Canada suffers from Dutch Disease

[bleeding heart]

If we want to grow our economy and raise our standard of living, let the Chinese/Indians etc. be our worker bees, while we design & own the hive.

Ah, the wonders of the imperial mentality! It goes in and out of style, but never quite dies.

[Shakeyhands]

Hmm, according to the cites the currency appreciation accounts for somewhere between a quarter and one third of the loss of manufacturing jobs. So what accounts for the bulk of them? Could it be ruinous economic policies the Liberal governments of Ontario and Quebec have in place?

Pay for a study and find out Argus, I mean if you say it, it must be correct.

[madmax]

Hmm, according to the cites the currency appreciation accounts for somewhere between a quarter and one third of the loss of manufacturing jobs. So what accounts for the bulk of them? Could it be ruinous economic policies the Liberal governments of Ontario and Quebec have in place?

It could be and it is, along with ruinous Trade Agreements signed by our Federal Governments along with the abandonment of an economic policy for manufacturing.

Regardless, even 25% of lost jobs across Canada is significant, so while there is a job gain from subsidizing the oil fields to ship raw product offshore, there is a net loss in Manufacturing Jobs.

Once upon a time the Conservatives were Conservative and Not Liberal. Since 1988 the Conservative and Liberal Economic policy has been the same.

[madmax]

Pay for a study and find out Argus, I mean if you say it, it must be correct.

I would actually feel comfortable paying Argus to do a study. I don't have to like what he says, but I do know that he works with facts.

[madmax]

No it's not, there's simply not enough jobs involved in design as opposed to manufacturing.

HOLY FRIGGIN TORO KAKA

As little as 6 years ago, my friends business had just under 1,000 Design Engineers and Techs.

Today he has 2, himself and his original business partner.

Most clients have been retained. Work is offshored with Cheap Engineers from India and China and other parts of Asia, where the manufacturing work has been relocated to multiple plant operations to try to protect from product and intellectual property cloning.

The clients lost have returned to R&D in the US.

ATS also gutted vast numbers of design and skilled trades and offshored their work, alot going to North Korea, for Canadian Contracts in Nuclear, Solar and Oil

[madmax]

What's "corporate" about it? Who do you think employed those now unemployed former manufacturing workers? Corporations did.

Let me ask you, how much do you think you would pay for most of the things you buy if they were all manufactured in Canada/US, or any other western industrialized country? Workers here make around $10/hour at least, plus any benefits (and auto workers make MUCH more). .

Price is established by what the consumer is willing to pay. A Vehicle made in Mexico and one made in Germany are both sold in Canada for the Same price.

However to follow your argument to its ultimate train wreck would result in deflation like the dirty 30s where practically everything was givin away as people had no money and no one could make money.

What ultimately has to give is the number of new homes or financing of new homes or price of new homes to accomodate the division of the middle class.

Regardless, anyone involved in Manufacturing knows that Canada received an artificial benefit from the dollar being lower then its US counterpart.

Not all companies rely on the dollar being lower, depending on how they have priced their products.

The question is, is the dollar now artificially higher?

[madmax]

You forget to mention that those cheap goods also cost Canadians good paying jobs which leads to higher unemployment... and as a result, drives down wages in other sectors.

You know what else is here and is a reality because of failed economic policies such as the corporate utopia you're preaching.... Maple Spring. Get used to it too. Civil wars have been fought over this before...history will repeat itself.

This is correct.

[Michael Hardner]

The jobs that are lost are replaced, in theory, and there is a net economic benefit that the government has to balance.

In fact, the benefits have not been balanced, and companies use profits to buy favorable legislation, but don't reinvest in the community. The effects of that strategy will soon be felt, as companies will not be able to buy influence over a N. Americans who don't work for them, and din't need the handful of jobs they offer. In fact, we will be their customers, which is a different power balance altogether.

[Keepitsimple]

What by having the very experts who Harper hired to study this agree with Mulcair?

The only ones looking foolish in this are Harper and his minions.

Yawn......Harper didn't "hire them". The report was initiated by bureaucrats - who paid three "academics" to produce a report.....but interestingly, the report is quite clear and rips Mulcair's haughty hypothesis to shreds....but you actually have to read and understand it of course. Only about a third of our manufacturing problems relate to currency conversion......and duh!... a good portion of the change is a result of the weakening of the US dollar. That's why anyone worth listening to is calling Mulcair Goofy.

Industry Canada paid $25,000 to three academics to produce the lengthy study............

[Argus]

Oh I see. The "It's not 100% of the cause" so it doesn't matter argument.

It's not the biggest cause, by any means. Besides, they seem to be assuming the Canadian dollar has risen because of oil and gas production. In reality, it's the US dollar which has fallen due to deliberate US monetary policy.

[Rick]

Yawn......Harper didn't "hire them". The report was initiated by bureaucrats - who paid three "academics" to produce a report.....but interestingly, the report is quite clear and rips Mulcair's haughty hypothesis to shreds....but you actually have to read and understand it of course. Only about a third of our manufacturing problems relate to currency conversion......and duh!... a good portion of the change is a result of the weakening of the US dollar. That's why anyone worth listening to is calling Mulcair Goofy.

That's strange then because renowned right wing pundit...Diane Francis of the National Post also agrees with Mulcair.

Industry Canada is an arm of the Canadian Government. Is Harper not in charge of the Canadian Government...

[Argus]

Hey... I have an idea... Let's kick the economic powerhouse (ONtario still is) in the shins with slanderous comments from our finance minister...

What slanderous comments? McGuinty's inept and incompetent fiscal management is one for the record books. He has managed the seemingly impossible by making Ontarions long for the sound fiscal management of Bob Rae! Ontario's debt is now bigger than California - which is three times the size and considered and economic basket case.

and then claim that the new guy is trying to divide the country for wanting to properly enforce regulation and factor the real cost (including environmental clean up) into the business.

The new guy IS trying to divide the country. He's clearly made the decision that he can't hold onto Quebec and please the West, so he's appealing to Ontario instead and trying to pry them out of the Tory fold.

[Rick]

It's not the biggest cause, by any means. Besides, they seem to be assuming the Canadian dollar has risen because of oil and gas production. In reality, it's the US dollar which has fallen due to deliberate US monetary policy.

No, in reality when the Canadian dollar started to rise because of the oil and gas, long before the U.S. greenback fell, the manufacturing sector of this country started exporting less to the U.S.

This would be three full years before...

[punked]

The new guy IS trying to divide the country. He's clearly made the decision that he can't hold onto Quebec and please the West, so he's appealing to Ontario instead and trying to pry them out of the Tory fold.

Pointing out something the governments own study confirms isn't trying to divide the country. Ignoring problems so one part of the country can prosper while another part of the country suffers because of it is trying to divide the country. Sorry you are a wrong, Dutch Disease is a real thing and good government would do something to address it. Even that is just saying there is a problem.

[punked]

It's not the biggest cause, by any means. Besides, they seem to be assuming the Canadian dollar has risen because of oil and gas production. In reality, it's the US dollar which has fallen due to deliberate US monetary policy.

The Canadian dollar has risen against other currency to. Maybe look at the whole picture not just America.

[dre]

What's "corporate" about it? Who do you think employed those now unemployed former manufacturing workers? Corporations did.

I don't even know what's "right wing" about what I said either, frankly. It's reality.

I'm not dreaming of creating anything. It's been happening increasingly over the last 30+ years. It's here, get used to it.

Let me ask you, how much do you think you would pay for most of the things you buy if they were all manufactured in Canada/US, or any other western industrialized country? Workers here make around $10/hour at least, plus any benefits (and auto workers make MUCH more). The average Chinese manufacturing worker makes about 50 cents per hour. That difference is included in the price of what we pay for manufactured goods.

As for the unemployed, well, maybe some of them can start their own businesses, while creating some jobs for others. My uncle did it with a grade 10 education & was very successful.

Let me ask you, how much do you think you would pay for most of the things you buy if they were all manufactured in Canada/US, or any other western industrialized country? Workers here make around $10/hour at least, plus any benefits (and auto workers make MUCH more). The average Chinese manufacturing worker makes about 50 cents per hour. That difference is included in the price of what we pay for manufactured goods.

This is definately the rational behind free trade. Who cares if we drive out own wages down as long as stuff gets cheaper. Our wages could go down to 1 dollar per hour as long as a big screen TV only costs 20 bux!

The problem with this whole philosophy is that while wages are stagnant or falling only the price of SOME goods is coming down. We can afford more non durables than ever, its true, and from this standpoint we have a higher standard of life as a result of this "deal". BUT... The costs of other things are increasing fast... We have 8% energy inflation, 7% food inflation, healthcare inflation, tuition inflation etc. The cost of all these things will double over the next decade but our wages will not. This is going to be a disaster for us in the long run.

But the REAL fallacy in this whole arrangement is the idea that people can indefinately consume more than they produce. We have a massive ammount of real goods flowing from China to the west, and little but bits of paper flowing the other way, and weve pegged interest rates near historic lows in a desperate attempt to keep this cycle going.

All this "free trade" with the developing world has resulted in most western countries being on a crash course towards a debt and monetary crisis. And all this "globalism" is going to disappear once western currencies depreciate to the point where we can even afford chinese made junk, and that is inevitable because it was our productive capacity that our currency derived its value from in the first place.

Very very short sighted behavior and this is all going to catch up with us relatively soon.

[Rick]

This is definately the rational behind free trade. Who cares if we drive out own wages down as long as stuff gets cheaper. Our wages could go down to 1 dollar per hour as long as a big screen TV only costs 20 bux!

The problem with this whole philosophy is that while wages are stagnant or falling only the price of SOME goods is coming down. We can afford more non durables than ever, its true, and from this standpoint we have a higher standard of life as a result of this "deal". BUT... The costs of other things are increasing fast... We have 8% energy inflation, 7% food inflation, healthcare inflation, tuition inflation etc. The cost of all these things will double over the next decade but our wages will not. This is going to be a disaster for us in the long run.

But the REAL fallacy in this whole arrangement is the idea that people can indefinately consume more than they produce. We have a massive ammount of real goods flowing from China to the west, and little but bits of paper flowing the other way, and weve pegged interest rates near historic lows in a desperate attempt to keep this cycle going.

All this "free trade" with the developing world has resulted in most western countries being on a crash course towards a debt and monetary crisis. And all this "globalism" is going to disappear once western currencies depreciate to the point where we can even afford chinese made junk, and that is inevitable because it was our productive capacity that our currency derived its value from in the first place.

Very very short sighted behavior and this is all going to catch up with us relatively soon.

“A severe case of Dutch Disease has dramatically reduced the breadth of the Canadian business sector over the past decade, hollowing out manufactured goods exporters and making the nation increasingly reliant on commodity demand. Canada has often been referred to in jest as the 51st state, due to its historical reliance on the U.S. as a key export market. However, it is becoming more accurate to regard Canada as another Province of China,” writes MRB partner Phillip Colmar.

“When China stumbles in the years ahead,” points out Colmar, “and the commodity bull market comes to an end, Canada will suffer through a painful economic contraction. The fallout at that point [likely still a few years away] will be prolonged due to the fact that the Canadian business sector is uncompetitive and the household sector has accumulated substantial leverage to live beyond its means.”

Sums your point up...

Edited May 20, 2012 by Rick

[Michael Hardner]

The problem with this whole philosophy is that while wages are stagnant or falling only the price of SOME goods is coming down. We can afford more non durables than ever, its true, and from this standpoint we have a higher standard of life as a result of this "deal". BUT... The costs of other things are increasing fast... We have 8% energy inflation, 7% food inflation, healthcare inflation, tuition inflation etc. The cost of all these things will double over the next decade but our wages will not. This is going to be a disaster for us in the long run.

But the REAL fallacy in this whole arrangement is the idea that people can indefinately consume more than they produce.

We have a trade surplus and growing GDP. How else do you deliver production?

[Argus]

The Canadian dollar has risen against other currency to. Maybe look at the whole picture not just America.

It'd be hard not to rise against most European currencies these days, and there has been a concerted effort by the likes of Japan and China to keep their currencies low.

[punked]

It'd be hard not to rise against most European currencies these days, and there has been a concerted effort by the likes of Japan and China to keep their currencies low.

What? Countries who want to protect their manufacturing sectors are depressing their currencies. Geeee I wonder why they would do that? Fact is our currency is rising and it is costing or economy jobs and making us a weaker country. Time for the government to acknowledged this is a problem and come up with some plan to fix it. That is all the NDP have been saying and from what I can tell you agree with them.

[CPCFTW]

Who needs rig pigs making 50-100k when we could restore a laughable textiles industry with employees making 20k!?!?

Whatever jobs are lost in ON are more than made up for by oil industry (and spin-off) employee's tax dollars being funneled to have not provinces. Also much of the finance industry in Canada is built around financing oil companies, and the TSX-V is an exchange primarily built around resource industries.

Furthermore, a stronger dollar lowers consumer prices... An iPhone, or 40in hdtv would cost $800 in Canada with a weak dollar instead of $500. A new car would cost 30k instead of 20k.

But don't let facts get in the way of a good left-wing pseudo-economics circle jerk.

[mentalfloss]

You can spin it however you want, but the truth is that there is some influence from an artificially inflated dollar. No one is suggesting that we need to sacrifice resource sector - only that we need to sustain a balanced economy so that we don't suffer after the boom is over.

I'm not sure how that is a "left-wing" goal, considering there are right-wing premiers that support a good long term strategy.

Edited May 20, 2012 by mentalfloss

[punked]

Who needs rig pigs making 50-100k when we could restore a laughable textiles industry with employees making 20k!?!?

Whatever jobs are lost in ON are more than made up for by oil industry (and spin-off) employee's tax dollars being funneled to have not provinces. Also much of the finance industry in Canada is built around financing oil companies, and the TSX-V is an exchange primarily built around resource industries.

Furthermore, a stronger dollar lowers consumer prices... An iPhone, or 40in hdtv would cost $800 in Canada with a weak dollar instead of $500. A new car would cost 30k instead of 20k.

But don't let facts get in the way of a good left-wing pseudo-economics circle jerk.

You have no idea what you are talking about. It is scary what could happen if the resource sector crashes and we have nothing in the country to pick up the slack. This is one of those putting all your eggs in one basket things. The crazy part there is no reason for it. We can tackle Dutch Disease with out hurting our resource sector if you "Conservatives" would stop making a political game out of it. This isn't a Alberta vs. Ontario thing, it is a good governance vs. bad governance thing and you keep cheering on bad governance for no reason what so ever.

Stop trying to spin the loss of the Manufacturing sector as a good thing. It makes you look small minded.

BTW our dollar has had no effect on consumer prices. This is another time where your claims make you look stupid. When our dollar was low we paid 10-15% more on things then the US now our dollar is high and we still pay the same amount. Grab a book next time you are at the mall and look at the US price vs the Canadian one. Get a clue

Edited May 20, 2012 by punked

[madmax]

The new guy IS trying to divide the country. He's clearly made the decision that he can't hold onto Quebec and please the West, so he's appealing to Ontario instead and trying to pry them out of the Tory fold.

I disagree. I believe that he holds an opinion that is supported by many economists. On another note, the country isn't an one trick Oil Pony but highly diverse.

For 1/3 to be affected by a high dollar is significant and the report goes as high as 40& and that is across the country.

Therefore a healthy debate is not a bad thing. You don't have to agree with Mulcair, you can have your own opinion but you can't have your own facts.

What is interesting is that other politicians want to make this a "East/West affair... but its more likely an affair of whom is beholden to various interests. My guess is that BC won't be saying the word "goofy" for much longer... as that bunch of Free Enterprise LibraCons are getting tossed.

If the Industry is not paying its own freight and the government and public will be footing the bill when the damage is done, there is nothing wrong with considering the real costs of extracting oil from the tar sands.

Canada has always had these sands available, its not always optimum conditions to develop them since the 70s there have been many false starts. But now that we are gung ho on this.... its time for an analysis of what is being done and who is paying for it and who is benefiting and who is getting negatively affected.

That is standard fare...

Edited May 20, 2012 by madmax

[madmax]

It's not the biggest cause, by any means. Besides, they seem to be assuming the Canadian dollar has risen because of oil and gas production. In reality, it's the US dollar which has fallen due to deliberate US monetary policy.

Yes, it is deliberate US monetary policy and our dollar is high because of a deliberate subsidization of the oil sector and driving up our currency accordingly.

The US could change monetary policy in the next 10 years, but I doubt it, they need a low dollar like Canada could use one.

Is the Canadian Dollar worthy to be above the US based on anything other then speculation..? Oil and the Dollar seem to go hand in hand, and we see speculators driving up the price, beyond what is reasonable and it will come down.

This does not create the stabilty manufacturing prefers regardless of the price of the dollar. It is why many contracts fix the price regardless of change over a set period.

Yes hedging for and against the market, but eventually the overall trend will prevail and the sector will leave.