How Sandy will affect the Canadian economy
It will take a long time before the final calculations of the economic cost of Hurricane Sandy are finalized. Earliest estimates peg it at over $10 billion in damage to property and infrastructure and as much as $50 billion (or 1.7 per cent of U.S. GDP) in economic damage. But that’s almost certainly going to be revised upward several times.
The political cost of Sandy, however, will mostly become apparent on Nov. 6, the day that Americans elect a new president.
The stark reality is that for President Barack Obama, Hurricane Sandy couldn’t have come at a better time in the campaign. As the incumbent, he controls the machinery that provides comfort and care during crisis. It’s given him a unique opportunity to display leadership and empathy. It’s also given those who deride him for a “big government” mentality reasons to reflect.
Government-funded bodies like the Federal Emergency Management Agency — which have played a huge role in restoring some order in the hardest-hit states — are suddenly in the spotlight. This isn’t great for Mitt Romney, who has publicly declared that a federal government role in disaster relief is unaffordable, “simply immoral” and risks “jeopardizing the future of our kids.”
In this campaign, as always, Republicans have been banging on about the need to reduce the size of government and its cost — a stance that voters generally support unless it affects them directly. It’s always far easier to tighten someone else’s belt for them than to tighten your own.
The heightened, post-Sandy debate about “big” versus “small” government is almost sweet: after all, for all the clatter, governments everywhere have become steadily bigger and more intrusive as they’ve bailed out car companies and banks and insurance companies — not to mention the tens of billions spent on economic stimulus programs in the aftermath of the global financial crisis.
Perhaps the most interesting example of the new appreciation for “big” government spending is the improbable bromance that’s blossomed between Chris Christie, the plain-spoken, Republican-boosting Governor of New Jersey and President Obama.
All that said — and against daunting odds — Romney remains a strong candidate and a popular one with those who are unperturbed by his skills as a political shape-shifter.
But what does the outcome of the U.S. presidential election mean for Canada? It’s all the more relevant given that Hurricane Sandy has re-kindled discussion about extreme weather patterns and the underlying issue of global climate change. Inevitably, those discussions have a way of tracking back to Canada — an ambitious energy exporter and home of the controversial Alberta oil sands.
On the energy file — which is a crucial one for Canada’s economy — relations with the United States have been a little complicated lately.
Under President Obama, the Keystone XL pipeline was blocked. And U.S-bound oil exports have slowed because of weaker demand in a weaker economy and because new technology has led to the development of unconventional oil and gas reserves that were previously inaccessible.
The current U.S. administration has also implemented a raft of low carbon fuel standards, a passive-aggressive way to block oil sands production, as well as standards for renewable fuels that are unfavourable to Canadian hydro exports.
But while the current agenda hasn’t particularly favoured Canada, Mitt Romney’s approach to these issues — and several other core platform elements — is no more certain. And all of that’s why, relatively late in the game, Ottawa is now taking measures to diversify our energy markets and turning to Asia for greater certainty of demand.
After all, without strong, secure markets, it’s not very tempting to spend billions of dollars to develop energy resources in northern Alberta.
That raises a new post-election question: how will America’s increasingly public ambivalence toward China affect Canada, which is actively cozying up to the Middle Kingdom?
Mitt Romney, for example, has pledged to “crack down on cheaters like China” and promised that on day one of his presidency he’d declare China a currency manipulator and impose tariffs. Although President Obama has been a little more circumspect, his tone has become increasingly aggressive.
Henry Kissinger famously declared that the United States doesn’t have friends, it has interests. But even if we discount the usual rhetoric about the friendship between our two countries, what does all this portend for those American interests?
It’s naive to think that our blossoming relationship with China won’t have some implications for our traditional ties to the U.S., that we’ll be perceived — however unfairly — as choosing sides against our neighbours and their “interests.”
Clearly, the environment isn’t the only thing that’s subject to the effects of climate change. Political storm warnings may soon be next.
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Sept. 19 (Bloomberg) -- Betty Liu reports on today’s top news headlines on “In The Loop.” (Source: Bloomberg)
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