Quebec isn’t stuck with Canada

Pierre Trudeau was Canada’s most successful liberal leader. However, his career-long fight with Quebec separatists also glamorized a bitter, deeply illiberal tendency in federalist thinking right across the country. There was, simply, nothing lighthearted or openminded about his utterances or his arguments about Canada’s federation. We honor his memory: to this day, it’s just common sense to dismiss any talk of Quebec independence as nihilistic in the rest of Canada, and suicidal stupidity in Quebec.  

Federalism—for Quebec in Canada or, someday for that matter, for Canada in a larger union with the US—should remain a positive ideal for liberals and conservatives who want to maximize their freedom and their influence for good in the world. That said, however, it’s not our duty to encumber any new discussion in Quebec about its options with contemptuous clichés: that they’d fail on their own and that their ideal alternative—"sovereignty association"—is unworkable.

That option is second-best, as are all sorts of federal models, but it could turn out to be what Quebecers want, and accommodating what a clear majority of people want is surely better than using fear to hold that clear majority in this federation.

David Frum offered the classic blunt-force antiseparatist argument in his pre-election column last weekend, “The real reason that separatism is dead.” He doesn’t deign to evoke Trudeau’s victorious liberal spirit. Rather, he points to the crowd scrambling out a burning theater: “Look at the European Union.”

“An independent Quebec would be crazy to stay on the same currency as the rest of Canada. If it did, it would find itself exactly in the position of Spain and Italy relative to Germany. No, worse than that — in the position of Argentina relative to the United States during Argentina’s brief tragic experiment with 'dollarization' in the early 2000s.

“The great lesson of the past dozen years of currency experiments is: Currency union without fiscal union leads to financial crisis and economic depression.

“If Quebec breaks the fiscal union with Canada, it must for its own sake exit the currency union too. Which means that Quebeckers will awake the next day to huge depreciations of their salaries, benefits, and savings.”

A politically sovereign Quebec operating within a common market and currency union with Canada—or, indeed, along with Canada, using the US dollar—is likely a vision beyond the competence of premier-elect Pauline Marois to sell, let alone negotiate. However, worldly David Frum’s contempt for the idea is unconvincing.

Compared to the rest of North America, Quebec isn’t another Spain, Greece, or Argentina. It’s economic potential and technological competence put it closer to the Netherlands and France.

Its human and resource potential is above average on this continent. Sure, it needs a responsible government. But it doesn’t need a fiscal straight jacket or massive IMF loans to manage and finance its public services and infrastructure.

The Great Recession hasn’t killed global capitalism and won’t destroy the eurozone. The survivors are determined to preserve both. No one outside Tory dinner clubs in London imagines that the countries of Northern Europe can’t govern their affairs within the eurozone, along with significant nation fiscal autonomy. On this continent, the collapse of the housing markets in Nevada, California, and Florida didn’t put the US currency union in doubt or lead to socializing the banks.

Of course, it’s verboten to imagine aloud that after a successful pro-independence referendum, embittered Canadian federalists and victorious Quebec separatists could act promptly in their collective interests. However, if Frum looks a little closer at Europe, he might note that winners and losers in half a dozen languages are making massive sacrifices, financially and politically, to preserve the euro and their young federation.

Larry Summers compares Europe’s credit problem with the US

The crisis of confidence in Europe’s political machinery relates to the magnitude of its financial and economic challenges. Winners and losers are easier to manage in boom economies, and small losses easier to forgive than great ones.

Larry Summers offers a neat description of the scale of the euro zone’s credit problem—the amount of money that must be raised and, somehow, someday repaid.

“The second problem is the magnitude of the transfers that could be involved. During the U.S. savings-and-loan crisis, the Southwest received a transfer from the rest of the country equal to at least 20 percent of the region’s GDP. Is there a real willingness to commit to potential transfers of this scale in Europe? Maybe all of this can be resolved, but surely it will not happen quickly.”

Click on: www.washingtonpost.com/opinions/lawrence-summers-avoiding-a-global-catastrophe/2012/06/18/gJQACsBklV_story.html

So, the problem is big, but not unprecedented.

Why is it taking Europe’s leaders longer to resolve this problem? Surely, they are just as smart with money as Americans.

Northern Europe today is as financially strong as Washington was during the S & L crisis. Washington, however, not only had the regulatory authority to protect its long-term interests, its president and congress owed much of their political power—and future political success—to voters in the Southwest. Washington had a common motive as well as the means.

In a crisis, Washington politicians can’t as easily stand back and worry about “moral hazard” and scold those looking for help. (The virtues of “creative destruction” are undeniable and must be mastered if you want to earn a Harvard MBA. But, they are best not raised in Detroit.)

Spaniards don’t vote in German elections. However, Nevadans and New Mexicans help elect US presidents and can decide who has the next majority in the US Senate.