 |
| Oil drives Canadian dollar's value, but is high or low value better? |
Being forced to take Alberta charity is not only galling, but outright humiliating and so Quebec nationalists use the rationalization of the proverbial layabout, who complains that his rich brother-in-law, who helps support him, is a dishonest businessman anyways, making money on the backs of others.
How convenient....
Dutch disease is the apparent relationship between the increase in exploitation of natural resources and a decline in the manufacturing sector (or agriculture). The mechanism is that an increase in revenues from natural resources will make a given nation's currency stronger compared to that of other nations, resulting in the nation's other exports becoming more expensive for other countries to buy, making the manufacturing sector less competitive. LinkAnd so Alberta's Oil Sands are roundly blamed for contributing to Quebec's economic woes, whereby manufacturing jobs in Quebec are sacrificed because of the higher value of our dollar, which has the effect of pricing ourselves out of the international market, because of high labour costs.
It's a popular and neat idea, one that fulfills an important need, that is to shift blame, but it is a theory thoroughly debunked like that which proposed that immunization leads to autism in children, advanced by some Hollywood know-betters.
These theories live on because people want them to be true.
I'm not going to waste time dissecting 'Dutch Disease' because those who believe in it are inconvinceable, like 'Truthers' or conspiracy theorists who believe that the 1969 Moon landing was a hoax.
Sadly, the "Dutch Desease" theory was given new life by Thomas Mulcair who should know better, but who cynically chose an opportunity to score points with his constituency in Quebec, the hard and soft nationalists.
Now even if the theory was valid (which it is not) it described a situation in the 1960's in the Netherlands where the discovery of a lucrative gas field supposedly pushed up the value of the guilder, to the point where manufacturers were no longer competitive.
In the sixties, most of the manufacturing jobs were located in Western countries, in Europe and North America, where a higher than average currency could affect competitiveness.
But today, the jobs lost in Quebec are almost all re-routed to Asia, where salaries are so much lower, than even if we drop the value of our currency, it wouldn't make a difference.
As for those, who would argue that we would be more competitive in North America, I would ask in what domain?
Everywhere in North America, manufacturing jobs have vanished and a lower dollar wouldn't make much of a difference. Take for example Quebec's dairy industry, which could never compete with American prices because of price supports. Even if some new industries would sprout based on a cheaper dollar, the overall effect on the entire population would be devastating because everything we import would cost more, including all our fuel, agricultural products and manufactured goods.
The theory that we can somehow become richer by becoming poorer, can only be explained by wrapping the argument in nonsensical gobbledygook.
The removal the so-called effect of Dutch disease (again, it doesn't exist) would benefit a handful, but drop the standard of living of the entire Quebec population.
Hilariously, this is exactly what some nationalists argue for, an independent Quebec with its own currency that would drop to a level that would provide a competitive advantage over Canada.
It's an easily sellable plan if one omits to describe the negative effects.
I wonder what the effect of telling Quebec voters, before a referendum, that in an independent Quebec, everybody would have to take a 15% salary decrease, the day after the launching of a Quebec dollar!
And so we come to the issue of currency, and the question as to whether an independent Quebec will stay with the Canadian dollar or go forward with a new currency.
According to experts, staying with the Canadian dollar makes sense, Scotland independentists have already proclaimed that in the event of separation, Scotland would maintain the British pound as the national currency.
While there are solid economic reasons to keep the Canadian dollar, I'm not sure that Quebec could muster the political will to keep the Queen on its currency, especially when newer editions of the
Not only would the maintenance of the Canadian dollar be an affront, Quebec would be taking a huge step backwards, no longer enjoying any influence on national monetary policy.
More likely, is the scenario where the Dutch Disease proponents win out and Quebec would go ahead with its own money, accepting that its value will deteriorate, hopefully making the province slightly more competitive, but assuredly making the entire population poorer.
The cherry on the sundae of a currency exchange is the 14 billion windfall that the Quebec government would receive immediately as the Canadian dollar is eliminated and the Quebec dollar created.
The difference is in the cash money known in the trade as the 'M0" or the liquid cash in your pockets and bank accounts which amounts to about 14 billion dollars in Quebec.
In one fell swoop, Quebec would take that money and replace it with its own, in other words, giving out paper and receiving 14 billion in Canadian dollars back, a tidy sum that could finance the immediate shock of independence.
But all these gains would be wiped out in the increased cost of supporting the debt
Remember, that if Quebec reduces the value of its currency, the cost of supporting the collective debt, priced internationally, will go up.
Simply put, if Quebecers start being paid or earning in a currency that is less valuable than the Canadian dollar, they will have to spend more Quebec dollars to pay the mortgage on the family home, priced in Canadian dollars or its higher equivalent in local currency.
It is probably true that these issues are above the comprehension of the average citizen, but just the same, these issues exist.
And is it really realistic to vote on sovereignty before discussing these issues publicly?
According to the PQ, it is okay to keep people in the dark when the answers to these difficult questions are not easily explained with a positive result.
To those who disagree with everything I say here, I put this question to you..... Aren't we entitled to hear the answer from horse's mouth, that is, the position of the PQ in relation to currency in a new state, something which we can all agree, is of monumental consideration?
Shouldn't the PQ tell us before a referendum whether they will proceed to a Quebec currency or not and what the effects of either scenario is.
How on Earth should we pronounce on such a life-changing decision in the blind, how many Quebecers would buy a home without being informed of the cost or without taking a walk-through.
The process is called 'kicking the tires,' that is, examining the pros and cons beforehand, be it a car, home or investment.
I don't think many of us would purchase a vacation without knowing the cost, or for that matter, the attributes or shortcomings of the resort
Shouldn't we be doing the same with the issue of sovereignty, a bit of due diligence, so to say?
If everything is as rosy as the separatists would have us believe, then why don't they just explain how things will unfold.
That is the question I put to readers on the sovereigntist side.
Believe me, believe me not, but what are your sovereigntist friends saying about all this and more importantly, what are they not saying.
Up to now all we've heard is stony silence. We've already voted twice on an independence referendum, without ever being told what the financial plans for a future Quebec nation would be.
It is shameful and embarrassing, not that the PQ has hidden the fact that it has no plan, but rather that half of Quebecers voted in favour of this pig in a poke.
