to whom it could sell the dollars) wanted them to spend in the only
country where they are legal tender—Canada.
Canadian currency ultimately does no one any good except as purchasing
power in Canada. Actually, it would be miraculous if we could send
nothing more than Canadian money to other countries in return for real
goods. After all, the Bank of Canada has the power to create as much new
Canadian money as it wants (at almost zero direct cost) and so this
transaction would effectively mean Canada getting foreign products for
free. But the reality is different: it is only because Canadian money can
buy Canadian products and Canadian assets that others want it.
Protect Against Low-Wage Foreign Labour
This argument says that the products of low-wage countries will drive
Canadian products from the market, and the high Canadian standard of
living will be dragged down to that of its poorer trading partners. For
example, if Canada imports cotton shirts from Bangladesh, higher-cost -
Canadian textile firms may go out of business and Canadian workers may
be laid off. This argument suggests that Canada is worse off overall by
trading with Bangladesh. Is this really true?
As a prelude to considering this argument, think what the argument
would imply if taken out of the context of countries and applied instead to
individuals, where the same principles govern the gains from trade. Is it
impossible for a rich person to gain by trading with a poor person? Would
Bill Gates and Elon Musk really be better off if they did all their own