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This is the third and last installment of my conversation with Jeff Rubin, author of the Canadian best-seller "Why your world is about to get a whole lot smaller: oil and the end of globalization".  

 

Congratulations to Randy Berg who has won the second of three autographed copies of Jeff's book. Read Part 2 of this series and his comment here. Dont forget to read Part 1 if you haven't. You too win a copy! All you have to do to be eligible is leave a comment on this post, sharing your thoughts about this issue: If you are concerned or encouraged, agree or disagree, etc. We will then randomly select a winner and send the copy. The deadline for Part 3 (this post) is next Sunday, August 30th). Hurry up though: This is the last one we are giving away!

Isabelle: It's a pretty amazing concept and it's something I hope our politicians have the guts to handle.

Jeff: Don't worry about the politicians. When oil is $ 7.00 a gallon at the pump, people will know exactly what to do. They will send the right message to the politicians. For example, I don't know why we're spending billions of dollars to pro-up the auto-industry that's due to obsolescence by triple-digit oil prices. We should be investing billions in public transit instead of putting more cars on roads.

Isabelle: If Europe can do it, we can do it, right?

Jeff: Exactly. But here's the difference. In Europe, they've already been paying those prices for the last 10 years. When we start paying those prices, we'll become European. It's all about price. When gas is $ 7.00 a gallon, people won't have to buy my book. They'll know exactly what to do.

Isabelle: Can you tell me more about the concept of Carbon tariff on imports?

Jeff: I'm just saying this: if we're going to close coal plants and pay 3 times as much for our electricity...Now I know in Montreal you're blessed with hydro-electric power but that's not the way it is for most people in North-America outside of Quebec and Manitoba who have hydro-electric. It's coal plant or gas. California doesn't allow coal plants, so their power prices are 3 times as much as Texas. But if we are going to, all of a sudden, shut coal plants around North-America and pay 3 times as much for our electricity and then find out that China is building 800 coal plants, that does not make a whole lot of sense. So what I'm saying is we can't stop China from building coal plants, but what we can do is say : "if your steel factory gets its power from coal, from dirty power, we're going to charge you a tariff so that you pay the same price for your carbon emissions as our steel producers pay for their carbon emissions. In other words, you don't gain any economic advantage by using dirty power.

Isabelle: And what are the chances that someone will stand up to China and say that?

Jeff: The chances are excellent once we start paying 3 times more for our own power to close a coal plant. Because there's no point us making economic sacrifices for the environment if they're just going to be building coal plants like mad. Again, we can't tell them what to do, but what we can do is make sure they gain no economic advantage when they trade with us by using dirty power.

Isabelle: That would certainly fix 2 problems at once: the environmental one and the unfair trade that's going on.

Jeff: Exactly. And I think that's coming. There are some big changes and some big challenges but you know, it's not all doom and gloom. At as I say at the end of the book, in many respects, the new small world around the corner may be a whole lot more livable than the big one we're about to leave behind.

Isabelle: As a parent, I must tell you that I hope you are right. And in the meantime, I'm getting myself a ZENN Car!

Jeff: Now that makes sense! That's why I say: the key is not about the Bank of Canada, the Minister of Finance, the Prime Minister of Canada or the Premier of Quebec. It's not about those guys. It's about you and me and the decisions we make everyday in our lives.

Isabelle: And I think that's the most uplifting message of your entire book. Thank you very much for writing it, and thank you so much for your time. I really appreciate it

Jeff: Thank you and best of luck with your website!

Tell us what you think about Jeff's theory by next Sunday, August 30th. We will then randomly select a FINAL winner who will receive an autographed copy of  "Why your world is about to get a whole lot smaller."

Image source: China Digital Times

This is the second installment of my conversation with Jeff Rubin, author of the Canadian best-seller "Why your world is about to get a whole lot smaller: oil and the end of globalization". 

 

Congratulations to Kristy Smith who has won the first of three autographed copies of Jeff's book. Read Part 1 of this series and her comment here. You can win a copy too! All you have to do to be eligible is leave a comment on this post, sharing your thoughts about this issue: If you are concerned or encouraged, agree or disagree, etc. We will then randomly select a winner and send the copy. The deadline for Part 2 (this post) is next Sunday, August 23rd).

  

Isabelle: Do you think that such a rapid change will cause civil unrest?

Jeff: Whether is causes civil unrest or doesn't, we will have to change nevertheless. I'm quite confident that people will change. I believe that people will respond to prices. We're going to have to change our diets. We're not going to be able to eat avocadoes in February in Toronto because the cost of flying them in from Southern California or Mexico is going to make that avocado too expensive. But we'll end up eating more local produce and that means that we'll have to restore land back to farm land.

Isabelle: It also means that in Canada we're going to be eating a lot of potatoes!

Jeff: We'll eat potatoes, we'll eat corn. I'll tell you something, when I was a kid growing up in the sixties in Toronto, there were no fresh blueberries and raspberries in January, there were no avocadoes and I survived. I'm sure others will too. People will change their minds because at the end of the day, people will have no choice.

There are people who believe that we should go back to local because it cuts down on the carbon trail, and there are people who believe that we should go back to local because it will put us more in touch with our environment, and that's all fine. But I'm saying, even if you don't believe that, you're still going back to local because the whole model of a global economy doesn't work on triple-digit oil prices.

Isabelle: This is the best news I've heard in many, many months. Because what we do here at Buy Canadian First is help Canadians find goods made in Canada.

Jeff: Well, this is right up your alley because you're going to find more and more made in Canada. Of course, this is every bit as true in China as it is in Canada. Distance costs money for everybody. But in the Canadian economy that I see in the future, more and more things we consume will be made in this country.

Isabelle: That is certainly welcome news for a lot of our manufacturing members here who are struggling!

 Jeff: I think the big surprise will be that triple-digit oil prices are going to breathe new life into our rust belt. And it's going to lead to more farms, as well.

Isabelle: That's an interesting subject, because suburbia is replacing farmland almost overnight in many parts of the country. That's certainly the case here in Montreal.

Jeff: Those houses will be abandoned. And what we'll see is farm land re-claim those sub-divisions. And not in 20 years. In 4 to 5 years. In 4 to 5 years, you're going to see land starting to be reconverted back to agricultural use. And that will be as a result of soaring food prices and plunging suburban real-estate prices.

Stay tuned for more good news for Canadian manufacturers in Part 3!

In the meantime, tell us what you think about Jeff's theory by next Sunday, August 23rd. We will then randomly select a winner who will receive an autographed copy of  "Why your world is about to get a whole lot smaller."

Image source: Flickr Creative Commons: Dan Zen

Did you get a chance to read Jeff Rubin's book: "Why your world is about to get a whole lot smaller: oil and the end of globalization"? If not, you should run out and get it today. It's a great read. His book has been on Maclean's Best Seller non-fiction list for 11 weeks now!

Jeff was the Chief Economist at CIBC World Markets for almost 20 years. He was one of the first economists to accurately predict soaring oil prices back in 2000 and is now one of the world's most sought-after energy experts. He's a true Canadian with amazing vision!

I had the pleasure of spending some time on the phone with Jeff a little while back to discuss his book. I will share our conversation in a series of 3 blog posts, starting with this one.

We are also giving away 3 autographed books, one for each part of the series. All you have to do to be eligible is leave a comment, sharing your thoughts about this issue: If you are concerned or encouraged, agree or disagree, etc. We will randomly select a winner and send you your copy. The deadline for part 1 (this post) is next Sunday, August 16th). 

 

Isabelle: Your book is about how rising oil prices are about to transform our way of life, into something completely different. Something closer to what our grandparents probably lived...

Jeff: That's pretty accurate. We are going to see even higher oil prices, and at the end of the day there's not a whole lot we can do to prevent that. However, there is a lot we can do to make sure that when we see these higher oil prices, they don't have the same kind of devastating impact that they've had on our economy and our lives in the past. And that's about making changes in the way we live, and changes in the way we organize our economy so that we end up using less energy and in particular less oil.

And the single most important thing that we're going to do is go back to the idea of a local economy as opposed to a global economy. A global economy is where we produce something at one end of the world and sell it at another end of the world. But no matter what mode of transport we use (air, boat, train, truck) we're all burning oil. And as oil gets more expensive, distance starts to cost money. It doesn't matter if the wage rate is a lot cheaper in China, because in everything from steel to food the cost of moving things is going to be more important than the difference in the wage rate.

So a lot of things we thought were gone forever, like farms and steel mills, are soon going to be coming back because it's not going to be economic to buy our food or buy our steel from China. At the same time, everything that we now will make for ourselves will cost us a lot more money than we're used to. So we'll get back a lot of high-paying manufacturing jobs, but we'll be able to buy less with our wages because things will cost more.

We will tend to live more in the cities then in the suburbs because we won't be able to afford to commute 40 miles back and forth to work. And as people leave the suburbs, and food prices continue to rise, then ultimately many of those sub-divisions will be returned to the farm lands that they were 30 or 40 years ago.

Isabelle: What is the timeline on that?

Jeff: I think we will see triple digit oil prices again within 12 months. And when we do, I think we're going to start seeing some of these things happen very, very quickly. Because these things are not going to happen because people necessarily chose to live their lives this way, these things are going to happen because the economic reality of triple-digit oil prices are going to leave people with no choice but to change their way of living.

Stay tuned for Part 2...

In the meantime, tell us what you think about Jeff's theory by next Sunday, August 16th. We will then randomly select a winner who will receive an autographed copy of  "Why your world is about to get a whole lot smaller."

Canadians are concerned about the new protectionist stance in the buy American provision of the US stimulus bill. America's new bill already has Canadian steel mills on edge with several more industries curious of their fates as well. The bottom line is that this provision could potentially cause a ‘tit-for-tat' retaliation by other countries who could adopt the same policies causing global trade wars and impose a reintroduction of huge tariffs that NAFTA phased out. You may wonder why Canada hasn't implemented a similar provision; it is because the Canadian government adheres to the North American Free Trade Agreement (NAFTA) and World Trade Organization (WTO)?

On February 19th 2009 President Obama and Prime Minister Harper met in Ottawa for a news conference, you can read the transcript here. The leaders discussed many things that included the Buy American act and NAFTA, Obama assured to uphold his obligations to NAFTA and WTO and said this:

Now you didn't ask me about the "Buy American" provisions, but since it relates to our recovery package, let me just reiterate -- and I said this very clearly before the bill was passed and before I signed it -- that I think it was very important to make sure that any provisions that were there were consonant with our obligations under WTO and NAFTA.

He also stated:

I provided Prime Minister Harper an assurance that I want to grow trade and not contract it. And I don't think that there was anything in the recovery package that is adverse to that goal.

Prime Minister Harper also commented on the provisions:

On -- on the "Buy American" provisions -- and let's also be very clear, as well, that in both WTO and NAFTA, there are -- there are industries and there are ways in which and there are levels of government at which one can have domestic preferences and purchasing policies...So I think it's critical that the United States has been a leader for a long time in the goals of an open global economy. I think it's critical that that -- that that leadership continue. And I'm -- I'm quite confident that the United States will respect those obligations and continue to be a leader on the need for globalized trade.

Here at Buy Canadian First we always say "it's not about buying Canadian always, it's about buying Canadian first"; it's knowing and weighing your options. Shopping consciously in much the same way consumers are looking for eco-friendly products. 

I'm curious, if what Prime Minister Harper says is true, that these treaties have ‘domestic preferences and purchasing policies' then clearly some of the outsourcing practices conducted at the Government level doesn't make sense - Stephen Harper.

Why has 48 year old Grohmann Knives Limited lost its contract to supply the Canadian Military to a lesser quality non Canadian-made knife? Why has the Ontario Government's procurement office stopped buying their Ontario flags (of all things!!) manufactured by a Toronto company and instead purchased them from a foreign flag maker?

Shouldn't our Government be setting the example first (there's that word again) for all Canadians to be inspired by? Hopefully Harper's new economic action plan can look into the allowed ‘domestic preferences' and start practicing what it preaches. God knows our hundreds of thousands of unemployed workers could use the contracts!

Not that I want to turn this post into a rant line, but I'm asking you to leave a comment about how you feel about this and tell me if you know of other examples of such contradictions and lost contracts. Our Account Managers will then contact them and see how Buy Canadian First could help them.

Image source: pm.gc.ca