Downsides of an export economy

[rtwinger]

Is this guy on a bender? Just got his pink slip at the steel mill, went to a bar and got drunk, came home and beat the **** out of his wife and started writing posts on apolyton in his rage-filled mood.

Maybe he'll be able to write bull **** posts on forums as part of his community service.

[KrazyHorse]

Go away.

[notyoueither]

If Canada SPENT ALL OF THE MONEY IT GOT FROM SELLING MINERALS ON STUFF then it WOULD NO LONGER HAVE A SURPLUS.

You could stop having a surplus RIGHT NOW by IMPORTING MORE.

I believe a lot of it is exported, in cash, to the owners of operations in Canada. I'm not sure if that counts in the surplus numbers though. Impressive if it does and we still have a significant one.

Aside from that, there are only so many bad Hollywood movies I can watch in any one day.

[notyoueither]

No, you don't understand. It's very simple.

1) a significant portion of Canada's exports are from primary production
2) ???
3) therefore we will always have a trade surplus

You forgot gathering underpants.

[KrazyHorse]

The profits to foreign owners of Canadian production count for Canada in the trade balance but are netted out in the current account balance. In Canada's case the net effect of this last step is almost 0 as we currently receive similar amounts from Canadian investments abroad as we pay out to foreign owners of Canadian investments.

[notyoueither]

I'm amazed we didn't spend it all in Disney Land.

[KrazyHorse]

I'm amazed you don't understand that there's nothing special about extractive and agricultural production which would imply a natural trade surplus.

[notyoueither]

The profits to foreign owners of Canadian production count for Canada in the trade balance but are netted out in the current account balance. In Canada's case the net effect of this last step is almost 0 as we currently receive similar amounts from Canadian investments abroad as we pay out to foreign owners of Canadian investments.

That's not what Stats Can says.

[notyoueither]

I'm amazed you don't understand that there's nothing special about extractive and agricultural production which would imply a natural trade surplus.

Well, I suppose we could forget all about all that oil. I assume Stelmach and Danny Williams would have something to say about that though.

Alternatively, Ontario could deindustrialise. That might be a plan.

Nothing is absolutely assured. Some things are more likely than others though.

[KrazyHorse]

That's not what Stats Can says.

2007 and 2008 both had the balance of investment income being significantly less than 1% of GDP from what I see.

[KrazyHorse]

Well, I suppose we could forget all about all that oil. I assume Stelmach and Danny Williams would have something to say about that though.

Alternatively, Ontario could deindustrialise. That might be a plan.

Nothing is absolutely assured. Some things are more likely than others though.

I still don't understand the line you're trying to draw between having oil and having a current account surplus.

The only real effect that being a large net exporter of oil has on a trade balance is that the trade balance displays significant volatility.

[KrazyHorse]

Having oil is like having a bunch of factories or a well-educated population. It allows you to make more stuff with less effort.

That's it. It doesn't tell you anything about whether or not you're going to import more than you export.

[Impaler[WrG]]

I've always thought simple balance of trade to be an outdated idea now that monetary systems are not based on gold reserves. Under a gold reserve system currency is very much a zero-sum gain, one country gains wealth only if another losses it because the gold quantities change very little. But under modern Fiat money systems which are continually growing its meaningless to look at look at a simple trade balance without taking into account how much the money supply and GDP of the countries in question are related.

P.S. KH lay off the name calling

[Dinner]

I'm amazed we didn't spend it all in Disney Land.

You really should. Cali's economy could use the boost.

[Wezil]

Alternatively, Ontario could deindustrialise. That might be a plan.

We're working on it.