Saturday, March 9, 2013

The Strange Economics of Stephen Harper

Even though he only has a Master's degree in economics, our Prime Minister likes to present himself as an economist. And, like the myriad other untruths propagated by his regime, perhaps the biggest lie is that resource extraction, especially tarsands oil, is the most prudent activity around which the Canadian economy should revolve. Indeed, the Harper propaganda machine is so powerful that when anyone dares question the wisdom of such a narrow approach, he or she is automatically labelled anti-Alberta, anti-growth, and profoundly un-Canadian. One doesn't have to search too far back in memory for the pilloring Thomas Mulcair endured over his 'dutch disease' remarks.

Yet somehow, the most potent criticism hurled against Hugo Chavez as President of Venezuela, his reliance on oil exports to the exclusion of a more diversified economy, is supposed to have no application to Canada in Harperworld.

In today's Star, Thomas Walkom attempts to set the record straight. Entitled Alberta’s oil woes mean trouble ahead for Canada, his piece observes that oil, the unilateral basis of the federal government's trade policies, is in trouble. Citing Alberta's deficit budget in which spending will be slashed, he examines the similarities between Alberta and Venezuela:

Curiously, Alberta has much in common with the Venezuela that Hugo Chavez bequeathed to the world. Both rely on heavy oil exports to the U.S. Both are one-party states (Alberta more so than Venezuela). Both are utterly dependent on the price of oil and both have economies that, in different ways, have been deformed as a result of this dependence.

Venezuela faces a reckoning and so does Alberta. So, indeed, does Canada as a whole.

Echoing the 'dutch disease' currency inflation problem articulated earlier by Mulcair, Walkom says, as a result of the decline in oil prices for the tarsand product,

We are already seeing a decline in the Canadian dollar as a result of the resource slowdown. In the long run, this should be good news for Canadian manufacturers who export their goods. In the short run, it means all of us are a little poorer.

Where we don’t see any change is in the federal government’s approach to the economy. The Harper Conservatives remain dazzled by resources. They believe that if the markets want Canadians to hew wood and draw water, that’s what we should do.

But markets are notoriously fickle. This is a fact the entire country will have to face. Alberta is just getting there first.

As Walkom's piece suggests, expect no new understanding or economic insights in the world that Stephen Harper and his cabal inhabit.


  1. The end may be nigh, Lorne. A recent item in Britain's Financial Times noted that market analysts are steering their investment clients away from high-carbon fossil fuels recognizing that these could soon become "stranded" assets. The article itself is behind a paywall but you can find excerpts and a link to it here:

    In essence, when you're betting on an unconventional petroleum that is not only high-carbon but high-cost that is in almost all probability a soon-to-be stranded asset.

    At the end of the day we may be servicing a Chinese only demand. We would do well to recall how China gamed the Pacific Rim coal markets to realize what that means.

  2. I am currently reading a book by Jeff Rubin, Mound, called The End of Growth, which offers real cautions regarding the future of the resource with which Harper is obsessed. Thanks for the link. I will check it out.

  3. It is important to recognize that the Conservative Party represents the political wing of Big Oil.