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musings on an economy

the journal of Michael Werneburg

twenty-seven years and one million words

Today I met an old colleague downtown for lunch. We discussed the dismal state of the employment market and the ramifications for the economy as a whole.

His thinking is that NAFTA sent Canada on a collision course with its current hollowed-out structure, and that it won't return as long as we're in that agreement. We worked through some of the ramifications and realized that it's likely true:

1. All the manufacturing jobs dried up in the twenty years after NAFTA was signed, and nothing really replaced them.

2. Similarly, primary resource industries have been operating at huge discounts to international markets (e.g. oil) or have such low margins and high variability (mining, forestry, agriculture) that there are periodic blowouts, closures, and general marginality.

3. The few remaining "industries" in this country are ring-fenced domestic markets. Banking, publishing, insurance, etc. This includes services such as the software industry: you'll find successful units of foreign companies in Canada, but local companies seem to have a very hard time of it. Yes, there are exceptions but not many.

Where does that leave innovation? Well, there's no place for it. Ours is not to innovate but to fulfill orders for the economic machine to the south. We consume innovation but it's not needed for our role in North America's integrated economy.

What this means is that lawyers and accountants worked out something that sacrificed the livelihoods of the rest of us while preserving their own rackets. Good work if you can get it!