HEWERS OF WOOD AND DRAWERS OF WATER

The title is traditional. It describes a country that exports raw materials; a country that has little (or has lost it) “value added” production; a country that ships the means to manufacture to other countries and then imports the finished goods. The Third World is full of these countries exporting raw coffee beans, raw cocoa beans, unprocessed bauxite and other resources. Just like Canada!

Just the other day I heard that America, the bastion of industrial might, now manufactures only two percent of the clothing worn by Americans! About 20 years ago the number was 50%. It means that America has become what Canada continues to be, an exporter of raw materials and an importer of finished goods.

America, I think, still grows enormous quantities of cotton, and makes millions of yards of synthetic fabrics, or at least they have the capacity to do it. But it cheaper to send the cotton to El Salvador or Honduras and keep Wal-Mart prices low. I giggle at “Save money – Live Better.”

It’s profitable of course, or no one would do it. But profitable for whom? Certainly not for the citizens, even though in the short term we pay lower prices. But if jobs have flown and they haven’t the money to spend, the question of whether a price is too high or too low becomes academic.

But America was a world leader. It is now the world’s biggest debtor nation, its per capita share of accumulated debt second only to the U.K.

But I wander. The issue is: economic survival. The debate has been heating up and cooling off for years, even before Walter Gordon, Lester Pearson’s Minister of Finance in the 60s pronounced in “A Choice for Canada” that we now generate enough wealth to own all our own resources.

But there has never been an economic policy, except the policy foisted on us by the system of the “corporatocracy.” Even an economics beginner knows the theory of “value added.” (I don’t mean value added tax,) If you convert raw material, say a log, into dressed lumber, you increase the value tenfold. If you go further, and manufacture something – say furniture – from that finished lumber – you increase the value another tenfold. Do the math. From raw logs to finished wood product, 100 fold increase in value! Mind-boggling. Last year when I visited New Zealand, where a pine tree grows to full maturity in 25 years, I visited their largest (by tonnage) port. There were cargo ships everywhere carrying – you guessed it – raw logs. When I asked a kiwi how much finished lumber they export, he said the countries they ship to, like Japan, want to do their own finishing. Sound familiar? Scratch the soft-wood lumber debate in Canada and you uncover the real reason for the tension: Americans will take all the raw logs we can sell them. They want to do the finishing. They need the jobs.

But our economy rests, not on finished products, and the jobs that go along with it, but on exporting raw materials to countries where the wages are low, working conditions are poor, and no one is especially fastidious about the environment. It’s commonly called “the rush to the bottom, e.g. using the cheapest labour possible.

How many Canadians know that Saskatchewan is the world’s leading producer of mustard seed? But how much finished mustard comes from Saskatchewan? None. It comes back to us from France as Dijon, from Japan as Oriental, from America as hotdog mustard.

When the World Bank and the International Monetary Fund get into financing third world countries’ economic expansion, they seem unable to help them create valued-added industry. Africa is the world’s greatest producer of cocoa beans, and could be one of the world’s biggest producers of sugar. All that is missing is milk. Wouldn’t you think that Ghana or Tanzania might be able to produce chocolate? Perhaps the world’s greatest chocolate maker, Belgium, got in the chocolate business using cheap coca beans from King Leopold’s empire in the Congo. Why doesn’t Jamaica or Trinidad make finished aluminum? Whey don’t sugar-rich emerging economies follow Brazil and make ethanol. Why wouldn’t the World Bank lend money to Cuba and get them fuelling the world?

Those are all silly questions aren’t they? Yes they are’