Daily Archives: June 18, 2015

It’s Worse Than You Think

The Fraser Institute came out with a new report today titled Ontario vs. the US Rust Belt: Coping With a Changing Economic World. The report challenges the political narrative that a high dollar and deindutrialization due to global forces are the main factors driving the deficit in Ontario. It does so by comparing the economies of the US “Rust Belt” states to Ontario’s.

In terms of the Canadian dollar vs. the US dollar, the repot notes that:

… the appreciation of the Canadian dollar versus the USD of the 2000s was a reversal of the unusual weakness of the 1990s.

and

… the exchange rate is currently near its long-term average,
so Ontario policymakers cannot continue to cite this as an excuse for
chronic budget deficits.

In other words, exchange rates are not a major factor in Ontario’s deteriorating fiscal position and industrial decline. So let’s look at the issue of the deindustrialization of Ontario.

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