Everything That’s Old Is New Again

Frontier Centre, Uncategorized, Worth A Look

Reflecting upon the 70th anniversary of Canada joining the Second World War last week, I couldn’t help wondering how well pleased veterans were by the way things had gone since for the old Dominion. The Canada of 2009 is not the Canada of 1939, and many of the least appreciated changes are attributable to one Pierre Elliott Trudeau, a political parvenu who had not exactly stood shoulder-to-shoulder with them when it mattered.

But, it is the nature of the pendulum to swing. A fascinating new book hits the stores this week proclaiming that what has been sold for 50 years as authentic Canadian values–the socialist vision of an enlarged state with enlarged budgets and taxation, of which Trudeau was the most articulate proponent–is doomed by demography. In Fearful Symmetry: The Fall and Rise of Canada’s Founding Values, Brian Lee Crowley argues the qualities which established Canada in the first place are on their way back, and will invigorate the country.

Crowley says Ottawa’s anxiety lest baby boomers find themselves unemployed, and the forces of Quebec separatism, made worse by unemployment, would send the province spinning off into the St. Lawrence, have been overtaken by events. Fears a generation will be jobless have been replaced by uneasiness that there may not be enough workers to replace baby boomers: This will force wages higher, taxes lower (to improve incentives,) and incent policies that favour families.

Meanwhile, Quebec’s demographic decline, and its dependence on the rest of Canada to pay for its full-blown socialism, will diminish its leverage within Confederation. Crowley speaks of the end of the bidding war between Ottawa and Quebec City for the hearts of Quebecers.

Why is it the end? Because Quebec’s population is becoming a smaller fraction of Canada’s year by year–and because the centime is dropping there, that threatening the person who’s bankrolling your habit that you’ll quit unless he gives you more doesn’t work forever, and also that without Ottawa’s contributions, Quebec-libre will have the fiscal ability of Burkina Faso to provide government services.

Crowley’s name may be familiar to Herald readers, as an occasional contributor. A time-served academic, founding president of the Atlantic Institute for Market Studies, and for a brief shining moment a one-man think-tank within Finance Canada, Crowley has a gift for cutting to the core of an argument with an apt phrase or a telling anecdote.

“One gets more of the behaviour one rewards,” he told me darkly in an interview years ago, to explain how well-intentioned attempts to give provincial governments comparable abilities to deliver services had the perverse consequence of rewarding fiscal recklessness in have-not
provinces. For instance, if borrowing does not affect equalization entitlement, but tax increases are clawed back by Ottawa, why not borrow? Why tax?

Likewise, regionally generous EI qualification distorts the labour market: Why move for work, if the government makes it easy for you to stay? Crowley relates how when Liberal Leader Michael Ignatieff heard this analysis when Crowley presented it at the Harvard Canada Seminar in 2005, he was “sympathetic.” Not so much anymore, it seems.

Fifty years ago, the dangers of unemployment and separatism were believed in good faith by policy-makers. They responded with centrally administered programs to bind citizens tightly to Ottawa, especially Quebecers. The “bidding war” was the result, and with it the centralized state that flourished–or metastasized, as some of us prefer –under Trudeau’s stewardship. But, says Crowley, we got the problems wrong, and the solutions government chose undermined the country’s work ethic.

The good news is the old excuses for statist intervention are evaporating. It is time to rewrite the incentives, to reward hard work and to reap the reward demography offers.

No, the Red Ensign isn’t coming back. But a country where effort and reward are better matched, and where government doesn’t reach quite so far into your pocket, is available. We must just choose it, says Crowley: His book provides all the reasons to do so.