Emil Bjarnason used to tell a story about a man named Stanford Kingsley Claunch. Claunch was best known for pioneering his own idea of medicine. His theory was that disease was a person's best friend. The purpose of germs he argued was not to cause ill health, but to produce the diseases that cured illness. He was especially fond of malaria which he claimed was 'guaranteed to burn up all the poisons that make people sick' provided that an ignorant doctor didn't prescribe medicines that would interrupt the fever before it had done its job.

Fortunately, this nut was discredited before he could harm anyone.

Unfortunately, the Bank of Canada is putting Dr. Claunch's theory into practice.

Instead of dealing with the crisis in manufacturing jobs, the Bank of Canada is fighting a made up bogeyman of 'out of control inflation'. Their suggested cure? Increase interest rates to create job losses.

As part of the twisted logic of capitalism, CIBC recently celebrated this Dr. Claunch style strategy of creating a manufacturing jobs crisis to reduce inflation.

"The Bank of Canada, eying an economy operating above its non-inflationary speed limit, will welcome the dampening influence of an even stronger currency on both economic growth and inflation. A couple hundred thousand additional factory job losses, while far from derailing domestic economic growth, might be a route to opening up a bit of slack in today's ultra-tight labour market, forestalling a more serious wage threat."

Another way to say this is:

"The Bank of Canada will be happy that the skyrocketing loonie will cause more factory closures and job losses because this may dampen inflation. Throwing another 200,000 manufacturing workers out of a job, far from being a bad thing, is a good thing because far too many workers still have a job, and this will help us reduce wages."

This meant another 31,000 manufacturing jobs were lost in April and May and if the big banks like CIBC get their way, another 200,000 are to come.

So our appointed Bank governor gets out his sledge hammer to clobber inflation and punishes the whole economy in the process for good measure while pointing to wage gains of a few Canadians who made good somewhere, and probably Alberta.

What they don't mention is that the U.S. unemployment rate is at 4.5 percent and has been lower than our U rate for several years. And the U.S. economy is creating a lot more jobs every month than Canada with an unemployment rate still over 6 percent. I don't understand this situation here in the Northern Puerto Rico.

[ 02 July 2007: Message edited by: Fidel ]

quote:

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Originally posted by dewolfemann:
"The Bank of Canada, eying an economy operating above its non-inflationary speed limit, will welcome the dampening influence of an even stronger currency on both economic growth and inflation. A couple hundred thousand additional factory job losses, while far from derailing domestic economic growth, might be a route to opening up a bit of slack in today's ultra-tight labour market, forestalling a more serious wage threat."

Another way to say this is:

"The Bank of Canada will be happy that the skyrocketing loonie will cause more factory closures and job losses because this may dampen inflation. Throwing another 200,000 manufacturing workers out of a job, far from being a bad thing, is a good thing because far too many workers still have a job, and this will help us reduce wages."

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Originally posted by 500_Apples:

In this case, the statistical factory closings are all right if they cause less statistical harm than 7% inflation would.

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But we've had nowhere near seven percent inflation. And tight money policy disproportionately rewards the rich while punishing the jobless. Economists know now that Mulroney's recession method of fighting inflation costs the country more in terms of deficits and debt than would allowing healthy inflation.

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Originally posted by Fidel:

But we've had nowhere near seven percent inflation. And tight money policy disproportionately rewards the rich while punishing the jobless. Economists know now that Mulroney's recession method of fighting inflation costs the country more in terms of deficits and debt than would allowing healthy inflation.

The Yanks have allowed inflation to run a little hotter since abandoning Milton Friedman's tight money policy in 1982. Canada's BoC Governors haven't been quite as "Liberal" about inflation as have Federal Reserve Chairmen Greenspan and now Bernanke. The result has been lower unemployment rates in the U.S. than here.

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I'm not an economist Fidel, a few things.

1) I have a suspicion the government lies to us about a few economic statistics, or at least "massages" the methodology to make them look better (like with the unemployment rate). I wouldn't be surprised if "real" inflation were higher than the rpeorted 2.5%.

2) The reason inflation is "low" currently, is probably in part due to high interest rates. If they were lower, inflation might be higher. The bank seems to believe it would be.

3) Any American inflation right now is being run by the cheap US Dollar, and the supply-side fiscal steroids that are Bush's tax cuts financed through trillion dollar deficits.

4) The US started off with lower unemployment than we did. It is in the past five to seven years that we have begun to narrow the gap. We used to have 10% to their 4%. Now we have 6% to their 5%. Canada has been practicing a tight money policy, and the USA... loose money. Our manufacturing sector is doing better than theirs.

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Originally posted by 500_Apples:

4) The US started off with lower unemployment than we did. It is in the past five to seven years that we have begun to narrow the gap. We used to have 10% to their 4%. Now we have 6% to their 5%. Canada has been practicing a tight money policy, and the USA... loose money. Our manufacturing sector is doing better than theirs.

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As a matter, the Bank of Canada is practicing a little freer money policy since the late 1980's early 1990's when zero inflation was the target. Now the BoC allows inflation to roam between one and three percent with a mid-point target of two percent. The Fed has allowed inflation a little more room, between three and four percent, and their U rate has been hovering steady around 4.5 percent.

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1) I have a suspicion the government lies to us about a few economic statistics, or at least "massages" the methodology to make them look better (like with the unemployment rate). I wouldn't be surprised if "real" inflation were higher than the reported 2.5%.

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It’s not actually lying. Rather, it’s taking a particular definition of what’s largely subjective and calculating based on that.

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2) The reason inflation is "low" currently, is probably in part due to high interest rates. If they were lower, inflation might be higher. The bank seems to believe it would be.

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Actually, interest rates are still at a 50-year low (although now rising). What may be moderating inflation more is the currently high trade value of the Canadian buck. In other words, while there’s more money being borrowed, due to low interest rates, there’s still a fairly high demand for Canadian dollars by international banking, money trading and speculation firms and governments. That’s helping keep inflation in check.

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3) Any American inflation right now is being run by the cheap US Dollar, and the supply-side fiscal steroids that are Bush's tax cuts financed through trillion dollar deficits.

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True in part, although it’s actually the other way around. Bush’s supply-side trillion-dollar deficits and the hugely expensive borrowing due to all the no-end-in-sight military atrocities around the globe (Iraq, Afghanistan, Missile defense, new torture bases, maybe an attack on Iran, etc.) is de-valuing the US dollar, especially since its stability is in question.

The US greenback spiked in price about ten years ago, after the Asian crash (caused when multi-national corporations saw that North American consumer markets weren’t expanding anywhere near the rate needed to ensure profitability for the trillions of dollars invested in Asian sweatshop industries). That’s when big time corporate elites and governments started dumping their Asian currencies and buying up US dollars.

That’s when US Federal Reserve Chair Alan Greenspan defied the IMF/World Bank prescription of responding with jacking interest rates to match the rising dollar demand and did the opposite: drastically slash interest rates. That way large-scale and personal borrowing became easier, and, combined with the huge rush of US dollars, flooded the economy with cash—while the high demand off-set inflation rates. The move basically saved the US economy from a crash and bought it at least another ten years. Other major economies followed suit, and that’s why we have the current global economic spurt now.

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4) The US started off with lower unemployment than we did. It is in the past five to seven years that we have begun to narrow the gap. We used to have 10% to their 4%. Now we have 6% to their 5%. Canada has been practicing a tight money policy, and the USA... loose money. Our manufacturing sector is doing better than theirs.

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In terms of unemployment rates, again, it depends on what you consider unemployed and how you measure it. The US, last I knew when I lived there, considered anyone who work four hours in a month to be employed—hardly realistic. Also, the huge underclass of chronically poor and unemployed there are not counted in the regular jobless stats. So the rates usually seem low compared to Europe, for example, which has far more inclusive definitions.

As for manufacturing, it’s true that right now much of Canada’s sector is doing not too bad compared to the US. First, this country’s far more high-skilled and stable union work force provide it a higher productivity index, which gives it some good leverage on international markets.

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Richard Brennan / Canadian Press
Business - Tuesday, July 03, 2007 @ 07:00

An average of 190 well-paying manufacturing jobs are disappearing in Canada every day - most of them in Ontario.

That's been the case since 2004 when Canada hit its peak for employment in the manufacturing sector. The high dollar, cheap imports, Canada-U.S. border slowdowns and the fear of increased interest rates are proving to be a deadly combination.

"In the manufacturing sector it is very serious because we are finding a perfect storm," said Perrin Beatty, president and CEO of Canadian Manufacturers and Exporters.

From the beginning of 2004 until the end of May, Canada has lost 239,100 manufacturing jobs or almost 192 every day, according to Statistics Canada. Of those job losses, 148,000 were in Ontario, where the Dalton McGuinty government is currently campaigning for re-election in October

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Jacqueline Thorpe, Financial Post, with files from newswires
Published: Monday, June 25, 2007

During the long march down in Canada's unemployment rate to a 30-year low of 6.1%, the cry from many quarters has been that the quality of jobs being created is not a patch on the big-paying manufacturing jobs that have disappeared.

"Yes, there are jobs out there, but it's clear the quality of new jobs being offered to Canadians month after month pales in comparison to the jobs that are being lost. I think people deserve better," said Ken Georgetti, president of the Canadian Labour Congress, after the May labour market report.

A new report from Export Development Canada shows such arguments are a myth.

Stephen Poloz, chief economist at EDC, details just how powerful the job-creation boom has been.

While the manufacturing sector has shed nearly 260,000 jobs since May, 2004, the rest of the economy has created 1.1 million new jobs -- a net increase of 860,000.

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[ 05 July 2007: Message edited by: Free_Radical ]

So the Financial Post would have us believe it's okey-dokey to lose our manufacturing base?

[ 05 July 2007: Message edited by: N.Beltov ]

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Originally posted by Lard Tunderin' Jeezus:
~ yawn ~

So the Financial Post would have us believe it's okey-dokey to lose our manufacturing base?

Why am I not the least little bit surprised? How did I know that no source for their stats would be cited?

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They wrote: "A new report from Export Development Canada shows such arguments are a myth." That's above standard for Canadian journalism. Get back to me when you see bibliographies in Canadian Op-Eds.

I found it on their website very easily, in about thirty five seconds:

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Originally posted by N.Beltov:
I'd advice people to stay away from the link to the Nazional Post publication. It polluted my computer and I had to do a cold re-boot.

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I never read the post, unless it shows up as a link or it's available for free.

Comparing it to the nazis is rather lame.

A) 1.1 million new jobs were been created in the same period that 260,000 manufacturing jobs were lost.

B) Many of these new positions (in total, a number exceeding the jobs lost) pay more on average than the jobs lost.

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Originally posted by 500_Apples:
They wrote: "A new report from Export Development Canada shows such arguments are a myth." That's above standard for Canadian journalism. Get back to me when you see bibliographies in Canadian Op-Eds.

I found it on their website very easily, in about thirty five seconds:

http://www.edc.ca/english/publications_2198.htm?HP=RN-02-e .

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The unemployment numbers – In May 2007, last month, the unemployment rate held at 6.1% with the loss of employed work being offset, once again, by a gain in self- employment. The manufacturing sector continues to bleed jobs: 12,000 were lost in May, adding to the 19,000 lost in April. Over a quarter of a million jobs have been lost in that sector over the past five years. Last month, the number of Canadians who wanted to work but did not have a job stood at 1,083,600.

Economist Andrew Jackson’s Analysis

It is clear that the quality of the new jobs falls far short of the quality of jobs being lost due to industrial restructuring. Strikingly, almost all of the growth in paid employment over the past year (226,000 out of 229,000 positions) has been in sales and services jobs. This is the lowest paid occupational category, where many jobs are part-time. One- third of the new jobs created since December have been in the lowest paid industrial category of all – accommodation and food services.

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They wrote: "A new report from Export Development Canada shows such arguments are a myth."

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After checking this out, it appears once again that the only myth here is that the corporate media and its Neo-con spew are based on honest journalism.

First, what they quoted is not a "report" at all, but a commentary by Stephen Poloz, chief economist and senior VP for Export Development Canada.

Second, he makes what totally unsubstantiated claims about how great things supposedly are for new jobs, etc. In addition, if you compare the numbers he’s claiming (which I have yet to see any actual report to back up) are fairly marginal increases-assuming they are true.

But the real clincher as to how good this all is can be shot down by the fact that, as usual with these corporate apologist types, he hurls out these supposed weekly earnings figures without matching them to the cost of living, especially in today’s crisis era of record high personal debt.

rising Personal and Consumer Debt

How much a worker earns in simple dollar figures means little when assessing how well of s/he is unless you offset that with the cost of living, inflation and the Consumer Price Index.

Now compare this to the Canadian Labour Congress release that actually DOES quote a real report from Statistics Canada showing that in fact real incomes overall continue to slide.

Statistics Canada monthly Labour Force Survey

Finally, Poloz’ numbers, if they are true, reflect the recent brief economic spurt caused by record-low interest rates—apparently the only thing between the current situation and a global recession.

For example, the construction wage rates he posts as being better than manufacturing jobs is nothing new. Low interest rates have caused a huge bump in commercial-industrial and resource sector construction, which are traditionally fairly heavily unionized and have above average wages and benefits even when things are slow. Add to this the growing skills and labour shortage in that sector and you can see why wages have shot up.

But that’s not the way it is in the much larger service sector, where even Poloz’ numbers show only a marginal increase, which can be easily eaten up by the CPI.

But Poloz actually isn’t the problem here. It’s the Global CanWest empire and its legacy of lying.

500 Apples wrote:

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I never read the post, unless it shows up as a link or it's available for free.

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Good move on your part.

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Comparing it to the nazis is rather lame.

Reminds me of when online conservatives compare CBC to pravda.

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I don't mind calling it the Nazi Post, since it has over its 10-year existence supported just about everything that comes close to Nazism.

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Originally posted by Steppenwolf Allende:
But the real clincher as to how good this all is can be shot down by the fact that, as usual with these corporate apologist types, he hurls out these supposed weekly earnings figures without matching them to the cost of living, especially in today’s crisis era of record high personal debt.

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Originally posted by Steppenwolf Allende:
Finally, Poloz’ numbers, if they are true, reflect the recent brief economic spurt caused by record-low interest rates—apparently the only thing between the current situation and a global recession.

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Manufacturing is still considered the linch pin of all developed economies. Stable manufacturing employment tends to support spinoff jobs in tertiary and surrounding sectors. The reverse is true when good-paying manufacturing jobs are lost.

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Originally posted by Free_Radical:

This is over a 3+ year period, since May 2004.

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Canadian Centre for Policy Alternatives March 2007

"Lots of insecure jobs created in 2006; but more good jobs lost"

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So far, the manufacturing job losses and their inevitable effect on the rest of the labour market have been seemingly contained, but many economists are waiting for the other shoe to drop. As noted by the TD Bank, “Sooner or later the manufacturing decline has got to cross-infect the remainder of the job market.” Eventually the multiplier effect of these job losses in our primary wealth-creating sectors will work their way through the economies of the two largest labour markets in Canada. Without some decisive action to address the root cause of the problems, job losses in the remainder of the economy are imminent.

Ominous signs are already apparent. For the first time in many years, GDP growth, starting in late 2005, has trended towards flattening, yet employment has continued to rise at a fairly even and sustained basis. This is quite odd behavior for the GDP and employment rates. Typically, the two follow one another around the graph like bees to honey. It is the nature of their relationship. There are points of departure, but typically these are short-lived. Undoubtedly at the root of this anomaly is the rapid replacement of high-value-adding/high-paying jobs within the manufacturing sector by low-value-adding/lowpaying jobs in other sectors.

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They've been saying information technology is going to replace high value-added manufacturing and other sectors as the wealth-creating engine of Canada's economy for a while now. So far it hasn't happened. Kanata-Ottawa used to be referred to as "Silicon North." Nobody calls it that anymore since the accounting scandals and tech bubble collapse at the beginning of the decade.

[ 05 July 2007: Message edited by: Fidel ]

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On Dalton McGuinty’s watch, Ontario has lost over 175, 000 manufacturing and resource sector jobs. It’s happening because of McGuinty’s unwillingness to intervene to preserve Ontario’s manufacturing heartland. Rather than mobilize the resources at the government’s disposal, McGuinty has said that this sector’s challenges are “unavoidable.” ...

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Originally posted by Free_Radical:
All that needs to be demonstrated is that the new wages are equal to or higher than the former wages - the cost of living issues are constant.

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Originally posted by Lard Tunderin' Jeezus:
On what do you base this claim? There's no report to be seen, and no sources cited by Poloz, so as far as I can tell you've pulled this out of your ass.

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[ 09 July 2007: Message edited by: Free_Radical ]

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Originally posted by Fidel:
Where's that detailed jobs report you and Poloz have threatened to produce ?.

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Originally posted by Free_Radical:
I have made no claims to the methodolgy used by Mr. Poloz.

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Originally posted by Free_Radical:

All I have are his numbers - which state that when compared, side-by-side, the new jobs pay more than the old ones.

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By and large, the high point for Poloz' jobs report comes from growth in public services: health care and education with 232,000 positions. Those are good unionized jobs paying a living wage, and once again, thanks to soft budgets in the public sectors.

The rest of Poloz' jobs report mentions some smaller numbers created by private enterprise and in the highly volatile energy, construction and service sectors. And what Dr Doolittle government couldn't take advantage of Canada's naturally-occurring fossil fuels and massive energy exports to the States 24-7 and on the cheapo?.

Compared with the quarter million good-paying manufacturing jobs w've lost across Canada, this is not good news. A lot of those full-time jobs in construction are seasonal and vulnerable to cyclical downturns. The manufacturing jobs we've lost tended to be permanent and supportive of jobs in surrounding sectors. This is how primary wealth-creating sectors work to drive other parts of the economy with multiplier effects.

Brian Baloney promised Canadians "Jobs! Jobs! Jobs!" as a result of his free trade agreement with the Yanks and so did the little guy from Shawinigan. The country is only just getting round to producing full-time payroll jobs in the same numbers created during the 14 years leading up to FTA-NAFTA as the 1990's were a disaster. Canada has a full-time jobs deficit that needs some catching up on.

There was mention of high tech IT economy to replace the loss of our hard currency generating primary sector jobs. So far, it hasn't happened.

[ 09 July 2007: Message edited by: Fidel ]

TorStar June 9, 2007

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OTTAWA–The Canadian economy's torrid pace is showing signs of slowing to a comfortable trot as new statistics yesterday indicated the danger of overheating may be receding.

The eagerly awaited May jobless numbers proved to be a non-story as Canada's unemployment rate remained at 6.1 per cent for the fourth month in a row, and employment registered a mere 9,300-job gain over April, below the 14,000 that market forecasters were expecting. ...

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A "torrid pace" and "galloping" economy. Sounds good to me so far. And now for the truth mentioned toward the end of the newspeak, I mean, news piece

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Manufacturing continued to shed jobs in May, with 12,300 fewer people employed in the sector.

The moderate rise in May employment was supported by a 32,700 rise in full-time jobs,(haleluliah, there it is in news print, "full-time jobs" And anybody knows full-time jobs are good news!!!) offset by a loss of 23,400 part-time jobs. In the summer-job market, 33,000 more students working in May than a year ago.

There was another large rise of 56,000 in self-employed people, while private sector employees fell by 58,000. Since October, the number working for themselves has jumped 6.5 per cent. Some 70 per cent of new jobs this year has been in the self-employed category – a sign of a weak labour market.

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So the bulk of new jobs created in the first half of 2007 have actually been the "self-created" variety and not private sector payroll jobs. That's what this Orwellian news piece on job creation eventually revealed to us at the end.

So where are all the full-time payroll jobs Brian Baloney promised Canadians at the end of the 1980's?. Is this our reward for allowing big-giant foreign corporations to own our manufacturing sector and big-giant energy companies to siphon off our valuable stuff and untaxed profits for a wink and a nod from Ottawa and Wild Rose County officials ?.

[ 14 July 2007: Message edited by: Fidel ]

Almost every single caller, whether they personally were financially better off or not, said that they don't see people in general as better off, because while there is less unemployment, the jobs suck, and while there is more family income, family members are working more hours, which means wages are down, and that there is way less job security and the majority of people don't qualify for EI, so they don't apply, which means they don't even enter into the employment statistics.

People in boom areas and industries in Alberta were miserable because, while they were getting rich, their quality of life sucked due to long hours, skyrocketing cost of living, and lack of diversified business (e.g. in boom areas, service workers are so scarce that you wait in line for 45 minutes for a coffee at Tim Horton's, etc., although I don't really think that's a bad thing, actually).

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Originally posted by Free_Radical:

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Total employment: 16.007m
Total mfg sector employment: 2.300m

May 2004 payroll survey (SEPH) release:

Total employment: 13.440m
Total mfg sector employment: 1.991m

June 2007 Labour Force Survey (LFS) release:

Total employment: 16.837m
Total mfg sector employment: 2.022m

April 2007 payroll survey (SEPH) release (latest available):

Total employment: 14.235m
Total mfg sector employment: 1.808m

According to the LFS, mfg employment fell by 278,000, and total employment rose by 830,000.

[ 21 July 2007: Message edited by: Fidel ]

Change in average weekly earnings, May 2004-April 2007: 9.1%

From the Bank of Canada:

Change in the CPI, May 2004-April 2007: 6.3%

Change in real average weekly earnings: 2.8%

[ 21 July 2007: Message edited by: Stephen Gordon ]

Yet we are a 'growth sector', one which makes the government proud. Indeed, they have government programs to create more of us - an ever-expanding army of skilled contract workers, insecure and desperate.

I'm very sympathetic to worries about the cyclical risks of these sort of jobs. But I'd prefer to deal with these sorts of risks directly, either by extending EI, or by creating an EI-type program that self-employed people could use during bad times.

eta: Since the OP was about monetary policy, it should be pointed out that the Bank of Canada's goal is to *avoid* sharp recessions, by making monetary policy one of 'no surprises'. And it's hard to fault them in this category. Notwithstanding various shocks to the global economy, we haven't had a severe recession since they adopted inflation targeting 15 years ago.

[ 21 July 2007: Message edited by: Stephen Gordon ]

[ 22 July 2007: Message edited by: Fidel ]

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OTTAWA -- Economic strength in Canada is migrating east, but only as far as the Manitoba-Ontario border, according to provincial forecasts Friday, one of which described the outlook for the country's largest provincial economy as "grim and grimmer."

"It appears that the first-quarter results are the last good news that we can expect for sometime for the Ontario economy," the report by the Institute for Policy Analysis at the University of Toronto warned. . .
And with the Bank of Canada focusing on the national inflation rate, which has been pushed up by soaring prices in Alberta, interest rates will likely rise further, it added.

The institute forecasts Ontario's economy will grow by just 1.7 per cent this year, well below the 2.3-per-cent national average, then weaken further to 1.5 per cent in 2008, and post only a moderate recovery to 2.4 in 2009.

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[ 22 July 2007: Message edited by: The Wizard of Socialism ]

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Originally posted by The Wizard of Socialism:
Yes, of course. God forbid we have any economic prosperity in The West. Don't worry. We're still overpaying for your manufactured goods from 2,000. miles away that we could easily get better and cheaper 90 miles to the south of us.

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Yes, I'd much rather pay for a Toyota manufactured with union labour in the U.S. than non-unionized here in Ontario. Good point.

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"If Canada doesn't want the brightest computer programmers, science PhDs, doctors and financial experts there are a hundred other countries that do," says Myer Siemiatycki, director of Ryerson University's graduate program in immigration and settlement studies.

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We're still overpaying for your manufactured goods from 2,000. miles away that we could easily get better and cheaper 90 miles to the south of us.

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Can you name one thing you've purchased in the last six months that has been made anywhere in Canada, let alone Ontario?

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I can, scented liquid for diffusers from Bio Botanicals, and that is about all I have bought product wise recently.

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Originally posted by Lard Tunderin' Jeezus:
Can you name one thing you've purchased in the last six months that has been made anywhere in Canada, let alone Ontario?

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