The high-and-mighty virtiol which greeted Tom Mulcair’s comments last week about the downside of oil-powered currency appreciation is lamentable (repeating the over-the-top reaction to Dalton McGuinty’s similar comments a few weeks ago).Â Mulcair made two modest and empirically substantiated statements: the loonie is sky-high as a result of the oil boom in Alberta’s bitumen sands (I doubt you’d find a single currency trader on Bay Street who would disagree with that), and that overvaluation is causing negative side-effects on other industries and regions in Canada.
Following up on Erin Weir’s most excellent interventions, here is my column in yesterday’s Ottawa Citizen on this issue.Â And here is a graph that went with the column in the print edition, but which you don’t seem to see in the on-line version.Â It shows that in the last decade, Canadian petroleum exports grew by close to 2 percentage points of GDP — fairly impressive.Â But Canada’s exports of everything else (manufacturing, services, and tourism) declined by several times as much — and the two offsetting trends are not unrelated.Â No wonder Canada is mired in a large, chronic international payments deficit, even as we scrape the stuff out of the ground faster than ever.
These diatribes against anyone who even acknowledges potential downsides or side-effects of the bitumen boom seem to herald a new, dangerous tendency in Canada’s political culture.Â Opposing a bitumen-exporting pipeline in Canada these days makes you a foreign-financed subversive.Â And it seems that questioning the economic effects of the bitumen export strategy makes you equally seditious.Â I call this “energy McCarthyism,” and it should be rejected forcefully not just by those concerned with Canada’s deindustrialization and staples dependency, but by those worried about the quality of our democracy.
Jim – Kudos to both Erin and yourself for this series of postings.
There is another perspective that needs to be incorporated in the Petro-Critique and that perspective involves housing costs.
See the recent Diane Francis column on foreign speculators acting to drive up condo prices in Vancouver and Toronto:
The condo bubbles in Toronto and Vancouver are caused by foreign speculation and are making housing unaffordable and creating financial risk for the country in terms of government-insured mortgages.
We live in a world in which many central banks are debasing their currency or promoting a ZIRP environment. This makes it difficult to preserve capital, much less earn a return on capital.
Since Canada has a currency tied to commodity exports, it is viewed as a “safe” currency and investment dollars flow in. Some portion of these foreign funds are directed toward Canadian real estate investment which drives up the price of housing and places it out of reach of residents.
The second aspect of this problem arrives in the future when the “hot money” decides Canada is no longer a safe haven and the money begins to flow out as quickly as it arrived. I think we may all be surprised by how quickly that may happen and the carnage that it will create.
Somehow appropriating the decline of the value adding future of Canada and the innovative capacity that we need to build, and turning it into an attack on the oil industry is surely a sign of regionalism by the tories. We are talking about the value adding and innovative capacity of all Canadians that has been set against the machinations of the oil industry. So for Harper and his cronies to say it is regionalism is about as absurd as it gets.
The last time I checked a majority of oil assets in Canada were owned by foreign interests.
This would be a comedy if it were not so deadly serious to the future economic well being of all Canadians. Like many countries, we need to have our dollar be reflective of our PPP and not some notion of what oil is trading at.
It is precisely this argument that Mulcair will knock off Harper in the next election.
Funny really, as Harper keeps painting himself into the tar sand corner. That truly is the regional tendency that proves to be Canada’s freedom from Harper’s tyrannical rule.
Unfortunately, this ‘energy McCarthyism’ you so aptly name is evident in the enabling role of the Harper agenda being played out at the CBC.
Last Thursday’s At Issue Panel spent its entire 14 minutes talking about Mulcair’s comments, the subtext being that he isn’t really fit to lead the nation given the divisive nature of his comments. Of course, not a word was said about the master of national division, Stephen Harper.
This was followed by a truly distasteful tantrum by Rex Murphy, who furthered the theme of the divisiveness of this ‘national leader’, a term he used three times with heavy sarcasm in reference to Mulcair.
Clearly, the CBC chooses to ignore the sad history of appeasement efforts.
Maybe you should point how how many more people are employed by manufacturing compared to the oil industry. The impression has been created that manufacturing in Canada is all but dead and therefore our focus should be on the oil industry.
Diane Francis is not a credible source. The “foreign buyer” theory is just that–and hard evidence is lacking. Thus far, all I’ve seen are anecdotal references to foreign money based on the experience of some real estate agents–particularly in Vancouver, which has a visible Asian minority population–not to mention some highly unusual sales, like a house in Woodbridge that recently sold for many times the asking price. But no one seems to know much beyond that…
More news today on supposed divisiveness of Mulcair’s response to the oil industries. Wow talk
about a backwards flag waving exercise- phrack!!!!
Why are people saying it is divisive and evil for Canadians to question pursuing oil and resource extraction as an economic strategy. Especially at the torrid pace of resource development mainly the tarsands and the result of it raising our dollar to a point that it kills off the rest of the economy, is known as the dutch disease and its destructive effects are well documented. Recent evidence is coming out that manufacturing in Canada contains an increasingly large proportion of the knowledge workers in our country building innovative things does take brains! The knowledge economy is our key to an innovative future, yet we sit here and let an out of control Harper wave the flag over the resource extraction industry controlled by foreign interests destroy our future capacity to have a higher standard of living? How is that even remotely considered dividing the country? Which is how the tories want us to perceive it.
yes but jack mintz is reported in the financial post as saying that manufacturing has been in decline in canada for the past 20 years(even when the loonie was 80 cents) so its not the oil patch stupid! anyone care to take him on??
Jack Mintz is not wrong; manufacturing has been in decline for at least 20 years. In fact, I’m willing to bet the decline began sometime just after the signing of the FTA and then NAFTA.
Once we lowered our protection barriers, jobs that require labour moved south, to warmer and more desperate climes. Once China opened up, everyone offshored the labour to China and the rest of Asia.
It is not rocket science; people who live in a climate where they can sleep under a banana leaf can afford to work for less than we in the frozen North. And people who are in desperate conditions will work for any type of wage at all. There is no way that North Americans can compete, until we are living in the same circumstances, which is where the Neo-Cons will take us.
The petro-state that Canada has embraced has only sped up the process of industrial decline, but it is not the root cause.
It is also true that, should we manage our resources differently, we might have the capital to invest in 21st century manufacturing.
On the other hand, we could also admit that we are simply trying to tinker with a system that doesn’t work for the majority of people: Capitalism. Until, we acknowledge that private interest will not ever serve the public good, (except by accident), and move to a different system of wealth distribution, we will continue to move down this path of decline. At least as far as the 99% of us are concerned.
I think it was fair for Hoback to ask the question he did- he just did it poorly. The Steelworkers are a highly-Marxist organization who came to the table with an agenda that was set back in the days of the Waffle. They believe strongly in nationalizing mines and other natural resources- so, Weir’s testimony is naturally bent against foreign investment.
I wrote a more detailed explanation in an article yesterday.
Greg, do you have evidence to support your claim that nationalization would be bad, besides ad homemin attacks and Red Baiting?
Wow, baiting the Steelworkers as a “Marxist” organization … now I KNOW we live in McCarthyist times!
Jim Stanford, did you read the article I wrote? There were clear links between the Steelworkers and Marxist/Trotskyist organizations. Do you deny them? How about Carolyn Egan, who is one of the leaders of the International Socialists?
We should look at the CAW when discussing Marxist/Trotskyist links too Jim.
You seem all too close to the people who hijacked Occupy Toronto on behalf of the International Socialists. Or, are you just ignorant of the fact of who they are? If you have any confusion, I’d be glad to share more details with you…
You seem oblivious to USWâ€™s history as a strongly anti-communist union. Your articleâ€™s attempt to associate USW with the Waffle is especially bizarre given the Steelworkersâ€™ instrumental role in expelling it from the NDP.
Your â€œclear links between the Steelworkers and Marxist/Trotskyist organizationsâ€ are that a Communist Party website quoted Leo Gerard and that Socialist Worker has quoted me? When Report on Business or Financial Post quote us, is that a clear link between the Steelworkers and corporate Canada?
holy phrack what a bunch of whackos we have posting these days on the PEF.
The Steelworkers communist? the middle of all middling labour unions is actually secretly hoarding a revolutionary army! Finally the truth comes out Lol. that is comical and to have somebody on here saying they have proof is even more bizarre.
I wish right wing nut jobs would take their meds more often.
Erin you have a case of cheveux dangereuse, and have been exposed, you better report that to grandmaster chess champion Leo Gerardov.
Hi Erin. I’ve published my response to your position on an article here:
Are you, or have you ever been, a member of the Anarchist/Libertarian Movement?
But seriously, I was curious with this following quote from your bio:
“Iâ€™m neither left nor right- as an ethicist, I try [to] look at the world by what is right and wrong. I donâ€™t believe in the concept of political parties- politicians should represent their constituents, not party politics.”
How exactly do you measure “what is right and wrong”? I imagine your Masters in “Philosophy & Ethics” from Moscow State University has something to do with the construction of your paradigm.
I completely concur with your views on the validity of Mulcair’s observations, Jim and Lorne, Erin and Darwin et al. I was amazed at the parody-like attack from Rex Murphy when he asserted that Mulcair was “against” the western provinces, merely because he is supporting full cost accounting on a resource that must be managed with maturity.
Greg Renouf’s assertions about Marxism appear to me to be questionable in the extreme. I would challenge Mr. Renouf to provide some detail on precisely what is wrong with Marx’s general point that capital tends to alienate labour from the value of its production, and tends to push this alienation to an intolerable level when capital is given free reign to act with increasing monopoly, and ruthless undercutting of labour in the economic transaction. I fail to see anything qualitatively different in Marx’s description of the depersonalization of labour when all control is hoarded by capital, and the Papal encyclical on the priority and dignity of labour.
In my view, as someone who joined the Conservative party during the 1974 election, and am paid up until 2015, I feel that the financial elite has delegitimated its right to exclusive control of the mechanics of the economy by the institutionalized deceptive practices that lead to the 2008 financial collapse, and labour needs to organize a complete overhaul that will enable community economic development [CED], and economic democracy for everyone in a genuine social economy.
You’ll have to excuse Greg Renouf. He’s an idiot who has no clue what he’s talking about. See, for example, his linking of the Waffle with the Steelworkers – a claim made in complete ignorance of the fact that the Steelworkers demanded the Waffle’s expulsion from the NDP (and had previously warred against Mine Mill due to its links with Communists).