Canada Catches The Dutch Disease

[work in progress]

The deindustrialization of a nation's economy that occurs when the discovery of a natural resource raises the value of that nation's currency, making manufactured goods less competitive with other nations, increasing imports and decreasing exports. The term originated in Holland after the discovery of North Sea gas.

What is dutch disease? definition and meaning

Up here in the Great White North, we are finding the pace of deindustrialization accelerating, largely because our Government is going gangbusters in an effort to open up all of the Alberta Tar Sands for exploitation, along with the building of pipelines to get the end product to markets in the U.S. and China.

Canada lost industrial plants at twice the pace of the United States last year, a new report says.
Industrial Info Resources, a business intelligence group, reported on Friday that Canada saw 79 industrial plant closings in 2011, costing nearly 14,000 jobs, while the U.S. saw 430 plant closings and 63,000 jobs lost.

Given the relative sizes of the U.S. and Canadian economies, this indicates that the pace of industrial plant closings, as well as job losses, is about twice as high in Canada as in the U.S.

Canada Manufacturing Jobs Disappearing At Twice The Pace Of U.S.: Report

And the biggest contributing to factor to the downturn in manufacturing, is the effect oil exports have on currency:

Bank of Canada Governor Mark Carney said on Friday that a robust Canadian dollar has sapped a lot of the country's manufacturing competitiveness by raising costs of its exports in foreign markets.

"Certainly our competitiveness in manufacturing has gone down a tremendous amount, not just versus the United States where there has been a sharp rebound ... but also vis-a-vis third countries as well,"

BOC's Carney says strong dollar hurting exports | Business | Reuters

Back during the days of the Energy Crisis in the 1970's,
Venezuela's oil minister in the early 1960s and one of the founders of OPEC, was the first to call attention to the oil curse.

Oil, he said, was not black gold; it was the devil's excrement. Since then, Pérez Alfonzo's insight has been rigorously tested -- and confirmed -- by a slew of economists and political scientists. They have documented, for example, that since 1975 the economies of resource-rich countries grew at a slower rate than countries that could not rely on the export of minerals and raw materials. And even when resource-fueled growth takes place, it rarely yields growth's usual full social benefits.

Can oil-rich countries avoid the resource curse? - By Moisés Naím | Foreign Policy

[work in progress]

I couldn't gather any interest in discussing my homeland's complete abandoning of principles in recent years, in the chase for tar sands profits. Maybe because I was focusing on the toxic effects that oil development has had economically on nations that go all in on oil extraction, and turning their economies over to the oil cartels. But now that the "Dutch Disease" is back in the news in Canada, thanks to new NDP leader - Tom Mulcair, who has become the leader of the Opposition, it's time to try again.

Recent news up here regarding Mulcair's visit to Alberta is leading me to think that he might be willing to play ball with Big Oil rather than shut down this rolling disaster up here. Mulcair tones down oilsands rhetoric ahead of Alta. visit

Tom Mulcair is dialling back the NDP's anti-oilsands rhetoric as he prepares for his first visit to Alberta's massive, unconventional petroleum deposits.

The NDP leader is to tour Suncor's oilsands project near Fort McMurray on Thursday.
The visit is akin to walking into the lion's den for Mulcair, who has been lambasted by western premiers for blaming booming oilsands exports for artificially inflating the Canadian dollar and, as a result, hollowing out the country's manufacturing sector -- a phenomenon dubbed the "Dutch disease."

On Monday, the words "Dutch disease" did not cross Mulcair's lips as he discussed his upcoming tour. He seemed to take pains to tone down his rhetoric, which was already much less inflammatory than the diatribes his predecessor, Jack Layton, used to unleash against the poisonous "tar sands."

The blather contained in the rest of this piece indicates that he will use the "sustainable development" rhetoric that the Conservatives and the previous Liberal government used when discussing the ever-expanding tar sands operations in Northern Alberta. I should note that during the runup to the NDP Leadership Convention that selected Mulcair, one of the fears of this odds-on favourite from the beginning was that he was going to be one of those middle-of-the-road leaders...similar to a Bill Clinton or a Tony Blair, who would quickly jettison party principles that might negatively affect odds of winning. Now that the NDP has become our Offical Opposition, and the long governing Liberal Party looks like it might fade away into obscurity, it looks like Canada could turn into the two-party state type of democracies that the U.S. and England have, where one party runs to the right, another runs to the left or at least tries to sound left in their rhetoric, and both parties take their orders from the guys with the money!

The significance for the rest of the world is that tar sands exploitation for oil cannot wear a green figleaf to protect it! It is the most carbon-intensive oil development happening in the World (at least till the U.S. gets shale oil up at an equivalent level) and if nothing can stand in the way of the oil companies' continued drive to go after the last drops of oil available on Earth, there is no hope for future generations, plain and simple! NASA's James Hansen has said previously that 'full scale exploitation of the tar sands is game over for the battle to stop global warming,' and it's worth noting that Canada isn't the only country that has tar sands deposits that oil developers are looking at for future exploitation. Venezuela and India also have these deposits.

Right now, the latest news on CO2 and other greenhouse gas levels looks like the situation is getting worse. A story just came out yesterday from some labs in the Arctic that CO2 levels have hit the 400 ppm milestone. This is especially significant that the trend now is that the Arctic is at the leading edge of atmospheric carbon levels, rather than lower latitudes in the Northern Hemisphere where most of the cars and industrial emissions occur, because this is more evidence that the Arctic is already in a positive feedback cycle, where melting ice and warmer temperatures are causing the release of trapped methane and carbon in permafrost and deep ocean waters. The latest reading from the Mauna Loa Observatory in Hawaii (the global standard for atmospheric gases) is 396.30, so 400 as the world average is not far off!

The bad news is that 400 is already too high, and unless there are volcanoes going off every year or some geoengineering equivalent, the ice in the Arctic and Antarctic will continue to melt...the planet's albedo will continue to darken and absorb more energy from the Sun...so all of the natural cycles will force the global average temperatures higher and a lot faster than policy makers had previously planned for....assuming that any of them were actually seriously planning for the future!

The net result is higher average temperatures, with more floods and droughts (you ain't seen nothing yet), flooded coastal areas, and major declines in world food production and all of the negative effects that could result from that. And, Canada has played its part in making it all happen a little faster.

[work in progress]

Up here in the Great White North, there has been a concerted and needless to say - well funded pushback from the Conservative Government and their oil company puppetmasters against the Leader of the Opposition for making reference to the "Dutch Disease" phenomena. But now it looks like the OECD is also underlining this simple point that oil drives up the value of currencies and prices manufacturing and other related economic activity out of business. And their report pushes back against the oil lobby-funded reports that have been trying to draw a smiley face on Canada's tar sands and deep sea oil dependence of late:

the fact that Canadian manufacturing has fallen further and faster than the United States, where resources play a smaller role in the economy, can be partly explained due to exchange rate movements, Jarrett said.The analysis mirrors that of NDP Leader Thomas Mulcair, who has been accused of pitting regions against each other for political purposes.


Canada Dutch Disease? OECD Says Yes