The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.
NDP Leader Thomas Mulcair is right with one part of his critique of Western Canada’s oil-driven economy, and wrong about all the rest. On balance, it’s a poor batting average for someone who, some day, hopes to become prime minister.
Mr. Mulcair has been chastising the oil industry, and the governments that regulate it, for not making the industry pay the full cost of emissions that create greenhouse gas emissions.
Even Exxon-Mobil in Houston (and the Canadian Association of Petroleum Producers) thinks there should be a price on carbon – through a tax or, less preferably, a market-trading system for emissions. Alberta has such a tax, but it is set way too low to be very effective. So Mr. Mulcair is correct that pollution costs should be factored into the product’s final cost. Otherwise, all of society loses from the pollution.
To say, however, that Alberta and Canada are acting like Nigeria in regulating the industry is political nonsense. As is his wider critique that Canada is suffering from “Dutch disease,” whereby high prices for commodity exports drive up the Canadian dollar which, in turn, hollows out the manufacturing industries of Central Canada.
This “Dutch disease” analysis is simplistic in the extreme. Worse, for a potential prime minister, it deliberately targets one part of the country for special (and wrong) blame, which is not what a serious national leader should do in a highly regionalized country.
The reasons for the strength of the Canadian dollar go way beyond the fact that Canada exports oil. It also exports natural gas, minerals, potash, forestry products and hydro, especially from Mr. Mulcair’s own province, Quebec. Those products (except maybe forestry these days) are in high demand, especially in Asia. When demand is high, prices tend to track demand.
Moreover, the Canadian economy has lower deficits, less debt and a somewhat better future growth track than other industrialized countries, all of which makes the country a magnet for the inflow of money. Does Mr. Mulcair decry that strength, because if deficits and debt soared, unemployment rose and economic growth slowed, Canada might have a lower dollar all right, but at what cost?
For the rest of this article, please go to the Globe and Mail website: http://www.theglobeandmail.com/news/opinions/jeffrey-simpson/mulcair-should-drop-the-dutch-disease-rhetoric/article2437459/