Saturday April 19, 2014

Rich, not average people, will benefit from mine

In a Nov. 30 letter to the editor, Peter Tsigaris asked a very important question, “What are the local spillover benefits from the Ajax mine?”

The Daily News avoided an opportunity to look at the evidence that shows how projects like Ajax expose us to product price volatility, currency fluctuation, trade  deficits, job losses and dependency on unstable commodity markets and short term wealth for the few.

Consequently, many readers may not understand the spillover effect, since it is based on evidence critical of industry and the information they’ve presented.    

KDN editorials often ignore or distort scientific and economic facts, a missed opportunity to explain value-added economies. Without the help of the media, the public is often in the dark about how a resource rich province can build a stable, sustained, long-term economy.

The spillover effect from resource extraction industries (like mining) has benefits and huge opportunity costs. In the short run, as Tsigaris notes, the tertiary or service sector of our economy, the wealth movers — merchants, lawyers, educators, and so on, who facilitate sale and extraction — will “benefit (financially) from the presence of the mine.”  

However, in the long run, the taxpayer and the worker will be asked to pay for the real spillover costs.

Since we don’t add value to the copper and gold that we ship elsewhere, every economist will tell you the spillover effect or job creation is minimal in the local market, as Tsigaris concluded.  

Of course, if the corporation built a smelter here to produce copper wire or some other salable product, the multiplier effect would grow jobs, create wealth, and offer business profits and tax revenues in a more stable economy.

For every mining job we create locally, we outsource over 21 jobs to other parts of the world. This outsourcing is a huge opportunity cost to our city and nation. It’s the wealth created by these jobs that we consume while we, the taxpayers (provincial and federal), absorb real spillover costs on health, environment, reduction in government revenues, as well as workers’ wages and benefits, of every mining job created locally as costs are socialized. That shouldn’t be ignored.  

Politicians, the media and wealth movers are not wealth creators like the miner who works in the pit, since they don’t add value by promoting the sale of  raw copper, logs, oil or gas to foreign or domestic  interests. Foreign and domestic corporations that come to Kamloops to dig copper and gold do not grow our wealth; they just make it possible for the wealth creators — mine workers — and wealth movers to consume more value-added products made with our resources in India, Mexico and China.

Unfortunately, in our society, wealth movers — often corporations — have aligned themselves with government to ensure their voices are heard and media oftentimes won’t contradict them.  

These corporations help make the rules that government enacts and the media promotes, consequently, value-added  products are made outside of Canada, which we import and consume.

Rather than promoting a manufacturing or knowledge-based economy at home, the media promotes this consumption-waste cycle, which in the long run is unsustainable.

The spillover costs and benefits must be calculated by the City within the framework of an overall strategic vision or development plan for Kamloops. The editors should caution the City council to understand that meaningful job creation should be more than an advertising slogan or political ”bumper sticker” from a well-connected industry.  

It’s a message resource extraction industries often trumpet and newspaper editors frequently parrot for public consumption without realistic analysis.    



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