Greenbacks for all
In a recent column in the Globe and Mail, Andrew Coyne described a serious problem. Productivity in Canada has always lagged behind the U.S., he noted, saying that we need to ensure the amount and quality of capital that labour has to work with. Second, we need to make certain that labour and capital are efficiently employed.
While Coyne had few answers to improve the situation, he did sound the trumpets, saying, “If this country is ever to break out of the sluggish growth track … it will have to do something striking, even shocking.” Let me quickly say I have an answer for all of this, and it is shocking, but let me continue to lay the groundwork.
Here’s another measure of how poorly we stand compared with the U.S. and other nations. Arthur Labatt, of the beer Labatts, did not work for the family firm. He became an accountant, worked in the securities industry, and then was one of three founders of Trimark, the mutual fund company, where he made his millions.
Here’s what he wrote in his memoir, A Different Road. “In the 1960s, the Canadian stock market was far more important relative to world markets than it is today. A balanced international equity portfolio would have at least a five percent weighting in Canadian companies, usually resource stocks. Today, a one-percent exposure to Canadian stocks might be tops, given the number of Canadian companies that have left the country as well as the greater investment choices available in emerging markets.”
I’m putting those two commentators together with a conversation I had a while back with Robin Korthals, long-time president of Toronto-Dominion Bank. With the success of the euro, he said, Canada becomes really residual. “Forget nationalism,” he said. “If France, Italy and the Netherlands can give up their currency, what’s the big deal? The cost of maintaining our currency is high and it’s just another deterrent for foreign investment coming here. If you want to locate somewhere in North America, the extra factor in Canada is the currency.”
OK, now for my obvious answer to Coyne’s conundrum: Replace the C$ with the US$.
Just think how easy it will be to travel to Florida or Arizona in the winter with no need to go to the bank in advance for walking around money. Maybe our gas prices at the pumps will come closer to U.S. prices because we’ll get rid of the 30 percent premium we now pay. Ordering from Amazon.com will assume new clarity. Most important, adopting the US$ means removing the foreign currency risk for companies and people who want to invest here. Recent university graduates will be less likely to sign up for jobs with Microsoft because there will be more good jobs here. Bring on the greenback!