Voodoo economics: Mulcair’s cap-and-trade doesn’t include a trade

Is anyone paying attention to Thomas Mulcair’s economic theories? A new poll has the NDP tied at 35% with the Conservatives, so maybe it’s time to treat them as a serious contender.

Here’s Mulcair’s central economic idea, as told to reporters outside the House of Commons last week:

“The NDP came down four-square in favour of cap-and-trade … the losses of hundreds of thousands of Canadian jobs is due to the high Canadian dollar … the Canadian dollar is partially artificially high because of failure to internalize environmental costs.

If we apply the basic principle of polluter pay, we will reduce the pressure on the Canadian dollar, save some of those jobs, start getting back the balanced economy that we’ve had since the Second World War.”

Every sentence of that is voodoo. Mulcair says the NDP is for cap-and-trade. That’s where oilsands companies would have a legal limit of how much carbon they could emit (that’s the cap part). And as that limit is ratcheted down, cleaner or more efficient companies would sell their extra carbon quota to companies that need it (that’s the trade part). Cap-and-trade rewards clean companies and makes polluters pay.

Except that in the NDP plan, there isn’t a trade part. The government gets the money. It’s a carbon tax. The NDP’s 2011 campaign plan acknowledges this, saying it will raise $20 billion for their new spending plans.

But that’s not the weirdest part.

Mulcair says “hundreds of thousands” of jobs in Ontario and Quebec were killed by the evil oilsands, and he says a carbon tax will fix that.

There’s only one possible way that could happen: If the oilsands were taxed so brutally that they literally reduced the amount of oil they produced and exported, then the world demand for Canadian dollars to buy our oil would fall, and so our dollar would fall.

That’s Mulcair’s plan to get Americans to buy Ontario-manufactured products again: Have everything Ontario makes sell at a discount through cheap Canadian currency. Inefficient Ontario factories will become competitive again if our foreign customers only have to pay 60-cent dollars.

Mulcair doesn’t propose to improve Ontario’s productivity — that is, union productivity at GM or Ford. He wants to devalue the dollar.

And he’s willing to kill the oilsands to make that happen. But look at the last part of Mulcair’s plan. He wants to use the money to “rebalance” our economy to get back to the industrial mix we had since the Second World War.

He says this often: We need to rebalance the number of people working in agriculture, manufacturing and services.

Once upon a time, 95% of Canadians were farmers. Today it’s 1.8%. It’s been declining every year since the Industrial Revolution. But Mulcair wants to rebalance that.

Apparently he thinks we need more people working in the fields. Maybe replace those job-killing tractors.

Same thing with factories. Factory employment peaked in the industrialized economies in the 1940s. Since then, ever more of us work in services — everything from computers to health care to media. Mulcair wants to fix that too. Fewer doctors and web designers. More assembly line workers.

Mulcair would tax the most productive sector — the oilsands — so he could subsidize industries that have naturally closed down on their own. It’s nuts. But so far, the Media Party hasn’t dared ask a question about it.



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