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Book review: “Canada’s Century” by Brian Lee Crowley et al.

The great dilemma of the modern Canadian conservative movement has been its struggle to successfully establish some patriotic narrative of national pride and purpose. Since at least the 1960s, the dominant strain of Canadian nationalism has been identifiably leftist in one form or another, whereby patriotism is generally defined as support for the Liberal Party and its various agendas of socialized medicine, multiculturalism, and cultural subsidies. Conservatives, who tend to be critical of such things, are now saddled with the uphill battle of trying to culturally reorient a country that has been dominated by the ideology of the other side for so very long.

The Canadian Century is an interesting cultural artifact in this regard, as it represents an attempt to link the rising popularity of conservative fiscal principles with a classically Canadian appeal to anti-American chauvinism. In doing so, it presents a new, fairly modest right-wing thesis of Canadian nationalism in which the country’s national purpose is defined as simply being more fiscally conservative than the United States — a goal we are said to be currently achieving. It’s a bold and challenging argument, and will likely be very attractive to many Canadian fiscal conservatives who desire a sense of patriotic identity, yet remain profoundly disillusioned with the government-directed nationalism of the Liberal Party, and find themselves increasingly nonplussed by the agenda of Obama’s America.

Though the idea that Canada’s national identity can be simplified into such a narrow economic goal is somewhat naive and unsophisticated, The Canadian Century is nevertheless an unusually sobering look at the political realities of North America from a perspective we rarely hear. As a book on the fiscal state of the continent, and the challenges that await in the new decade, it may prove enormously prescient.

Four important facts

Authored by a trio of Canada’s leading free-market intellectuals (Brian Lee Crowley, Jason Clemens, and Niels Veldhuis), The Canadian Century is a tome that desperately wants to remind Canadians of four important facts that are either largely forgotten or unfashionable to recall in the present day:

1) Canada had a very, very poorly-run economy from the 1960s to the late 1990s, and in terms of national debt and unsustainable spending, was teetering on “third world” status.

2) The 1993-2003 Liberal government of Jean Chretien embarked on a remarkable agenda of fiscal conservatism to resolve the aforementioned crisis, as did many of the provincial governments of the same era.

3) Canada’s political culture has historically favored small-government and low spending. The left-wing goofiness that dominated the 1960s through 1990s represents an aberration of the national character.

4) The United States has become an extremely fiscally irresponsible country in recent years, and should no longer be regarded as anyone’s role model.

With such points assembled into a cohesive whole, the authors’ conclusion is self-evident: Canada’s destiny, ordained by its historic ideology and America-toppling desires, lies in perpetuating a tradition of fiscal restraint and small government. This is the “Canadian Century” the title refers to, a future in which Canada stands alone as a model of growth and wealth, the proud benefactor of its own sensible fiscal traditions. It will be a country engorged with national purpose.

The fall and rise of conservative Liberalism

For a book with such a decidedly conservative message, its heroes are explicitly non-partisan. Canada’s most celebrated fiscal leaders are both prime ministers from the Liberal Party, an institution whose historically respectable brand is said to have suffered a regrettable decline through a prolonged, failed dalliance with leftism.

There is much hagiography of Sir Wilfred Laurier, the longest-serving of Canada’s Victorian-era prime ministers, and the second Liberal to hold the office. In his day, we are reminded, liberalism was still understood in its traditional sense: a philosophy of high individual freedom and low levels of government involvement in private lives and private commerce. By modern standards, much of Laurier’s agenda was remarkably libertarian: low taxes, low tariffs, minimal regulation, and a vehement distaste for anything resembling welfare statism. Canadians had to sink or swim in those days, but the country was evidently better for it; from 1896 to 1911 Canada was in an undeniable “boom,” with massive urban growth, industrial expansion, and rising global relevance as one of the West’s primary exporters of wheat and minerals.

Laurier-style liberalism was a victim of its own success, however. Having pushed Canada to a comfortable level of wealth, it faded quickly in the aftermath of two world wars, and by the 1970s had been superseded altogether by the left-liberalism of Pierre Trudeau. In the interventionist fashion of the time, Canada proceeded to ratchet up spending, welfare, and protectionism, with the predictable consequences of high debt and taxes, as well as a new social culture of dependency and entitlement.

The extraordinarily horrifying consequences of Canada’s unrestrained decades of fiscal incompetence cannot be understated, and The Canadian Century does a good job of bluntly reminding its readers just how awful things had become by the mid 1990s. In 1993, Canada’s national debt represented a full 80% of the country’s GDP, teetering the national credit rating on the precipice of total collapse. A full one-third of all tax revenue was used simply to pay down debt-related interest payments, yet government spending continued to rise with blissful indifference. Canadians were paying a high price for this, of course — the income tax rate, in some cases, was over 50% — yet they were also taking in large amounts: an astonishing 12% of Ontarians, denizens of Canada’s richest province, were on welfare as of 1994.

Whatever Greece analogies you may be thinking of are completely apt.

It was in this context of undeniable looming doom that Canada saw the dawn of what The Canadian Century‘s authors somewhat mawkishly refer to as the “Redemptive Decade.” The exact stats are probably not worth hashing over in too great detail, but suffice it to say, shortly upon taking office in the mid ’90s, the Liberal government of Prime Minister Jean Chretien and his long-suffering finance minister, Paul Martin, quickly realized the crippling magnitude of Canada’s fiscal disorder and moved swiftly to correct it. Things were cut, things were lowered, and things got better very quickly. Deficits turned into surpluses, Canadians got off welfare and back to work, and The Economist began writing cover stories about the northern miracle.

The Liberal Party became far less identifiably left-wing during this intense era of unabashed fiscal conservatism, but the results seemed to speak for themselves. Canada had gone, the authors triumphantly proclaim, “from a fiscal basket case to the envy of the industrialized world.”

And envy of the world is very much Canada’s natural status, they say. Much as we may like to believe Canada is a nation defined by its ample welfare state and spend-happy government, the Martin-Chretien era was really far more in tune with the country’s historic traditions than the flamboyant Keynesianism of Pierre Trudeau — airports and fawning biographies notwithstanding.

Is America the new Canada?

It’s in this context of economic self-congratulation that The Canadian Century addresses its second major theme, perhaps best described as a treatise of economic schadenfreude against the United States. While Canada has succeeded in reducing its tax, debt, and spending burdens to manageable levels, the United States “has generally failed to achieve reforms that come even close to matching those achieved in Canada.”

This unto itself is a fairly novel line of argument: how often does one hear the case that Canada has actually bettered the US in terms of competitive tax rates and reining in the welfare state? But the statistics presented are a sobering example of how reality often inconveniently defies popular myth.

In the realm of health care, for instance, even before the costly Obamacare reforms, the United States of America still greatly outspends Canada in the maintenance of its existing publicly-funded regime. As a percentage of total GDP, Canadian health spending hovers around 10% of our gross domestic product, while in the States, most recent estimates peg the number at somewhere near 16%. A side-by-side analysis of other entitlement programs reveals much the same story. US state pensions are far more generous than their Canadian equivalents, for instance, and no American government has yet had the courage to scale back Social Security benefits the way the Chretien administration did in 1998.

The US tax system is also noticeably more socialist than Canada’s, and is only ever reformed in a direction of increased vindictiveness towards the wealthy and successful. Tea Party rhetoric aside, ordinary Americans are simply not taxed very much, yet reap enormously disproportionate benefits funded almost entirely by angrily soaking the country’s richest 20%. The United States engages in a very crude system of taxing large corporations and the wealthy to the virtual exclusion of everything else, particularly consumption. Canada, in contrast, has steadily sought to drift the tax burden away from high incomes and the corporate sector and onto individual purchases, mainly though sales taxes. Though hated by the public, such taxes are enthusiastically applauded by a grateful private sector, who celebrate them as a boon to productivity.

The most sobering comparison of all, however, and the most iconoclastic to America’s reputation as a cold-hearted, state-starving miser, is a a chart on page 137 revealing that there is in fact no practical difference whatsoever between Canada and the United States when it comes to government spending. Under the Obama administration, state spending as a percentage of GDP has sharply risen to an all-time high of 41% compared to Canada’s 43% (which actually represents a fairly significant low for the latter).

So who’s better?

There are conclusions to be drawn from all this, and the authors would very much like them to be flattering statements about Canada’s growing competitive advantage over the United States, and America’s concurrent decline into the basket case status that Canada worked so hard to escape. But such conclusions are not so easily reached, in large part because the Harper government has done little to continue, or even consolidate, the gains of his Liberal predecessors.

Surpluses, for instance, one of the most celebrated victories of the “Redemptive Decade,” quietly disappeared from Canada’s 2009 budget in favor of a dramatic increase in spending, ostensibly for recession-fighting stimulus purposes. Though supposedly only a temporary measure, Ottawa’s forecast nevertheless predicts deficit spending to continue for at least another six years. The authors blame a lot of this on the fact that Harper controls only a minority of seats in the House of Commons, but it’s similarly true that the present administration has shown little courage in making significant cuts to the size or scope of government, which, all things considered, is still absurdly large and wasteful. (As Andrew Coyne reported recently, the “grants” section of the Public Accounts of Canada takes up over 280 pages).

In short, though an ample gap of difference existed between Canada and the United States at the beginning of the decade, it seems to be one that is rapidly closing. “There is substantial risk that current federal policy will undo the fiscal reforms of the Redemptive Decade,” the authors say at one point, and nearly contradict their book’s entire upbeat thesis in doing so. Though America may very well be permanently crippled by its “economic straitjacket” of unmanageable spending and unaffordable entitlements, Canada faces handicaps of its own that are just as difficult to weasel out of. Indeed, it is the very spirit of nationalism that The Canadian Century so eagerly tries to stoke that may impose the harshest toll on Canada’s ability to pursue a long-term agenda of rational self-interest.

The costs of nationalism

Canada’s extravagant, state-run health care, for instance, is identified in The Canadian Century as the country’s “great unreformed entitlement program” of which no significant effort to rein in cost or efficiency has been made by any government since the program’s introduction. As of 2008, 44% of all provincial spending is presently being devoted to the propping up of health care and nothing else, a trend that threatens to turn provincial governments into single-service entities within a decade or two. Devoting only two-and-a-half pages to the matter, the book treats this topic somewhat casually; a serious problem, but surely one we’ll get around to solving someday. But the reason we haven’t, of course, is that modern Canadian nationalism has built an enormous cult of patriotic worship around the very notion of “free health care,” on a scale no other entitlement program has ever enjoyed. When Canadians name Tommy Douglas as their greatest citizen and medicare as their proudest national symbol, it becomes impossible for any political party in this country to even broach the subject of free-market reforms, no matter how desperately needed.

It’s similarly worth remembering that the only reason we care so much about health care in the first place is because it’s perceived as something that distinguishes us from the Americans, and it’s this passion for distinctness at literally any cost that reveals our somewhat psychotic predisposition for irrational policy.

Though The Canadian Century promises to liberate Canada from the shameful darkness of “America’s Shadow,” the American shadow is not easily escaped, in part because, as the authors unambiguously state, Canada and the United States presently function as “a single economic entity.” The need to escape America for patriotic reasons, while simultaneously embrace it for economic ones, forms the central dilemma of Canadian existence, and has historically proven itself to be a rather powerful motivator of economic madness.

Free trade is perhaps the most quintessential example. For a country that sends upwards of 80% of its exports across its southern border, unrestrained trade with the United States is a policy that has been celebrated by centuries of economists as one of the most self-evident recipes for greater Canadian prosperity. Yet it’s also been one of the most fanatically opposed by the Canadian people themselves.

For all his patriotic celebration in The Canadian Century, it’s worth noting that Prime Minister Laurier was actually one of the most high-profile victims of a typically Canadian bout of economically ignorant nationalistic insanity, a topic the book gently brushes over. Championing free trade with the United States in 1911, with the enthusiastic support of the Taft administration, Sir Wilfred was accused by the Conservative party and its media allies of orchestrating Canada’s annexation and subjugation at the hands of the hated Yankees. “Reciprocity today, annexation tomorrow,” etc. In the ensuing general election, the PM was solidly thrown from office.

The Prime Minister’s main crime was his supremely logical belief that Canada’s economic future lay in expanding ground-based trade with the country on its southern border, rather than shipping goods across the Atlantic Ocean to London, as many nationalists, evidently more partial to the make-believe advantages of imperial solidarity than real-world material prosperity, desired. His devastating loss provided the patriotic justification for a prolonged, and depressingly popular phase of imperial preference, protectionism, trade diversification, and other hopeless attempts to deny Canada’s North American economic destiny.

When free trade did eventually come to this continent an astonishing 77 years later, it’s worth remembering that even then the Canadian people still significantly voted against it. Though Brian Mulroney won a large majority government on his single-issue campaign in favor, his share of the popular vote was only 43%. Given the choice, most Canadians fearfully gave their support to the anti-trade Liberals and NDP, whose campaigns featured frightening images of vanishing borders and for-profit health care.

Anti-Americanism remains the central dilemma of Canadian economic self-interest, and the muddled way The Canadian Century chooses to address the topic does not give one hope that it is a problem we have the capacity to overcome anytime soon. For instance, though escaping the American shadow implies some degree of sovereignty, the authors still state without irony that “the border represents perhaps the single greatest threat” to secure maximum gains for Canada, and that “retreating from deeper integration with the Americans is simply not available as a choice” unless we want to suffer a “wrenching decline in our standard of living.”

To such statements, one could quickly draw a fairly logical conclusion: there should be no border at all, though the Canadian mind is not programmed to fathom such heresy. Whether or not such a treasonous idea is practical or feasible is obviously highly debatable, or at least it would be, if anyone had the courage to debate it in the first place.

Instead, the authors propose the usual sort of backdoor shenanigans, such as a jointly-run border commission or a continental judicial branch to impose nation-state type policies on a binational polity. This is the kind of stuff that feeds into the wildest conspiracy theories on both sides of the border, of course, aggravating both America’s extreme nativist right and Canada’s crazed socialist left. Both groups, not without justification, fear the consequences of transferring the fate of the continent from the hands of traditional democratic institutions, and into the hands of a new shadow class of EU-style technocrats. Since all three authors are comfortable members of this class already, their failure to contemplate any type of populist pushback against bureaucratic continental integration is unsurprising, but revealing.

A failing America, in any case, is useful to Canada only in the sense that many American corporations may be more likely to relocate north, or that wealthy Americans will elect to invest more heavily in Canadian industry. Such scenarios seem destined to ruffle more than a few nationalistic feathers. A new era of protectionism, spawned by an unholy alliance of threatened Canadian businesses and various “cultural leaders” who simply dislike American brands, seems entirely possible.

Learning to succeed despite ourselves

If Canada is to embrace a style of conservative nationalism separate from the increasingly anachronistic traditions of Toryism and monarchism, the country could probably do worse than the novel strand offered by Mssrs. Crowley, Clemens, and Veldhuis. As a Conservative strategy for electoral success in the age of Harper, The Canadian Century‘s philosophy of economic responsibility as a path to national greatness may serve even better, and certainly offers an attractive counter-narrative to tired Liberal tropes of patriotism through ever-more government.

As an attempt to resolve the fundamental contradictions of the Canadian polity, however, The Canadian Century is a work far too timid and conventional to sit alongside some of the great books on the subject, including, it should be noted, the far more ambitious Fearful Symmetry, authored by one of Century‘s co-writers.

It is not hard to convince a Canadian that taxes should be lowered or that governments should not spend more than they take. Much more difficult, however, is convincing the populace that state-funded health care is not a fundamental right, or that this country’s future is inseparably tied to ever-closer integration with the United States — and not smug rejection of it. The question as to what extent Canadian interests are being actively harmed by Canadian nationalist mythologies is an important one, and one that must be addressed in any serious effort to prepare the Canadian economy for 21st Century greatness. Merely trying to divert that nationalist energy to more productive ends is not good enough.