Thursday, May 17, 2012

Mulclair Is Right About Dutch Disease....

and this is what some call unintended consequences. A quick google of "Dutch Disease", which NDP leader Mulclair has steadfastly stated is the reason for the decline of manufacturing in Ontario and Quebec also includes this gem, which I'm hoping either a member of the government or media might mention to Mulclair:

Diagnosis: It is rather difficult to definitively say that a country has Dutch Disease because it is difficult to prove the relationship between an increase in natural resource revenues, the real-exchange rate, and a decline in the lagging sector. There are a number of different things that could be causing this appreciation of the real exchange rate. The Balassa-Samuelson effect occurs when productivity-increases affect the real exchange rate. Also important are changes in the terms of trade and large capital inflows. Often these capital inflows are caused by foreign direct investment or to finance a country’s debt.


Similarly, it is difficult to show what is causing a decrease in the lagging sector. A case in point is the Netherlands. Though this effect is named after the Netherlands, economists have argued that the decline in the Dutch manufacturing industry was actually caused by unsustainable spending on social services


6 comments:

Joanne (True Blue) said...

Ha! Good catch!

Blame Crash said...

These facts are of little importance to Comical Ali Mulclair. A battalion of tanks could rumble right by this dummkopf and he wouldn’t see or hear a bloody single one of them. That’s because he’s just like his fellow protesting Quebecers who are deaf dumb and blind to anything that requires them to look beyond their own hyper self centeredness.
That province couldn’t “separate” quick enough for me, or better yet, it’s the real Canada that should be “separating” from them.

Dollops said...

In the 17th and 18th centuries as with today, no conquest could be considered complete until the opposition was or is eliminated. So it is with Indians, the French and any other minority who will not be assimilated. Variety is good up to the point where it becomes an end rather than serendipity.

Blame Crash said...

Now wouldn’t it be fun to turn the table on them and watch their reaction to being cut loose! And cut loose without any alimony! Being dumped is bad enough, but it’s especially so when done in public where the whole world can see.
The truth of the matter is that this would be the best for all concerned. After they had their totally predictable hysterical hissy fit, these mooches would buckle to reality posthaste and only then could the adults in that province be in a position run the place responsibly.
With or without them, this sort of thing happening would be for the best.

oxygentax said...

The problem with Mulcair's statement is that he's ignorant of history. For virtually the entire history of currency in Canada, the dollar remained at or near par with the US dollar. During the 80s, 90s and early 2000s, the dollar was artificially (or possibly actually) low compared to the US economy. This may have allowed manufacturing to become complacent and less efficient, but realistically it's still insane to blame a part of the economy that's humming along for the shortcomings of other portions of the economy.

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