As I have said before, we all have to deal with our own ideological contradictions. One of the most challenging positions is the one that is dead set against free trade. There is no doubt that free trade has formed basis of an economic revival in much of the world from China to Brazil to Africa but all the benefits that were supposed to accrue to the rich countries – that’s a harder sell. Sure, we have seen a fairly high number of jobs created in higher end occupations and, for a place like Canada, a greater demand for our natural resources. There is also no doubt that global trade has kept the cost of a lot of products from cell phones to underwear much lower than they would have been.
But we are in relatively heavy debt – public and private, we have entitlement programs that are taking an ever increasing share of our economic output and we are well below full employment across Canada with some areas much worse than others.
I remember discussing global trade back in my MBA days – in 1989-1990 – and even then thinking it would ultimately be more beneficial to the have-nots than the haves but I thought then, and now, that maybe a little belt tightening in the rich world for the benefit of the poor part – not a bad trade off.
But as the dust settles and we look forward, we need to be thinking about how we foster economies that create at or near full employment and enough revenue to pay for our public services and infrastructure. If the rich world has to belt tighten more and more – it is reasonable to assume that eventually we will get more protectionism, more stifling of trade and investment flows and more bitterness between countries. The optimists will retort that as countries like China get richer, they will need more and more products/services from the rich countries and it behooves these countries to get good at stuff the Chinese want. Canada is lucky enough to have oil and potash and other minerals.
We probably should also have some high value services or produced goods.