Constructing an industry without all the necessary supplies can lead to fiscal imbalance. Welcome to the post-truth world of economics.
Facts are hard and certain, true and real – as opposed to opinions, beliefs or stories. Alternative facts, contradicting old-fashioned facts, are what we used to call lies. And in the midst of this new post-truth reality, we must also deal with partial truths.
The oath of witnesses in court binds them to tell the truth, the whole truth and nothing but the truth, because an incomplete truth can lead to very unfair consequences.
However, in a world where time is scarce, attention spans are short and news is delivered in tweets, very few people make the effort to see the whole picture.
One person who does is Vaclav Smil, professor emeritus of University of Manitoba and versed in engineering, math and many of the social sciences. His work shows that getting at the whole truth takes some doing but it’s important.
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Take, for example, the idea of eating locally. Environmentalists rightly point out that eating locally saves the energy costs of transporting food from far away. But that’s only part of the truth. They often don’t mention that producing vegetables in Canada year-round requires heating greenhouses for months.
The lack of a softwood lumber agreement between Canada and the United States illuminates another partial truth.
Lumber sales affect the heart, soul and pocketbook of many Canadians. Most of British Columbia’s income from wood is the result of exports to the States, for example.
The lack of a replacement for the agreement that expired over a year ago leaves B.C. producers subject to punishing duties and reduced sales.
Unfortunately, current American policy related to lumber duties is framed by partial truth.
Slapping expensive duties on imported Canadian lumber increases employment in the U.S. lumber industry and improves its profits. The American lumber lobby makes sure its government knows this.
But this is only part of the picture, according to research from Naomi Christensen of the Canada West Foundation.
The U.S. imports Canadian lumber not just because it’s cheap. The American lumber industry can’t produce enough to meet its country’s needs. So by blocking Canadian lumber, the U.S. industry can inflate the prices for their scarce production. This hurts American consumers, and reduces construction and other related jobs.
The National Association of Home Builders (NAHB) is working to present the full story. This American organization points out that the 25 per cent duty proposed for Canadian imports would reduce lumber supply and increase the price of new homes. The NAHB estimates that every $1,000 added to the price of a new home puts it out of reach for another 150,000 Americans.
And as many as 8,000 jobs will disappear in construction and related sectors. That means about $450 million in wages won’t be paid. The impact on the American economy would be significant – a depressed housing industry would diminish overall economic growth, running counter to U.S. government targets.
It’s vitally important that all the facts about the impact of duties on lumber reach American decision-makers. Too often, only the words of the U.S. lumber lobby reaches their ears. Hopefully, the NAHB can make its findings heard and other lumber users similarly find a voice. Unions whose members’ jobs will be affected should also speak out.
Canadian negotiators in government and the lumber sector must gather all the facts on the impact of lumber duties, especially those that will hurt the fellow citizens of the American negotiators across the table from them.
Otherwise, the voices of the U.S. lumber interests – and their partial truths – will be the only ones heard.
The economies of Canada in general and B.C. in particular will be hurt.
And the unemployed U.S. construction worker who can no longer afford a house will think that American border barriers are keeping America great, never realizing how badly he has been hurt.
Troy Media columnist Roslyn Kunin is a consulting economist and speaker.
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