Our Free Market Past

Commentary, Michel Kelly-Gagnon (historic), Role of Government, Uncategorized

Now that the United States and Canada are through celebrating their national holidays, and the official images of the two countries are fresh in our minds, a look back might help shape our perspectives.

Two years ago, Americans celebrated the bicentenary of the famed Lewis and Clark expedition of 1803 to explore the Northwest. This expedition was funded by the U.S. Congress, at the request of President Thomas Jefferson. Few people know that, whereas the U.S. government subsidized its westbound explorers, the Canadian West was explored by a private expedition paid for by private interests. Indeed, in Canada, during the 1770s, the North West Company and fur traders such as Alexander Mackenzie were moving their way to the Canadian West in search of profit, and without government money.

I think there is great symbolism to be found in that story. It contradicts the notion that U.S. history is all about private initiatives, and that Canada’s history is nothing but a long succession of heavy government interventionism. This is simply not true. Actually, for many years, in many areas, it was the other way around. More and more distinguished scholars are showing us that it is a fabrication of our nationalist elites (and I mean both Canadian and Québec nationalists) that you cannot be a “real Canadian” or a “real Québecer” if you are opposed to statism and big government.

In fact, until the 1960s Canada had quite limited government. And, in many areas, it was more limited than the government of our neighbour to the south. Indeed, a quick survey of the last 100 years shows it was frequently the Americans who led the way with interventionist policies, with Canadians following afterwards.

Here are just a few examples:

  • The United States created a central banking system in 1913. In Canada, that didn’t happen until 1935.
  • The Americans started collecting income tax in 1913. Canada didn’t start confiscating income until 1917.
  • Sir John A. Macdonald’s National Policy of imposing tariffs on imports was actually inspired by the Americans.
  • The same is true with government subsidies for railway construction.
  • Franklin Delano Roosevelt started enacting his big-government New Deal programs in 1933. In Canada, those kinds of reforms weren’t initiated until several years later, and did not go as far.
  • The Great Society programs of Lyndon Johnson began in the mid-1960s, which inspired Pierre Trudeau’s “Just Society” in Canada in the late 1960s.
  • You can find more details about those examples, and others, by reading William Watson’s great book, Globalization and the Meaning of Canadian Life, published in 1998 at U of T Press.

    Now, it is obviously a fact that in today’s Canada taxes are high, the unions are strong (especially in Québec) and you have powerful interest groups who will fight any attempts at change. It is also undeniable that, under most indicators, governments in Canada (especially when you compare provincial governments with state governments) are bigger today than they are in the United States.

    But what needs to be challenged is the claim that interventionist government, high taxes, protectionist policies and socialized medicine constitute the very fabric of our national identity. We should not accept any more the notion that anyone who believes that less government is economically beneficial as well as morally justifiable is, de facto, trying to Americanize Canada and, thus, would be some sort of traitor to the Canada nation. The reality is that this so-called “Canadian identity” based on government compassion (or socialism, to speak more clearly) was only invented in the 1960s and ’70s.

    It may seem hard to believe today, but Québec itself had one of the least interventionist governments on the continent until the Quiet Revolution. For example, when Roosevelt launched his New Deal there was consternation in Québec. Louis-Alexandre Taschereau, the Liberal premier at that time, referred to it derisively as “a socialistic venture bordering on communism.”

    And, despite all the propaganda to the contrary, there is still a strong tradition in Québec that favours individual liberty, personal responsibility and free enterprise. You won’t see this if you only listen to the political or media establishment. But polling data tell us a different story. Consider the following:

  • A Léger Marketing poll from Jan. 29, 2004, found that 70% of Québecers wanted the Charest government to keep its promise to cut taxes, even though the media and every pressure group in the province were unanimously saying the opposite.
  • A poll released on Nov. 11, 2004, showed almost half of Québecers would support a flat tax. This result is especially remarkable given that not a single political party in the province is promoting such an idea.
  • On June 1, 2004, a poll showed that 51% of Canadians—and 68% of Québecers—would accept allowing citizens to buy private health services for faster service, so long as the public system was maintained.
  • All this is to say that free-market ideas are part of our Canadian heritage and of our Canadian identity. It’s something to be proud of. And it’s about time we started explaining to our fellow citizens, with patience, passion and reason, that you can be a true Canadian while wanting to reduce government control over our lives.

    Michel Kelly-Gagnon is President of l’Institut économique de Montréal, a sister think-tank. This article originally appeared in The Financial Post on July 6, 2005.