“Hewers of wood and drawers of water.” This biblical phrase, popularized by Harold Innis, continues to describe so much of our economic activity in Canada. Here in central BC, as with nearly the entire country outside the handful of big cities, the resource industry is the main economic driver. But our main customer has threatened our ability to provide the raw materials it needs for its manufacturing sector, and so we must look elsewhere.
To this end, Mark Carney is holding an investment showcase with very exclusive invitations sent to all the world’s major money managers. Leaders of huge private investment firms Blackrock, Temasek, and Blackstone will be joined by managers of sovereign wealth funds of Norway, Abu Dhabi, Saudi Arabia, China, and more! Carney is seeking a trillion dollars to invest in Canadian “major projects” – pipelines, transmission lines, ports, offshore wind, etc.
All of these projects are based on natural resources (or staples). The projects themselves certainly keep Canada’s economic focus on hewing wood and drawing water, maintaining our dependency on other economies for manufactured goods. But the focus on international investment also sets us up to fall into the famous “staples trap.” Massive amounts of capital are required to develop Canadian natural resources, and Carney is attempting to pull this capital out of international sources. But those sources have no incentive to further develop the wider economy. They are happy to continue to export raw materials to other markets, rather than increasing the value of those materials through further processing (such as the plastics plant that was proposed near Prince George).
We see the problem of relying on international capital in some of the manufacturing that many of us take for granted: sawmilling. As Saik’uz First Nation and the District of Vanderhoof pointed out earlier this summer, locally-owned mills are far more likely to maintain local manufacturing capacity. Local manufacturers are also more likely to work with First Nations to ensure that “non-timber values” are maintained alongside timber harvesting, and that there is a sustainable supply of timber. Multinational corporations who hold large amounts of forest tenure are willing to liquidate the timber as fast as possible, and then abandon local manufacturing or move the machinery elsewhere. Their commitment is not to the production, but to maximizing shareholder profit as reported quarterly.
While Carney’s big investment summit may yield the cash infusion he is looking for, it ultimately undermines Canada’s future ability to diversify our economy. His very public posturing around fast-tracking – clearly announcing that foreign financing can expect quick returns on investment – also undermines existing ways we evaluate these projects on grounds other than economic benefit, including both environmental assessments and the potential to impact constitutionally protected Aboriginal rights. All of these issues further our economy’s dependence on export of raw materials, and cements our price-taking position in the international system – a problem originally identified by Mel Watkins when he coined the staples trap way back in 1963.