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Please note: Some words in the article below are in red and underlined, the result of unauthorized advertisements creeping in. Please disregard!
The following text recently appeared on the cover of a major Canadian magazine:
THE NEW UNDERCLASS
Why so many smart, educated, ambitious young people have no future
The above text accurately describes the tragic employment situation in Canada, for young adults and for Canadians of all ages. The further tragedy is that it does not have to be this way. With correct and rational management of our country, our employment/economic situation could be a lot better.
The media generally, including TV, print, and on-line media, will not publish factual presentations on how we got into our unfavorable employment/economic situation, and how we could turn the situation around. All we see in the media is one side of every issue.
Prime Minister Harper's policies are very damaging to Canada but the Liberals and the NDP are providing only very weak if any challenge to these policies.
Students are busy with their studies. But I suggest students should take time to look up and out into the world they will be entering after completion of their programs. I hope to attract many thousands of students to join with me to force politicians of all parties to take real action to increase employment opportunities for young adults and generally for Canadians of all ages.
Conclusion
We need forthright action to deal with the severe lack of employment faced by Canadians. Waiting and hoping that the economy will improve is not enough.
There is no way to exaggerate the importance of manufacturing to a healthy economy. We have to increase manufacturing in Canada to make it possible for the economy to offer employment to Canadians of all ages and all educational backgrounds.
To increase domestic manufacturing, we have to reduce imports of manufactured goods. For example, our imports of manufactured goods from China are five times our exports to China. This situation is not reasonable; it is not "trade". It is a pathological phenomenon never envisioned by economists prior to the 1960s.
We have to tell each country we "trade" with that we will not allow imports of manufactured goods above the level of that country's purchases from us. We can do this. We don't have to be slaves to the World Trade Organization.
Reducing imports of manufactured goods, not to zero but down to a level with our exports, with resulting increase in domestic manufacturing, is the only way to turn our economy around and turn the employment situation around.
Seven deadly sins: seven wrong Harper policies taking Canada down and down and down
Selling Canadian companies to foreign interests (Liberals and NDP also support these sales), despite polls showing 70% of Canadians are against these sales.
Allowing sales of mines, lands, and forests to foreign interests, thereby losing sovereignty over these priceless and irreplaceable assets.
Allowing sales of raw logs to foreign interests, without requiring processing in Canada of the logs into finished lumber, thereby losing Canadian manufacturing jobs.
Allowing sales of crude oil to foreign interests, without requiring processing in Canada of at least some of the oil, thereby losing Canadian manufacturing jobs.
Trade deficit in manufactured goods tripled since Harper took office, to an estimated $100 billion in 2012 (almost $3000 per capita). Demonstrates massive failure of Harper policies on trade and other aspects of management of the economy.
Entering into trade deals and treaties with China and EU that will severely damage the services sector in Canada, as well as further damaging the manufacturing sector.
Failure to recognize that loss of manufacturing creates government deficits, due to loss of value-added effect and loss of manufacturing jobs. Cutting needed services in an attempt to reduce deficits does not get at real cause of problem, and is counterproductive.
Down and down and down
In addition to our present severe employment problem, we have to face the fact that Canada is continuing to go further down because every Harper policy is absolutely wrong and aimed exactly in the wrong direction.
But I do not claim that the Liberals or NDP if in power would be doing any better. A glaring example is that all three major parties, Conservative, Liberal, and NDP, amazingly and inexplicably are prepared to allow sales of Canadian companies to foreign interests. All three parties try to explain why a very bad idea is somehow good for Canada. And they take this position despite recent polls showing that on the order of 70% of Canadians do not want to see sales of Canadian companies to foreign interests.
Is there some behind-the-scenes central authority that has ordered all three parties to support sales of Canadian companies to foreign interests? Or are the Liberals and NDP making their own decisions to support sales of Canadian companies? Are they afraid to be different from Harper?
The three parties are on the same page of the same hymnbook on this issue. On request I will provide texts of statements from the three parties, showing the strong similarity!
Generally if the reader has questions, comments, criticisms, please contact me immediately at esj@interlog.com
I want to enter into dialogue with Canadians to improve my message and make it more effective.
Policies that are taking us down
Under this heading and following headings, I mention policies and actions of the Harper government that are doing more damage to the Canadian economy every day.
Selling Canadian companies to foreign interests is absolutely the most stupid and short-sighted action we could take. After the recent sale of Nexen, Harper seemed to say that there will be no more sales. But I strongly suspect that in fact Harper after an interval will allow further sales.
The government is allowing the sale of Canadian mines, land, forests to foreign interests. Again, these actions demonstrate complete stupidity and short-sightedness beyond belief. Sell the coal, sell the oil, but don't sell the companies, don't sell the mines, don't sell the land, don't sell the forests.
Sales of raw logs to foreign interests are being allowed, abrogating regulations that existed for many years prohibiting such sales. The object of the regulations was to create employment through processing of raw logs into finished lumber, thus benefitting the economy and all Canadians.
There is no effort to do refining or processing of at least part of the crude oil we are selling or propose to sell in the future. Similar to the issue of raw logs, we are missing the opportunity to benefit the economy, benefit the employment situation, and benefit all Canadians, through domestic processing of crude oil.
Failure to understand
Most ordinary Canadians have a strong, practical, commonsense belief that manufacturing is important to our economy. Manufacturing provides employment directly, and also creates a more complex economy with lots of niches where people of all levels of education, in many different fields of study, can find employment.
In addition, and very important, manufacturing provides a value-added effect that enriches the economy. Very few people understand this critically-important fact. If we send manufacturing activity away to foreign countries, we lose jobs AND we impoverish our economy and our country.
The problem is that the people who have power in Canada, the people who run the country, do not understand, or more likely do not want to understand, that a viable economy requires manufacturing.
This lack of understanding was demonstrated in the 1960s, when power groups in Canada created a rationale for what they already wanted to do, namely send manufacturing away to supposedly low-cost countries.
These power groups went to a tame think-tank in 1968 (approximate date) and obtained a report stating that manufacturing can be done anywhere. In place of manufacturing, Canada will forge ahead with knowledge-based industries.
The idea that where manufacturing is done is immaterial to the health of the nation is one of the biggest bloopers of all time. Western countries have now completed a 50-year test of this idea. The present disastrous state of the economies of all western countries proves beyond any doubt that this idea is wrong.
Another fallacy is that we can rely on "knowledge-based " jobs, as we now see that these jobs can also be sent away to low-cost countries!
Harper relationship with foreign countries
Once we understand that we can't have a healthy economy without manufacturing, then we see the disaster in all Harper's trade deals since he took office in 2006, completed and proposed. Rather than helping manufacturing in Canada, these deals are destroying manufacturing. See below for further comments on this issue.
Harper is delusional when he thinks he wheels and deals on an equal footing with China or European Union (EU). In fact, in terms of population, Canada is a tiny country in comparison with China and EU.
China and EU have huge and varied manufacturing bases. As a result they have little or no need for our manufactured goods. So we can only lose through Harper's naive wheeling and dealing.
Harper's proposed TransPacific deal, which includes other Asian countries, will also not help Canadian manufacturing. Some of these countries do a lot of manufacturing themselves, and in any case China is right at hand for any manufactured goods needed.
Proof that Harper's policies are headed in exactly the wrong direction can be seen in our international trade figures. Our trade deficit in manufactured goods with all foreign countries has tripled since Harper took office. The estimated trade deficit for 2012 is $100 billion, almost $3000 for each and every Canadian man, woman, and child. The disastrous trend in these trade figures directly demonstrates continuing job loss in manufacturing. See the Appendix for detailed information on this topic.
This net $100 billion is real wealth hemorrhaging out of our country, weakening our economy. $100 billion kept in Canada could provide manufacturing equipment and wages for one million Canadians.
Completed and proposed deals with China and EU also include trade in services. The further total delusion is that Canada, the mosquito to the elephant of China or EU, will obtain service work. What will really happen under these deals is that Canada will suffer further employment loss as powerful companies from powerful countries march in and take our service work. In addition, if for example a city in Canada has a policy of placing engineering service work with Canadian firms, we will be subjected to penalties decreed by tribunals set up under these deals.
On the same page on another issue
If you are driving your car along the 401, and you see on your dashboard that the engine temperature is going up and up, are you going to keep on driving, or are you going to stop the car and investigate the problem?
In Canada we have, at substantial cost, a highly competent agency that provides data on our trade deficit in manufactured goods. If we see the trade deficit going up and up, do we keep on driving, or do we pull over and lift the hood to see what's wrong?
Answer: Our politicians keep on driving, despite the fact that in so doing they have wrecked the engine (of the economy)! Politicians pay no attention to the trade deficit data, even though we spend money to have the data collected and presented on the government website.
No politician talks about the steady increase in our trade deficit in manufactured goods since Harper took over. (Again, please see Appendix.) The Harper record of a tripling of our trade deficit is a huge target that could be attacked by the Liberals and NDP to their great advantage. But not a peep!
Do we have here another case of a mysterious central authority dictating what the political parties are allowed to say? (In this case, nothing!) Or have the three parties made their own decisions not to mention this extremely frightening issue?
More generally, Liberal and NDP reaction to Harper's trade deals and other policies is muted. So Harper is free to proceed with his insane policies and actions.
I have absolutely no connection with the Green Party and I am not suggesting how anyone should vote. But it appears that the only voice in Canada sounding the alarm on Harper is the Green Party.
How can we turn Canada around?
The first step is to recognize that China is an enemy, not a friend. For example, China's objective in buying a Canadian company is to help China, not Canada. Selling a Canadian company to China helps China, with absolutely no benefit to Canada.
Rather than cozying up to China with trade treaties and trade deals, we should be cutting ties with China.
All western countries, USA, UK, Australia, EU, others, have suffered tremendous job loss by allowing jobs to be sent to China and other low-wage countries. But no other country has cozied up to China the way Harper has.
Canada buys five times more manufactured goods from China than China buys from us. (USA figure is just under four.) Our trade in manufactured goods with all other major countries except USA is also in negative territory. The result is our $100 billion per year net hemorrhage to foreign countries. See Appendix for details.
If a patient is bleeding heavily when brought to the emergency room, hospital staff drop everything to work to stop the bleeding. Canada or any other western nation is no different, except that we have not yet been taken to emergency!
How long can Canada go on, suffering a huge hemorrhage of money and jobs?
We have to end the blind obedience to World Trade Organization (WTO) rules and regulations. It is crystal clear that the whole WTO concept is a complete disaster for all western countries.
We have to tell each supplier country we deal with that we will not allow imports of manufactured goods beyond the level of that country's purchases from us.
Within weeks of putting this policy into place, there will be hope in the air, as existing and new Canadian manufacturers begin to ramp up. When the policy is fully implemented on a stepwise basis over three or four years, we will have a new Canada with much stronger employment and stronger economy.
Detractors will object to this idea, but they have no solution of their own. They point to allegedly higher costs of Canadian-made items, but fail to consider the hidden societal/financial cost of saving one dollar by buying a foreign-made item, probably in the area of five to ten dollars.
The famous bottom line!
Reducing imports of manufactured goods, not to zero but down to a level with our exports, with resulting increase in domestic manufacturing, is the only way to turn our economy and our employment situation around.
Appendix
The discussion in this Appendix relates to trade in manufactured goods.
International Trade is measured in the following way:
Balance of Trade = exports - imports
If exports are $10 billion and imports are $5 billion, the Balance of Trade is $5 billion and you are in good shape.
If the opposite, the Balance of Trade is $5 billion - $10 billion.
The result is -$5 billion
The Balance of Trade is negative and you are in trouble!
Math is coming in here. It is necessary to understand positive numbers and negative numbers.
To make discussion easier, if the result is negative as shown above, we simply say
"Our negative balance of trade is $5 billion."
If we are doing even worse, and the Balance of Trade is -$20 billion, we say the negative balance of trade is $20 billion. As the negative balance of trade gets larger, we are in deeper and deeper trouble.
Harper became prime minister in 2006. The following numbers express our negative balance of trade in manufactured goods with all foreign countries, over 200 countries, for each year. For an individual country, the Balance of Trade may be positive or negative. Add the Balances of Trade for all the countries, using the correct procedure as learned in math courses, and you get the net result, namely the Balance of Trade for that year.
Negative balance of trade in billions of dollars
2006 27.9
2007 32.6
2008 59.0
2009 76.0
2010 81.0
2011 93.1
2012 100.0
2012 figure is estimated; the official government figure was not yet available at time of writing.
Note that the negative balance of trade became worse every year. In other words, our negative balance of trade was larger every year.
Now look at our major traders:
Amazingly, our Balance of Trade with USA is positive! It was $19.7 billion in 2011, and a lot larger a few years earlier.
We have a negative balance of trade with the following, for 2011:
(again in billions of dollars)
ASEAN countries 7.5
China 38.2
European Union 27.0
Japan 8.3
Mexico 17.8
The ASEAN group of countries is made up of Indonesia, Malaysia, Phillipines, Singapore, Thailand, Brunei, Burma (Myanmar), Cambodia, Laos, Vietnam (10 countries in all).
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