Stephen Rees's blog

Thoughts about the relationships between transport and the urban area it serves

The US economy

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I have predicted here, more than once, that the US recession is going to be serious and long term. That argument is one I use to question the “need” for Gateway. In case you think this is merely me being a Jeremiah it is based on what economists call “fundamentals”. This article looks at recent economic history in the US and explains why the present measures to stave off recession do not address the current problems.

Robert Reich is professor of public policy at the University of California at Berkeley. He is former US secretary of labour and author of “Supercapitalism

Most Americans are still not prospering in the high-technology, global economy that emerged three decades ago. Almost all the benefits of economic growth since then have gone to a small number of people at the very top.

The question for us of course is the extent to which the optimism of our governments that we are somehow insulated from these effects is justified. The real wage stagnation, increased working hours and labour participation rates as well as high personal borrowing rates are also seen here – though in somewhat more muted fashion. But mostly the US is still our biggest market. And our motor vehicle manufacturing sector is inextricably linked to US factories on the other side of the border – as we have recently seen. Our lumber industry here has been hit very hard indeed by the declne in US housing starts and the falling value of the greenback is causing us all kinds of heartburn – not least in tourism.

Yet we think that they are going to let us take a bigger slice of their port business? I don’t think so, Tim.

Written by Stephen Rees

January 31, 2008 at 11:02 am

Posted in Economics

One Response

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  1. I have inserted a link into the text above to a CCAP report on the experience of free trade here. The link is to the Press Release, but it is worth downloading the report. Summary of key conclusions

    1987 and 2006:

    * The 41 companies’ combined revenue grew from $142 billion to $310 billion while they shrank their combined workforce by over 118,000.
    * The Big Three automakers shrank their Canadian workforce by over 50%–from 87,626 to 43,000. Their revenue grew by 70%, from $38.9 billion to $67.3 billion.
    * Despite the massive Alberta oil boom, the three major oil companies in the sample cut their combined workforce by almost one-third, from 22,500 to 15,428. Their revenues soared from $13.7 billion to $53.4 billion–a 290% rise.

    * Corporate profits are at a 40-year high, but Canadian workers’ wage share of the economy has fallen steadily.
    * Only the richest 5% of income earners saw rapid growth in their inflation-adjusted incomes from 1992-2004.

    Stephen Rees

    February 3, 2008 at 10:25 am


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