What nonsense!

Maclean's Magazine, August 8, 2011, page 13.  Paul Wells column about Canada-China relations. 

The first part of the column provides to the reader a general impression that high-principled Canada has not been dealing with China, due to the human rights situation in China. 

Canada is a tiny, ineffective and inconsequential mosquito compared to the giant elephant that is China.  Does anyone believe that China is concerned about Canada's views on human rights in China?

Suppose Canada really refused to enter into any economic dealings with China.  Do you think that China would be concerned in the slightest?  China has huge volume dealings with United States, Australia, and every other western country.  Do you think that China would be concerned if Canada were not on this list?

The politicians of Canada, starting with Prime Minister Harper, and his Cabinet Ministers, seem to be totally out of touch with reality.  They don't seem to know what every ordinary Canadian knows, and that is that our stores are filled with goods made in China. 

I went into a wholesale plumbing store and a staff member told me that every item in the store is made in China.

So despite the pretense that Canada is not dealing with China due to the human rights situation in China, the fact is that we ARE dealing with China.  We are buying huge volumes of manufactured goods from China.

Millions of Canadian manufacturing jobs have been transferred to China and other foreign countries.  Successive Canadian governments have allowed this transfer process to occur.  In fact, Canadian business and government "leaders" in the 1960s approached a tame think-tank, a think-tank that will say anything the client desires if there is enough money on the table, and arranged for the production of a report on economic trends.

The report stated that we no longer need old-fashioned "smokestack" industries.  We don't need to manufacture anything.  Where the manufacturing of ordinary consumer items is done is immaterial.  The Canadian economy will grow and thrive on "knowledge-based" activities.  So the Canadian government had its rationale for allowing the "hollowing out" of manufacturing in Canada.  

I have taken the phrase "hollowing out" from an excellent letter to the editor written by an ordinary citizen in the 1980s.  Amazing how the ordinary citizen's understanding is so much more profound than that of whole armies of politicians and government bureaucrats!

The results of the 50-year process of transferring manufacturing employment to China and other foreign countries were entirely predictable and are now apparent to everyone, except those politicians and bureaucrats:

+  Simplification of the economy, eliminating many "niche" job functions where people formerly could find employment.  Now Canadians at all levels of education cannot find employment.  A frightening column by Thomas Walkom, Toronto Star, July 30, 2011, page A6, describes a dog-eat-dog employment future where the working career is a continuous scarmble for the next short-term employment contract, with no guarantee that wages will be paid, with no benefits, with no security. 

+  Perpetual government deficits at all levels, because so many Canadians have no employment or employment at lower wage levels than in the past, with the result that there is less tax revenue going to governments.  Politicians and bureaucrats forgot that workers in factories in China don't pay Canadian taxes!   Business "leaders" forgot that Canadians who don't have employment can't buy!

+  Impoverishing of the Canadian economy due to loss of the critically-important value-added effect of manufacturing.

+  Evaporation of the claimed "knowledge-based" benefit to the economy, as it became all too clear that knowledge-based employment can also be transferred to low-wage countries.

There is only one way to improve the economy in Canada, including the top priority of increasing employment, and that is to get the manufacturing jobs back from China and other foreign countries.

Prime Minister Harper and his Cabinet Ministers and all other politicians at all levels of government should be taken on a tour of stores.  They should pick up the packages and look on the back and see the phrase "Made in China".  Maybe if they would spend several days doing this it would penetrate into their brains that too much manufacturing has been lost to overseas locations, causing too much damage to the economy.  Maybe it would penetrate that this destructive process has gone too far and has to be reversed.

Fortunately, costs of manufacturing in China, and associated costs of doing business in China and other low-wage countries, are going up.  A recent U.S. study showed that manufacturers for a number of years have been overestimating the "savings" associated with overseas manufacturing.  So even without intelligent action by governments, manufacturing activity is gradually coming back.

Intelligent actions that could be taken by the Canadian government include:

+  Tariff or foreign sales tax on manufactured goods from foreign countries that don't buy from us in approximately equal amounts.

+  Reduction in taxes for business organizations, incorporated or not, that do their manufacturing in Canada. 

+  Encourage small business, incorporated or not, by eliminating tax on first $50K of profits, each year. 

+  Extreme caution and re-consideration before going ahead with a trade agreement with EU.  It is very unlikely that EU will buy manufactured goods from us. 

Why do politicians and government theoreticians think it is a good idea to get into a free trade agreement with an entity such as EU with a population 20 times greater than ours?  The larger entity in a free-trade arrangement always demolishes the smaller partner. 

Much worse is free trade with China.  Population is 40 times greater and wages are one-tenth.  So we are suffering a 400-fold disadvantage.  It is completely insane to be in a free trade arrangement with China!