Seamanship Quotation

“In political activity, then, men sail a boundless and bottomless sea; there is neither harbour for shelter nor floor for anchorage, neither starting-place nor appointed destination.”
— from Michael Oakeshott's
Political Education” (1951)

Tuesday, May 29, 2012

Weak polling on a strong Canadian dollar

When an important issue is complex and poorly understood, it’s tempting to turn to demagogues to clear things up. As bad an option is to leave it to polling firms like Forum Research Inc. to define the question.

Yesterday, the National Post released the Forum’s results on a legitimate national issue: what to do about the Canadian dollar? Its existence and its value are critical to the well-being of every Canadian and to the shape of Canada’s future economy. Unfortunately, they asked a loaded question, reflecting a lopsided, shallow understanding of what’s at stake.

Some 1,800 Canadians were asked: “Which is better for Canada, a high dollar based on resource exports, or a low dollar supporting manufacturing?”

Predictably, a healthy plurality of Canadians (45% to 35%) favored supporting manufacturing over a “high” dollar. No kidding.

It’s hard to imagine how anyone, not living in a mining town, could turn down the only positive proposition in the question: supporting manufacturing.

Rational economic policy-making can carry on despite the popular myth that manufacturing is our most important sector. It’s been a myth for generations. However, there are elements of Forum’s question that further undermine intelligent discussion.

The question asked about a “high” dollar, implying that something is out of the ordinary. It didn’t ask whether Canadians like having the dollar roughly at par with the US dollar, as it is today, or whether they’d like it to shrink to 80cents, for instance.

Furthermore, it stated as a fact that the high dollar is “based on” resource exports, a widely disputed assertion. 

Most important, it established an arguable beneficiary—manufacturing—of a weaker Canadian dollar, but didn’t identify the downside. This reflects a dimwitted, hoary tendency of seeing economic conflict as a struggle amongst producers, with the consumer out in the cold.

It would have been more accurate in economic terms (and, so, more honest) to ask: would you favor a reduction in your relative standard of living to enhance the profits and, thereby, the growth of traditional exports industries, including resource, energy, and autos?

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