Canadians of every
income class are paying a new (and rising) 23% import and travel tax for
the privilege of having a dollar that’s free to bob like a cork—a cork that magically
accommodates Ottawa’s management manual for Canada’s internally loose and
externally entangled economy. Do they in return, however, receive superior government
for keeping a standalone, supposedly market-priced Canadian dollar?
Paul
Krugman and other Keynesian scholars living offshore in New York and London admire
our cork and believe that eurozone members—especially Greece—are suffering
terribly because they no longer have corks of their own floating, in a sea of
trouble.
The Canadian
Nobel Prize economist Robert Mundell developed an alternative concept of transnational
Optimal Currency Areas that helped convince the 17 eurozone governments
to replace their individual currencies by creating the euro, in 1999. They
hoped their OCA inspiration would do a better job of expanding prosperity and peaceful
trade than continuing to let Europe’s tangle of national borders justify its tangle
of currencies.
Canada’s state intelligentsia,
to this day, barely gives the case for a transnational Canada-US currency the
time of day. Overwhelmingly,
those in the know insist that the status quo is optimum, that Canada’s economy is too different from that giant
economy to the south to forgo having a cork of its own. And besides, why would
our cork interest global thinkers in Washington?
As is so often the
case, economic jargon and wonky gossip disguise raw self-interest and
legitimate politics.
Friends of the
Canadian dollar place the pursuit of national full employment and income
equality over the pursuit of wider regional efficiencies and productivity. Proponents
of a wider currency area, on the other hand, stretch “optimum” for the sake of distant
liberal free trade benefits. Twentieth-century vested interests—in
Canada’s auto industry, for instance—use “optimum” to justify not buying
anything that’s not a perfect fit, immediately.
Certainly, the gap
between the mixed economies of Germany and Greece is painfully greater than the
six national borders between them. However, that gap between Canada and the US
depends today less on one border and more on exactly where you live and work within either federation. Keynesians in
both capitals are chasing the same economic growth imperative, almost in
tandem, quarter-after-quarter, and, instantly, over the phone in emergencies.
North American business
site-locators and investors carefully study regional census data, business cycles,
and shifting consumer preferences. They worry little, however, about the respective
professionalism of regulators and public servants or the chances of a comeback
by Marx in Saskatchewan or even radical left or right separatists in Quebec or
anywhere else. Cross-border Canadian and
American white-collar and blue-collar workers ask about the quality of local
schools, not whether they’ll be shunned in the workplace and in neighborhood
stores.
Still, being human,
government monetary economists are not likely to decide en mass that their
lucrative, highly technical skills are unnecessary and serve an unnecessary
currency. They will continue to believe and avow that there exists no
sophisticated alternative to the Canadian status quo.
Okay, they needn’t
be muzzled—but they shouldn’t own the podium.
Whatever the
ideological hype of their government, the Greek public overwhelmingly favors keeping
the euro and seems ready to keep sacrificing to avoid going back to the glorious
days of a sovereign drachma.
The euro
represents in Greece not merely peace of mind for tourists and foreign investors,
but now also genuine restraint on mischievous Greek governments that, in the past, artificially
inflated their economy in order to finance extravagant and crony government.
And while the eurozone doesn’t have a formal “sharing” fiscal union to
complement its currency union, Greeks surely note that Greece has received—and
is receiving—hundreds of billions of euros in help, in large part, because it’s
in the euro currency union.
Greek middle classes
and entrepreneurs are asserting the benefits of a common currency, believing it
serves their interests, if not the interests of individual state managers. Canadians
aren’t hurting as much and are more deferential.
Yet Canada is an
exceptionally safe place to think out loud. We’ve done ourselves little harm
when we’ve tried it before.
The Bank of Canada
isn’t holding a gun to our heads. It merely represents a set of pro-loonie
defenses that puff up the benefits of the loonie and shrug away the price we
pay in forgone purchasing, in lower productivity, and in our ability to move
money, products, labor, and ideas back and forth across our defenseless
border.
(Continued)
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