In the hyper-polarized context of Canadian energy policy debates, even suggesting that there might be a downside to the untrammeled energy boom centred in northern Alberta is enough to get you labelled a traitor or an economic illiterate -- or both. Conservative political leaders in both Ottawa and Edmonton, backed by energy-friendly think-tanks and the Sun media chain, have tried to paint such thinking as idiotic and dangerous, not deserving of serious consideration. This is a distinctly McCarthyist strategy: it relies on vilifying and marginalizing opposition, rather than debating facts and arguments.
Those who follow the business press closely, and listen attentively to corporate economic commentators, are still mainly in the dark about "who is actually getting what" in the business world.
Some very interesting information does turns up. A current New York Times series entitled "The United States of Subsidies," covers business subsidies handed out by U.S. local governments. It cost $80 billion to attract and keep companies in local communities, the NYT estimated.
For novelty value if nothing else, Mark Carney's appearance at the CAW convention last week was bound to spark lots of attention. After all, we could find no other historical example of a Bank of Canada Governor ever speaking to a union convention. That says something in and of itself, of course. Central bankers speak to audiences of financial leaders and business leaders all the time. (To be fair, Mr. Carney and his predecessors have met regularly with labour reps in private sessions.) Sitting next to Mr.
The high-and-mighty vitriol which greeted Tom Mulcair's comments last week about the downside of oil-powered currency appreciation is lamentable (repeating the over-the-top reaction to Dalton McGuinty's similar comments a few weeks ago). Mulcair made two modest and empirically substantiated statements: the loonie is sky-high as a result of the oil boom in Alberta's bitumen sands (I doubt you'd find a single currency trader on Bay Street who would disagree with that), and that overvaluation is causing negative side-effects on other industries and regions in Canada.
Want to know why Canada's currency is sky-high despite our sluggish recovery, our large and persistent current account deficit, and our lousy export performance?
Check out this fascinating story in Friday's National Post, by Yadullah Hussain, on why Canada's oil reserves are such a uniquely hot commodity in the eyes of global oil corporations.
The most interesting comments from Bank of Canada Governor Mark Carney last week, in releasing the Bank's semi-annual Monetary Policy Report, dealt with the relationship between the price of oil and the Canadian currency. The Globe and Mail reported Carney as publicly questioning why currency traders automatically presume such a direct link between the loonie and the world oil price. After all, he accurately pointed out, Canada produces a lot more than just oil.