Thomas Mulcair supporter, SFU prof Doug McArthur, also linked tar sands to economic woes
More than a month before NDP Leader Thomas Mulcair sparked a national debate over the impact of the “Dutch disease” on the Canadian economy, one of his influential Vancouver supporters gave a public lecture on the same subject.
At a March 21 roundtable discussion on the economy, SFU public-policy professor Doug McArthur explained how tar-sands developments are driving up the value of the dollar and harming the manufacturing sector.
“This is distorting our economy,” he said at the time. “As long as this situation remains, we’ll face the Dutch-disease problem, which was that their manufacturing sector was essentially destroyed by high gas prices in the 1980s. By the time…the richness of these resources began to decline, they had no sector left to make the kind of investments that are needed. And they ended up being a deindustrialized economy.”
McArthur, a former deputy minister to B.C. NDP premiers, spoke at SFU Woodward’s in the Goldcorp Centre for the Arts. He publicly backed Mulcair's successful bid to win the NDP leadership race.
On May 7, Mulcair made similar comments on CBC Radio’s The House, telling host Evan Solomon that Dutch disease has caused widespread job losses in the Canadian manufacturing sector.
“The Canadian dollar is being held artificially high, which is fine if you’re going to Walt Disney World, not so good if you want to sell your manufactured product, because the American client, most of the time, can no longer afford to buy it,” Mulcair said. “We’ve hollowed out the manufacturing sector. In six years since the Conservatives have arrived, we’ve lost 500,000 good-paying manufacturing jobs.”
McArthur doesn't comment on private discussions he might have with people, so there's no way of confirming whether or not he influenced Mulcair to take a public position on this issue. In March, Mulcair wrote an article in Policy Options about the economic impact of tar-sands projects.
Mulcair’s recent remarks have since been condemned by Finance Minister Jim Flaherty and three western premiers, including Christy Clark.
And on May 16, three researchers affiliated with the Montreal-based Institute for Research on Public Policy released a study concluding that only 25 of 80 manufacturing industries experienced a “significantly negative relationship between the US-Canada exchange rate and output”. According to the paper, labour-intensive industries, such as textiles and apparel, suffered the greatest impact, whereas other groups—including food products, metals, and machinery—weren’t harmed nearly as much.
“On balance, the evidence indicates that Canada suffers from a mild case of the Dutch disease, which warrants a commensurate public policy response,” the researchers wrote.
McArthur, on the other hand, suggested in March that Canada should “slow down the pace of development in the tar sands”, calling it one of the “major large-scale challenges facing the Canadian economy”.
“The problem is none of our governments are responding in any active or even direct way to try to change this pattern,” he said.
A decade ago, the Canadian dollar was worth 64 cents in the United States. Now, the Canadian dollar trades around par with the U.S. greenback.
During his lecture, McArthur examined Canadian industrial-product and commodity prices over the past decade. He pointed out that lumber and wood products were down 11 percent, textiles were up by four percent, and machinery and equipment increased by five percent. Motor vehicles, transport equipment, and electrical and communications products were all down.
In contrast to an overall decline in prices of tradeable manufactured goods, McArthur noted, copper materials were up by 333 percent, metallic ores increased by 239 percent, and nonferrous metals rose by 251.6 percent.
Employment is up nearly 30 percent in the resource sectors, he stated, whereas it had fallen by 25 percent in manufacturing over the decade.
“The response of industries there is to reduce labour costs, reduce profit margins, or increase productivity,” McArthur explained. “That’s the only way they can continue to function and stay viable in the face of this.”
The public-policy professor pointed out that downward pressure on wages in manufacturing counters the goal of creating a high-skilled, high-wage economy.
In addition, he stated that the higher dollar is widening the productivity gap between Canada and the U.S.—meaning that there is less production per unit of labour employed in this country. McArthur noted that manufacturers cannot easily address this by increasing investment when they’re less competitive internationally.
“We need to take steps to manage the exchange rate to see that it doesn’t keep going up and up, which it will if we keep pushing the tar sands as fast as we are,” he said.
Listen to Doug McArthur’s speech on Canada’s economy catching "Dutch disease".
Follow Charlie Smith on Twitter at twitter.com/csmithstraight.
Comments
12 Comments
Arthur Vandelay
May 17, 2012 at 9:46am
Thank you GS for this article. It explains so much. Namely:
1. Q: What happens to NDP policy maker comrades after they fail in public life? A: They produce spin from wanna-be academia like SFU under the pseudo-cred of a “public policy professorship”.
2. Q: Has Frenchy Mulcaire yet matured into a full-on Canadian politician ... will he be able to shovel it as good as the Harperites? A: Huge YES! This story can’t even see spin in its rear view mirror.
3. Is there nothing from the NDP that the GS won’t publish ver batim? A: This one is a bit more complicated. After the GS took a pass on publishing the piece of econo-drivel that the CCPA recently spat out about a “Canadian bank bailout” (that was proven a joke by real economists in mere hours after its publication) I thought the answer was yes, they don’t publish the really crazy stuff. But now the tide has turned, were back to spitting out the crazy stuff without any sort of critical thought or perspective.
How about these facts:
In the same time period that Frenchy Mulcair proclaimed, “We’ve hollowed out the manufacturing sector. In six years since the Conservatives have arrived, we’ve lost 500,000 good-paying manufacturing jobs.” and hence “… the American client, most of the time, can no longer afford to buy it”. Really? But in that same period of time:
a. the US manufacturing sector lost between 5 – 6 million jobs,
b. the US entered its worst recession in nearly 100 years,
c. China went from the coming out of the stone ages to becoming the world’s number one manufacturer, one that pays its manufacturing labour something less than $2/hour.
I can only hope that the GS posters who are so adept at calling out (and rightly so) the political right on their lies, are equally adept at those on the left. But moreso, that they realize that Frenchy Mulcaire and his surrogates (like the publically-funded and smiling Mr. Macarthur) are not above some “either your with us or you’re with the child pornographers” of their own.
Charlie Smith
May 17, 2012 at 10:10am
Arthur Vandelay,
For a guy who hates the Georgia Straight so much, you sure spend a lot of time on our site. Your use of the word "Frenchy" makes me wonder if might be a paid Conservative hack, who comes onto sites like this to try to engage in a little bit of voter suppression.
If I'm wrong, feel free to phone me at the Georgia Straight (604-730-7000) if you want to eliminate these suspicions of mine. I'm sure they're shared by other regular readers of Straight.com.
Charlie Smith
Arthur Vandelay
May 17, 2012 at 11:00am
Charlie, the last time I was on your site (as Bruno15) you accused me of being a (federal) Liberal hack. I only dumped the Bruno15 pseudonym as I lost my cool a bit after the last election, where I railed against the GS for its part in electing a CPC majority.
Is it so unbelievable that someone might (a) enjoy debate and (b) want there to be some kind of perspective in the moderator of that debate?
Also, is the reference to "Frenchy" again so unbelievable from anyone but a paid hack? The guy is running for the top political post in our nation, while he is the citizen of another country. This to me is untenable, and I think your readers need reminding of it. I think its illegal in many Western democracies.
Full disclosure, I am a chartered accountant, I live in a federally and provincially Liberal riding, and have NEVER voted PC or CPC in my life and voted provincially Liberal once, in 1991 along with the rest of the province to make the pain stop. I have never been a member of any political party at any level in my life.
I am still under the impression that the GS site is for debate, and not cheerleading. I think my comments are fair, but am not beyond being called out if they are factually incorrect. I think I give you and your fellow writers the benefit of the same fair treatment, only calling you out for the egregious. If you still need me to call, let me know and I’d be happy to put your fears aside.
Buzz
May 17, 2012 at 11:45am
Give em Hell Arthur. One thing I have learned over the years is just what you said - the GS will print basically anything the NDP says as gospel. Charlie loves to say he has no agenda while ignoring the sins of the NDP. Another thing I have learned is that the left is only good at criticizing the right. They look the other way when their friends spout b*llsh*t and lies. And Charlie, I read the GS to see how out of touch with reality the left is and for the occasional laugh at what you think is logical.
Nana
May 17, 2012 at 2:01pm
I always find is so totally disturbing and misleading to blame a high dollar for the loss of manufacturing jobs. Come on people, maybe these companies need to look at efficiencies and waste reduction (and by waste I mean ALL forms of waste) before blaming the high dollar. It's like saying that Canada needs to be inferior to survive.
Charlie Smith
May 17, 2012 at 3:40pm
Bruno,
I was told by a French citizen who works here that once you have French citizenship, you can't get rid of it. I'll look into this to see if it's true. If it is true, as M. Jacquier informed me, it's not fair to condemn a guy who has no choice in the matter.
I don't think we played any role in electing a CPC majority, but you're free to disagree with me on that.
After all, it was the Canwest papers, the Globe and Mail, and others who endorsed the CPC, not us.
I don't mind a debate. In fact, I take some pleasure in seeing that every single vote has gone against Buzz for his comment.
I could regale you with stories about how much crap I took during the NDP years for writing about fast ferry cost overruns, a stupid pipeline project to Vancouver Island, and a foolish rapid-transit project through five NDP constituencies where there was barely enough transit ridership to justify a bus every half hour.
Charlie
Arthur Vandelay
May 17, 2012 at 4:36pm
Charlie
French citizenship sounds like herpes. Mr. Mulcair probably should get that looked at.
Bruno was my dog's name. As he was a really good boy, I am honored to be referred to by the same name.
Cheers.
please call Charlie!
May 17, 2012 at 4:54pm
come on Arthur step up!
You might get a raise!
RealityCheck
May 17, 2012 at 5:15pm
Getting back on topic, this has to be one of the most ridiculous approaches to economic theory ever! The only way to weaken our dollar is to weaken our economy and lower our standard of living below that of a first world western democracy. Mulcair has become the first Western leader to say he wants to weaken his country and lower the living standard of its citizens...think about that for a while.
Birdy
May 18, 2012 at 12:38pm
re: Charlie
"...makes me wonder if might be a paid Conservative hack, who comes onto sites like this to try to engage in a little bit of voter suppression."
I've been looking, and I can't find where to apply for these paid hack jobs. Do you have any leads? Tell you what... Hook me up, and later I'll become a whistleblower and you can do a big story exposing the secret world of paid hacks.