Seamanship Quotation

“In political activity, then, men sail a boundless and bottomless sea; there is neither harbour for shelter nor floor for anchorage, neither starting-place nor appointed destination.”
— from Michael Oakeshott's
Political Education” (1951)

Monday, February 28, 2011

Imagining Canada was somewhere else

As predictable as the decline of the US economy and its adolescence, mass democracy has been the idea of leading Canada to safer shores. Choosing the world over America has been the lapel pin of sophisticates since Richard Nixon floated the dollar in 1971. The credibility of staking Canada’s future elsewhere has been maintained by two conflicting realities: the US’s success in driving globalization and the US’s volatile business and political cycles. Every time she’s down, the globalists in Ottawa say, “This time, it could be for keeps.” 

Surprisingly, Jeffrey Simpson, a Globe and Mail’s national columnist, joined the dreamy pessimists with the article “Uncertainty over the US means a shadow over Canada.” He casts an alarming scenario and concludes with an austere fantasy as a national strategy.

“But what would happen if a major ratings agency downgraded U.S. debt, or a big lender began to diversify away from U.S. debt, or the U.S. dollar plunged? This is a country accustomed to making the rules, then breaking them with impunity. But what happens if that impunity is removed, and the very forces of globalization that the Americans have trumpeted turn against the chief trumpeter.”

America can’t “govern itself properly” and Canada becomes a high dollar “safe haven.” How do we prepare for this dangerous vindication of Canadian superiority? Simpson tells us we should repeat what we’ve been saying to ourselves for 40 years:

“With so much uncertainty, the best option for Canada is to get deficits down much faster than federal and provincial governments are now intending, refocus as much spending as possible on improving competitiveness rather than politically attractive subsidies and useless tax expenditures, and diversifying our economy like mad outside North America. The resulting life jacket would be thin, but it might provide a little insurance against the storms ahead.”

Forget about slashing the deficit. That’s what everyone thinks you should say when you’re talking about life jackets. Hanging onto his life jacket, however, are three unlikely assumptions. The US political system will drive the US market into a catastrophic recession; at the same time, other markets will grow and drive up the Canadian dollar; and federal government policies and spending can re-orient and tone up the Canadian economy. 

Sure, we sell 75% of our merchandise to the US. And, increasingly, those exports are made up of resources, not high-value manufactured goods. We’re not beating a declining America, but we’ll do better somewhere else. Somewhere, perhaps, where we are new might be easier? Why would those markets be easier—especially the ones that are beating the Americans? Demographically, where will there be better growth than in the US? Why will another Ottawa industrial strategy—that is not “politically attractive”—close the 20-25% productivity gap with US manufactures? 

There’s too much that’s escapist about an insurance policy that counts on the unknown. It looks defeatist to invest in North America when the others are moving pins on maps of the globe. Surely, however, the best insurance policy would be to drive greater North American integration so that North America can continue to prosper and compete. 

Diplomats and visionaries in Ottawa may be fed up trying to tell Americans how to practice democracy in a mixed economy. However, if they aren’t up to Washington, they better think twice about Beijing, Moscow, and Cairo.

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