I have to admit, I'm a little confused at the moment. I've seen it referenced time and time again that our having a lower dollar value will make our manufacturing sector more competitive, because we can export our products for cheaper than what other countries such as the USA can produce a similar product for.

However, when the dollar value was sitting around 65 cents per US dollar, we had to pay significantly more for products than we do now with our higher dollar. For example, ignoring inflation, if we have to pay $20 for a book at parity, we'd have to pay $30 for the same book if our dollar value were 65% of parity.

If your manufacturing sector worker is making $60k per year regardless of dollar amount, he could buy 3000 books if the dollar is at parity, and only 2000 books if the dollar is at 65 cents to the American dollar.*

So at the end of the day, if purchasing power is the same whether its $40 000 per year at parity, or $60 000 per year at .65 cents to the dollar, why not just reduce wages when the dollar is at parity to maintain the same competitiveness the manufacturing sector would get if the dollar were lower?



*Not saying they would buy that many books. I'm just using it as a reference frame because a book is one of those products where it is clearly displayed that the book has a set value that requires different amounts of currency to purchase depending on the value of currency used. There are many other products that are similar.

   

NOt everything you buy is from the US, so your analogy fails there. Ie you would have relatively more money to spend with a low dollar, than with reduced wages in a high dollar. Other currencies may also have declined in relation to the US dollar, so between Canadian goods and goods from countries other than the US, you would be a lot better off with a low dollar and higher pay. Also, wages are nowhere near 100% of the cost of manufactured goods. The manufacturer will have to pay more for inputs he gets from the US, but relatively less for Canadian sourced inputs or again, from other countries.

Also, who's going to trust employers to be truthful about how much they would have to reduce wages to remain competitive. It's not like we live in Germany, where industry, unions and government all co-operate together to make things work. We've got the good ole Blimy adverserial system of settling labor issues.