Pubdate: Sat, 28 Feb 2009 Source: National Post (Canada) Copyright: 2009 Canwest Publishing Inc. Contact: http://www.nationalpost.com/ Details: http://www.mapinc.org/media/286 Author: Conrad Black Bookmark: http://www.mapinc.org/decrim.htm (Decrim/Legalization) CANADA'S NEW-FOUND MORAL AUTHORITY With global markets tanking and unemployment soaring, Canadians are pinching their pennies. But as National Post contributors have explained in a week-long series ending today, economic doom and gloom has its upside. In the present economic context, austerity means more savings, more investment and less elective spending on consumable or depreciating assets. It is not as grim a regime as a diet, which requires self-denial. Savings, investment and the growth associated with each can be a good deal more and durably satisfying than prodigious consumption. Where a diet --and, in most cases, austerity -- are the consequences of one's excesses, in Canada, austerity will have little to do with Canadian public policy errors or bad public spending habits. Canadian leaders since Brian Mulroney -- and especially Paul Martin, (one of the outstanding finance ministers in the country's history)--and successive governors of the Bank of Canada, have all shown commendable fiscal prudence. Not so in the United States. The U. S. government, under both parties in the Congress and the administration, deliberately eliminated private savings by reducing interest rates and facilitating home ownership with uncommercial mortgages and encouragements to consumption generally. Canada has as high a percentage of family home ownership as the United States without recourse to financial leger de main. When serious financial problems eventually arose, not only the U. S. banking systems, but those of Britain, France and many other advanced countries, were severely shaken, but not Canada's. No Canadian bank has needed or asked for a bail-out. Stephen Harper and Jim Flaherty had no reason to know how serious a problem non-performing mortgages would be in the United States and elsewhere, and how they could affect Canada. Since the core of the Canadian economy is extracting and exporting natural resources, the recession has entered through the back door of declining demand for our base metals, forest products and even energy. Essentially, Canada need not do much more than roll back natural-resources production by about 10%, and assure that the social safety net is strengthened to provide adequate assistance to everyone in need of it. The fact that austerity is imposed on us by the gluttony of others rather than by our own impetuosity makes it more irritating but less humbling. As Canada enters this crisis with clean hands, it has an opportunity for moral suasion as well as bargain buying. We have the opportunity to use the credibility accumulated by the economic common sense of successive governments to play a larger role in international economic policy making, and to use accumulated wealth to buy back foreign assets in Canada and to invest advantageously in foreign countries. The federal government should, with the co-operation of the provinces and the private sector, establish a fund for acquiring chunks of Canadian industry from voluntary but perhaps hard-pressed foreign vendors, for redistribution, by sale or proration to Canadians. Instead of playing footsie with Castro and Chavez as it has, Canada should play a distinct role in Pan-American affairs by advocating the extension of the North American Free Trade Area (NAFTA), to all politically compatible states in the Americas; and the systematic pursuit of the return of the cheap manufacturing industry from the Far East to the Americas. This could be worked together with the problem of under-documented immigration in the United States, as migrant workers could be more generously accommodated there, or retained in Mexico, as those industries are repatriated to the Americas to employ them. We should explore a common currency zone to embrace most of the Americas and Japan, with possibilities for further expansion. Because Japan is ageing quickly and has national debt worth 180% of GDP, (more than twice the corresponding figure for either the United States or Canada), currency equivalences would have to be calculated carefully. But the present large U. S. trade and debt imbalances would be largely and painlessly absorbed into the America-Pacific currency zone. Canada should assist Mexico and other countries in convincing the United States to abandon its catastrophic war on drugs. Apart from its domestic consequences -- a trillion dollars spent, two million people imprisoned, while over US$25-billion of illegal drugs enter the United States from Mexico each year, and are in more plentiful supply and at lower cost than when this so-called war began -- other countries, especially Mexico, are being torn to pieces. Mexico suffered 6,000 drug-war deaths last year, and the drug gangs number up to half a division of warriors each, with armoured vehicles, rocket-propelled grenades, howitzers and drug-delivery submersibles. It is an illustration of the mad, presumptuous egotism that can be a permutation of American effusion and optimism that it imagines it is the duty of other countries to stop the production of drugs, rather than of the United States to reduce internal demand or at least prevent importation. Such huge volumes of illegal drugs could not possibly enter the United States without the collusion of many corrupt U. S. officials; nor if the U. S. armed forces, and not just a hodge-podge of Homeland Security agencies, were conducting this "war." The United States has fallen into the sloppy habit of declaring "wars" rather cavalierly and then pressuring others to fight the battles for them. In this one sense, it is emulating the Muslim jihad and fatwa. There are absurdly severe sentences for marijuana use, and up to life imprisonment for growing 1,000 plants, yet marijuana is the largest cash crop in California and 40% of Americans are marijuana users at some point. This is nonsense, a caricature of witless American self-importance and a worse fiasco than Prohibition, which didn't significantly reduce alcoholism but delivered the liquor and beer and wine industries into the hands of the underworld. Canada is uniquely placed to tell the United States, in a hemispheric context, that if it wants to reduce domestic drug use, it should try the same methods that it and many other countries have used to reduce tobacco consumption, and in any case, should stop asserting disintegrating pressures on other countries. Canada does not want to become a busybody, and austerity does not usually translate into hectoring neighbours, but as I wrote here last week, eventually the Americas are going to have to group more closely together to counteract economic growth in China and India with a larger market. This hemisphere's strategic objective should be to approach a level of unity that keeps us well ahead, by all relevant indicators, of India and China, with a comparable population. Contrary to the claims of alarmists, this should not be difficult, as China's restriction of procreation to one child per couple, and the terrible complexities of Indian sociology, will prevent those countries from approaching the social cohesion or economic efficiency, much less the wealth in natural resources, of this hemisphere any time soon. Canada's credibility has risen in these travails, and the United States should become accustomed to negotiating with allies and not just raising a flag and expecting everyone to follow. This kind of austerity could be both useful and satisfying. And for individuals, watching positive bank and investment account balances grow can be more pleasing than watching assets, often bought with borrowed money, depreciate. - --- MAP posted-by: Jay Bergstrom