Is Growth Over? — MY COMMENT

by John Brian Shannon

Read Paul Krugman’s fascinating New York Times economics blog “Is Growth Over” which deals with the political, economic and social picture of the future.

Some nations are replacing retiring workers with robots at an accelerating pace — and for good reason.

In Germany, this is an absolute necessity as a huge pool of German workers are approaching retirement and there aren’t nearly enough Germans to replace them. Germany imports (low) millions of workers from Turkey and the MENA nations, but Germany still can’t keep up with the demand for labour in their export-driven economy.

What’s a country to do? Phone all their export customers and tell them they can’t produce all the widgets they ordered? Not the German way!

So, I understand, precisely, the position of the Germans and agree with their moral reasoning and their necessary choice.

While at the same time, I worry about other nations (us) making a massive shift to robotics – for very different reasons, and none of them moral — causing workers (who are human beings, after all) to become redundant while concentrating evermore billions into the hands of the infamous 1% of the population.

A switch to robots to improve the bottom line could become a threat to millions of workers in the coming decades and might become the most profound, social issue since the 1960’s anti-war movement.

Replacing retiring workers with robots (as is the case with Germany now) is a moral decision, which was made to ensure the German economy does not falter and thereby harm large numbers of citizens.

In this case, it is a completely understandable and moral decision, one that benefits vast numbers of German citizens.

Replacing presently-employed workers with robots so that 1% of the U.S. population can make more profit is an immoral decision, which will allow the 1% to keep evermore of the U.S. money supply for themselves at the expense of the other 99% of the population.

In this case, it is not understandable, nor is it a moral decision – as it primarily benefits 1% of citizens over 99% of citizens.

It will come down to this, will we assure human rights for American citizens who want jobs and want to contribute to their nation’s economy, or will we favour a small number of people (the 1%) who want more, more, more, for themselves?

Who is America in business for? The 1% or the 99% of American citizens? It is a political, economic and social decision that voters will need to make in the next election cycle.

Or, put another way, should 3.1 million citizens have near total employment and economic control over 315 million citizens? [315,091,138 U.S. Census Bureau Jan 1, 2013 estimate]

Unfortunately, the 1% may be holding all the cards by the time a full conversation can occur and by the time the masses fully realize this, it may be far too late to do anything about it.

There is a better way. Read the Financial Post‘s “Employee compensation is an integral part of corporate culture” by Marty Parker, for one shining example of a better way. While just the tip of the iceberg, this one example could foreshadow a quiet and heart-warming revolution, one that benefits workers and corporations, while strengthening the very fabric of our Western society.

JOHN BRIAN SHANNON

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Canada – Resource Boom or Manufacturing Boom? Why Not Both!

by John Brian Shannon

I’m a big fan of Saskatchewan Premier Brad Wall. You can’t argue with success and the province has excelled with Brad Wall as premier. Well done on all counts, Premier Wall.

NDP leader Thomas Mulcair has a point, however. By devaluing the dollar, a huge part of Canada’s economy (almost 50%) could ALSO start to perform at a high level instead of continuing to sputter along at half-speed.

Not just the resource-based provinces romping along as they have been doing — but manufacturing provinces could return to full performance.

For manufacturing, a lower dollar will drive the demand of exports higher, Canadian production will ramp up, employment will increase. And we all know where – Ontario which is Canada’s largest ‘value added‘ economic zone.

Some people use the term manufacturing, but I call it what it really is, value-added. We take our provincially-owned raw resources and add value to those resources by manufacturing something from them or processing them, instead of merely selling our finite resources out of the country and getting nothing more from them.

Manufacturing has stalled in Canada, due in part to Canada’s strong dollar – our exports have become uncompetitive over the years as the dollar has risen. A direct correlation exists between those two stats.

If you want the biggest economic engine in Canada to suddenly begin to receive larger volumes of orders from other countries including the U.S. our biggest trading partner, causing those goods to become cheaper is the way to go.

Devaluing the Canadian dollar has NO EFFECT on Canadian consumers at all, unless you are purchasing goods and services from outside Canada. And if you are buying goods from other countries – shame on you – buy Canadian!

If devaluation inconveniences you because you purchase goods from other nations, a booming economy (Cdn resources PLUS Cdn manufacturing) firing on all cylinders should more than make up for it!

Some may wonder about losing our strong resource sector exports, which are already performing very well due to high demand for them in the rest of the world.

The price of raw resources will not drop when demand is so high.

It’s only different in the case of Canadian coal exporters who are facing dropping demand, which equals lower prices ($192.86 in July 2008, now at $99.75 in May 2012) devaluation could help, however, as a lower price will increase demand.

Those coal quotes are the 60 month (thermal coal) contract price from indexmundi.com — but are representative of world thermal coal price trends: http://www.indexmundi.com/commodities/?commodity=coal-australian&months=60

It is better to sell lots of coal at $85.00 per metric tonne, than hardly any at all at $100.00 per metric tonne.

Tourism to Canada would also receive a major boost as our prices would become more affordable due to devaluation of our dollar.

So, what’s the downside of getting Canada’s manufacturing sector and related (which together represent up to 50% of Canada’s economy) again firing on all cylinders — by devaluing the dollar by up to 20%?

As long as demand remains high for gas and oil there should be little downside for Canada’s resource-based provincial economies, as that high demand dictates prices will stay the same, or continue to increase.

I can understand Premier Wall’s concerns for Saskatchewan’s resource and agriculture based economy – but at this point in time, world demand remains high for all resources – and for coal too – but only at the right price.

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