Friday, May 18, 2012

Canada's Dutch Disease?

The shrewd Prime Minister Stephen Harper
is damn good at his job and an example for conservatives.
So I was planning on my Honor post for tonight, but then I ran across this gem.
It reveals a growing fight in Canada around where to place the blame for the loss of manufacturing jobs, primarily in the Great Lakes area. Naturally the socialists want to blame 'Others,' specifically those in the heavily conservative areas that have grown substantially with oil production in the past few years.


So the NDP has pulled Dutch Disease out of its hat: a very, very convenient argument. DD is something they should teach you about in college political science courses, but don't because it's a crack against foreign aid and such is against the dogma of the academy. It happens when a large growth in natural resource production or an influx of foreign aid valuates currency so much that fabrication industries flee to cheaper places with cheaper currencies (as to export back to the highly-valued currency markets and thereby make more wealth). It's a tidy little argument that favors the socialists and, if accepted by the population, gives them leave to regulate natural resource production to economic demise, depopulating producing territories, and preventing the Conservatives from getting any more free seats in the House of Commons. The Conservatives' response is epic, simple, hyperbolic, and effective: “The leader of the Opposition wants to call Canadian employers a disease.” Both reveal the genius and creativity of the Canadian political establishment, even if they're total crap. 

The socialists have chosen, as always, to conclude they want to. If they relied of facts of the world, they wouldn't be socialists. As the end of the article says, "the report concluded that cyclical factors and global competition are mostly to blame for the decline in factory production," but such is not in the headline. There are a dozen other major explanations for Canada's loss of manufacturing jobs, all of them shared with the American Midwest's loss of the same jobs. You can be very sure we don't have DD (the expansion of fracking is a pittance compared to our economy's size, even in its weakened state).  Until the fortunes of Michigan and Ontario see a wide and thusfar nonexistent disparity, I'll doubt the Canadians have it either. 
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Edit: this report lends credence to the DD theory, specifically the inversion of manufacturing jobs with the drop in currency value. I still have my doubts as this could be due to the growing instability in China, northern Mexico, and Europe.

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