Diversifying export markets and internal trade

Canada extracts the raw materials for energy and production for itself and much of America. So much so, its dollar was once considered a petrodollar and really it still is.

The extraction of resources in Canada are commonly identified in several main categories:

• forestry
• oil and gas
• water
• minerals
• fertilizer
• land-grown food
• seafood and fish

These categories of commodities are the basic building blocks for production of pretty much everything we consume. However, the abundance of these resources in Canada does not translate into a monopoly over their export or even their extraction and use.

Almost everywhere in the world also has these resources and most other places in the world have nicer climates to access them.

Canada is also ridiculously large which means all that resource has far to travel to get anywhere.

All that seems fairly well understood, but is missed in much of the discussion about how we, as an national economy, can respond to attacks from the USA.

Unfortunately, the liberals in Canada are not focusing on supporting the industries that use these input. Instead, they are engaging in an undergraduate economics exercise, coming up with clever sounding models to support policies based on neoclassical economics.

The liberals say that the main obstacle to economic resilience is internal trade in goods. And the main obstacle to the trade in goods are "inter-provincial trade barriers". This is, not enough free trade.

That's right. The response to the failure of free trade with the USA, a program that has put Canada in a particularly vulnerable position, is more free trade.

Reality, however, says the main obstacle to moving goods East-West is the distance and not "regulatory barriers to trade", according to Statistics Canada's recent study on inter-provincial trade.

Knowing reality should lead to an obvious solution to the facilitation of inter-provincial trade: low cost transport, logistics, and postal services.

This solution is exactly the opposite of complaining about Canada Post's costs to "taxes" and the privatization of those assets.

Transport methods East-West for all those resources are an issue in Canada. Rail, pipelines (and, no, they don't have to just carry bitumen), roads, airports, hot air balloons are all part of this conversation. We cannot be beholden to just one mode, but we should establish the public companies that promote the best modes for our geography.

The other issue is finding suppliers for the movement of goods for smaller enterprises to ship things to refining, midstream,processing, and value added production and then back again.

Again, the cost (and distance) of travel is the impediment to inter-provincial trade.

The solution to most of our problems in Canada for expanding production using our resources is getting it from where the resources are, but few workers are (because of the climate and distance from other things) to where workers and production are and then onto where the rest of the production can be finalized or exported.

Canada's economy was originally supported with this in mind, but we have facilitated North-South trade because that is closer, cheaper, and a larger market for output.

If we want to "diversify" trade both internally and externally, we must look to state-owned and supported transport as part of the production system of our economy.

Why state owned? Well, socialism of course, but also because if the market was going to build it, they would have already.