Mulcair’s Disease

There is one fundamental reason why NDP leader Thomas Mulcair keeps harping to us that Western Canada’s energy industry is some form of “disease” infecting the nation as a whole. That is simply because it obviously is NOT a disease. We know what a disease is and don’t have to be reminded or told repeatedly. Many Canadians working in the energy industry know that this is the last thing that could characterize the source of their high standard of living.

The “Dutch Disease” to which he refers is a trivial macroeconomic theory originally advanced by a couple of academic economists who developed an economic model to explain an observation about the Netherlands, which experienced some “deindustrialization” when its exports supposedly became too expensive as a result of a strong currency. The strong currency followed the shift in economic focus for the Netherlands after the discovery of North Sea oil. The demand for energy boosted energy exports for the Netherlands.

Like junk science climate models, economic models make far too many assumptions about variables over which no one has any control. Even worse, scientists or economists building these models will assume that variables will act in a certain way or they will eliminate them from the model altogether.

One glaring aspect overlooked in the “Dutch Disease” idea is that economies are systems in a state of flux. Regardless of the resulting makeup of imports and exports in a national economy, the currency value fluctuates to account for the relative strength of differences. This particular model also did not take into account all variables, for the simple fact it could not. People in an economy do not do what you assume they will do. They change their minds and there is no economic model that can account for that.

Macroeconomics is a discipline that plays into the hands of social engineers, central planners and politicians advocating national energy policies. The conceit of these elites is that they presume to speak and plan for the rest of us when it comes to economic activity.

It is time for Mulcair to be challenged to define his terms and present a moral case for his archaic notions of total control over the lives of Canadians.

©Copyright 2012 Edward Podritske

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