Egypt and the Northern economy.

Dealing with economic cycles has been the key to economic survival and economic growth since the floods in Egypt. According to legend, a Pharaoh once dreamed about seven fat and seven lean cows. Joseph helped the Pharaoh predict a coming depression. He told the Pharaoh that the cows stood for seven good years and seven bad years.

The Pharaoh was a very good manager. He put Joseph in charge of preparing for the hard times. Joseph must have done a good job because we are still talking about him.

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In fact, Rick Bartolucci could use a few advisors like Joseph in the Ministry of Northern Development and Mines. We often forget that Egypt had a boom-bust cycle just like Northern Ontario. The decisions Rick makes, just like the decisions the Pharaoh had to make, will determine the future of his realm. MNDM doesn't even have one Joseph, unfortunately. Maybe it is time to copy the Pharaoh and hire some advisors.

Another economist who would make an ideal advisor for MNDM is William Stanley Jevons. Jevons is famous for his work on the business cycle-trying to explain why the economy wobbles between rapid growth and depressions. If Jevons worked at MNDM you can be sure he'd have already studied the devastating Northern boom-bust cycle, and he would have some suggestions about what to do about it. He would have predicted the current economic supercycle, and gotten the Ministry thinking about how to take advantage of it.

Jevons would certainly point out that there are the three main parts to the ups and downs in the north's economy. There is a short cycle that looks like a ragged-toothed rip-saw. Most economists have given up trying to find a single explanation for these short, irregular oscillations. He would also remind us that increasing productivity will also drive down employment, producing a long-run downward trend.

Finally, Jevons would point out the "long wave" or "supercycle." Philip Richards, one of Britain's top fund managers, recently described three past supercycles. There was one during the British Industrial Revolution, another during America's huge period of growth, and a third when the Japanese economy took off. In each case huge new markets were developing.

Phillips says that we are now in a fourth super cycle driven by China's rapid expansion. The Japanese superboom was supported by only about 150 million people. This time, says Phillips, there are nearly three billion in play and the growth in demand will be bigger than anything the world has seen.

Over just the next five years, the Chinese are committed to building same amount of highway as the Americans build in the 40 years when they created their interstate highway system. China will need huge amounts of steel and copper just to build the highways, and more to build the cars they drive on those highways.

Phillips is convinced the boom will last. We have India, Indonesia and Vietnam, and Russia, all with growth rates of around eight percent. He is so sure that his company is investing in copper, zinc, nickel and gold, all metals that Northern Ontario produces. The super boom is good news for Northern Ontario even if it doesn't reverse the long-run downward trend or save us from the aggravation of the short term cycles.

Now what if Rick Bartolucci were to ask our two dead economists for advice? It is pretty obvious what Joseph would recommend. He'd say use the fat years to prepare for the lean years to come.

But what does that advice mean today? Joseph just collected grain to sell during the lean years. All Joseph had to do was get people through the bad years alive. Stockpiling wood and copper in Northern Ontario just wouldn't have the same effect. In the modern economy you still stockpile wealth, but in a different form. You invest in skills and knowledge. Instead of building granaries you build research centres.

One thing that doesn't change is that you have to start early and invest heavily. Joseph knew that. We in Northern Ontario don't know that yet. And at the rate we are moving, when the lean years come we won't be ready.

And what would Jevons say? Jevons isn't available, having died in 1882 at the peak of his career. But he might say that the economy is like a ratchet-you push ahead when the cycle is rising and make sure you don't slide back when it falls. Today, that means having a plan to take advantage of the supercycle.

Dr. David Robinson is an associate professor of economics at Laurentian University. He can be reached at [e-mail].