pay less in cost of living), and absurdly expensive real estate. Even the cost of meat has gone up to the point where it'll make an Albertan think about going vegetarian (then again, a cabbage costs like 3$).
Not sure I'd even want to start a tech company here - people are too cheap to pay for services, and good luck ever getting any funding - maybe a small government grant or something...
Considering the CAD is so weak to the USD and there are skilled software engineers up there, wouldn't it make sense for VC's to fund Canadian startups? If you can get a software engineer at 30-50% of the price in the US with state funded healthcare ...
One would think so. Doing open source consulting in Montreal I've discovered that Canada is pretty backwards on average when it comes to having access to lots of forward-thinking companies to trade with. Many investments seem to be very focused on cheapness and "deliverables" with bad specs as a preferred approach to software development, when most engineers have acknowledged for a long time that working iteratively is better.
The Canadian environment is extremely fertile for exploitation by US companies though, and we're having some success working with them already. It helps that the exchange rate is favourable. I would like to see much more competition and American money around here if only to teach the crusty old guard what it means to be innovative.
I'd love to see services overtake natural resources as a main export because it would be more sustainable and it would improve the lives of regular people a lot more than, say, unrefined oil or softwood lumber do.
"I'd love to see services overtake natural resources as a main export because it would be more sustainable" ... this was always something that bothered me with the Harper government, this complacency to rely on the resource sector. But then, another part of me feels like this is also a cultural problem, Canada was funded on exporting its resources and has always evolved like this, from fur trade, to wood, to oil ... There is the MARs initiative in Toronto, but I don't what it will lead to.
I really feel like funding/moving startups that don't require a specific geography could gain in Canada. Maybe the currency needs to stabilize first.
"American money around here if only to teach the crusty old guard what it means to be innovative"...I totally agree, I deal with big vendors, and smaller alternatives would be great.
> If you can get a software engineer at 30-50% of the price in the US...
This is the mindset that got Canada into this situation in the first place.
As a recent Waterloo grad, I've witnessed first-hand how the tech industry in Canada has been bleeding talent to the US, even from our own top schools. Just about everyone I know who's good enough to have offers from US companies have taken the offers and left.
And it's not hard to imagine why: the average "highly competitive" salary in Canada is pathetic compared to what you could be making in the US for a similar position.
I think Blackberry has been a prime example of a company hit by this. Even with the advantage of being literally next door to the Waterloo campus, most students I know treated it as nothing more than a "safety" in their co-op and grad job search. So in the end, the only students Blackberry ever had access to were the ones who weren't good enough for the US companies, and the few good ones who couldn't to go to the US for what ever reason.
I can't see this trend slowing any time soon, unless Canadian companies start offering salaries competitive with companies across the border, rather than just with their other Canadian neighbors.
I agree with your thesis, but I doubt Blackberry would be a top choice even if it was in San Francisco. They had the world by the thumbs for a while...
Why would you think you can get a software engineer at 50% the price of one in the US? Particularly given Canada's median income is now roughly on par with the US.
The US is a very large place with a lot of cities, it has 30 cities the size of (or larger than) Vancouver. You can find good software engineers across the entire nation, including in lower cost locations. From Portland, to Las Vegas, to Kansas City, to Raleigh, to Atlanta, to Detroit, to Pittsburgh, to Tulsa etc. You have dozens of cities to choose from that will have good engineers.
There's no reason you'd need to pay bay area salaries or locate in Silicon Valley (or NY). Unless you're trying to build the next juggernaut tech-startup and are going to take on the VC to match (in which case that pays for the high salaries).
Depends on the market. I don't live in the Bay Area or NY, but knowing how much I make where I am (plus that of my peers) and similar pay levels in the Toronto tech labour market (one of the better ones in Canada), I would probably end up with ~50% of my US compensation in Canada even when assuming 1 USD = 1 CAD. Once you factor in the exchange, it's probably in the low 40s.
And that doesn't even account for take-home pay after taxes and the large Canadian urban markets' cost of living, since the tax brackets top out quite a bit lower in Canada (not that I think the higher taxes are a bad thing; I don't feel my taxes in the US are high enough).
Because of the terrible exchange rate. It's a weird thing... I have an American client that I bill in CAD. We negotiated the rate when the exchange was close to parity, and have continued at the same rate as the canadian dollar has tanked. It works out pretty well for us... they can now afford more hours, and I spend less time chasing other clients to fill the gaps..
The only part that sucks is when I have to order parts or equipment from down south.
Unless you pay me in USD or double the CAD salary (aka be Google or Ubisoft), I won't be working for your abroad company when I can work for locally based startups and tech companies.
House prices are sticky (no one wants to sell for a loss). Eventually they will fall though, as long-term unemployment rises (the effect is delayed until people burn through savings/severance packages and/or run out of EI).
I'm not necessarily convinced oil investment leaving Canada is a major blow after all. It will leave some unemployed, but most of that oil from what I've read was being exported abroad and the profits pretty much exclusively went to private businesses and the elite. The employment benefits locally were a drop in the bucket.
It wasn't like Canada was living in a golden age during this 'boom', in fact housing prices across most of Canada and costs in general have skyrocketed. If there was a 'boom', it wasn't being felt in most of the country.
With globalization I just fail to see how it helps the average person, it just seems to mainly help the extremely wealthy. The rest of us are just left in a race to the bottom.
This analysis misses the knock on effects of the oil economy. In Calgary or Edmonton for instance, the centre of the oil economy in Canada, all jobs depend on oil. If you don't work in oil but work in a geographic region fuelled by oil profits, your profits will drop as well. All retail and most all service industries are being hit.
Canada was absolutely enjoying an oil boom. It can be hard to see the connection between a new highway or hospital and oil prices at 100, but rest assured they are intertwined. Yes people who owned oil production facilities benefit most as they took on the most risk, but all of Canada benefits when they do well. It is sort of like being a cafe owner in Silicon Valley saying, "I'm not sure how I, as a normal hard working person, benefits from all these rich programmers around."
Further, oil revenues are a major component of the tax base to Federal and Provincial governments. With those revenues drying out, transfer payments to non oil provinces, and social programs across Canada are threatened. Oil is absolutely fundamental to the Canadian economy at this point.
I have no problem with improving the prospects of the poor in China/India. The issue is the savings in salary costs doesn't go to the consumer, it goes to the executives.
> The issue is the savings in salary costs doesn't go to the consumer, it goes to the executives.
This is a bit simplistic. Some of the savings do and some go to the consumer by way of competition among firms.
Inflation has been pretty flat in recent years and that's not because governments stopped printing money. It's because prices on goods and services have been under a lot of pressure due to globalization. That means consumers are paying less than they would be if that weren't the case.
Granted, those at the top are raking in the cash. But money is worthless unless you spend it and when they spend it, somebody has to do the work that the money is being spent on. That creates jobs.
Certainly everybody wishes they were making more money and in some cases, the grievance is legitimate.
Trickle-down economics is a failed theory. The wealthy only spend a small percentage of their income. They re-invest most of it. True, sometimes they invest in businesses (VC, IPOs, Business expansion, etc.), but most investment dollars go to the secondary markets (Stocks, Derivatives, etc.), which does not create any jobs and produces no value.
> But money is worthless unless you spend it and when they spend it, somebody has to do the work that the money is being spent on. That creates jobs.
The issue is that the rich spend a smaller proportion of their money than the middle class.
So while globalisation does increase the prospects for some poor people, it definitely does take wealth out of the global economy and into the hands of the '1 percent'.
that is so not true. the benefits of globalization and such benefit all. the cost in hours of work you to buy most common goods continue to go down. even many services have dropped in real hours cost for people because the equipment needed and supply chain over all has seen reduced cost.
that trite line is great for politics but not for anyone who thinks for themselves
My retirement funds have, as some of their holdings, a comparatively small handful of shares in companies, as part of a fund managed by an institutional investor, whose goal is to deliver shareholder value to people who hold shares of the managing organization, which may be completely separate.
Saying "Your interests should be aligned with exceedingly wealthy individuals because you hold shares in some companies which they control." is wrong at best, and disingenuous at worst.
and the profits pretty much exclusively went to private businesses and the elite
That's not true. The Alberta gov't (where most of the oil is) has a royalty system. One of the reasons why the Alberta gov't ran a surplus most years was because of all the oil royalties. That money was spread around a lot in Alberta and it had one of the lowest tax burdens and generous welfare benefits.
For what it's worth, yes, this is what we get for being hewers of wood, drawers of water, etc. Traders don't call CAD a commodity currency for nothing.
Isn't this a really positive indicator that Canada is acquiring more foreign holdings?
Isolationism is generally a path to irrelevance. The most powerful countries are porous and actively engaged with the world, allowing capital and people to flow in and out. Isolated countries wither.
Agreed. The savvy Canadian investor (even a retail investor planning for their retirement) wouldn't invest 100% in Canadian investments. I think this is a natural rebalancing of the admittedly enery- and commodity-heavy sectors of the Canadian market.
In financial markets, China is usually considered an emerging markets country, not a developed markets country, so this is not necessarily a contradiction.
I don't get the comparison: What capital controls has Canada put in place? The newly elected government has pledged an anti-austerity budget for the next few years and the debt level is much more sustainable than Greece given surpluses from the late nineties to late 2000s (plus a small one this year from the outgoing government).
As the Tunisian economy reels from the crash of the tourism industry due to terrorism, all of the new startups are starting to cater to entrenched upper middle class Tunisians who's family money is stuck here. The policy kind of enforces saving money, and buys a bit of time for the economy if things go awry. It also creates a lot of animosity for the Tunisians who'd much rather have Euros to invest properly.
Economic policy is fascinating stuff. Any other fun stories out there?