Dutch Disease denial: Inflation, politics and tar |

Aerial view of Syncrude Aurora tar sands mine in the Boreal forest north of Fort McMurray - photo Jiri Rezac

Aerial view of Syncrude Aurora tar sands mine in the Boreal forest north of Fort McMurray – photo Jiri Rezac

Thomas Mulcair, who I don’t trust, correctly diagnoses Dutch disease for Canada and is roasted by the totally biased major media for it. And that’s how productive corporate-owned media is.

An excerpt from the above linked-to article by Christopher Majka follows:

“Does Canada suffer from Dutch Disease?

The short answer is yes. A quick historical review: in 1998 the average price for West Texas Intermediate crude oil was $16.74; it is currently trading at $90.72, having more than quintupled in price. While the extraction of oil from bitumen (a.k.a. “tar”) is costly, difficult, and requires increasingly more energy input per barrel of oil output, the meteoric rise of oil prices has made it economically worth pursuing.

Coincident with this has been the meteoric rise of the Canadian dollar that in 1998 traded at $0.63 against the US dollar. It rose to a high of $1.10 in 2007 and is now trading at $0.98, 55 per cent higher than it was in 1998. This synchronicity of is not coincidental; the rising price of oil has converted the Canadian dollar into a petrocurrency whose value is increasingly linked to the price of oil.

As petrodollars arose, the manufacturing share of Canadian GDP began to shrink, which Majka explains using the example of the price of a car made in Canada since 2007, revealing an industry which experienced a 30% reduction in revenues. He continues:

“There are, however, many factors at play in an economy and this apparent coincidence cannot simply be taken at face value. Consequently, economists Michel Beine, Charles Bos, and Serge Coulombe investigated the impact of the increase of oil prices, the consequent spectacular development of the Athabaska bitumen sands, and their impact on the Canadian economy with a series of sophisticated statistical analyses in order to carefully separate Dutch disease from other factors in the economy. Their results showed that “54 per cent of the manufacturing employment loss due to exchange rate development between 2002 and 2007 are related to a Dutch disease phenomenon. The remaining 46 per cent can be ascribed to the weakness of the US currency.”

“Economists Célestin Bimenyimana and Luc Vallée concur with an even more recent 2011 study and point out a particularly troubling feature of the Canadian strain of Dutch disease. While the Netherlands are a geographically small and socio-culturally homogenous country, the same is not true for Canada. In the Netherlands workers who lost jobs in manufacturing could readily retrain and find positions in the gas industry.”

Thomas Walkom’s May 30, 2012 article looking at this (“Mulcair’s politically deft oilsands critique is right (sort of)”) in the Toronto Star, includes this:

“Mulcair has been savaged by Stephen Harper’s ruling Conservatives — and the premiers of Alberta, Saskatchewan and British Columbia — for suggesting there is a downside to the oilsands.

“In fact, Mulcair’s argument is neither new nor odd. He says the high loonie, by making Canadian exports pricier in foreign markets, has hurt Ontario manufacturers. And he says the dollar is high, in large part, because Canada’s booming oil economy has boosted worldwide demand for this country’s currency.”

Stephen Harper’s Conservatives don’t have enough ‘productive’ things to do. That’s their problem. Idle hands are the Devil’s workshop. They’re busy coddling bosses, making it easier for exploitative bosses – their favorite type of boss – to hire easy to intimidate and pay poorly migrant labor. When activists notice this, and the lies told in connection with this (See my earlier post titled “Are Immigrants Solely Responsible For Jobs Being Lost To Canada-Born Workers? part 5.”), their response is to cynically alter an already crippled EI program to make it harder for Canadians to collect EI, using the excuse that they are too willing to pass up low wage jobs. If things are that tough, so the argument goes, then desperate Canadians who have lost their jobs shouldn’t be so quick to turn up their noses at crappy jobs that migrants have been scooping up.

Could Canadian governments get busy and introduce legislation that would respect migrant, temporary laborers and make it easier for them to become Canadian citizens if they wanted? Could we pass laws to clamp down on abusive bosses? Could the government stop collecting EI contributions from migrant workers that they can’t ever collect because of the rules about how long they can stick around in a given year? And can the government somehow ensure that the jobs seasonal foreign workers are asked to do are safe and well paid so that Canadians ‘and’ migrant workers would want them and could benefit from them? And of course, the more money workers make, the more taxes they pay and the more money is spent and the more economic activity there is – if the economy is important and having revenues sufficient to run the country and do social (civilized) spending matters.

Yes, There are other issues, such as the discussion about growth. Growth, in a capitalist system, is a problem after a period of time. That point has been reached. However, We have the system we have and it’s based on exploitation, which is unacceptable. Then there’s the vital issue of fair taxation. Fair taxation IS NOT HAPPENING! What’s the government (and all of our governments) doing about that? It’s doing absolutely nothing. It isn’t even interested in easy, effective solutions such as the Tobin Tax. It’s shovelling out tax cuts to corporations that don’t pay enough taxes, creating debt that it punishes the people for, although the people don’t ask the government to do unfair taxation or create deficits and debts. The people are punished with austerity – a stripping away of the civilizing features of society – for what the government, at the behest of special interests, does.

Could the Canadian government get busy and create jobs? Absolutely! Instead of offshoring jobs, by sending our raw materials to other countries to be turned into marketable products – lumber, fish, fruit – we could be doing that here. And of course there’s the opportunity to create untold jobs if we wanted to help our home, the planet, by giving up dependence on old, polluting industries (oil, coal) and move into sustainable, green energy. But entrenched special interests and the needs of aggressive, imperial states to maintain armies, dependent on oil, mean that corporatocracy governments will not change.

But none of that matters to elites the way it matters to us. As the Architect in The Matrix said to Neo, when Neo suggested that the machines needed humans and wouldn’t dare destroy them: “There are levels of survival we are prepared to accept.” In other words, Yes, Bosses and elites need their slave labor. But that doesn’t mean that they have to care that much about their slaves. The opulent, safe minority will always be okay (even when things don’t work properly and many slaves are cast aside as superfluous), even if there’s rebellion and cars burning in the streets and fascist cops beating already beaten citizens for protesting being beaten.

"There are levels of survival we are prepared to accept" (cyberpunk review)

“There are levels of survival we are prepared to accept” (cyberpunk review)

Can governments that are not truly of and for the people be expected to act like they are when push comes to shove?

Politicians have two jobs to do. That’s the problem. When the people ask their ‘leaders’ to do the right thing, in this case, rationally develop the tar sands – if they must be developed – so that the Dutch disease doesn’t do so much damage and so that manufacturing in Canada, such as it is, can survive, They expect, perhaps unrealistically, their leaders to respond positively, with enthusiasm, using the tools at their disposal, which are not insufficient, to find solutions. Indeed, Majka notes that Dutch disease is a problem that Canada has and that “there are solutions.” But when captured governments are busy doing crime, essentially, which involves rule-breaking and doing deals with special, lawless, interests, How can they at the same time work with law-abiding citizens to make the country run smoothly for the benefit of everyone and not at the expense of the environment? It can’t be done. (I’m struck by how often new laws and rules coming down from corporatocracy governments just happen to completely nullify, without discussion with all parliamentarians or Canadian citizens who are affected, other laws. Look at the privacy laws that websites everywhere direct visitors to. Where do they stand now? Probably nowhere since so much police state power has been legislated. Governments, and corporations, can look at your private information and do pretty much what they want with it.)

If there is no law preventing the Alberta government from charging the lowest royalties in the world to foreign interests allowed to profit from our oil (Majka notes that it’s 39% for example, compared to Norway’s 76%), Should there be? With neoliberal capitalism, and the deregulation that is such a prominent feature of it, sometimes ‘no’ law is as good as a bad law. Actually, the problem is not that Alberta’s royalties for tar sands oil is the lowest. That’s not really the issue. The problem is that Alberta’s low royalties charged for access to its tar sands are ‘extremely’, not competitively, low. But that’s what you get when special interests run things and governments are fronts for them.

Much can be forgiven when decision makers, who are imperfect, have good intentions. Ours don’t have good intentions. Clearly. Their goal, because it’s the goal of their class, is to kill democracy and replace it with a form of capitalism more similar to that exercised by the Chinese government. (Real Conservatives didn’t have that goal, even if they did believe in inequality. They felt some ownership of the poor. Neoliberals, including neoconservatives, are inhuman. They get a kick out of destroying social safety nets and then creating conditions where people desperately need them.) If you offered that option to people, they’d say ‘no thanks’. So you don’t. You simply force it on them or sneak it past them, as the most recent Ontario omnibus bill demonstrates. The gangsters in power masquerading as Benefactors in power are aiding and abetting the theft of all that citizens (in Ontario and Canada and everywhere where the Chinese form of democracy hasn’t been totally established) own. See the CUPE article titled “Act hidden in budget bill begins sell-off of Ontario, means more back-room deals.” That article/alert includes the following:

At the press conference, the Canadian Union of Public Employees (CUPE) Ontario president released a new legal opinion written by Shrybman, a partner at Sack Goldblatt Mitchell LLP practicing in public interest and international trade law, on Schedule 28 of the budget legislation, Bill 55.

“This act opens the door to privatizing every public service in the province, even contracting OHIP services out to an American HMO, all without the approval of the Legislature, and all without any scrutiny,” said Hahn. “Ontarians learned from Ornge and eHealth that major deals affecting public services must be done out in the open and transparently. This act will give us a crate of Ornges.”

Contrary to earlier reports, Schedule 28 is not limited in scope to Service Ontario. The legal opinion, which is posted on the CUPE Ontario website at, states that Schedule 28 gives cabinet authority over “contracting out or privatization of any and all Ontario Government Services,” to any person or corporate entity, whether Canadian or foreign-owned…

CUPE Ontario is calling on all three parties to remove this disastrous Act from the budget bill immediately.

“The Liberals are taking a page from Stephen Harper’s playbook. They’re attacking the foundations of our democracy, and hiding the legislation in a huge budget omnibus bill,” said Hahn. “We believe the public has a right to know what its government is doing, and has a right to have a say in how services are delivered. Schedule 28 takes the last requirements for accountability and transparency and throws them out the window. That’s something that should be seriously debated in the house.”

Let’s see how the rightwing, pro free trade, Mulcair responds to that threat. And do I expect Mulcair to single-handedly alter NAFTA and the destruction of Canada’s energy security inherent in it when he becomes prime minister or partner in a minority government, as is possible? Nope. I expect him to do an Obama, partly because, as with Obama, his past doesn’t suggest he won’t. (I see our NDP, rather than any individual attached to it, as being the good cop in the corporatocracy’s good cop/bad cop operation here in Canada.)

As we all know, free trade deals, in the neoliberal era, are not about free trade in any positive sense. They are about giving more power and freedom to corporations, which always involves taking it from the people. This is why trade deals are now done in secret. (Call it transparency and accountability, like Stephen Harper does, if you wish.) Citizens find out about them only through tiny blurbs in the media or reports in alternative media. You won’t find references to the people’s wants and needs in those deals either because that’s not what they are about. Justin Akers Chacón notes, in his (July/Aug 2007) ISR article, “Casualties of neoliberalism,” that “Neoliberalism in Mexico (with the passage of NAFTA) was designed to induce a painful shock treatment into the economy, with the rapid transition to open markets, the abolition of tariffs and subsidies, and the reduction of social spending. Nowhere in the 700-plus pages of NAFTA text was there a plan to address the land loss, deindustrialization, and impoverishment that would immediately result in those sectors of the economy made vulnerable by exposure to the world market.”

You can only ‘force’ elite democracy, which means corporate rule, which means fascism, which means entrenched inequality, which means austerity, on the people, which is happening right now. You can’t offer inequality and a ruined environment freely to the people, giving them the choice to accept or reject it, because the people wouldn’t accept it. Laws are now gushing out of corporatocracy governments stripping citizens of civil rights and empowering corporations, and the agencies of force employed by states, that don’t serve citizens but only police them – since people have been so badly abused that they are less willing to suffer so that a minority of lawless parasites can live like kings – and the abused people are therefore getting rowdy. But that’s okay (and is also a source of profit making for the private sector in security). Unseen glory isn’t glory. The people can know, to a great extent even, that they are being swindled. When elites and their tools take the means of survival from us, we notice them. They want that. That’s their glory. They just don’t want to deal with the destruction that they cause in a positive way, which, of course, would require them to admit to their betrayals and then get busy and try to right things. That isn’t going to happen. That isn’t interesting to them. (See the Democracy Now segment titled “The Filter Bubble: What the Internet Is Hiding from You.”“)

I was flabbergasted, repeatedly, when reading what numerous contributers to had to say about Barak Obama’s hypocrisy. It’s stunning, even to those who knew he was no shining knight in white armor. I already knew that his is a captured government and that the corporatocracy would never let anyone become president of the United States who was not solidly neoliberal, but to read the details of how thoroughly corporate America has infiltrated government and its agencies took my breath away. Corporate America doesn’t just have a strong hold on the government of the United States. It ‘is’ the government of the United States. Look at the pernicious influence of corporate lobbyists on Capitol Hill. And now, rich corporations have the wind of Citizens United pushing their sails. Democracy Watch says that Canadian corporations (with boards composed of Americans and Canadians) spend $25 billion annually to lobby politicians and promote their interests. And I don’t see my country getting any better. I’m sure they wouldn’t spend that amount of money if they didn’t think it was going to get them something in return. See “The System Is The Scandal.” I also wonder whether the easy money handed over by lobbyists, indirectly, to legislators makes those legislators more or less hardworking – for the people.

I do understand when citizens who expect their political leaders to act like leaders and do the jobs they’ve been ‘hired’ to do end up disillusioned and cynical (corrupted) when they observe those leaders acting like enablers of gangsters. But the good cop/bad cop routine appeals to elites who like to destroy souls while they destroy their own, along with everything else, and those disillusioned citizens need to understand that. ‘Their’ leaders, a few exceptions notwithstanding, are not ‘their’ leaders.

“It is necessary to point out that although the stealth neoliberal president has been taking baby steps out of the closet, he would always stay by the entrance: as long as there is no popular pressure against his neoliberal policies, he would stay on the outside; at the first signs of a threatening pressure from the grassroots, however, he would crawl back inside the closet, and begin preaching populism or uttering ineffectual, benign corporate-bashing rhetoric. This is his mission and his political forte – a master demagogue” -pg 155 of “Hopeless – Barack Obama And The Politics Of Illusion,” edited by Jeffrey St. Clair and Joshua Frank.

I don’t think Obama is a master demagogue. And if he took a few baby steps soon after being elected, which is arguable (look at the cabinet he assembled!), he has stopped taking ‘baby’ steps. And he’s turned around and tossed a grenade in his neoliberal closet. Really, He’s just a bald faced liar. And, from the corporatocracy’s standpoint and it’s need to install an American president in the White House in a general election, any smooth, upper class, neoliberal liar will do. And that there are a few out there who are equally sophisticated, Democratic Party members and ready, willing and able to serve power in a grand way is without doubt. Still, The author of this entry, Ismael Hossein-Zadeh, captures fairly nicely the good cop/bad cop approach of the corporatocracy to managing the people through the electoral system. Michael Hudson adds something to the good cop/bad cop discussion when he notes that “…Obama has only done what politicians do: He has delivered up his constituency to his campaign backers – the same Wall Street donors who back the Republicans. What’s the point of having a constituency, after all, if you can’t sell it?” (“Obama’s Sellout On Taxes,” pg 142 of “Hopeless.”)

Just in one area only, namely food and agriculture, Look at the situation. Obama is enamored of biotech and agribusiness, including Monsanto:

=== == =
Like Obama’s campaign promises to end the wars in Iraq and Afghanistan; like his promises to bring out-of-control banksters and oil companies under control; like his promises to drastically reduce greenhouse gas pollution and create millions of green jobs; Obama has not come [through] on his his 2008 campaign promise to label GMOs…

Obama’s Administration, like the Clinton and Bush Administrations before it, has become a literal “revolving door” for Monsanto operatives. President Obama stated on the campaign trail in 2007-2008 that agribusiness cannot be trusted with the regulatory powers of government.

But, starting with his choice for USDA Secretary, the pro-biotech former governor of Iowa, Tom Vilsack, President Obama has let Monsanto and the biotech industry know they’ll have plenty of friends and supporters within his administration. President Obama has taken his team of food and and farming leaders directly from the biotech companies and their lobbying, research, and philanthropic arms. – “Monsanto’s Minions,” by Ronnie Cummins (“Hopeless”)
= == ===

Ronnie Cummins goes on to mention some of the names of those biotech and biotech-related representatives who are now part of Obama’s government, including: Michael Taylor, Roger Beachy, Islam Siddiqui and Ravi Shah. Then there’s Ramona Romero and Elena Kagan, who’s crimes are so egregious she merits her own, separate, entry in “Hopeless.” (See “Kagan’s Disturbing Record,” by Marjorie Cohn.)

So much of what we eat is, besides de-natured, not proven safe, thanks to corporatists like Obama. That applies to food on the land and in the polluted seas. Neoliberals like Obama and Stephen Harper not only assist corporations by giving them the freedom to do as they wish, even when, as in the case of Wall Street, they demonstrate that they are irresponsible and criminal-minded, but, when those special interests cause mayhem, as BP did in the Gulf (See the incredible account of that in “Hopeless,” titled “Let Them Eat Oil,” by Jeffrey St. Clair.), they then let them off the hook and protect them. (Let’s see whether Obama appoints Jeffrey Sachs to lead one of international capitalism’s collective hit men, namely the World Bank.) Look at who Obama’s chief of staff (a hardcore pro free trade, pro Israel, neoliberal hawk), Rahm Emanuel called to an emergency meeting with Obama when the whole BP/Gulf debacle was beginning to look bad for Obama’s administration: Larry Summers! (See Jeffrey St. Clair’s entry, “Let Them Eat Oil: The Bi-Partisan Path To The Gulf Catastrophe,” in “Hopeless – Barack Obama And The Politics Of Illusion.”) Larry Summers famously said:

== =
“‘Dirty’ Industries: Just between you and me, shouldn’t the World Bank be encouraging MORE migration of the dirty industries to the LDCs [Less Developed Countries]? I can think of three reasons:

“1) The measurements of the costs of health impairing pollution depends on the foregone earnings from increased morbidity and mortality. From this point of view a given amount of health impairing pollution should be done in the country with the lowest cost, which will be the country with the lowest wages. I think the economic logic behind dumping a load of toxic waste in the lowest wage country is impeccable and we should face up to that.

“2) The costs of pollution are likely to be non-linear as the initial increments of pollution probably have very low cost. I’ve always though that under-populated countries in Africa are vastly UNDER-polluted, their air quality is probably vastly inefficiently low compared to Los Angeles or Mexico City. Only the lamentable facts that so much pollution is generated by non-tradable industries (transport, electrical generation) and that the unit transport costs of solid waste are so high prevent world welfare enhancing trade in air pollution and waste.

“3) The demand for a clean environment for aesthetic and health reasons is likely to have very high income elasticity. The concern over an agent that causes a one in a million change in the odds of prostrate cancer is obviously going to be much higher in a country where people survive to get prostrate cancer than in a country where under 5 mortality is is 200 per thousand. Also, much of the concern over industrial atmosphere discharge is about visibility impairing particulates. These discharges may have very little direct health impact. Clearly trade in goods that embody aesthetic pollution concerns could be welfare enhancing. While production is mobile the consumption of pretty air is a non-tradable.

“The problem with the arguments against all of these proposals for more pollution in LDCs (intrinsic rights to certain goods, moral reasons, social concerns, lack of adequate markets, etc.) could be turned around and used more or less effectively against every Bank proposal for liberalization.”
= ==

See “Larry Summers’ War Against The Earth,” by Jim Vallette (CounterPunch, June 15, 1999). Too bad CounterPunch’s Alexander Cockburn is a global warming denier. But that’s why I say that we, humans that is, can’t fix the mess we’re in. Sick patients can’t heal themselves. They need a healthy, trained doctor. Mankind will only survive with help from a higher power, one very different from Barack Obama, the corporatocracy’s current top dog, emphasis on dog.

And now, for your edification, I give you “Lazy” by Deep Purple:

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