A couple of perspectives. When the first FTA was signed US/Canada, Canada was unready to compete. The town where I grew up had an agricultural processing company owned in the US, but which was the centre of economic activity for miles around, with a large, unionized workforce paying decent wages. Post free trade, the company consolidated its production facilities mostly pulling everything back to the US. Jobs in Canada were lost, economic activity in the surrounding area declined, and a sad story all around. The people who lost their jobs did not move to another economic sector in another province since they had homes and families where they were living. So that was a 198’s story.
The current housing issue is very complex and I would argue (as you were starting to point towards I think with the reference to the WWII production enconomy) that it will take substantial direct investment by government (and the provinces and federal government would have to work together on this) to build new housing stock and make it available at affordable prices (either rental or for purchase). I say this because I have noticed that while the demand for housing is very high, new housing starts are not meeting the demand. Why? Because existing resale homes are selling substantially below the cost of construction of new homes. This is not all that unusual, but the difference means that it not profitable for most home builders to purchase property, finance the build, and sell for a profit. Too high interest rates (from stupid application of discredited monetary policy principles) play a role in this, but lumber prices (and other construction supplies no doubt) have not followed traditional supply/demand repricing due to concentration of ownership. Lumber is 30% of the cost of new home construction—boost its price through oligarchic pricing and the retail cost of new construction becomes unaffordable.
Check the commodity price for raw logs vs lumber through the pandemic and you will see what I mean. Raw log prices did not change much at all but lumber prices quadrupled. While lumber prices have declined since they are trading substantially above the pre-pandemic range.
At the time, my father was a financial executive economist and lawyer who, while he agreed with free trade in principle, opposed the FTA because it wasn't free trade. It gave the U.S. access to Canada's markets without Canada getting access to US markets in return. Aside from the damage that would cause, because most of the bargaining chips had been given away, there wouldn't be
From his perspective, it meant that Canada also had nothing left to bargain with at the next round (NAFTA).
Another great article! Thank you.
A couple of perspectives. When the first FTA was signed US/Canada, Canada was unready to compete. The town where I grew up had an agricultural processing company owned in the US, but which was the centre of economic activity for miles around, with a large, unionized workforce paying decent wages. Post free trade, the company consolidated its production facilities mostly pulling everything back to the US. Jobs in Canada were lost, economic activity in the surrounding area declined, and a sad story all around. The people who lost their jobs did not move to another economic sector in another province since they had homes and families where they were living. So that was a 198’s story.
The current housing issue is very complex and I would argue (as you were starting to point towards I think with the reference to the WWII production enconomy) that it will take substantial direct investment by government (and the provinces and federal government would have to work together on this) to build new housing stock and make it available at affordable prices (either rental or for purchase). I say this because I have noticed that while the demand for housing is very high, new housing starts are not meeting the demand. Why? Because existing resale homes are selling substantially below the cost of construction of new homes. This is not all that unusual, but the difference means that it not profitable for most home builders to purchase property, finance the build, and sell for a profit. Too high interest rates (from stupid application of discredited monetary policy principles) play a role in this, but lumber prices (and other construction supplies no doubt) have not followed traditional supply/demand repricing due to concentration of ownership. Lumber is 30% of the cost of new home construction—boost its price through oligarchic pricing and the retail cost of new construction becomes unaffordable.
Check the commodity price for raw logs vs lumber through the pandemic and you will see what I mean. Raw log prices did not change much at all but lumber prices quadrupled. While lumber prices have declined since they are trading substantially above the pre-pandemic range.
Anyway, fwiw….
At the time, my father was a financial executive economist and lawyer who, while he agreed with free trade in principle, opposed the FTA because it wasn't free trade. It gave the U.S. access to Canada's markets without Canada getting access to US markets in return. Aside from the damage that would cause, because most of the bargaining chips had been given away, there wouldn't be
From his perspective, it meant that Canada also had nothing left to bargain with at the next round (NAFTA).