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Canada's Place in the Global Economy

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Here, reproduced, without comment, under the Fair Dealing provisions of the Copyright Act from the OECD Newsroom, is the OECD's look ahead:

http://www.oecd.org/newsroom/balanceofeconomicpowerwillshiftdramaticallyoverthenext50yearssaysoecd.htm
Balance of economic power will shift dramatically over the next 50 years, says OECD

09/11/2012 -  The balance of economic power is expected to shift dramatically over the next half century, with fast-growing emerging-market economies accounting for an ever-increasing share of global output, according to a new OECD report.

Divergent long-term growth patterns lead to radical shifts in the relative size of economies. The United States is expected to cede its place as the world's largest economy to China, as early as 2016. India’s GDP is also expected to pass that of the United States over the long term. Combined, the two Asian giants will soon surpass the collective economy of the G7 nations. Fast-ageing economic heavyweights, such as Japan and the euro area, will gradually lose ground on the global GDP table to countries with a younger population,  like Indonesia and Brazil (see chart).

Looking to 2060: A Global Vision of Long-term Growth uses a new model for projecting growth in the 34 OECD members and 8 major non-OECD G20 economies over the next 50 years. The report forecasts global economic growth of  3 percent annually, with sharp differences between the emerging-market economies, which are expected to grow at a much faster pace, and the advanced countries, which will likely grow at slower and often declining rates. Cross-country GDP per capita differences mainly reflect differences in technology levels, capital intensity, human capital and skills.

"The economic crisis we have been living with for the past five years will eventually be overcome, but the world our children and grandchildren inherit may be starkly different from ours," said OECD Secretary-General Angel Gurría. "As the largest and fastest-growing emerging countries fully assume a more prominent place in the global economy, we will face new challenges to ensure a prosperous and sustainable world for all. Education and productivity will be the main drivers of future growth, and should be policy priorities worldwide.

Short (3:30) OECD Video

The shifting balance of long-term global output will lead to corresponding improvements in living standards, with income per capita expected to more than quadruple in the poorest countries by 2060. The increase could even be seven-fold in China and India. With these gains, the gap that currently exists in living standards between emerging-markets and advanced economies will have narrowed by 2060.
But large cross-country differences will persist. China will see more than a seven-fold increase in per capita income over the coming half century, but living standards will still only be 60% of that in the leading countries in 2060. India will experience similar growth, but its per capita income will only be about 25% of that in advanced countries.
"None of these forecasts are set in stone," Mr. Gurría said. "We know that bold structural reforms can boost long-term growth and living standards in advanced and emerging-market economies alike."
OECD research shows that wide-ranging labour and product market reforms could raise long-term living standards by an average of 16% over the next 50 years relative to the baseline scenario, which only assumes moderate policy improvements.

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The cheap goods we buy and the cost to get them is a large problem.  I just did a fast Google for Spain and Greece trade deficit.  They are both problem countries, both import lots and Spain at least has nothing to sell to the world to offset their expenses.

A lot of people has been doing this with China for a long time,  Even in Canada, CEO's are literately folding up manufacturing companies, putting the machinery on ships and sending it to china; to produce the goods once made here so they can be resold back.  This has happened to a family member of mine.  The individual went from a $15 per hour job with overtime after 40 hours, plus benefits and pension matching, down to to a 20 hour week at minimum wage working retail for a big box store.

How has this helped Canada?  Less tax revenue, less money for the individual to spend and less localized economic productivity,  higher tax payer burden do to IE payments from the Government, now less money for the Government to spend on infrastructure, medical, military etc.

I have nothing against cheap goods,  Cheap goods are fine.  I'm saying the poison is the cure in this scenario.  A alcoholic who is hallucinating and shaking and on the verge of death.  He may as well have another drink or two to stop the withdrawal then go to the hospital.  Hair of the dog.

I am saying the importing, and transferring out of money to other nations, for cheap goods,  helps to keep the poor people poor and makes it tougher for the country as a whole economically. 
I am also saying if you want cheap goods from overseas, it needs to be balanced cost wise, or if not balanced than a tariff needs to be added to make it balance.
 
kevincanada said:
The cheap goods we buy and the cost to get them is a large problem.  I just did a fast Google for Spain and Greece trade deficit.  They are both problem countries, both import lots and Spain at least has nothing to sell to the world to offset their expenses.

A lot of people has been doing this with China for a long time,  Even in Canada, CEO's are literately folding up manufacturing companies, putting the machinery on ships and sending it to china; to produce the goods once made here so they can be resold back.  This has happened to a family member of mine.  The individual went from a $15 per hour job with overtime after 40 hours, plus benefits and pension matching, down to to a 20 hour week at minimum wage working retail for a big box store.

How has this helped Canada?  Less tax revenue, less money for the individual to spend and less localized economic productivity,  higher tax payer burden do to IE payments from the Government, now less money for the Government to spend on infrastructure, medical, military etc.

I have nothing against cheap goods,  Cheap goods are fine.  I'm saying the poison is the cure in this scenario.  A alcoholic who is hallucinating and shaking and on the verge of death.  He may as well have another drink or two to stop the withdrawal then go to the hospital.  Hair of the dog.

I am saying the importing, and transferring out of money to other nations, for cheap goods,  helps to keep the poor people poor and makes it tougher for the country as a whole economically. 
I am also saying if you want cheap goods from overseas, it needs to be balanced cost wise, or if not balanced than a tariff needs to be added to make it balance.


:bullshit:

What globalization does, has done, demonstrably, over the past 25 years is, turn:
heavy%20load%20up%20from%20inle.jpg
into
resize_image
.

And that is, undeniably, "good."
 
E.R. Campbell said:
:bullshit:

And that is, undeniably, "good."

While the pictures are nice, I do respect your postings.  But if you are going to call bullshit.  I do expect you to back it up.  I gave my opinion and a reason for that opinion,  look at "troubled" countries, look at their trade deficits.  Any reader can connect the dots from Deficit to economic trouble and even put it in chart form.

Plus I think you misunderstood me a little,  I am for globalization not against it, I blame greed for economic hardships I also blame greed for the trade issues I outlined above.
 
Wouldn't "good" denote long term gain? At the current rates of resource extraction and environmental degradation it won't be "good" for much longer than a few decades. Maybe if we are lucky until we are dead. But I have kids so I still give a crap.

The economic sacrifice zones are growing. Basically human created wastelands. Places like the Grand Banks, the Tar Sands(so isolated who cares I know) or Sudbury :) in Canada. The mountaintop removal in West Virginia's foot hills(I was there as a kid, so beautiful) and the Gulf in the USA. Almost all the world's coral reefs. I checked that out personally. That amazing world is dying at an alarming rate worldwide.

Humanity never created an economic model that included environmental sustainability. We need a new system that does not externalize the costs of production. We have covered the entire planet. There is no place left to sweep all our crap under the carpet and no new places to go to after we foul our own nest. This was rarely a problem when there was only 100 million people.
 
kevincanada said:
While the pictures are nice, I do respect your postings.  But if you are going to call bullshit.  I do expect you to back it up.  I gave my opinion and a reason for that opinion,  look at "troubled" countries, look at their trade deficits.  Any reader can connect the dots from Deficit to economic trouble and even put it in chart form.

Plus I think you misunderstood me a little,  I am for globalization not against it, I blame greed for economic hardships I also blame greed for the trade issues I outlined above.


My problem, kevin, is that I think you misunderstand trade issues, globalization, and, indeed, basic economics.
 
E.R. Campbell said:
My problem, kevin, is that I think you misunderstand trade issues, globalization, and, indeed, basic economics.

Then prove me wrong.  I've cited reasoning to back myself up using,  Obama policy,  New York City policies, the destruction of Greece and Spain, Local manufacturing industries closing their doors, local municipal polices that regulating store zoning, how employing part time people in retail is potentially bad,  I even went into Keynesian policy.

The only thing I claimed is hiring work forces of part time employees is bad, unfair trade is bad and to much debt/interest is bad.

You kind of have to give me something?  Or you don't have the right to call bullshit on my writtings.
 
And now Japan is having more trouble according to this article which is reproduced under the Fair Dealing provisions of the Copyright Act from Sky News:

http://news.sky.com/story/1010216/japan-nears-recession-amid-china-boycott
Japan Nears Recession Amid China Boycott
The world's third largest economy risks recession as its recovery efforts are damaged by a Chinese boycott of Japanese goods.

Monday 12 November 2012

Japan is on course to enter recession as it battles against a tide of economic problems including a costly dispute with China.

The world's third-largest economy contracted by 0.9% between July and September from the previous three months - a fall which under-pressure Prime Minister Yoshihiko Noda described as "severe".

The latest predictions suggest a return to growth in the fourth quarter is very unlikely which would result in a technical recession.

A combination of the financial crisis in Europe, a strong yen and a Chinese boycott of Japanese goods are damaging recovery plans following the devastating earthquake and tsunami in March 2011.

The boycott was sparked by Japan's nationalisation in September of an East China Sea island chain claimed by both Tokyo and Beijing.

Japan is on course to enter recession as it battles against a tide of economic problems including a costly dispute with China.

The world's third-largest economy contracted by 0.9% between July and September from the previous three months - a fall which under-pressure Prime Minister Yoshihiko Noda described as "severe".

The latest predictions suggest a return to growth in the fourth quarter is very unlikely which would result in a technical recession.

A combination of the financial crisis in Europe, a strong yen and a Chinese boycott of Japanese goods are damaging recovery plans following the devastating earthquake and tsunami in March 2011.

The boycott was sparked by Japan's nationalisation in September of an East China Sea island chain claimed by both Tokyo and Beijing.


The global recovery is still so fragile that every bit of bad news is magnified and then rattles around the world's markets, knocking things over.
 
kevincanada said:
The cheap goods we buy and the cost to get them is a large problem. 

That should read "the goods we buy". It is a fallacy to believe that because it comes from China ergo it is cheaper.  It may be made cheaper in China than here but that just gives the company managers a larger profit.  It doesn't contribute to a price reduction for you and I.  consider Blue Jeans.  They were being manufactured in the US up until a few years back and then one by one the plants there started to close and the whole mfg went off-shore.  I didn't notice that the price came down though did you?  My flag is made in Barrie.  It cost me about 12 dollars more than a comparable off-shore product.  It is the 3rd one I have bought from there because it lasts more than twice as long as it's offshore shelf mate.  But I am fortunate.  My local store sells both.  Wallmart and others usually only offer the offshore variety.  I don't get a choice.  And that is bad for both the local economy and my blood pressure
 
While I think UK Prime Minister David Cameron is correct in saying that the G8 still matters it is some of the G8 that matter, not all, and it shuld morph into something better, a Gn consisting of:

1. NAFTA (three members, one voice);

2. The EU (20+ members, one voice);

3. China;

4. Japan;

5. ASEAN (10 members, one voice);

6. India;

7. Brazil;

8. Australia;

9. South Africa; and

10. South Korea.

This new group should usurp global authority over the key points PM Cameron made in the linked article ~ T3:

1. Freer trade;

2. International tax reform; and

3. Transparency.
 
Breaking news: Mark Carney leaving Bank od Canada, going to head the Bank of England.

Big step up for him.
 
E.R. Campbell said:
Breaking news: Mark Carney leaving Bank od Canada, going to head the Bank of England.

Big step up for him.


But stupid Canadian journalists are still asking him about being Liberal leader.  :facepalm:

Canadian television journalism is an intellectual wasteland populated by nincompoops.    ::)
 
Here is the official announcement from HM Treasury:

logoHMT.gif

Governor of the Bank of England

26 November 2012

Her Majesty the Queen has been pleased to approve the appointment of Mark Carney as Governor of the Bank of England from 1 July 2013. He will succeed Sir Mervyn King.

Welcoming the appointment the Chancellor of the Exchequer, the Rt Hon George Osborne MP, said:

“Mark Carney is the outstanding candidate to be Governor of the Bank of England and help steer Britain through these difficult economic times. He is quite simply the best, most experienced and most qualified person in the world to do the job.

He has done a brilliant job for the Canadian economy as its central bank Governor, avoiding big bail outs and securing growth. He has been chosen by the rest of the world to be the chair of the international body, the Financial Stability Board, charged with strengthening global financial regulation after the financial crisis.

Along with its central role in monetary policy, this Government has put the Bank of England back in charge of regulating our financial system so that we don’t repeat the mistakes of the last decade. Mark Carney is the perfect candidate to take charge of the Bank as it takes on these vital new responsibilities. He will bring strong leadership and a fresh new perspective.

I look forward to working with Mark as we continue to rebalance our economy, deal with our debts, and equip Britain to succeed in the global race. We needed the best – and in Mark Carney we’ve got it.”

Notes for editors

1. Mr Carney is currently Governor of the Bank of Canada, having taken up his office on 1 February 2008. He also currently serves as Chairman of the Financial Stability Board (FSB) and as a member of the Board of Directors of the Bank for International Settlements (BIS). He is also a member of the Group of Thirty, and of the Foundation Board of the World Economic Forum.

2. Prior to becoming the Governor of the Bank of Canada, Mr Carney was Senior Associate Deputy Minister of Finance (2004 – 2007) and Deputy Governor of the Bank of Canada (2003 – 2004). Prior to that, Mr Carney had a thirteen-year career with Goldman Sachs in its London, Tokyo, New York and Toronto offices. Mr Carney has a bachelor's degree in economics from Harvard University (1983 – 1988) and a Masters and Doctorate in economics from Nuffield College, Oxford University (1991 – 1995).

3. Mr Carney was born in Fort Smith, Northwest Territories, Canada in 1965. As a Canadian citizen he is a subject of Her Majesty The Queen. He is married to Diana Fox Carney, an economist and British citizen. They have four daughters. Mr Carney has indicated he intends to apply for British citizenship.

4. Mr Carney has indicated he intends to serve for five years.

5. Under the Bank of England Act 1998, as expected to be amended by the Financial Services Bill which is currently being considered by Parliament, the Governor of the Bank of England is appointed by Her Majesty the Queen on advice from the Prime Minister. He was advised by the Chancellor of the Exchequer, who oversaw the appointment process, and, as with other public appointments, consulted the Deputy Prime Minister. The selection panel for the recruitment process comprised Sir Nicholas Macpherson, Permanent Secretary HM Treasury; Tom Scholar and John Kingman, Second Permanent Secretaries, HM Treasury; and Sir David Lees, Chair of the Court of the Bank of England.

6. Her Majesty The Queen has also been pleased to approve, under the Bank of England Act 1998 as amended by the Banking Act 2009, the Chancellor and Prime Minister’s recommendations for the re-appointment of Charles Richard Bean as Deputy Governor of the Bank of England for Monetary Stability from 1 July 2013. Mr Bean has agreed to stay on for a year to help oversee the extension of the Bank of England’s responsibilities and the transition to the new Governor.  He has asked to stand down on 30 June 2014.
 
And from this end....
The Honourable Jim Flaherty, Minister of Finance, today announced that Mark Carney, current Governor of the Bank of Canada, has been appointed as Governor of the Bank of England effective July 1, 2013.

"On behalf of the Government and all Canadians, I would like to thank Governor Carney for his work at the Bank of Canada and offer my best wishes in his future role at the Bank of England,” said Minister Flaherty. “This appointment, which marks the first time a foreign national has headed the Bank of England, is another strong example that Canada’s monetary and fiscal systems serve as models to the world. While other countries have faced significant turbulence, our financial system has consistently been ranked as the soundest in the world.”

Carney, whose term as Governor began February 1, 2008, had previously served as Senior Associate Deputy Minister of Finance and G-7 Deputy of Canada. He was also recently named chair of the Financial Stability Board.

“As Minister of Finance, I appreciate the guidance Governor Carney has provided in recent years,  in fulfilling the Bank’s mandate of maintaining the stability of our monetary system and controlling inflation,” noted Minister Flaherty.

The usual practice for selection and appointment of the Governor of the Bank of Canada will be followed. The Board of Directors of the Bank of Canada will shortly form a special committee comprised of independent directors whose mandate will be to undertake a recruitment process for the selection of the next Governor.

Governors of the Bank of Canada are recommended by the independent directors, and appointed by the Minister of Finance and the federal cabinet.
 
Army.ca member and journalist, but not a stupid one, David Akin did a lengthy and thoughtful interview with Mark Carney about a month ago. It can be seen/heard and read here and, by the way, kudos to SunMedia for even allowing such an interview; many Canadian media outlets would not think that something of this length and narrow interest would be worth the effort.

Listen carefully, especially, to Part 3 for his views on Europe and the USA. There is nothing surprising - Governor Carney would never surprise anyone in the media - but it is very clear.
 
Rumour has it that Governor Carney will get £624,000 (about $(CA)1 Million) a year, apparently -- double the salary of his predecessor, Sir Mervyn King, who made £305,000.

Good thing he's getting a raise. A very nice, but far, Far, FAR from the most expensive, apartment in Central London can be had for about £500,00 per year ~ and it's only 5 miles or a half hour's drive from the Bank of England.
 
Now it is time for the rumour mill to speculate about Governor Carney's replacement. The National Post does so in this article which is reproduced under the Fair Dealing provisions of the Copyright Act from that newspaper. There is some speculation that Prime Minister Harper will want the list of candidates (which will be provided by the Bank's Board of Directors) to include a Francophone and a woman:

http://business.financialpost.com/2012/11/26/who-will-fill-mark-carneys-shoes/
Who will fill Mark Carney’s shoes?

John Greenwood

Nov 26, 2012

Mark Carney’s departure from the Bank of Canada is clearly momentous news and we can be sure that over the coming days pundits will be working overtime to sum up his extraordinary contribution to the central bank and the country. But the real question that needs to be answered ASAP is: Who will fill Mr. Carney’s shoes?

Once upon a time central bank governors were selected from the ranks of career economists within the federal government but more recently candidates have come from the private sector — Mr. Carney, for example — as well.

Among the top contenders is Tiff Macklem, senior deputy governor of the Bank of Canada and Mr. Carney’s right hand man. Mr. Macklem joined the Bank in 1984 shortly after graduating from Queen’s University and except for a stint back in academia to earn his PhD he has stayed at the central bank ever since.

In terms of finding a replacement for Mr. Carney, Canada is in a good situation because there’s no lack of good candidates, according to Finn Poschmann, vice president of research at the C.D. Howe Institute. “Tiff Macklem is an experienced economist, a known quantity and a sure set of hands,” he said. “No one in the banking community would blink an eye if Tiff was the next governor.”

Capital Economics suggested in an update that Jean Boivin, who was recently appointed deputy finance minister following a stint as deputy governor of the central bank, might be an interesting choice. Notably, Mr. Boivin studied at Princeton with Ben Bernanke, chairman of the U.S. Federal Reserve.

Other names being discussed include Don Drummond, former chief economist at Toronto-Dominion Bank and now a visiting scholar at Queen’s University. Mr. Drummond also served for more than two decades at the federal department of finance.

The list includes Julie Dickson, current Superintendent of Financial Institutions. As head of the country’s top banking regulator Ms. Dickson has worked closely with Mr. Carney in ensuring the stability of the banking system and in her role as Canadian representative on varous international regulatory committees.

Jean Boivin is a Francophone and Julie Dickson is a female.
 
I think the Government hit a homerun with this appointment. According to the article the difference in Carneys pay and Sir Mervyn is due to the generous pension that Sir Mervyn will be getting.

http://www.bbc.co.uk/news/business-20503377

The Canadian economy and Canada's banks weathered the great financial storm of 2007-08 in better shape than pretty much every other major developed economy, with the possible exception of Australia.

Which is why George Osborne was very keen to recruit the governor of the Bank of Canada, Mark Carney, to succeed Sir Mervyn King in a rather bigger and more complex job, as governor of the Bank of England.

Mr Osborne regarded Mr Carney as the central banking equivalent of Sir Alex Ferguson or Pep Guardiola. But Mr Carney isn't cheap - and will receive a pay package of £624,000.

The chancellor first approached Mr Carney last February - and Mr Carney said no (as you can see from this BBC interview).

But Mr Osborne was keen to get his preferred central governor, because Mr Carney was widely perceived to have all the bits: he is admired by monetary economists, regulators and - allegedly - his staff (or to put it another way, he is an unusual economist and central banker, in that he is seen as a half-decent manager).

What's more, he brings with him the ability to seriously influence the future all-important global debate on making the banks safe, because he is the chair of the Financial Stability Board - the senior worldwide financial regulatory body.

So Mr Osborne would not let go and went back to Mr Carney a couple of weeks ago, and this time he said yes.

However, Mr Carney still had to get through the interviews: he had his a fortnight ago; and the UK now has its first ever foreign governor of the Bank of England (although Mr Carney has a British wife, British children and will apply for British citizenship).

Some may feel a tiny bit sorry for the four other eminences on that short list (Paul Tucker, Lord Turner, Lord Burns and Sir John Vickers) - because they now look like the chancellor's insurance in case Mr Carney said no.

As it happens, I did not think Mr Carney was in the frame because a well-placed Treasury source told me - in terms - that the unknown fifth person on the short list "was very unlikely to get the job" (see my blog of two weeks ago).

Mr Osborne looked pleased as punch with having kept the appointment under wraps till parliament was informed at 3.30pm and - perhaps especially - with the enthusiastic support for the advent of Mr Carney given by Ed Balls, a shadow chancellor who rarely praises his oppo.

So where does the controversy - if any - lie in the Carney pick?

Well, it is yet another promotion for a Goldman Sachs alumnus (the two most important central banks in Europe, the ECB and the Bank of England, will be run by former Goldman managing directors).

And on paper his pay at the Bank of England looks chunky. He will receive a package of £624,000, and will receive a yet-to-be-decided relocation and accommodation allowance (the court of the Bank of England will fix this emigration payment - and, for what it is worth, Barclays got a bit of stick for saying it would pay extra tax on behalf of Bob Diamond, when its former chief executive moved back to the UK).

Now Mr Carney's package of £624,000 is more than double Sir Mervyn King's salary of £305,000. But the Treasury and the Bank of England both point out that Sir Mervyn is a fully paid-up member of a staggeringly generous Bank of England pension scheme. That scheme is now closed, so Mr Carney isn't allowed to join it. But if he were allowed to join it, according to the Treasury that would be roughly worth the £300,000 difference between his salary and Sir Mervyn's (so it really must be an amazing, gold-plated scheme).

Also, the Treasury points out that Mr Carney will receive less than the £685,000 package of Martin Wheatley, who will run the UK's newly created Financial Conduct Authority, and less than Hector Sants was paid as chief executive of the Financial Services Authority.

So there are other public servants paid more than Mr Carney. And to state the bloomin' obvious, only time will tell if Mr Carney will turn out to be value for money.
Update:

It is hard to think of another developed economy where a foreigner would be appointed to such an important and sensitive public service post.

So the choice of the Canadian Mark Carney to be the next governor of the Bank of England marks the UK as unusually free from nationalist prejudices and hang-ups.

And that is certainly how the chancellor sees the appointment.

I have just interviewed George Osborne for the BBC and he says that his choice of Mr Carney is testament to the openness and tolerance of Britain, which he reveres.

But doesn't it also show a dearth of home grown talent? Well, Mr Osborne insists the runners-up were all first rate.

He would not confirm their names. But apart from the ones I have mentioned before, they also included the founding chairman of the Financial Services Authority, Sir Howard Davies.

As for whether Mr Carney is worth his £624,000 a year, Mr Osborne did not grumble when I pointed out this is four times his own remuneration, and simply said - as you would perhaps expect - that it is the going rate for the job.

So should we read into the arrival of Mr Carney that there really is a conspiracy for former Goldman Sachs partners to rule the world? Well, Mr Osborne sees it the other way round - saying that Mr Carney had made an important choice to leave behind the even more lavish rewards on offer at Goldman.

Hmmm.

So what is it about Mr Carney that persuaded Mr Osborne to pursue him all year, and not even to give up after Mr Carney initially turned down the job?

Well it is that - unlike all the other serious candidates - Mr Carney has actually run a central bank, and a particularly successful one at that.

Oh, and as a secondary consideration, Mr Osborne has got to know Mr Carney pretty well and likes him. But running a central bank like the Bank of England will be quite a step up from the Bank of Canada, for a number of reasons.

First, the UK economy is in much more of a mess than Canada's

Second, the British banking industry is in much more of a mess than Canada's.

Third, the Bank of England is an institution in a state of some flux, having been criticised by some for failing to stem the great crisis of 2007-8, and about to be endowed with enormous new powers to temper the next financial crisis.

Mr Carney has not signed up for the quiet life.
 
Two years from now, the Queens Birthday honours, as a British citizen, Sir Mark, then eventually Lord so in so. Good on him.
 
And now some bad news. US environmental groups are essentially attacking Canada economically and depriving the economy of some $18 billion/year, a considerable amount of new wealth to fuel investment and job creation. Vivian Krause details some of the shenanigans here:

http://opinion.financialpost.com/2012/11/28/vivian-krause-u-s-greens-shut-down-canadian-oil/

Vivian Krause: U.S. greens shut down Canadian oil

Vivian Krause, Special to Financial Post | Nov 28, 2012 8:38 PM ET | Last Updated: Nov 29, 2012 8:23 AM ET

For U.S. foundations, this is about fossil fuels

Heads up, Canada! Our one and only big energy customer, the United States, isn’t going to need Canadian oil any more. That’s the implication of the International Energy Agency’s latest predictions. The U.S. will be the world’s largest oil producer by 2020 and the largest oil exporter by 2030. Some say this could happen a lot sooner.

At the same time that the U.S. is fast becoming an energy exporter, American charitable foundations are restricting Canadian fossil fuel development with conservation initiatives that put huge areas of land off-limits to natural resources development. Whether it is their intention or not, large conservation areas are de facto trade barriers that would restrict Canada’s marine access to global energy markets — on all three coasts — and maintain the U.S. monopoly on Canadian exports, keeping Canada over a barrel and on the sidelines of the global energy market.

Related

    Canadian pipelines targeted by U.S. funds

The downside of the U.S. monopoly on Canadian exports is huge. Joe Oliver, Minister of Natural Resources told the B.C. Business Council in a speech Tuesday that the Canadian economy loses out on $18-billion annually – $50-million every day – because Canadian oil is sold into the U.S. market below market value.

For the Canadians on the front lines of environmental conservation initiatives, it’s all about saving the bears, caribou, salmon and so forth. But for the U.S. foundations that fund these initiatives, this is about oil.

The largest environmental initiatives in Canada are the Great Bear Rainforest on the north coast of B.C., the Canadian Boreal Initiative and the Yellowstone to Yukon Initiative. In all three, the big funder is an American foundation.

Since the late 1990s the San Francisco-based William & Flora Hewlett Foundation (“Hewlett”) and the David & Lucile Packard Foundation (“Packard”), both created by the founders of tech giant Hewlett-Packard, have paid US$90-million to First Nations and environmental groups, tax returns show.

The Seattle-based Wilburforce Foundation, created by Gordon Letwin, one of the founders of Microsoft, has granted at least US$23-million to B.C. ENGOs and is the big funder behind the Yellowstone to Yukon Initiative which would restrict mining and energy development on a huge swath of North America, 3,200 km long and 500 km wide.

Hewlett’s Western Conservation strategy, co-funded by Wilburforce and others, aims to protect iconic species such as grizzly, lynx, beaver and bighorn. But there’s more to it than that. This initiative aims to restrict fossil fuel development on 85-million acres in the U.S., Alberta, B.C. and Yukon. In essence, they want eight parks, each the size of Switzerland.

Another Hewlett goal is that the energy supply is at least 25% renewable. As such, the focus on British Columbia is peculiar. B.C.’s energy is already 94% renewable, one of the best in the world.

The Canadian Boreal Initiative (CBI), co-funded by the Hewlett foundation and the Gordon & Betty Moore Foundation, aims to restrict roads, hydro, forestry, mining and energy development on 1.2 billion acres of northern Canada. That’s 40% of Canada! Federal and provincial governments have pledged to put off limits nearly 600-million acres of northern Canada, an area a third larger than Alaska and California combined. Under Jean Charest, Quebec agreed to restrictions over an area the size of Texas, with strict restrictions on an area double the size of all U.S. national parks, combined.

Pew’s arctic initiative, Ocean’s North, aims to restrict offshore oil and gas drilling but what we hear about most is protecting the belugas, polar bears and the people of the north.

The same U.S. foundations that fund conservation in Canada also fund American groups working towards energy security, including a foundation called Securing America’s Future Energy. The name says it all.

“U.S. dependence on foreign sources of energy constitutes a serious threat – militarily, socially and economically,” says Pew’s Project for National Security, Energy and Climate. In Pew’s view, renewable energy is not only clean, it’s patriotic.

American foundations aim to reduce fossil fuel dependence to stop global warming and strengthen U.S. national, energy and economic security. That’s clear. What’s unclear is whether they fund conservation initiatives in Canada, in part, to foster U.S. energy security.
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To address climate change, lead American foundations fund grassroots campaigns that bring about a “massive shift in investment capital” towards renewable energy and away from fossil fuels. This strategy is described in Design to Win, the touchstone project of the Presidential Climate Project which aims to create the climate legacy of President Obama.

The main funder of the Presidential Climate Project is the Rockefeller Brothers Fund (RBF), the same foundation that is behind-the-scenes on the campaign to block the Enbridge Northern Gateway pipeline and ban oil tanker traffic – but only on the strategic coast of British Columbia and in the Canadian arctic. Never mind the dozens of tankers that import oil to the U.S. on a daily basis, the Rockefeller Brothers are only against the tankers that would export Canadian oil to Asia.

The Rockefeller Brothers have powerful connections in Vancouver. The founder and long-time chair of the U.S. Presidential Climate Action Project was the late Ray Anderson. One of many positions that he held was as a long-time director of the David Suzuki Foundation.

RBF’s point person for both the Presidential Climate Action Project and the campaign against pipelines and tanker traffic is the same person: Michael Northrop.

Mayor Gregor Robertson, now leading the charge to block expansion of oil tanker traffic, met with Mr. Northrop in 2010, at taxpayers’ expense, at the Rockefeller Brothers’ offices in New York. In a letter earlier this year, Robertson said that he met Northrop “on the advice of New York Mayor Michael Bloomberg’s office” and that “the discussions focused solely on Mr. Northrop’s work as a member of Mayor Bloomberg’s Sustainability Advisory Board and New York City’s long-term sustainability plan.”

Since the late 1990s, environmental organizations (ENGOs) in Canada have received at least 2,000 grants for a total of US$425-million from 40 American foundations, according to my analysis of U.S. tax returns. (Earlier this year, I reported US$300-million from 15 foundations.)

Tides Canada, the charitable foundation at the center of the foreign funding fuss, reported 45% of total revenue from outside Canada in 2011, up from 40% in 2010.

Almost all of the U.S. foundations that fund Canadian ENGOs are members of the San Francisco-based Consultative Group for Biological Diversity (CGBD), an umbrella organization created in 1987 by the U.S. Agency for International Development (USAID), an agency of the U.S. State Department. CGBD members have more than US$50-billion in assets. They granted a total of US$3.2 billion in 2010; they can’t be out-spent. The Hewlett foundation and the Packard foundation alone have spent more than US$1-billion on climate and energy-related initiatives since 2008.

The CGBD’s focus on Canadian oil is no coincidence. Back in 2000, the CGBD had a pivotal meeting in Vancouver with a focus on energy and “Northern North America” (read: Canada). A CGBD report on that 2000 meeting says that its focus on B.C. goes back to “an historic CGBD briefing” in the early 1990s. “Local hosts, the Endswell and Vancouver Foundations, threw a rollicking party for the region’s environmental workers and visiting funders at the Web Café” (at the Vancouver aquarium), says another CGDB document on that same meeting. For 15 years, Endswell’s president has been Joel Solomon, a big backer of Mayor Gregor Robertson.

In 2002, the CGBD held its annual meeting in Yoho National Park, near Field, B.C. The focus was “interrelationships of global warming, energy extraction and large-scale landscape protection.” Keynote speakers were David Suzuki and David Schindler of the University of Alberta.

Some U.S. grants are unusually large. For example, in 2003 the Rockefeller Brothers Fund granted US$1-million to First Nations on the B.C. coast. Of all 2,500 grants for US$227-million made by the Rockefeller Brothers since 2003, that was the third largest, according to my analysis of data from the U.S. Foundation Center.

Environmental and aboriginal groups say they call the shots with their American funders and yet many U.S. foundations don’t even accept unsolicited proposals. They have agendas of their own and have been funding the same groups for years.

In terms of earning and keeping a social license to operate, dialogue with front-line environmental and aboriginal groups is important but not enough. There’s an elephant in the room. Government and industry need to deal directly with the deep-pocketed foundations that write the big cheques.

Vivian Krause is a Vancouver researcher and writer. On Twitter she’s @FairQuestions.
 
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