Canada suffers from Dutch Disease

punked · May 26, 2012

Fair enough and a good answer. I have long been disappointed with the fact that resource extraction is all Canada ever seems to fall back on and as industries go you're right; you can't count on them. I don't think anyone is really proud of the fact that's all we seem to be able to do for quick money. However I would point out two things:

1) It's been that way for a very very long time and it's hardly the fault of the past decade or so's governments, (or put another way it is directly the fault of the passt 50 years worth of governments), it's been like that for a century. Do you know what the Chretien government did 4 weeks after signing Kyoto? They bought $18 billion worth of oil sands land schemes as an investment.

2) The major impediment to a healthy manufacturing sector in this country has always been the low population. It was Laurier who recognized this way way way back when he instituted a wide range of policies designed to woo European settlers from Europe and away from the US. The economic principles here were just a newborn science at the time but it was he who envisioned Canada with a population of 100 million by the 1950's. It was his assertion that this was the magic number that would allow Canada to be a competitive industrial nation with the US and the rest of Europe. Imo and the opinion of many smarter than me he was dead on the money with this, but it just never transpired. To this day the 100 million number is still passed around. So how do we fix that?

Manufacturing no longer relies on huge population but now depends on the best tech and productive work force. So instead of letting resources go for nothing, and heat up our dollar to the point manufacturing leaves. Why don't we cool down the sector (that does not mean I want to punish the resource sector they play a very important roll in fact I want to grow but they need to grow at a planned rate so if there is a crash our country is decimated) this could done very easily. With targeted taxes on the resource sector, taxes which can be used to be reinvested in other sectors of the Economy. It does not even have to be reinvested in Manufacturing but could be something as easy as brining the Small business tax to 0. This way we diversify Canada's economy instead of putting all our eggs in one basket.

This isn't an East vs. West thing. It is a planning for our future vs. I want as much as I can get now. That is what this is about. It is scary that a very real debate is being framed in such a simple way.

Claudius · May 26, 2012

Manufacturing no longer relies on huge population but now depends on the best tech and productive work force.

Going to have to go ahead and disagree with you there, well maybe not entirely. I can agree insomuch as we may not need 100 million people any more but technology or not we need a lot more than 34 million spread out along the 2nd largest country on earth. Big manufacturing requires big factories and large populations to sustain them. As you point out technology may have reduced this need somewhat but it hasn't eliminated it.

It does not even have to be reinvested in Manufacturing but could be something as easy as brining the Small business tax to 0. This way we diversify Canada's economy instead of putting all our eggs in one basket.

I can agree with that, that is if small businesses can commit to decent employment numbers.

This isn't an East vs. West thing. It is a planning for our future vs. I want as much as I can get now. That is what this is about. It is scary that a very real debate is being framed in such a simple way.

And I have to disagree with you again,at least a little. The biggest schism in Canada has never been a divide between Left and Right or between rich and poor or even between French and English. It has always been regional and it's one of the things I can't stand about this country. Canadians fall too easily into the trap of letting politicians sway their regional prejudices and use them against each other. Part of this reason is facilitated by the incredible power provincial premiers have in what is supposed to be a federalist nation. Premiers in many ways enjoy more power and fewer checks and balances than a majority-backed PM. But in the interest of finding common ground I would agree that this is stupid and as you say, 'scary'. The debate shouldn't be framed in this way but since provinces hold dominion over their respective natural resources, and since this is one of the major glues that holds this dominion together it is a constant impediment to solving this problem. You can't just nationalize everything but at the same time you can't hold a homogenous federalist country together while allowing each province such incredible autonomy in this area.

I have to go now but this was interesting,hope we can pick it up later.

Edited May 26, 2012 by Claudius

TimG · May 26, 2012

So instead of letting resources go for nothing

Fact #1: we don't let resources go for nothing.

Fact #2: Resource extraction is a high tech business that requires a lot of high tech know how.

Fact #3: Manufacturing is often a low value add business that simply assembles parts made elsewhere - ESPECIALLY when it employees a lot of people.

Fact #4: When manufacturing does have a large value add it does not necessarily employ a lot of people.

I don't understand why you are so obsessed with manufacturing.

Edited May 26, 2012 by TimG

punked · May 27, 2012

Fact #1: we don't let resources go for nothing.

Fact #2: Resource extraction is a high tech business that requires a lot of high tech know how.

Fact #3: Manufacturing is often a low value add business that simply assembles parts made elsewhere - ESPECIALLY when it employees a lot of people.

Fact #4: When manufacturing does have a large value add it does not necessarily employ a lot of people.

I don't understand why you are so obsessed with manufacturing.

Maybe because it is 15% of the economy.

Moonlight Graham · May 27, 2012

In related news, I'm getting a Target store in my area next year. It's replacing my local Zellers of course. Globalization means transnational corporations kick some Canadian corp. butt, but also low, low, lower prices.

Jack Weber · May 27, 2012

In related news, I'm getting a Target store in my area next year. It's replacing my local Zellers of course. Globalization means transnational corporations kick some Canadian corp. butt, but also low, low, lower prices.

And exacerbating the downward spiral of our standard of living!!!

:rolleyes:

Yay Free Market economics!!!

Thank you Chicago School of Business...Thank you,Uncle Milty...

Edited May 27, 2012 by Jack Weber

TimG · May 27, 2012

Maybe because it is 15% of the economy.

And 85% of the economy is something else. I can see being concerned about job losses but the position Muclair is taking is that we should introduce government policies designed to sacrifice high paying jobs in one sector in order to favor another.

Jack Weber · May 27, 2012

And 85% of the economy is something else. I can see being concerned about job losses but the position Muclair is taking is that we should introduce government policies designed to sacrifice high paying jobs in one sector in order to favor another.

And Mr. Harper isn't doing these things by ommission?

Edited May 27, 2012 by Jack Weber

punked · May 27, 2012

And 85% of the economy is something else. I can see being concerned about job losses but the position Muclair is taking is that we should introduce government policies designed to sacrifice high paying jobs in one sector in order to favor another.

No the only thing he has been saying is that Canada has Dutch Disease and the government doesn't even know it. They aren't even saying it isn't a problem or there is nothing they can do. They are calling Muclair a liar and saying our dollar has nothing to do with it. They don't even know what is going on.

TimG · May 27, 2012

TNo the only thing he has been saying is that Canada has Dutch Disease and the government doesn't even know it.

Spare us the cuteness. Muclair is trying justify his punitive environmental policies by demonizing the industry. i.e. if he can get people in Ontario to hate the oil industry they won't complain if he screws Alberta with his anti-CO2 campaign.

FWIW: Macleans has come out with an editorial that says exactly what I have been saying in this thread:

http://www2.macleans.ca/2012/05/25/so-much-for-dutch-disease/#more-260494

As far I as I can tell the 'dutch disease' is largely a fiction and Muclair deserves the crap he is getting from the Tories.

Edited May 27, 2012 by TimG

dre · May 27, 2012

And 85% of the economy is something else. I can see being concerned about job losses but the position Muclair is taking is that we should introduce government policies designed to sacrifice high paying jobs in one sector in order to favor another.

We have had such policies for 30 years... That ship has long sailed.

wyly · May 28, 2012

Spare us the cuteness. Muclair is trying justify his punitive environmental policies by demonizing the industry. i.e. if he can get people in Ontario to hate the oil industry they won't complain if he screws Alberta with his anti-CO2 campaign.

it's apparent you really don't understand the issue...responsible environmental development is a legitimate concern, if you owned a property next door to gas station that was leaking fuel into the ground you'd be crapping your pants with the knowledge what it was doing to your property value, I doubt you'd be championing the energy corporations right to make a profit damn the contamination...resource companies have to pay the full cost of resource exploitation and not pass on the full reckoning to future taxpayers...if that makes some of these deposits uneconomical in the short term so be it, they've been there for millions of years and will still be there when it does become economical to exploit responsibly...

and I live in Alberta what goes on in the patch affects my bottom dollar, a little less development won't hurt us, it will make alberta a more affordable place to live...

TimG · May 28, 2012

resource companies have to pay the full cost of resource exploitation and not pass on the full reckoning to future taxpayers.

The full 'cost' of CO2 emissions is nothing but a fiction created politicians looking to justify tax increases by demonizing an industry. So spare me the 'polluter pays' rhetoric.

Michael Hardner · May 28, 2012

The full 'cost' of CO2 emissions is nothing but a fiction created politicians looking to justify tax increases by demonizing an industry. So spare me the 'polluter pays' rhetoric.

But politicians scheming for tax revenue ... now that's some demonizing. When I drove through West Virginia, there were billboards everywhere that just said CLEAN COAL, with a picture of a pretty mountain.

TimG · May 28, 2012

But politicians scheming for tax revenue ... now that's some demonizing.

It is demonizing when a single group is vilified. If politicians want more tax they should collect some from everyone. Searching for scapegoats is s medieval.

wyly · May 28, 2012

The full 'cost' of CO2 emissions is nothing but a fiction created politicians looking to justify tax increases by demonizing an industry. So spare me the 'polluter pays' rhetoric.

with every post you verify you don't understand the issue...

TimG · May 28, 2012

with every post you verify you don't understand the issue...

I understand the issue perfectly well - better than you by a long shot. The difference is I separate quantifiable 'costs of pollution' from hypothetical nonsense.

Michael Hardner · May 28, 2012

It is demonizing when a single group is vilified. If politicians want more tax they should collect some from everyone. Searching for scapegoats is s medieval.

Right... like environmentalists...

Michael Hardner · May 28, 2012

Right... like environmentalists...

The other unbeatable conspiracy theory is that, since everybody needs money, everybody is selling their opinion like a tawdry streetwalker....

wyly · May 28, 2012

I understand the issue perfectly well - better than you by a long shot. The difference is I separate quantifiable 'costs of pollution' from hypothetical nonsense.

clearly you do not, but continue on in your delusion as it's apparent to everyone but yourself...whereas myself with an actual long term friend who is a chemist in the employment of the government of Canada who studies the ecological effects of the tar sand exploration has more info than you ever will...

Edited May 28, 2012 by wyly

TimG · May 28, 2012

clearly you do not, but continue on in your delusion as it's apparent to everyone but yourself...

Really. Then show us how to calculate the 'economic cost' of an extinct species? If your answer is priceless then you are clueless and prove your rants about 'paying the cost of pollution' is nothing but an excuse to impose arbitrary taxes on industries you don't like. Edited May 28, 2012 by TimG

Topaz · May 30, 2012

A report out today says there is some truth in what the NDP leader was saying about Dutch Disease but then again we have another report that says different. Who's right? Can both? http://ca.news.yahoo.com/report-backs-mulcairs-claim-canadas-economy-suffers-dutch-153048605.html

punked · May 30, 2012

A report out today says there is some truth in what the NDP leader was saying about Dutch Disease but then again we have another report that says different. Who's right? Can both? http://ca.news.yahoo.com/report-backs-mulcairs-claim-canadas-economy-suffers-dutch-153048605.html

Just look at where the studies come from and it should tell you all you need to know about which is spin and which isn't. You always have to look at the source.

PIK · May 30, 2012

it's apparent you really don't understand the issue...responsible environmental development is a legitimate concern, if you owned a property next door to gas station that was leaking fuel into the ground you'd be crapping your pants with the knowledge what it was doing to your property value, I doubt you'd be championing the energy corporations right to make a profit damn the contamination...resource companies have to pay the full cost of resource exploitation and not pass on the full reckoning to future taxpayers...if that makes some of these deposits uneconomical in the short term so be it, they've been there for millions of years and will still be there when it does become economical to exploit responsibly...

and I live in Alberta what goes on in the patch affects my bottom dollar, a little less development won't hurt us, it will make alberta a more affordable place to live...

Actually since the left has put all it's eggs into the C02 devil, we have forgotten about real pollution.

Michael Hardner · May 30, 2012

Actually since the left has put all it's eggs into the C02 devil ...

Mixed metaphor of the day. Lefties, please note: only ONE egg per devil, please and thank you.

Also, to comment on the substance of the post as well as the comical imagery - there's no reason to suppose that economic awareness needs to be limited to a few topics.