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Wednesday, October 1, 2008
Stéphane Dion and Jack Layton like to suggest any economic woes happening in Canada is Stephen Harper's fault: Harpernomics is an in play term at present. U.S. banks are failing: Harpernomics; Car plant shutting down: Harpernomics. According to Dalton McGuinty, however, that car plant shutting down is Jean Chrétien's fault.
OK, that's not really what he said or meant, but a logical deconstruction of his comments can come to no other conclusion:
"There's no doubt that there's some of our traditional manufacturing is being challenged.''
The premier said it was time for a great deal of humility. But he sounded positively chastened.
He said Ontario manufacturers, sheltering behind the low Canadian dollar, "hid from global economic realities'' longer than did the U.S.
"We didn't make the necessary productivity gains that we should have made. We weren't necessarily as innovative as we could have been and should have been.''
He's right, but only partly so. He suggests the low dollar masked a productivity problem, but as I've previously noted, the low dollar was not a mask, but an indicator. It indicated that companies were not investing in Canada:
...problem is the opposite, the low dollar of the Chrétien era. While exporters and the unions loved the low dollar, and claimed it was driving growth through the 90's, it was really driving the present manufacturing contraction...
In the 90's everybody was building like mad, but not investing. Canada's manufacturing facilities have fallen behind the rest of the world. Changes to manufacturing have been drastic the last 20 years, and manufacturers have not been investing in Canada. The result: loss of jobs now.
If Jean Chrétien and his brilliant Finance Minister Paul Martin did not recognize this implication of the low dollar, they should have.
The current U.S. fiscal crisis has it's roots in regulations and lending practises that occurred through the 1990's (although certainly not exclusively). Conversely, at a time when manufacturing was soaring, credit was easy to get and a technological revolution was making factories built a mere 5 or 10 years earlier obsolete, nobody noticed that companies - manufacturers - were not investing in Canada. They were not building new plants and they weren't updating the ones they had. Ten years later there's a 'crisis' in the manufacturing sector, and everybody is surprised.
The only thing that should be surprising is that Dalton McGuinty was the second person to notice.
