From the CBC:

• Cut prices to reflect stronger Canadian dollar, Flaherty tells businesses (CBC.ca)

Essentially, Flaherty’s annoyed that, given the strength of the Canadian dollar against the American dollar, prices on imported items in Canada aren’t lower compared to the same prices in the States:

Finance Minister Jim Flaherty says he is frustrated that Canadians are paying too much for imported goods and has told business leaders the government expects them to pass along savings from the higher Canadian dollar.

If consumers don’t see benefits soon, he said, they should exert pressure by shopping around for the lowest prices.

What an offensive notion — that consumers need to be told by an elected official to shop around for lower prices.  That’s how the market works, is it not?  When businesses charge more than consumers are willing to pay, the consumers take their business elsewhere — supply, demand, and all that, yes?

Perhaps more offensive is the notion that (a) Canadian businesses should give even half a fuck about what the federal government tells them to and that (b) said federal intervention (that is, Flaherty calling out Canadian businesses) should come before consumers doing what they do best — drive the demand side of the equation.  Last I checked, this was not a command economy.

Would you believe that I quoted Marx in my high school yearbook?  My, how times have changed.  I guess illusions can only survive a finite number of beatings from reality’s cruel fists.

Let’s go back to that notion of shopping around for the lowest prices.  Flaherty says:

“So my point to the business leaders has been, ‘You should do what you can to accelerate the benefit to Canadian consumers,’ and I think, quite frankly, that Canadian consumers can help by shopping around.”

“Shopping around,” it seems, doesn’t actually mean what you think it means.  See, Flaherty wants you to be able to take advantage of that wonderfully high exchange rate with the American dollar, as long as it doesn’t involve actually taking direct advantage of that wonderfully high exchange rate with the American dollar:

One reason for his concern, said Flaherty, is that Canadians might start shopping in the United States, where savings can reach 40 per cent.

Gee whiz, numbnuts, isn’t that exactly what you had in mind?  Book-lovers from Vancouver refusing to pay forty dollars at Chapters and driving down to Seattle to buy the same book for thirty bucks at Barnes and Noble might actually, you know, make Chapters want to lower their prices.

Oh wait, I forgot: comparison shopping is Flaherty’s plan B.

Now, let’s look at this “strong loonie” business for a minute.  The CBC reports that:

[Deputy chief economist for the Bank of Montreal Douglas] Porter published a report in June showing that while the loonie has appreciated by 50 per cent over the past five years, import prices have not dropped accordingly.

Appreciated by 50%… against what?

I’d have thought this was common sense, but I am apparently dreadfully mistaken.  The value of goods, services, currencies, and such is inherently relative.  Despite what we’d all love to believe about the American dollar or an ounce of gold, there is no constant global benchmark against which we can measure the value of our stuff.

For example, I’m a bit of a coffee snob.  I prefer to buy locally-roasted beans on a roughly weekly basis, grind them just before I use them, and brew my coffee in a French press.  Starbucks, on the other hand, does some weird shit with their beans and brews them in an industrial drip machine: the end result is stronger than gas-station coffee, but no less mediocre.  Starbucks charges (with tax) two dollars for a medium coffee — on a normal morning, you’d have trouble getting me to pay ten cents for their product.

However: I’ve shortsightedly run myself out of those delightful locally-roasted beans.  Tomorrow morning, I’m almost certainly going to walk to Starbucks and give them two dollars for a medium dark roast.  Circumstances have changed: that coffee is now worth two dollars to me, given that I’ve run out of beans.

Similarly, the Canadian dollar is not strong in general terms, it is strong against particular currencies — in particular against the American dollar.

• Canadian dollar vis-a-vis selected currencies (Bank of Canada)

“Vis-a-vis.”  Isn’t that cute?

So the loonie has gone from about 0.63USD in 2002 to about 0.95USD in 2007.  That is, indeed, quite a jump.  It has done similar things against the Yen and the Yuan — and I guess we import a few things from China and Japan.  But lo!  The very same loonie has gone from about 1.22AUD (that’s Australian Dollar) to about 1.10AUD in the same time — it’s getting weaker.  Against the Euro and the Swedish Krona, it’s stayed about the same.  What do you want to bet that we’d be hearing a much different tune from Flaherty if we bought most of our imports from Australia?

But never mind such piddling capitalistic details.  The market had better do what the government says, dammit!

After all, look how well that’s working in Zimbabwe:

• Q&A: Zimbabwe’s Economy (The Beeb)
• Zimbabwe launches $200,000 note (The Beeb)

Short version: recent government-mandated price cuts, designed to overcome hyperinflation, have completely destroyed Zimbabwe’s retail economy.