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Resistance Is Futile

All things considered


October 10, 2008
By Jim Knisley


Topics

A catchphrase that entered the language a couple of decades ago thanks
to Star Trek: The Next Generation seems oddly appropriate today.

A  catchphrase that entered the language a couple of decades ago thanks to Star Trek: The Next Generation seems oddly appropriate today.

The phrase: “resistance is futile” was robotically uttered by the Borg whenever humans crossed their path.

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This time it seems to apply not to an alien race determined to conquer humanity, but to a seemingly sudden shift in our economic substructure.
For a century the economy was built on inexpensive energy in the form of readily available oil. Now, it is neither inexpensive nor as readily available.
In economies addicted to using oil, this had been a shock.  Combined with the banking/financial mess and tightening credit in the U.S. it has slowed economies across the developed world. At the same time real inflation (as opposed to the so-called core inflation central bankers like) has reappeared riding the two horses of the apocalypse – high fuel and food prices.
Canada has so far avoided the worst of this mess because of the oil, agriculture and potash in Western Canada and a more tightly regulated mortgage market. But it could be coming with inflation in the West and inflation and a slowdown in Ontario and Quebec.

Consumers, many corporations and even some provincial governments have recognized that they are facing a new reality and that while they can’t resist it, bowing to futility isn’t an answer.

Instead of playing what now looks to be a losing game they are changing the game and setting new rules as they go.

The first of these is that efficiency is king.

Just last year, power and prestige were on top. Bigger was better, excess was excellent and overindulgence was optimum.

Now, bigger is stupid, excess equals bankruptcy and over indulgence is sinful.
While the new game is in its early days the shift to efficiency is everywhere. The big three North American auto makers are dropping SUVs and large pickup trucks and are trying to save themselves by bringing in the small fuel-efficient cars they’ve long sold in Europe. Vespa can’t bring in enough scooters to meet growing demand.

Ridership on public transit systems in the big cities has soared leaving them with too little capacity and a desperate need for expansion.

This has even extended to food. A few weeks ago Michael Swanson of the economics department at Wells Fargo said in a report that “2006 marked the bottom of the cheap food era.”

The rising value of the Canadian dollar versus the U.S. dollar sheltered Canadians from much of the increase in food prices affecting the U.S. But that too is coming to an end. The higher value of the loonie has been accommodated by the financial system and current and future price increases are being passed through to consumers and when bread prices rise 35 per cent, people notice.

To keep food affordable people can and will change consumption patterns. But this won’t be simply a move to lower priced product. There will also be a move to quality. Many people are adopting a stringent value for money approach. They know that the lowest price often isn’t the best value.

This should work to the benefit of local producers. Because of lower transportation costs local producers are finding they can compete on price and still dominate on quality. They are finding that their advantage of being close to markets is beginning to offset the low labour costs of some imported produce.

The shift is stretching even further. Backyard gardening has become a phenomenon. More and more people are finding that they can grow vegetables cheaper than they can buy them. They are learning to appreciate just-picked flavour and they even enjoy the bit of work involved.
It also seems that microenergy is coming into its own. While governments continue to look to nuclear, natural gas and clean coal, people are turning to geothermal, photovoltaics, solar thermal, wood and wind as personal projects.
They are buying super-efficient appliances and adding insulation and vapour barriers to their homes.

An added benefit for many is that as they become more efficient they are doing their bit for the environment. One should not underestimate how important this is to many Canadians – especially younger Canadians.
These younger Canadians shouldn’t be confused with the tree huggers of the 1960s and 1970s. They are much more pragmatic.

They believe that the economy of the future belongs to the efficient and those who build that future will reap the greatest rewards. While some of the rewards will be personal they will also include a cleaner, more sustainable planet.

While some politicians, some businesses and some individuals may try resist, their resistance is futile.