Saturday, September 08, 2012

Low Growth & the Liberal Party of Canada: What should our economic policies be?

The future is not bright, and will get worse than most of us expect.

A safe assumption for the next decade is that there will be limited economic growth.

There is little that individual governments can do to reverse this.

Specific problems awaiting us:

Unemployment in Canada will be high compared to the past decade, and rising.

Whatever new jobs do arise will be lower-paying and probably part time ‘McJobs’. Youth unemployment will remain very high, with fewer good jobs open to well-trained college and university graduates. Consumers will be reluctant to increase their spending substantially. Demand for our natural resources will be slower than in the past. The EU and US economic engines will crawl ahead in first or second gear only.

There will  be little growth in the revenue flowing to the federal and provincial governments. Public sector debt will remain high and probably increase.

There will not be any rapid return to the fast growth of the past two decades.
Individuals will not borrow large sums of money in order to spend on consumable items in the expectation that they will earn more in future and be able to repay that debt. New homes will not be built at a fast click, and so will not drive the local economies. Good, high paying jobs will continue to flow out of the USA, the EU and Canada towards the less-developed economies, as companies continue to outsource manufacturing to countries with much lower wages and overall costs. The companies in the EU, USA and Canada will be allowed to continue this hollowing out process by their governments and the various trade treaties that have been, are and will be entered into.

The world economy will continue to be threatened by renewed financial instability because governments in America, Britain, Canada, the EU and other countries will not take the needed steps to  control the casino capitalism that takes place  in the ‘shadow banking’ institutions. Currencies will still be attacked by financial institutions through shorts on exchange values, as no adequate curbs will be taken to remove this piratical behaviour by the central banks of those countries. Massive sums of money will continue to flow out of countries into the tax-sheltered bank accounts of corporate shareholders, because tax havens will not be properly regulated to make such transactions transparent and regulate the flows (Mitt Romney will continue to ship his income into such tax havens and pay low taxes).

Realism and the Liberal Party:

The LPC is a party of the good times, as is the NDP.

The natural inclination of both these parties is to be optimistic, to assume that the good times will keep on rolling in, and to concentrate on either a brokerage function (the forte of the LPC over the past few decades) or on more and more income redistribution from the wealthy to the poorer citizens (the Dipper DNA demands this as its one and only economic Commandment). The Chretien/Martin government’s response to the earlier deep recession was to slash federal budgets substantially and download as much as possible of the funding problems on to the provinces and municipalities.

The Conservative Party under its out-of-touch leader, Stephen Harper, is sticking to its practice of whistling past the graveyard, hoping nothing untoward happens, and trying to blame bad things on the past governments. Meanwhile, the Tories continue to run a PR campaign aimed at framing Harper (remember his reluctance to stimulate the economy when the deep recession of 2008 hit us? And remember his advice to Canadians at the time to pick good companies to invest in because there would be good buys to be made as the recession hammered down stock prices? And his government’s ‘stimulus’ Action Plan of gazebos and trinkets? Expect him to know what’s going on and cope with it? Don’t hold your breath.)

Don’t expect Thomas Mulcair to change the outlook of the NDP to something akin to the Tony Blair centralization of policies. The NDP still has in the preamble of its constitution a socialist agenda aimed at nationalizing private sector assets, redistributing wealth, and demonizing the making of profit. And this is 2012! Marx and Lenin would be proud of the Dippers; they remain the closest to the views of those two gentlemen of all the modern industrialized nations.

The New Liberal Leader and Economic Realism:

It will be interesting to see if the candidates for leader spend time talking about the realities of the future, rather than simply playing Santa Claus and tossing out promises of presents galore to as many special groups as their teams can scramble to add to the list.

We would be better served if the candidates scrapped those gift lists and spoke about the realities of governing in a flat to slow growth era.

The Cat will be reading their proposals with interest.

Some suggestions:

Reduce the Hollowing-Out of Canada:

The LPC needs to reconsider the government policies (taxation and other), our legislation, and our mesh of international treaties, to determine what needs to be changed to begin the retreat from the hollowing out policies of the past, to policies and treaties that allow good, well-paying, real jobs to be created in Canada, and in the USA.

Manufacturing Realism:

We need to accept that our small population means that major manufacturing industries are unlikely to spring up in Canada, and to look elsewhere for new jobs in Canada.

Educating our People Assets:

We need to re-examine our policies regarding the education of Canadians, and place emphasis on two major thrusts: (i) a significant move towards technical training (ala Germany with respect to manufacturing) and knowledge industries (software development, and internet products); and (ii) making access to post-school education accessible in terms of spaces in colleges and universities, and funding students.

Our Natural Resources:

We need to develop our natural resources (oil and gas, tar sands, hydropower, mining, lumber) as extensively as possible, consistent with proper environmental protection, and to ensure that we can increase substantially export of those resources to other countries over the next five and more decades. At the same time, we need as a party to have policies which require and assist value-addition to such raw resources within Canada, before they are  exported, so that good jobs within Canada are created.

Unemployed Assistance:

We need to re-examine the plight of the unemployed and under-employed, and ensure that their basic needs are taken care of, and that we have constructive, effective and adequate training mechanisms in place to enable them to upgrade skills and find new jobs to replace the ones they have lost.

Reduce Casino Capitalism:

We need to increase our regulatory provisions to prevent further casino capitalism through the shadow banking system (such as derivatives, predatory currency and stock practices, and financial innovations that create little public good but siphon off much needed resources while increasing the risk of systemic instability).

Boost Immigration substantially:

We need to substantially boost our immigration targets, so that our population grows and new jobs are created through the need for homes, clothing, food and infrastructure.

Infrastructure development:

We need our levels of government to invest in and support the investment in infrastructure projects which create jobs within Canada.


  1. The Keystone GarterSeptember 08, 2012 2:54 pm

    I'm thinking there are two main policy timelines. Those that are longer than an election term; I'm just reading it takes ten years to open a lithium mine. And there are those shorter than an election cycle; under fours years, that might provide a bounce or thud for the Party that funds the shift/subsidy/penalty. I'd guess screwing around with university is just barely within the short-term category. Derivative instruments also generally fall in the short timeline...foreign aid is good for our children, but bringing in a worker with a degree might be more politically feasible...
    Harper gets undo credit for the Stimulus construction programmes while Romney is hurt by his opposition to the auto bailout (I was opposed too but my replacement was retool to wind turbine lines)...thermoplastics are a renwable/recyclable product that are useful in auto parts...the assumption is people will use less diesel and gas, not drive more. I remember when I was outsourced from a Mormon workplace: management was restructuring...

  2. TKG - right! The party needs short, medium and long term goals for the country under its governance. Let's voters know what to expect and how things fit together.

    A Mormom outsourcing, eh? Let's hope US voters outsource The Big Mormon come November 6!

  3. The Keystone GarterSeptember 09, 2012 3:33 pm

    ...for the materials science, the specifics are all lost in a maze of life cycles emissions and durability estimates. You can get very good ethane conversion to the plastic, ethylene, but the "shock wave" process consumes 7x as much electricity as standard cracking (I assume fluidized bed)....
    ANd instead of just heating everything and selling the fractions separately (open), if you recycle the feed and fuel (closed) back into the cracking, you lose about 20% of your revenue, but fuel is expensive. Somewhere between $100-$130 or so a barrel of oil, it becomes more profitable to use the closed method for an ethane heavy NG feedstock. This tell me the durability of parts and their social return are key.
    One paper says lithium won't cost much while another says lithium batteries are good enough for commuter vehicles...
    And some processes, vapour phase ones for instance, are fabulously energy intensive, yet how to weigh the good of a 10nm layer of sputtered copper vs a (lighter footprint) plastic moulded layer of 1 micron, when it comes to performance in your microchip or whatever?
    Some R+D is scaleable and some isn't. I wonder if it is possible to figure which is which beforehand. Typically when you use platinum or gold is materials R+D, you expect to use less in the finished product or find a replacement.
    Right now those renwable thermoplastics are mostly in use in wind turbine cables, I guess the insulating layer. But petro could be taxed and incented even more to ramp up other products. If batteries themselves, and I just read of polymer gel electolytes, can be made of petrochemicals, I think the main problem would be how to get the petrochemical division employees in charge of the entire companies.

    In terms of social capital, this planned jobs transition appears bad, but it is more risky to deal with AGW droughts, floods and famines. If evaporation is necessary for lithium brine harvesting, the runoff from melting glaciers might be used to make a green commodity. I like manufacturing. We have water, farming, plastics (potentially) and hydro advantages. Just have to end gasoline and diesel.

    1. The Keystone GarterSeptember 09, 2012 4:52 pm

      ..steam cracking. FB CVD is the lowest footprint CHT method to date. There is certainly the potential for companies to invent low footprint petrochemical manufacturing methods. This would preserve refinery jobs that will otherwise be lost to AGW "adjustment".

  4. The Keystone GarterSeptember 12, 2012 3:22 am

    ...there are specific products that have off-the-chart GHG (-) returns, and also other applications that have high social returns. In addition to ROI. I'm not sure which is best for oil refinery oil/tar. But even with some uncertainty in estimating ROI, social good, erergy payback or AGW potential, it is still possible to make a portfolio of plastic products. As those uncertainties firm up, you get a greater or zero portion of the anti-bacterial plastic or whatever, as your refinery fraction. Again, straight out trading profits from gasoline and diesel for future market share of plastics products. Really Can't Muddle thru Papers at the moment. How about a police pay cut to pay for the neocon deficit?


Thank you for commenting; come again! Let us reason together ...

Random posts from my blog - please refresh page for more: