Tear down this wall
It matters not a whit what the Bank of Canada does with interest rates later today – raise, lower or stand pat – the damage to our dollar has long since been done. When Stephen Poloz was appointed governor of the central bank in 2013 he forgot to take off the Export Development Canada hat he’d been wearing for the previous 14 years. Ever since he arrived at the bank the Canadian dollar has been in free fall, going from par with the US$ in May 2013 to under 69 cents today. It costs us $1.48 to buy one U.S dollar.
In the beginning I’m sure the governor thought a lower dollar was a brilliant way to create jobs through increased exports. How’s that working out? Well, our unemployment rate is stuck at 7.1 per cent while the U.S. rate is 5 per cent and heading lower.
The other cause of our economic malaise is swooning commodity prices. With one-third of our merchandise trade dependent on commodities, we continually get into these boom-bust situations as prices rise or fall for nickel, aluminum, copper and oil. When I began researching my book about BlackBerry ten years ago, I thought we were onto something. Research In Motion looked like it would become a global manufacturer, one of the few in our nation’s history. But even when BlackBerry commanded 50 percent of the U.S. smartphone market, 90 per cent of all their manufacturing was done outside Canada in countries like Mexico and elsewhere. So much for any long-term industrial benefit.
Looking ahead, there’s only one way to keep the C$ steady. Next time it gets to par, let’s adopt the US$ as our currency. We’ll be like backwater East Germany joining burgeoning West Germany. We’ll knock down the wall and get better cars, too.