‘Dutch Disease‘ is an economic concept describing a situation where a boom in natural resource development increases the value of a nation’s currency, thereby damaging the manufacturing sector by making its products more expensive to export.
NDP leader Thomas Mulcair recently used this phrase to describe Canada’s current state of affairs; specifically, the development of the Alberta oil sands and the correlating rise in the Canadian dollar to over-par with its American counterpart.
On the face of it, it fits. The dollar has risen in value, due in no small par to the increased price of our natural resources; and at the same time, Canadian manufacturers have long complained about the high exchange rate making their stuff less appealing to Americans who used to buy it at 65 cents on the dollar, and now have to pay 101 cents on the dollar.
Of course, there’s two sides to the argument, and while manufacturers are hurting, oil producers are doing great. It probably didn’t help Mulcair that when the premieres of the oil producing western provinces stood up to defend their cash cow, he dismissed them as ‘Harper’s Messengers,’ forcing him to apologize and later promise to visit the region.
The Conservative government has ceased on the issue, casting Mulcair as ‘divisive‘ for pitting the east against the west. It’s a funny argument coming from a party that described opponents of oil sands development as ‘enemies of the state.‘ It’s also hypocritical, seeing as the Harper government itself funded a study which concluded that 33-39% of manufacturing job losses in the last decade were attributable to the so-called ‘Dutch-Disease.’
It’s no wonder the Conservatives are looking for a point of attack. The NDP’s poll numbers are on the rise, though I wonder if this is a winning issue for the tories. There are far more people in Canada who care about manufacturing jobs than there are who care about the oil sands. If the NDP can convince people that the Conservatives are favouring oil companies over wage-earning Canadians, they could easily win back Ontario.