Written by -- Roy Olsen
Prince George
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Tuesday, 26 August 2008 |
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Both the provincial and federal governments seem to be treating this situation as a normal business cycle and have adopted the neo-liberal hands-off approach in order to let the market right itself. But this is not a normal trough in the business cycle.
The other misconception about the current plight of forestry in B.C. is that this situation is somehow a naturally occurring event, hence the “perfect storm” metaphor.
The housing market in the U.S. was booming in 2005 and 2006 due to an investment glut, equity inflation, real-estate speculation and unscrupulous banking practices. The bust was not a normal business cycle but a man-made catastrophe. Those who hold out hope that the U.S. housing market will eventually return to normal should not expect volumes and prices in this period to return anytime soon. What is likely to happen is that once things bottom out, if they haven’t already, there will be a fairly long period required to clear current inventories followed by gradual improvements.
As for the other elements of the "perfect storm" - the high value of the Canadian dollar and the softwood lumber agreement (SLA) - it seems odd to me that the exchange rate was not factored into the SLA so that as the Canadian dollar rose toward par with the U.S. dollar the tariffs would fall. After all, currency fluctuations are the normal and natural free-market mechanism for trade imbalances.
If our governments believe that this is just a short-term cyclical event, there should be no problem with heeding the call by workers in the forest industry for an extension to EI until the market returns to normal. I suggest tying the extension to volume and price indicators. For example, when volumes and prices for lumber return to 2004 levels, the EI extension would come to an end.
There’s a huge surplus in the EI fund in federal hands and there is a huge budget surplus in provincial hands as well. I say while we are waiting for the invisible hand of the market, let’s see visible hands of government helping these workers.
-- Roy Olsen
Prince George
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Last Updated ( Tuesday, 26 August 2008 )
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