Get used to the name Mark Carney. He’ll be our new Bank of Canada governor starting on February 1st, 2008. Gone will be our old friend David Dodge. Carney born in the North West Territories holds a PhD in Economics from Oxford University. He has a wide background in economics and finance working as an investment banker for Goldman Sachs and later for the Bank of Canada and the department of finance.
It’s a job I’d take in a minute. However, something tells me I wasn’t on the short list. Managing our economic levers with inflation on one side and unemployment on the other certainly doesn’t open up visions of grandeur. However for the dismal scientists who call themselves economists, its the stuff dreams our made of. With Canada’s unemployment rate dipping to a 33 year low last week of 5.9%, it would seem Mark Carney gets the job at an opportune time.
However, is it what it seems? Remember, this is a world hungry for Canadian commodities but most of us the last time I checked don’t live in Alberta. In fact Windsor Ontario recently topped Canada’s unemployment list among Canada’s largest 20 cities. Even with the loonie wafting over $1.02 US, it’s pretty clear to me we need some type of fiscal policy to move the Canadian economy forward. Resting on our laurels won’t be good for us or our new Bank of Canada governor David Carney any good.
Key in this debate will be how innovation and new technology intertwines with the nuances of our new post parity Canadian economy. In other words we need something within the abyss of what’s going on within our Canadian economy to keep jobs and economic growth percolating. Translation, you can’t have a 17% increase in our currency and not affect our job growth and economic wealth. I know our Canadian economic numbers are sterling. However, in the heartland of Ontario and Quebec where manufacturing and agriculture drive our economy, there is no way we can win, except for innovation and new technology.
What you say? Simply put if you work in the manufacturing or agriculture and food sector of our economy there is no way your business plan could have factored in the long term cost of an above par loonie. No way, unless you were a prophet and if you were I hope you cashed in and never have to work again. The key will be to do things even better, be more competitive through the use of new technologies and make innovation job one. I’m not being preachy here. I cannot see any other way. The better mousetrap we perpetually talk about is now coming the other way. With American goods being cheaper and cheaper guess what’s arriving at the factory and farm gate door? It’s cheap American competitive goods.
Hmmmm, I don’t like it either. If 2007 represents anything it represents a year where we consistently hear about “30 year economic milestones”, whether that is the value of our currency or a super low unemployment rate. For some of you its only news as your job is only very indirectly affected by this new world. For others like myself, we find ourselves hoping to go back to days of yore when the dollar was at 75 cents and our economic life was more stable. The unwelcoming news though is I don’t see that on the horizon. Our economic news is so stable; I cannot see the loonie going back down to those 2006 values.
So for the immediate future here we are. Newer technologies and innovative thinking will be key. However, there are things that government can do with their fiscal policy to make things better. How about an aggressive new capital cost allowance schedule so manufacturing firms and agricultural interests can write off capital costs more quickly. This would not only foster new technological innovations but also stimulate economic growth at time when it is sorely needed.
That could easily be gone especially when you consider our final federal budget surplus of $13.8 billion for the 2006-2007 fiscal year. In fact with money like that there could be a lot done to stimulate innovation and technological improvements through targeted government programs. The problem might lie with the fact our federal government’s fiscal policy needs to catch up with our new post parity world.
Key to that debate may be the opening of Parliament on October 16th. If they are prudent the Conservatives will have some of those innovation and technology planks in their throne speech. However, don’t count on it. It would seem at this time the election sabre rattling seems much more paramount.
That rattle will surely grow increasingly shrill. Nonetheless, it’ll be a pity if our politicians miss the point. What we need is a strategy to manage our economy through with innovation and technology being the key. An election we don’t need. What we need is an economic road ahead in this post parity world. The challenge ahead is to get it done.