Are we infected? - Macleans.ca

Are we infected?

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Thomas Mulcair worries that we’re suffering from Dutch Disease.

NDP leader Thomas Mulcair said Saturday that, because of the way it raises the value of the Canadian dollar, other parts of the country are paying a price for the prosperity enjoyed by natural resource sectors such as the oil sands in Alberta. “It’s by definition the ‘Dutch disease,’ ” Mulcair said Saturday on the CBC Radio show, The House.

The “Dutch disease” is a reference to what happened to the Netherlands economy in the 1960s after vast deposits of natural gas were discovered in the nearby North Sea. The resulting rise in its currency was thought to have caused the collapse of the Dutch manufacturing sector, and Mulcair said the same thing is happening in Canada. “The Canadian dollar’s being held artificially high, which is fine if you’re going to Walt Disney World, (but) not so good if you want to sell your manufactured product because the American clients, most of the time, can no longer afford to buy it.”

Dalton McGuinty has expressed similar concerns. The OECD has also raised the issue. Jack Mintz says Dutch Disease isn’t happening here. Stephen Gordon questions the concept. The Current considered the diagnosis in March. More research here and here.