The Canadian dollar is now on par with the American dollar for the first time in over 30 years. Judging from the media, it would seem like every Canadian has somehow magically become richer overnight and it is now time to do some big spending. But before you start throwing around your strong Canadian currency, take some time to ponder about how the strengthening of the dollar is really affecting things.
The stronger Canadian dollar is further bad news for an already diminishing manufacturing sector. Why? The stronger dollar will make selling Canadian products in other countries more expensive. Since most competition is coming from China, which has a lower currency, not to mention extremely low labour costs, it makes it harder for Canadian manufacturers to make a high enough profit and compete with capitalists from more competitive countries. Well, so a few factory workers loose their jobs; they can get new ones, right? I hear that Canadian unemployment is very low these days… Yes, it is true that these workers, once losing their jobs, may move on to new employment. However, this new employment is almost always lower paying, fewer hours, non-union and less stable then manufacturing jobs. The eradication of the manufacturing sector destroys the well paid jobs that Canadian unions fought for in the post-war period. When these workers lose their jobs many service sector jobs also disappear. It is calculated that for every auto-worker employed there are 7 other jobs created. With the loss of these workers it will further impact the jobs of others, as sales of products and services decline.
So why is the dollar rising so high anyway? The basic reason why the Canadian dollar is rising is due to the increased price and demand for oil and other raw exports such as copper. Canada is a very large exporter of oil, the largest exporter of oil to the United States, as well as having vast quantities of metals, lumber and other necessities for producing many products. Of course everyone has heard about the Alberta oil boom, and this is a direct result of the rising cost of oil, making the tar sands development profitable (although still extremely environmentally unsustainable). So while companies in sectors like oil are indeed benefiting from the increase of the Canadian dollar, they are not the only ones.
Have you ever checked on the price of things being imported from other countries, such as the USA or China? Since our dollar is now worth about the same as the US dollar, should not the prices for the things we buy which are imported from there also go down? Of course anyone who has even so much as been to the grocery store lately will know that this is not the case. In fact in many cases the prices continue to rise. One of the most absurd and angering illustrations of this is the price of books. If you check on the back cover of books, they have an American and a Canadian price. The Canadian price is always at least several dollars more then the American price, even though both the Canadian and American dollar are now worth the same. We are buying the same products the Americans are buying, but we are paying more for them, simply because we live north of the border. However, someone is benefiting from this, but it is not the average Canadian, it is the businesses who import all these things which we buy.
Unless you are an internet hermit who does all their shopping on Ebay, or live in close proximity to the American border, then you will not notice much from the rising of the Canadian dollar. However, large importers, which are all the big businesses such as Wal-Mart for an example, are making more money. For example, several years ago, it used to cost more to buy things from the US or other countries because the purchasing power of our money was less then the US. Now the purchasing power of the Canadian dollar is over 50% higher, which means if we buy things from there, we are getting it cheaper then what we were before. For instance, a few years ago, something that was $1 dollar American was around $1.20 Canadian. This many not seem like a huge deal, but when we are talking about things which cost hundreds of dollars and enormous quantities in the billions of dollars then you can begin to see how much big importing companies are now making compared to before. Our prices for many things have actually increased, but the cost for the companies to buy things from other countries has decreased significantly. This could be thought of as almost a hidden inflation, going directly into the pockets of big businesses.
From the current economic perspectives, one could make a guess and say that
the Canadian dollar will most likely continue to strengthen due to the almost inevitability, in the short term, of the continued price and demand for oil and other natural resources. This will be at the expense of the majority of Canadian workers, and the benefit of the rich national and multinational corporations. What we need to do in order to protect our jobs and truly benefit from our resources is end the anarchy of the market system altogether. To take democratic planed control of our resources, banks and manufacturing so that the people can truly benefit from them instead of simply serving to enrich already wealthy corporations
