Mulcair Knows Nothing About Economic Issues - What A Ridiculous Conclusion He Makes

In his Saturday appearance on the CBC radio program The House, NDP leader Thomas Mulcair rolled out shopworn arguments about how the oilsands are inflicting unreasonable costs on other parts of the country. Although he piously maintained he is not opposed to oilsands development and is not trying to inflame regional conflict, he then went on to do both.

Like King Canute, Mulcair is demanding that the tides of global economic change be rolled back. Canute, however, was trying to demonstrate to his countrymen the limits of human power, whereas Mulcair is trying to restore the Canadian economy of the past.

To be fair, the value of the Canadian dollar has been driven upwards by resource prosperity in the West, and this has further complicated life for a manufacturing sector already struggling with low productivity, soft U.S. markets and increasing global competition.

It may also be true that up to 500,000 good-paying manufacturing jobs have been lost in recent years, although Mulcair fails to mention the good-paying jobs that have been created in the West. However, will his proposed cure leave Canada better off?

In the past we used tariffs to protect Canadian manufacturers from competition, but in the era of NAFTA and global free trade initiatives, tariff protection is no longer available. Thus Mulcair turns instead to the possible salvation of a low Canadian dollar.

Here he refers to the Canadian dollar being kept “artificially high” by the oilsands. But why are highly paid jobs in the resource sector and eager foreign investment any more “artificial” than manufacturing jobs protected by a low exchange rate? Why is a high dollar artificial but a low dollar natural?

Given that the value of the Canadian dollar now floats, the only way to weaken the dollar is to choke off investment, production and employment in the parts of the economy responsible for the high Canadian dollar.
In other words, curtail economic growth in the West and drive down the value of the Canadian dollar to the point where manufacturing jobs in other parts of the country will be protected from global competition.

This proposed regional redistribution of economic opportunity is draped in the flag of environmental stewardship. But, when Mulcair asserts that “polluters must pay,” his indignation is directed only toward the oilsands — not to the consumers of petroleum products, not to Montreal or Toronto commuters. His own constituents are conveniently let off the hook.

Mulcair tops his recipe for economic mayhem by referring to the “Dutch disease” whereby the manufacturing sector in the Netherlands was hurt in the early 1970s by currency inflation brought about by an over-reliance on natural gas revenues. However, this appeal to international validation ignores the fact that the Netherlands is doing just fine today, and additionally, is a country spared the regional divisions that shape the Canadian economy.

The economic prescription advanced by Mulcair is both simple and potentially disastrous: curtail economic growth in the West and assume that a lower Canadian dollar will result, which will protect the manufacturing sector from global competition and soft American demand. It is impossible to imagine a more ill-advised policy prescription for the West and for Canada.

Roger Gibbins is the president and CEO of the Canada West Foundation.

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