Quote:
Originally Posted by Wharn
More de-industrialization is probably coming our way. According to the Globe and Mail, sales of small cars built in Mexico are surging, while the full-sized sedans made in Canada are being punished by onerous fuel economy regulations. Apparently, Ontario is also now one of the costliest places on the planet to build cars:
http://www.theglobeandmail.com/repor...ontent=2328777
Though Canada likely suffers from the Dutch Disease, an argument can also be made against McGuinty's Green Energy policy, which is no doubt a liability to manufacturing operations. High dollar, a 46% electricity price increase over the next five years and an Ontario Government deficit that's likely to continue into the 2030s. We're all fucked.
Too bad we can't create an ad campaign to counter this. "Remember the Ford Escort? Do you really want made-in-Mexico?"
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One of the primary reasons Mexico has become so attractive to foreign investment is the under-valuation of the Peso. Since that country's economic crisis of 1994, the value of the Peso against the American dollar has dropped from about 25 cents/peso to 7.9 cents, and it has generally been dropping every year. Put simply, a 70 peso/hour job in 1994 was worth $17.50 USD back then, and today is worth $5.52/hour USD. It's the same reason the cost of doing business in Canada has gone up so much in the past 15 years. It's all connected to supply and demand of the U.S. dollar. We can't control that.
There are things we can control, but Canada and Ontario have not taken sufficient steps to make ourselves competitive in the global market.
The new economic reality, which was probably considered unthinkable 25 years ago, is that Mexico's economy is bigger than Canada's (although GDP per capita is still lower, because of the size of the population), and Mexico has a rapidly-expanding middle class that has more purchasing power than ever before. Some economists predict they will have the world's 5th-largest economy by 2040.
There is no doubt in my mind that their government's provision of free post-secondary education has played a very large role in helping Mexico surge ahead economically; young people can afford to spend money on cars and houses rather than be drowning in student debt. Parents aren't forced to finance part of their childrens' education, and they can retire at an earlier age, opening up more job opportunities for the young. More spending power, more demand, a better economy. An economic spinoff from this is that post-secondary students do not have to work part-time and summer jobs, leaving open numerous job opportunities in the rest of the economy. It is unheard of in Mexico for university students to work while they're in school. Imagine how many unemployed Londoners could be employed if all the Western and Fanshawe students weren't forced to work to finance their education. (I was once one of those students, and yes, I recognized back then that my presence where I worked meant that someone in London feeding a family was jobless.)
Some Mexicans I've spoken with, especially those who have not studied economics, are largely unaware of the new North American order. Many do not understand how much Canada's economy has suffered in recent years, and how many jobs have moved from Canada to their country. Just as many are shocked when they learn how much post-secondary education costs in Canada, and how much debt graduating students are in. Some do understand, however; improved economic prospects in Mexico have been cited as one of the major reasons why attempted illegal immigration to the United States has decreased in recent years.
So Canada, what are you going to do to compete with Mexico, Brazil, and China?