Monday, March 31, 2008

Canadian Economic Hegemony In North America... It's Not A Dream

Of the three North American "powers" (the US, Canada, and Mexico) one can argue - with good reason - that Canada is economically the strongest, is richest in raw resources, and has the best infrastructure to support continued economic growth...

The United States - I've argued in past blogposts - is in a state of "post-colonial decline" similar to what the United Kingdom experienced in the 50s and 60s. Leaders of the US are mortgaging the nation's future on low taxes. This is meant to do two things: 1) win votes and 2) as an incentive for economic growth, encouraging investment in the American economy... On the first count the neoCons are probably doing alright. It's easy to win votes by promising less taxes. The problem is that there is a lack of economic education among the voting population. There is a mistaken belief that less taxes are better for you. Sure, if you're independently wealthy you don't mind a "user-fee environment"... but, for the average Joe, the dollars you spend on taxes, combined with the taxes of millions of others, go a LONG WAY in building infrastructure and providing much-needed services. It's a concept the right just doesn't get. Personal and corporate greed surpasses reason.

On the second count - lower taxes to "stimulate the economy" - the right is completely wrong. Particularly in America's case. Lower taxes certainly help individual consumers - for a bit. They even help fuel investment binges like the real estate "bubble". The dark side of lower taxes is the purging of government coffers by "small government" zealots who dismantle much of the government and national infrastructure systems in the slim hope that "private enterprise" will replace it (don't mention "profit motive" to these folks). The results in the US speak for themselves: Low interest rates caused the housing "boom" and eventual "bubble". Infrastructure suffers - or doesn't exist. No medicare. An appallingly high percentage of Americans have no health insurance. They pay cash to see a doctor or visit a hospital (up front please).

America has another problem that the unrestricted tax cuts can't compete with - or prevent. That is the outsourcing of everything from America. Why would anyone set up a factory or branch plant in the US, when Mexico - with it's cheap labor - is right next door; when Canada - with our universal healthcare - is right next door. The two American neighbors have some key competitive advantages (that need to be exploited, in our case - as we'll discuss later). Still more frightening for the US is the shift to India and China as major markets.

It is in this environment that the Yanks have decided lower taxes are the key - that, and the fact that the low tax mantra attracts voters - short term gain for long term pain (in reality). Like the UK in the 50s and 60s, America is producing inefficient, subpar products. The "bell-whether" for this is the US auto industry. Like the UK industry in the 50s, the Americans are about 5 years behind the rest of the world. Quality lags. Fuel efficiency is not a focus. Go to the UK today, and see what kind of cars - and even trucks - grace the roads. The vehicles are efficient, small, and many are powered by small diesel engines.

The US auto industry is not the only one. In the 60s and 70s American brands like RCA, GE, and Magnavox ruled the TV and electronics world. Nowadays these brands are laughable at best, and all manufactured in Asia or Mexico.

America's culture has become a culture of excessive consumption, with people buying corporate and social "logos". Children living in impoverished neighborhoods find ways to spend hundreds of dollars on the latest NFL or NBA jersey (made in China, of course).

America has done nothing to stop the rot. Europe was able to bring forth incredible social programs, government regulations of industry, and infrastructure projects to save those economies post-WW2. America has not done the equivalent. America has turned a blind eye to the rest of the world, to see how the economic success materialized. Post-war Germany didn't become an economic power by accident. There was careful social construction involved. That meant government "interference" - the kind that neoCons the world over do not like. European governments took time to build infrastructure, educate their populations, and support domestic industry (through medicare and social programs).

America has neglected infrastructure by relying on private contractors - who tend to only develop where there is money - not outlying areas that need to be developed. Having lived in North Dakota, I can attest to the primitive standards for internet and telecommunications in that state, Montana, and even rural Minnesota, when compared to Saskatchewan - where publicly funded and operated crowns developed a sparsely populated province.

The US has also neglected education. America's standards of education are below those of many so-called 3rd World countries - including India, China, and even - surprisingly or not - Cuba. Why is America's education system so primitive? They've sapped the public system by focusing on private education - including Universities. Most American students are challenged with maps of their own country - let alone the rest of the world (or even their immediate neighbors).

Well, enough about the hapless state of our Southern neighbors. What makes Canada different (so far - keep praying Harper doesn't have his way)? We have universal medicare, first of all. Our universal healthcare system - warts and all - is a HUGE competitive advantage that we fail to exploit. Past governments (read: Liberal) did indeed promote our healthcare system around the world, as a benefit to companies relocating here. The current Conservative government is caught in the American trap, and does nothing but bash Canadian health care. Wait until they start dismantling it for their much-touted P3Ps... (public/private/partnerships). Harper can't wait to get a majority so he and his Alberta cronies can dismantle our universal system. They'll do it by continuing to criticize the system we have until public apathy and concern leads to a change - any change... Just change it!

Canada has another big advantage over the US: We are not dogmatically anti-tax, or anti-government-funded development - well, at least not yet (let the Conservatives have a few years)... While our conservative-controlled/owned media bashes public institutions, our people still realize what good public development has done.

Canada is a young nation. Our resources are fairly less used and abused. Not saying that we should exploit these, but we do have more available. Our infrastructure is also young - comparatively speaking. We have no "evil" image in the world... We're actually still well-known the world over for our peacekeeping efforts. We haven't created a lot of enemies, and haven't become a part of any coalitions within which we stand out (with the exception of the recent Afghan "Mission" - although this is UN Sanctioned).

Given the well-liked state of Canada in the World, and our relative economic strengths, what would it take for us to surpass America as North America's strongest economy? Yes, it can happen. First of all, we'll need to grow. Not the slow population growth which is barely countering our death rate. We need to grow this country to roughly 75 to 100 million. We need to create conditions which urge part of the population of new immigrants to settle in the resource-rich Northern areas. Northern development will bring new growth. New growth will bring more newcomers. It's how the Prairies and the West were opened in general. The West too was known as a barren wasteland (but rich in agricultural land and resources) when Canada saw it's first major growth phase.

Maintaining Canada's "positive" stance in the World is also critical. We attract settlers with our conciliatory approach to World politics. We are appreciated for our relative neutrality and balance. We need to "fix" things here, though, as the Harper government - tied to Bush's Republic extremists - has somewhat ruined our reputation in some parts of the world.

We also are actually far behind the US in attracting foreign "minds" (ie foreign students) to Canada. There is currently an immigration competition going on between Western powers, to see who can attain the most Indian and Chinese engineers, scientists, and IT people. We risk falling behind, or completely out of the equation. Foreign students are actually "foreign direct investment", as they pay full for their studies, AND they pay much more than Canadian students. Our education system is far superior to the US' system, so we should have no problem attracting the students. Our immigration policy has to allow for more students, and advertise the benefits of study in Canada. It's that simple. We also need to work on expanding our schools, however. We need space for both domestic and foreign students. We also need to make provisions for the students to become citizens. With enough foreign student funding, we could make free university education a reality for Canadian students (this is the WesternGrit plan for Free Education in Canada)! With some of the best education available anywhere in the world, we can be the final destination point for many a scholar - and it never hurts to raise the national IQ. Great nations take great minds to grow. In Britain and America's heyday, it was scientists, engineers, legal scholars, and philosophers that drove national dreams and national growth. Nations like India and China have the world's highest per-capita numbers of scientists and IT experts - which is really the driving source behind their growth. We need our "skilled workers", but if we neglect to grow our intellectual classes our nation will suffer for it.

For the most part, a simple infusion of bright young minds and skilled workers, proper funding of infrastructure (including educational infrastructure), real urban investment, and environmentally-minded resource development, will result in a fast growing Canada. A climate of innovation driven by bright minds from differing backgrounds and worldly experience. Add to that liberal democratic values, with a system that can both "infrastructurally" and socially support the new populations. It's a simple formula, that has worked for nations in the past, and continues to work today.

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