Wednesday, January 24, 2007

Green: Environmentalism and Money

Consider the hypothetical resolutions below, decide whether you are for or against them, and be prepared to defend your position on either:
  • Resolved that Canada and Canadians be allowed to sell Canadian water and water rights to the United States 0r
  • Resolved that Canada adopt the American dollar as its national currency.
This is what my son and I discussed last night. Although he is in grade nine, he is taking a grade ten business course, and the final exam of the current semester will be written today. One of the above resolutions will be on the exam. I asked my son what, given his limited knowledge of either subject, his position would be on each. Not surprisingly, good capitalist-in-training that he is, his positions were:
  • Canada has a lot of water and as a natural resource it would be a good source of income for Canadian corporations or, in the form of water rights, a royalty source for the Canadian government.
  • Since Canada's largest trade partner is the United States, commerce between the two countries would be easier if we simply turfed our Canadian 'Loonie" and adopted the American dollar instead. After all, some other countries (including Panama, where I have business interests) are already doing that with apparent success, so why not join the party?
A lot of individuals with my son's limited knowledge and experience are in positions of power in government. They may be older and better educated, but they too make their decisions viscerally, in knee-jerk fashion, based on their prejudices. My son's leanings are capitalist, so he bases his decisions on what he thinks capitalist thinking would be on the subject. Our politicians are largely socialist, often Yankee haters, and they make their decisions accordingly.

I explained to my son that decisions of such magnitude need to be made very carefully. That doesn't mean months or years of discussions, it simply means being aware of the larger picture, the possible repercussions of any decision, and the knowledge that circumstances change constantly.

Let's apply these considerations to the issues at hand. Let's talk about the sale of water and water rights. Water availability in some parts of the United States is already low, so water is attracting a lot of attention as a commodity. T. Boone Pickens, the oil billionaire, is already buying water rights in select areas. He's not alone. Water is going to become a very hot item in decades to come. Although there is a lot of water in the world, it is not in infinite supply. Much of the world's water is in the oceans and it isn't much use to us unless it is desalinated. We need fresh water. There is much less fresh water available and at the rate populations are growing, more and more is being used every year. My position would be that water could be sold, in limited quantities, in areas where there is sufficient supply, but never if it would endanger future availability, and never in open-ended arrangements. Reviews should be held regularly. Water as a commodity and general water rights are issues much too large to be discussed in a short blog post, but I certainly would want responsible water rights management by people who have a long range outlook and who really understand the issues.

What about Canada adopting the American dollar as its official currency? It certainly would make a lot of things much easier, as far as commerce between our nations is concerned. But is that the only consideration? No.

The immediate reaction of many Canadians would be that we would lose yet another part of our Canadian identity and Canada would become indistinguishable from the United States and Canadians from Americans. That would be the least of our legitimate concerns. The fact is that the United States is in serious financial trouble. It already has the highest per capita national debt in the world, the highest un-funded liabilities, the largest annual deficits and the largest trade deficits. It is not only a super power, it is a super debtor. At some point, the American dollar is going to take an even worse dive than it has already against the Euro, the Yen, the Deutschmark, the British Pound, etc., and Canada should not adopt the American currency because of this. The Canadian dollar has risen steadily against the American dollar in recent years and we should encourage that trend to continue. Canada now runs annual budget surpluses and we actually make payments against our national debt. Our fiscal house is, if not in perfect order, then at least not in as much of a mess as that of our southern neighbour.

Yes, that was an interesting discussion we had last night, my son and I. I wonder how he will do on that part of his business exam today.

The Canadian fiscal situation is improving steadily, and I am proud to say that I might have had some small part to play in that. Years ago, in the early 1990's, one of my companies produced what we called 'The Doomsday Clock,' a software program that could be customized by country to track its national debt, how fast it was growing, and how it was apportioned per capita and per taxpayer. I appeared on TV and radio shows at the time and discussed the national debt problem. I also used my son Zachary, then an infant, as a' spokesman' in advertisements calling for financial responsibility in government. I played a part, a small part, in a larger thrust for financial responsibility in Canada, and so did my son. I'm proud of that.

We all live in a very complex world and it is imperative that, whatever our political or philosophical stripe, we think hard about what we want from our governments. In our push to grant so many 'rights' to ourselves, we have come very close to spending ourselves into national bankruptcy. Canada is improving. Alas, I see very little hope for the United States in the long term. What will happen when there is no money left, and no-one to coerce it from? No-one will have anything, and even the most fervid socialists will finally be happy. Everyone will have been made equally insolvent, equally hungry, equally hopeless and equally miserable.

That will not be a world in which I want to live.


  1. You write such interesting posts! I'm sure such a flaming liberal as me would drive you crazy.. but you do provide so much to think about. I have no answer to this particular situation - or perhaps I should say I don't have enough knowledge to take a position.



  2. Budget surpluses and paying down the national debt are good things in general terms. The dirty secret, however, is that government debt and debt in general are what allows the money supply to grow. Fiat money grows and multiplies as debt is added to the system. One dollar of government debt will produce nine dollars in the money supply due to the magic that is fractional reserve banking.

    The way things stand here in the US we might as well start using leaves as currency.

  3. Thank you, Chani! The fact is that my friends have always ranged across the political spectrum. It is fun discussing things with people of opposing views, as long as each participant in the dialogue has a thick skin and some level of tolerance. The water rights thing will sort itself out, somehow, someway. The U.S. fiscal situation, on the other hand is, I believe, without a benign solution.

    Pope -- you're right, of course. I wish I knew the ultimate outcome, so I could prepare better: hyper-inflation orsome sort of default or shenanigans that amount to the same thing?

  4. Less than 1% of the worlds water is suitable for drinking.

    We should sell to the U.S. and ask them to convert to Canadian dollars (more colorful, less hassel for us), since we own the water, anyway.

    And, the next time they poo-poo our beef, we can turn off the tap ~ telling them that we fear our mad cow may have leaked into the ground water.. you never know.

    But, we'd better have a better military by that time, I'd say. Since water may become more in demand than oil.