3.10.2012

Is Dutch Disease Why Only McDonalds and Starbucks are Hiring?

There used to be good jobs here in BC and across Canada when my oldest daughter graduated from high school back in '78. Back then a kid could find a job in the forest industry, manufacturing or fishing industries. A good job, a job that in time would feed a family, buy a home, maybe a vacation in the camper up at the lake and probably a pension someday. Some kids also went off to university, sooner or later they too found a job in their field [though they mighta had to move somewhere inconvenient to get a start].

But by the time my youngest daughter graduated from high school things were far different. Some still went on to university and a few still got decent jobs if they were uniquely talented or well connected. Many though hoped for a job at Starbucks but ended up at Tim Hortons. A few years later, by 2010, those who had 'secured' their position at Starbucks were happy because by then mosta the heavily indebted university grads were filling out applications there too.

What happened is called Dutch Disease. every major oil exporter from Venezuela to Louisiana has suffered some form of the ailment. 'The Economist named the economic malaise "the Dutch Disease," from which the astute Dutch eventually recovered but from which every major oil exporter from Venezuela to Louisiana has suffered at some point. Phillippe Bergevin first diagnosed Canada's growing infection in a paper titled "Energy Resources: Boon or Curse for the Canadian Economy?" Bergevin detected a number of critical and telltale symptoms including "a rising resource-led export sector coupled with a struggling manufacturing sector and a rising currency."

Jock Finlayson of the Business Council of British Columbia noted that every one cent rise in the Canada's petro dollar subtracted $150-$160-million from the forestry sector; and another $50-million from the mining sector. The Tar Sands carnival and the resulting Dutch Disease is responsible for 54 percent of the manufacturing employment loss across Canada due to exchange rate developments between 2002 and 2007 alone. By exporting vast volumes of oil instead of refining and consuming it here in Canada Alberta and successive federal flunkies have chosen to export thousands of high value jobs to U.S. refineries.

The bought and paid for politicians are right when they say the tar sands is all about jobs and revenue. They just refuse to add two important qualifiers: lost jobs and squandered revenue. Please do your own research on Canadian Dutch Disease. When you do you'll see why Caterpillar shutdown its plant in Ontario and opened a new one Georgia recently and why there's a lineup to get jobs at Mickey D's nowadays.

How the Tar Sands Threaten Canada's Economic Fate - A short course in Dutch Disease, deindustrialization and the Bitumen Curse.

Does the Canadian economy suffer from Dutch Disease?