05 March 2006

A note to Canada

Welcome to the big, wide world of oil exportation!

Your country has been a relatively small time country, oil-wise, for some time, with pipeline flow actually going from south to north across the US. Now that the direction is starting to *reverse* you will be facing an interesting future. Luckily, your political stance is already starting to shift from that of 'Neutral Western Nation with Socialistic Tendencies' to one of 'Somewhat Conservative Western Nation with Irrational Social Policies'. A slow and steady increase of oil output from the Athabasca Oil Sands will start to show up in a serious way in national politics over the next few years. Already the money flow is west to east, with a heavy stipend to Quebec, and that only increases with money flow from oil deals. I expect that the more socially liberal or socialist factions inside the country will want to tax that flow heavily in both directions. If allowed to do this Canada will become a welfare state attached to an oil industry, instead of an industrial state with a strong oil sector.

Another note on the natural resources sector is that your country is also a diamond exporter, third largest in the world. With a good sized industry that is still growing, and the glacial till diamonds not even being looked at yet, nor their source, you can expect a hefty increase in income there, also. Again, I would not be surprised to see many hungry eyes within your country to want to tax hell out of the diamond trade. So they would like your country to become a net natural resources exporter welfare state, instead of an industrialized state with a strong natural resources sector.

What am I getting at with this? Well, heretofore the question was how to keep Quebec in the country and the country as a whole together. As profits increase from natural resources flow outwards, the question will increasing become: 'What are our natural resources tax monies buying for us?' And that mostly from the western provinces. They will look south at a country with a heavy medical bill, but also a heavily expanding economy and the most productive people on the planet with low taxation and then look at socialized medical states in Europe with nearly no productivity gains, slow to non-existent industrial growth and truly enormous taxation of their industries to pay for extremely heavy socialized medicine and other goodies. They will see unfettered greed by socialists and relatively open with minor taxation capitalism and have to decide on the future of Canada. Canada actually *can* fund socialized medicine, but at the cost of no productivity gains, low industrial expansion and an outlook of dependency on natural resources. So if you find the folks in western provinces raising an eyebrow at increased taxation on natural resource exploitation, you might find the entire country in a spot of trouble. Keeping Quebec *in* becomes a non-issue and Quebecers may start to feel a bit discomfited as the monetary centroid of Canada moves westward and a bit north a kilometer or so every year.

Now, the wonderful other part of this is terrorism! What Canada has done is decline the growth of the cost of a barrel of oil even *with* India and China coming on-line. As China has a relatively *dirty* and inefficient set of early industrial period industries, they will find a natural cap on the growth of those while small high tech sectors grow by leaps and bounds. This means that the largest growth sector for oil is consumer, not industrial use. While they have many consumers as potential, they have limited areas where they can get the money together to live a modern industrialized middle class life. So they will reach a growing plateau of oil needs once the easy to move folks and industry get up and running. Getting the rural areas of China non-poor and productive is still quite a bit off. India, on the other hand, looks to leap into the 21st century and give first, second and third wave industry a bypass. Again, consumer needs will dwarf industrial needs for awhile, but by concentrating on distributed education systems they will move most of their population quickly into the middle class. This is that wonderful study done a few years ago showing a capping of world population and slow decline as the majority of the world's population becomes middle class. By doing so, and by having Saudi Arabia's net oil income decline due to maximum output and total reserve problems, and only moderate oil price increases over time. So export of virulent terrorism will actually *increase* in an attempt to radicalize Middle Eastern countries without an industrial base against YOU. Because CANADA will be threatening them!

I lived in a US border city from birth until I was able to get a steady job elsewhere. I know Canada, its peoples and its beauty. As a growing country economically and with wise investment into industrial expansion, Canada can become a high ranking powerhouse in the state of world affairs. That said, you can no longer run an 'open borders, welcome everyone no matter how awful you are' mentality. al Qaeda runs cells in most Canadian cities and a number of terrorist have gained entry into the US via Canada. You did not mind this, so much, because those rich, haughty southern neighbors deserved what was coming to them... but when those cells start working against your own people.... Well, lets just say that US foreign policy may start to look realistic and even a bit *too* liberal to your western provinces. And you will find that 'money talks'.

Canada must come to terms with the fact that being a small, second world, semi-hemi-demi-non-aligned nation works real well when you are not a global player. You are about to get a steady windfall of chips to become a global player, and attitudes that suit a small but vital country that keeps to itself will not matter to terrorists looking to destroy western civilization and anyone who practices in it. Over the next decade you will start to find that just like the citizens in the US, you will have a nice, invisible vest to wear.

To a terrorist bent on destroying western culture, no matter how nice the person is wearing the vest, it has only one look: a big, fat target painted front and back on it. Every American has one, even though we can't see it. And soon your wish to be known as North Americans will come true.
Because each and every Canadian will get one, too.

Wear it with pride!


ABFreedom said...

Most of us, in the west, have no illusions about where we stand in terms of the terror threat. We also have no illusions about where we stand on the socialist front. If Ottawa and/or the east attempts to make a resource tax grab *again*, which, in Alberta, belongs to the province ... there probably won't be a Canada as you know it. Also, the western provinces, now, don't really care what happens to Quebec ... there just barking in the wind, and no one's listening anymore....

Great post .. with a lot of excellent points .. you called the terror thing right on the money.

A Jacksonian said...

ABF - I wish that things had waited a few more months if not a year or so... I prefer to look pessimistic that gets it right on rare times rather than prescient.

Still, the choice is the same. Use the new found wealth to become a highly capitalized modern society and boost economic expansion, or become a socialist state dependant upon mineral wealth. My hope is for the former and for grubby fingered ones to keep their mitts off...

But only Canada can decide that in whole... or in its parts.

I thank you for your kindness and hope to drop in now and again when I have mind and energy together.