The Vindication Of Thomas Mulcair

Some will remember the abuse heaped upon NDP leader Thomas Mulcair back in 2012 when he said that Canada was suffering from the same Dutch disease that afflicted the Netherlands after natural gas fields boosting that nation's currency reduced the competitiveness of its exports back in the 1970s. The culprit in Canada was the unrestrained exploitation of its oil fields, leading at one point to our dollar being valued higher than the American one. Exports suffered, manufacturing continued to decline, and the Harper regime gleefully denigrated the NDP leader for an inconvenient truth.

It would seem that Mulcair's analysis has been validated by both statistics and analysis.

Says Bank of America Merrill Lynch economist Emanuella Enenajor,

"The currency's appreciation of almost 60 per cent over the last 15 years has really hurt the manufacturing sector".

The fact that oil prices have now dropped is not having the salutary effects one might hope for:

Just because low oil prices are reducing transportation and energy costs, and the floundering loonie is making Canadian exports attractive again — it doesn't mean the sector will bounce back immediately.

You can't just turn the lights back on in the factory and start sending the widgets out the door again.

When the energy sector started to lose steam, the old stalwarts of the economy weren't there to pick up the slack.

"The Dutch disease that Canada has experienced has been more than a decade in the making, and I think it has really hurt business confidence," added Enenajor.

Of course, with an election in the offing, expect the Harper regime to give no quarter, evidenced by party stalwarts like the redoubtable, predictable and hyper partisan Pierre Poilivre:

"The leader of the NDP calls [the natural resources] sector a disease!" Pierre Poilievre sneered at Mulcair across the floor of the House of Commons last week.

Here is the interview with Emanuella Enenajor:

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.

When The Left Is Right

Although one wouldn't know it by listening to the predictable, hysterical, and politically-motivated campaign Harper Inc. is mounting against Thomas Mulcair for his 'Dutch disease' comments, there is a growing view amongst analysts and think tanks that the NDP leader is correct to an extent in his assessments of the economic impact of unrestrained tarsands development.

In his column today, Thomas Walkom offers an overview of analyses that verify the inconvenient truth to be found in Mulcair's assertions.

'Dutch Disease' Confirmed By Harper-Funded Study

Despite the ongoing Harper-led campaign of vilification against Thomas Mulcair for his comments about the Alberta tarsands and Dutch disease, a Harper-funded study confirms the truth of his assertion.

As reported in The Globe, Industry Canada paid $25,000 to three academics to produce the lengthy study, which is about to be published in a prestigious journal, Resource and Energy Economics. The study concludes that between 33 and 39 per cent of the manufacturing employment loss that was due to exchange rate developments between 2002 and 2007 is related to the Dutch Disease phenomenon.

Despite that inconvenient finding, don't expect the character attacks on Mulcair to abate. If past practices are any indication, they will probably be taken to new levels as the party of national division, the Conservatives, seek to drown out rational debate with hysterical name-calling and finger-pointing, the chief weapons in their childish arsenal.