Wednesday, December 07, 2011

THE HARPER GOVERNMENT’S BOGUS CASE FOR A BORDER DEAL WITH THE UNITED STATES: CHECK OUT THE NUMBERS

Stephen Harper and Barack Obama are announcing A Canada-U.S. border deal at the White House today.

It is being presented to Canadians as an agreement that will yield greater access to the American market for Canadian exporters in return for the harmonization of Canadian security arrangements with those of the U.S. The idea is that we will benefit economically while satisfying the Americans that we are solid on the all-important issue, for them, of national security.

The Harper government makes case that the deal is necessary because Canadian exports have been and are being hampered by the thickening of the border since the terror attacks of September 11, 2001.

The case that Canadian exports to the U.S. have been harmed since 9/11 as a consequence of the implementation of new American security measures at the border is entirely bogus.

Let’s examine the facts:

In 2000, Canada exported US$230.8 billion worth of goods to the United States. In 2001, the year of the terror attacks, Canadian exports to the U.S. declined to US$216.2 billion. In 2002, there was a further decline in the export total to US$209.1 billion. The following year, however, the decline in Canadian exports to the United States halted and from 2003 through 2008, exports to the U.S. increased dramatically. In 2003, exports were worth US$221 billion; in 2004, US$256.3 billion, well above the total in 2000. In 2005, Canadian exports to the U.S. soared to US$290.3 billion, sixty billion dollars higher than the total for 2000. From there, the upward progress of Canadian exports to the United States continued unabated-----to US$302.4 billion in 2006 and US$317.1 billion in 2007, reaching a record high of US$339.4 billion in 2008. At this point, Canadian exports to the United States had soared by more than one hundred billion dollars a year above the figure for 2000. Clearly American security arrangements at the border were not holding Canadian exports in check.

In 2009, however, the value of Canadian exports to the U.S. plunged by US$113 billion dollars, to a total of US$226.2 billion, a savage drop that had vast implications for the future of the Canadian economy.

The reason for the plunge, of course, had everything to do with the great economic crash of 2008. It had absolutely nothing to do with post 9/11 U.S. security arrangements at the border.

In 2010, Canadian exports to the U.S. climbed back to US$277.6 billion, up just over fifty billion dollars from the previous year, but still over sixty billion dollars less than in 2008. While the pace of Canada’s exports to the U.S. was somewhat higher for the first half of 2011 than in the same months of 2010, the slowing pace of U.S. growth in the second half of 2011 threatens the level of demand for Canadian commodities. (The falling price of oil and the drop in the value of the Canadian dollar reflect the market’s assessment of these trends.)

When we examine the exports of Canadian products, overwhelmingly to the U.S., sector by sector, the picture becomes even clearer. The value of energy exports peaked in 2008 at C$125.7 billion. In 2010, energy exports were worth C$90.8 billion. The falling price of oil threatens to prevent a recovery in this sector. The export of automotive products peaked in 2006 at C$81.9 billion. In 2009, the export of automotive products had plunged to C$43 billion, recovering somewhat to C$56.8 billion in 2010. Exports of industrial goods and materials, made up of metals, metal ores, chemicals, plastics, fertilizers etc. peaked at C$111.3 billion in 2008, dropping sharply to C$79.1 billion in 2009 and recovering to C$96.5 billion in 2010. Forest products exports were at C$33.4 billion in 2006, plunging to C$19.5 billion in 2009 and recovering somewhat to C$21.9 billion in 2010.

While Canada has continued to have a positive balance of trade with the U.S., the Canadian surplus has plunged from a peak of US$78.3 billion in 2008 to US$21.6 billion in 2009 and US$28.5 billion in 2010. That dramatic decline has led to Canada running an overall trade deficit in goods with the rest of the world as a whole, something which has been very rare in previous decades. The overall impact of this shift is reflected in what has happened to Canada’s Current Account (balance of international payments). In 2006, Canada had a surplus in its Current Account (with the rest of the world) of C$20.5 billion. The following two years the Current Account remained in surplus, C$12.8 billion in 2007 and C$5.3 billion in 2008. Then came the plunge to a Current Account deficit of C$45.2 billion in 2009 and C$50.9 billion in 2010.

The weakness of the U.S. economy has led to the dramatic results spelled out above.

Canada is at a crossroads in its economic course, a critical historical moment. And there is precious little relevant attention to this among politicians in all political parties and the media to these developments.

The Harper government’s strategy is to promote tar sands exports and the construction of a pipeline to carry tar sands oil to be refined south of the border. Along with this, the Harperites are pushing a comprehensive border deal with the United States. The deal to be unveiled in a few weeks includes plans to share security-related information about Canadian citizens and residents with American security agencies. For the deal to be implemented, according to a report released by the Rideau Institute, “Canadian privacy laws will need to be violated or weakened”. At stake is Canadian sovereignty as Canada takes a giant step toward inclusion within an American continental security perimeter.

The Harper government will attempt to sell this agreement as necessary for Canada to enhance its exports to the U.S.

As has been shown here, the weakening of Canadian exports to the U.S. has everything to do with the economic crisis in which the United States now finds itself and nothing to do with the security measures being taken at the border by the U.S. since 9/11.

The border deal will share information about Canadians with Uncle Sam, making it more likely that in the future there will be additional tragedies such as the one that befell Mahar Arar in 2002. The Americans still have not taken Arar off their watch list.

What we urgently need is a debate about Canada’s economic future. The Harper government is leading us into a dead end, emphasizing tar sands exports and an intensified effort to bet our future on the markets for Canadian commodities south of the border. For this country to succeed in the 21st century, Canadians need to face the twin realities of climate change and peak oil. Canada will succeed or fail depending on how it faces the challenges of rebuilding our cities, transportation systems and energy delivery systems. We need to establish new industries in a host of fields and to rethink our trading strategy with the rest of the world, not betting everything on deals with the Americans.

Instead of fostering the needed debate, the Harper government is tying us every more tightly aboard the chariot of a declining superpower.

Sunday, September 25, 2011

THE HARPER GOVERNMENT’S BOGUS CASE FOR A BORDER DEAL WITH THE UNITED STATES

The Harper government has been negotiating a comprehensive border deal with the United States. It is being presented to Canadians as an agreement that will yield greater access to the American market for Canadian exporters in return for the harmonization of Canadian security arrangements with those of the U.S. The idea is that we will benefit economically while satisfying the Americans that we are solid on the all-important issue, for them, of national security.

The Harper government makes case that the deal is necessary because Canadian exports have been and are being hampered by the thickening of the border since the terror attacks of September 11, 2001.

The case that Canadian exports to the U.S. have been harmed since 9/11 as a consequence of the implementation of new American security measures at the border is entirely bogus.

Let’s examine the facts:

In 2000, Canada exported US$230.8 billion worth of goods to the United States. In 2001, the year of the terror attacks, Canadian exports to the U.S. declined to US$216.2 billion. In 2002, there was a further decline in the export total to US$209.1 billion. The following year, however, the decline in Canadian exports to the United States halted and from 2003 through 2008, exports to the U.S. increased dramatically. In 2003, exports were worth US$221 billion; in 2004, US$256.3 billion, well above the total in 2000. In 2005, Canadian exports to the U.S. soared to US$290.3 billion, sixty billion dollars higher than the total for 2000. From there, the upward progress of Canadian exports to the United States continued unabated-----to US$302.4 billion in 2006 and US$317.1 billion in 2007, reaching a record high of US$339.4 billion in 2008. At this point, Canadian exports to the United States had soared by more than one hundred billion dollars a year above the figure for 2000. Clearly American security arrangements at the border were not holding Canadian exports in check.

In 2009, however, the value of Canadian exports to the U.S. plunged by US$113 billion dollars, to a total of US$226.2 billion, a savage drop that had vast implications for the future of the Canadian economy.

The reason for the plunge, of course, had everything to do with the great economic crash of 2008. It had absolutely nothing to do with post 9/11 U.S. security arrangements at the border.

In 2010, Canadian exports to the U.S. climbed back to US$277.6 billion, up just over fifty billion dollars from the previous year, but still over sixty billion dollars less than in 2008. While the pace of Canada’s exports to the U.S. was somewhat higher for the first half of 2011 than in the same months of 2010, the slowing pace of U.S. growth in the second half of 2011 threatens the level of demand for Canadian commodities. (The falling price of oil and the drop in the value of the Canadian dollar reflect the market’s assessment of these trends.)

When we examine the exports of Canadian products, overwhelmingly to the U.S., sector by sector, the picture becomes even clearer. The value of energy exports peaked in 2008 at C$125.7 billion. In 2010, energy exports were worth C$90.8 billion. The falling price of oil threatens to prevent a recovery in this sector. The export of automotive products peaked in 2006 at C$81.9 billion. In 2009, the export of automotive products had plunged to C$43 billion, recovering somewhat to C$56.8 billion in 2010. Exports of industrial goods and materials, made up of metals, metal ores, chemicals, plastics, fertilizers etc. peaked at C$111.3 billion in 2008, dropping sharply to C$79.1 billion in 2009 and recovering to C$96.5 billion in 2010. Forest products exports were at C$33.4 billion in 2006, plunging to C$19.5 billion in 2009 and recovering somewhat to C$21.9 billion in 2010.

While Canada has continued to have a positive balance of trade with the U.S., the Canadian surplus has plunged from a peak of US$78.3 billion in 2008 to US$21.6 billion in 2009 and US$28.5 billion in 2010. That dramatic decline has led to Canada running an overall trade deficit in goods with the rest of the world as a whole, something which has been very rare in previous decades. The overall impact of this shift is reflected in what has happened to Canada’s Current Account (balance of international payments). In 2006, Canada had a surplus in its Current Account (with the rest of the world) of C$20.5 billion. The following two years the Current Account remained in surplus, C$12.8 billion in 2007 and C$5.3 billion in 2008. Then came the plunge to a Current Account deficit of C$45.2 billion in 2009 and C$50.9 billion in 2010.

The weakness of the U.S. economy has led to the dramatic results spelled out above.

Canada is at a crossroads in its economic course, a critical historical moment. And there is precious little relevant attention to this among politicians in all political parties and the media to these developments.

The Harper government’s strategy is to promote tar sands exports and the construction of a pipeline to carry tar sands oil to be refined south of the border. Along with this, the Harperites are pushing a comprehensive border deal with the United States. The deal to be unveiled in a few weeks includes plans to share security-related information about Canadian citizens and residents with American security agencies. For the deal to be implemented, according to a report released by the Rideau Institute, “Canadian privacy laws will need to be violated or weakened”. At stake is Canadian sovereignty as Canada takes a giant step toward inclusion within an American continental security perimeter.

The Harper government will attempt to sell this agreement as necessary for Canada to enhance its exports to the U.S.

As has been shown here, the weakening of Canadian exports to the U.S. has everything to do with the economic crisis in which the United States now finds itself and nothing to do with the security measures being taken at the border by the U.S. since 9/11.

The border deal should be scrapped.

What we urgently need is a debate about Canada’s economic future. The Harper government is leading us into a dead end, emphasizing tar sands exports and an intensified effort to bet our future on the markets for Canadian commodities south of the border. For this country to succeed in the 21st century, Canadians need to face the twin realities of climate change and peak oil. Canada will succeed or fail depending on how it faces the challenges of rebuilding our cities, transportation systems and energy delivery systems. We need to establish new industries in a host of fields and to rethink our trading strategy with the rest of the world, not betting everything on deals with the Americans.

Instead of fostering the needed debate, the Harper government is tying us every more tightly aboard the chariot of a declining superpower.

Tuesday, September 20, 2011

TWO CENTURIES AGO: TECUMSEH’S FREEDOM SPEECH TO THE MUSCOGEE PEOPLE

On September 20, 1811, Tecumseh rode into Tuckhabatchee, in present day Alabama, the capital of the Muscogee people. Twenty warriors, members the Shawnee, Kickapoo and Winnebago nations, rode with him. The last months of a tense peace between the United States and the native peoples led by Tecumseh were quickly passing. And the U.S. and Britain were well down the path to war.

Thousands of people watched the dramatic arrival of Tecumseh and his followers. Tuckhabatchee was overflowing with visitors and residents who were in town for the meeting of the Muscogee national council. Big Warrior, Hopoithle Miko and other important chiefs were in attendance. Long time North Carolina politician Benjamin Hawkins, the agent of the U.S. government appointed to the Muscogee nation, came to Tuckhabatchee to serve as the eyes and ears of Washington and to speak up for U.S. interests. A number of white traders were also on hand as well as representatives from the Choctaw, Chickasaw, Cherokee tribes, and even some from the Seminole nation, whose people hailed from south of the U.S. border in Spanish-ruled Florida.

The Muscogee people lived in settlements in what became Alabama and Mississippi, building their towns along the rivers and creeks of that lush territory. Because their settlements were located next to rivers and creeks, whites called the Muscogees the Creeks. Tuckhabatchee was strategically located at the junction of the Tallapoosa and Coosa Rivers.

There was great anticipation in the town about what Tecumseh, the famous Shawnee chief, would say when he addressed them. When he arrived in Tuckhabatchee, he was nearing the end of a journey that had taken him on a long arc from north to south across America organizing the native Confederacy whose purpose was to halt the acquisition of yet more native land by American settlers. He had reason to believe that his message would be well received, by many but not all, in Tuckhabatchee. Although, he came from the distant Ohio country with its markedly different terrain, Tecumseh had personal ties to the Muscogee that made this visit a homecoming as well as a diplomatic venture to win over peoples that were not his own.

Tecumseh stayed at the council for a number of days, but as long as U.S. Indian agent Benjamin Hawkins remained in town, he refrained from speaking. He had no intention of sharing his message to the Muscogee council with a representative of the United States government. Each day, Tecumseh remarked laconically that “the sun has gone too far today. I will make my talk tomorrow.” More than a week passed before Hawkins departed. The same evening, with a large multitude gathered, Tecumseh entered the council house and offered a wampum bag and a peace pipe to Big Warrior. Big Warrior smoked before he passed the peace pipe to the other chiefs. Tecumseh stood before the assemblage for a few minutes, looking over the crowd, before he began to speak. Accompanying Tecumseh that memorable evening as he had throughout his long tour was Sikaboo, his interpreter. Sikaboo was a proficient linguist, who spoke Muskogean, Choctaw, and English, in addition to Shawnee. When Tecumseh spoke to a crowd or negotiated with American or British political or military leaders, he did so in Shawnee. His knowledge of English was very limited, and he rarely attempted to speak to whites in their language.

There is no record of Tecumseh’s speech in Tuckhabatchee but he had been delivering essentially the same set of remarks on a number of occasions during his tour. We do have a record of his words spoken a few months later, and that gives us a good idea of what he had to say to the Muscogee national council.

Tecumseh was a masterful performer, who punctuated his remarks, with theatrical gestures. He used rhetoric to drive home the points he made and to leave an indelible impression on his listeners.

“Brothers----We all belong to the same family; we are all children of the Great Spirit; we walk in the same path; slake our thirst at the same spring; and now affairs of the greatest concern lead us to smoke the pipe around the same council fire.

“Brothers---We are friends; we must assist each other to bear our burdens. The blood of many of our fathers and brothers has run like water on the ground, to satisfy the avarice of the white men. We, ourselves, are threatened with a great evil; nothing will pacify them but the destruction of all the red men.

“Brothers---When the white men first set foot on our grounds, they were hungry; they had no place on which to spread their blankets, or to kindle their fires. They were feeble; they could do nothing for themselves. Our fathers commiserated their distress, and shared freely with them whatever the Great Spirit had given his red children. They gave them food when hungry, medicine when sick, spread skins for them to sleep on, and gave them grounds, that they might hunt and raise corn.

“Brothers---The white men are like poisonous serpents: when chilled, they are feeble and harmless; but invigorate them with warmth, and they sting their benefactors to death. The white people came to us feeble; and now we have made them strong, they wish to kill us, or drive us back, as they would wolves and panthers.

“Brothers---The white men are not friends to the Indians: at first they only asked for land sufficient for a wigwam; now, nothing will satisfy them but the whole of our hunting grounds, from the rising of the setting sun.

“Brothers---The white men want more than our hunting grounds; they wish to kill our warriors; they would even kill our old men, women, and little ones.”

“…..Brothers----We must be united; we must smoke the same pipe; we must fight each other’s battles; and more than all, we must love the Great Spirit; he is for us; he will destroy our enemies and make his red children happy.”

We do know that in his stirring address at Tuckhabatchee, Tecumseh drew on his close ties to the Muscogee people. “Oh, Muscogees!” he shouted. “Brethren of my mother! Brush from your eyelids the sleep of slavery, and strike for vengeance and your country!”

When the Shawnee Chief called on his audience to join him in the struggle and spoke of his ties with them, the effect was overwhelming. A thousand warriors raised their tomahawks in the air.

All through Tecumseh’s address, Big Warrior sat with a disapproving frown on his face. At the end of his talk, Tecumseh searched out those who had appeared unmoved during his speech and then he fixed his gaze on Big Warrior. Pointing his finger toward the Muscogee leader’s face, he told him: “Your blood is white: you have taken my talk, and the sticks and the wampum, and the hatchet, but you do not mean to fight: I know the reason: you do not believe the Great Spirit has sent me: you shall know: I leave Tuckhabatchee directly, and shall go straight to Detroit: when I arrive there, I will stamp the ground with my foot, and shake down every house in Tuckhabatchee.”

The first to reply to Tecumseh was William Weatherford, a mixed blood Muscogee, who was also known as Red Eagle, a man who would play a vital role over the next few years. He was far from convinced by what he had heard. If Tecumseh was so set on war with the whites, Weatherford demanded to know, why had he not already led the northern tribes into battle against them. Tecumseh replied that all of the native peoples needed to come together in the struggle at hand. Weatherford shot back that the Shawnee Chief’s suggested path would lead to war with the United States and that the native peoples could no more count on the British than on the Americans. Relying on the British for military assistance would be sheer folly.

There were others who rejected Tecumseh’s suggestion of a native alliance against the United States. During a conversation with Cherokee leaders later that evening, one chief warned Tecumseh that if he carried his message to Cherokee country, he would kill him.

Tecumseh did win adherents to his cause, however. His words stirred many of the warriors present. The Muscogees faced their own struggle to halt the seizure of their lands by the Americans and the words of Tecumseh would be remembered by them during the perilous events to come.

The Shawnee chief departed for the north. The prophecy he had hurled at Big Warrior was not forgotten. Some of the Muscogees counted the days, calculating how long it would take Tecumseh to reach Detroit. In the early hours of December 16, the day when the Muscogees had reckoned he would complete his journey, the earth trembled as the first waves of the most powerful series of earthquakes, of which there is a record, struck the eastern United States. Every house in Tuckhabatchee was shaken to the ground. “Tecumseh has got to Detroit!” was the message on the lips of many Muscogees on that day.

The earthquake was felt as far away as New York City and southern Canada. For a short time, the mighty shock, to be followed by further quakes over the next four months, caused the Mississippi River to flow backwards.

That the earthquakes struck is an indisputable fact. And it is no less a fact that many Muscogees connected the trembling of the earth with Tecumseh’s prophecy and drew the conclusion that the Shawnee chief’s call to arms must be heeded.

(This is an excerpt from the upcoming book by James Laxer titled Tecumseh and Brock: The War of 1812 to published in the spring of 2012 by House of Anansi in Toronto.)

Saturday, September 03, 2011

WHY THE TAR SANDS ARE DESTRUCTIVE FOR CANADA:" ETHICAL" OIL AND OTHER RESOURCEFUL FANTASIES



The Harper government’s Big Idea for the future of the Canadian economy is that Canada should become an “energy superpower”. What will make it so is the gargantuan development of the Alberta tar sands, which the Harperites and their friends depict as “ethical oil.” In truth, the development of the tar sands is reducing northern Alberta to a stinking hell. Long after this dystopian nightmare has been put aside, Albertans will be left with the environmental catastrophe that is being wrought. Not only is the tar sands a disaster for Alberta, it is helping drive the planet down the path to irreversible climate change. Our grandchildren will pay the price for this.

The members of the Harper government are driving the Canadian economy into a dead end. Far from promoting the diversification and qualitative development of our economy, they are returning to us to our colonial roots, an economy based on digging stuff out of the ground to send to other more advanced economies, for their profit, while we get to clean up the mess that is left behind.

The Harperites will not face the two most pressing realities of this century: climate change and peak oil. Humanity needs to change course. Canada needs to change course.

Facing these twin imperatives, Canadians need to rebuild their cities, their transportation systems, and their manufacturing sector. That’s how we will create jobs and make a contribution to the betterment of the planet.

It used to be fun to go abroad as a Canadian and receive kudos from people about how great our country is. Not any more. They know we’re “the colossal fossil.” Let’s change that.

Here’s a look at the evolution of the petroleum industry in Canada and the “ethical” tar sands:

Eastern bankers turned up their noses at Alberta petroleum in its early decades which was one reason that the Alberta oil patch fell into the hands of the major American and European oil companies. The Alberta oil industry came of age in 1947 with the discovery of the major oil field at Leduc just south of Edmonton by Imperial Oil, the country’s largest petroleum company. Imperial was a subsidiary of Standard Oil of New Jersey (now Exxon Mobil), with 69.7 per cent of the company’s stock held by Jersey Standard.

By 1960, non-residents owned 77.3 per cent of the investments in the Canadian petroleum industry. Foreign control of the industry was even higher at 89.8 per cent. A decade later, foreign investment in the Canadian petroleum industry totaled $9.8 billion and more than 91 per cent of the assets and more than 95 per cent of the industry’s sales were accounted for by foreign-owned firms. Eighty per cent of that foreign ownership was in the hands of major U.S. based petroleum companies.

During the 1960s and early 1970s, the basic goal of the Canadians subsidiaries of the foreign owned petroleum companies was to increase the export of oil and natural gas to the United States. To stay in compliance with the regulations of the National Energy Board of Canada which required that enough oil and natural gas be set aside for domestic needs, the companies issued reports that made the case that Canadian petroleum reserves were ample for the domestic market for decades to come, and that, therefore, Canada could safely increase its exports to the United States.

Then came the global oil price revolution of 1973 and things turned upside down. Between December 1973 and the middle of 1974, the global price of oil soared from about $3.00 a barrel to $11.00 a barrel. The Liberal government of Pierre Trudeau responded to the global petroleum crisis by establishing a regime of price controls and export taxes for the sale of Canadian oil. Under this regime, Ottawa froze the domestic price initially at $3.80 a barrel in September 1973. After the world price skyrocketed, the federal government raised the domestic price of petroleum to $6.50 a barrel. Meanwhile, Canadian oil was sold to the U.S. for the world price. The difference between the domestic price and the world price, for this exported oil, was collected by Ottawa in the form of an export tax.

The Trudeau government’s petroleum regime generated fierce opposition from the major oil companies, the governments of the petroleum producing provinces, Alberta and Saskatchewan, and from the United States government. The companies swiftly demonstrated that they had the means to fight the new regime. Prior to the global oil price revolution, the companies, in their testimony before the National Energy Board had assured Ottawa that Canada had plenty of oil and natural gas to meet domestic needs for the long-term future. In 1972, Imperial Oil, making the case for additional exports of Canadian petroleum included this statement in the company’s annual report: “In the current debate, the export of Canada’s energy resources is being questioned; in effect, we are being urged to ‘bank’ our petroleum resources. Our present energy reserves, using present technology, are sufficient for our requirements for several hundred years.” Two years later, after Ottawa’s pricing regime had been established, Imperial and the other petroleum giants sang a far different tune. In 1974, with their eye firmly on the demolition of Canada’s two-price system for petroleum, one for Canadians and another for Americans, the petroleum companies warned of looming oil and natural gas shortages within a few years. Gone were the surpluses that had supposedly existed as far as the eye could see.

By the time the oil companies claimed that they needed incentives to explore for the petroleum Canadians would need in the not too distant future, the Trudeau government had become highly suspicious of the trust worthiness of the industry. The fact that top ministers and officials had concluded that the information provided by the petroleum companies was heavily slanted to serve their interests was one of the reasons, the Trudeau government decided to establish a publicly owned oil company, Petro-Canada. The NDP, which held the balance of power during the minority Parliament of 1972 to 1974, had pressured the Liberals to create a crown owned company. Before the election in the summer of 1974 in which the Liberals regained their majority, the government committed itself to create Petro-Canada. It was after the election, though, that major steps were taken provide the company with a strong capital base to take over the assets of a number of foreign owned oil companies operating in Canada. Petro-Canada was to become a vertically integrated company, operating in all aspects of the industry, from exploration to production, refining, transporting and retailing petroleum products. Crucially, the company would provide a much needed “window on the industry” whose data on petroleum reserves could be relied upon by the government.

In March 1975, Energy Minister Donald Macdonald made the case in the House of Commons that Canada needed Petro-Canada to deal with the vast changes that had roiled the petroleum industry: “It is the extent and nature of these changes which have in our view tipped the balance decisively in favour of federal entrepreneurship in the oil and gas industries.”

Petro-Canada moved quickly to acquire the assets of foreign owned petroleum companies in Canada, under the Trudeau government, prior to its defeat in the election of 1979, and then again following the Liberal victory in a second federal election in the winter of 1980. Between 1976 and 1982, the crown company purchased the Canadian assets of Atlantic Richfield, Phillips Petroleum, Petrofina Canada, and British Petroleum, spending $3.7 billion these acquisitions.

In 1980, following the resumption of power by the Liberals in an election early that year that defeated the short lived Conservative government of Joe Clark, the Liberals introduced the National Energy Program. The NEP’s centerpiece was the Canadianization of the petroleum industry---the goal was fifty per cent Canadian ownership by 1990---through both the growth of publicly owned Petro-Canada and through the encouragement of privately owned Canadian petroleum companies. Petro-Canada had already been enlarged through numerous acquisitions of the assets of foreign owned firms in Canada. The emphasis in the NEP was to foster the growth of privately owned Canadian firms through a tax incentive scheme designed to further this objective. The Petroleum Incentive Program (PIP) established a tax system with higher rates for foreign owned than for Canadian owned petroleum companies. The additional taxes reaped from the foreign owned companies were used as so-called PIP grants to provide additional capital for the Canadian owned firms.

The federal government retained its system of price controls, setting the domestic price of oil lower than the world price. In 1981, the federal government negotiated a revenue sharing deal with the Alberta government. Tensions between the two governments remained high, however.

And then in 1982 the world price of oil plunged from about U.S. $30 a barrel to about U.S. $10 a barrel. The reasons for the collapse of petroleum at that time were not mysterious. The collapse resulted from the restoration of oil production in Iran---production had dropped perilously close to zero at the time of the Iranian Revolution in 1979, which had provoked a temporary doubling of the world price of oil.

With the onset of a sharp recession in 1982, and a surplus of oil production in the OPEC countries and from the North Sea, demand fell and so did the price. Alberta’s jobless rate soared above the national average. Thousands of people turned to food banks to sustain themselves. In Calgary, newly constructed office tours were mothballed as projected business expansion turned to ashes.

At the time, the Trudeau government was confidently forecasting an era of energy mega-projects that would propel the nation’s economy forward as the world price of oil rose, according to some forecasts, to U.S. $60 a barrel. One attractive feature of the mega-projects for the members of the Trudeau government was that most of them would be located outside Alberta, in the North West Territories, the Beaufort Sea or off the coast of Newfoundland in the Hibernia field which was being explored at the time. Such massive developments would reduce the disproportionate power of Alberta in the energy politics of the country, induce capital investment, create jobs and generate revenue for the federal government. When the price of oil fell, Ottawa’s hopes disintegrated and the mega-projects vanished from the drawing boards and from public discourse.

Along with many other petroleum producing regions, such as Texas which was equally hard hit---office tours were also mothballed in Houston---Alberta suffered during the years of the bust. In Alberta though, a legend grew up, more truthfully it was concocted, and it persists to this day. According to the legend, the slowdown in the Alberta oil patch was caused by the Trudeau government’s National Energy Policy (NEP).

When the price of oil fell, the petroleum companies sharply reduced their exploration activities in Alberta. As the province lapsed into a period of sharp recession, the myth spread like a prairie fire that the pain was caused by the NEP. The theory was established---based on no evidence---that interference from Ottawa had imperiled the well-being of the Alberta oil patch.

The myth that served the interests of the foreign owned oil companies, the United States government, and Conservative politicians who detested the idea of government involvement in the petroleum sector. Those who were not served by the myth were Canadians, in particular Albertans. Politicians looking for votes in Alberta are often tempted to attack the bogeyman of the NEP to curry favour in the province.

The trouble with the myth is that it has provided cover for the thoughtlessness and rapacity of energy policy in Alberta and in Ottawa over the past several decades. In 1984, when Brian Mulroney’s Conservatives swept to power in a federal election, the new prime minister quickly traveled to New York to address the Economic Club and tell his corporate audience that Canada was “open for business” once again. The Mulroney government quickly ended the regulation of petroleum prices in Canada, and dispensed with the National Energy Program. Instead of encouraging the growth of Canadian ownership in the petroleum industry, Mulroney sang the praises of foreign investment. He replaced the Trudeau era Foreign Investment Revenue Agency (FIRA), which had been established to ensure that particular foreign takeovers of Canadian companies served the national interest, with Investment Canada, a body established to encourage foreign investments and takeovers.

The most important initiative the Mulroney government took to ensure that no future Canadian government would ever attempt to do the things the Trudeau government had done in the petroleum sector came under the heading of what was misleadingly labeled as “free trade”. Under both the Canada-U.S. Free Trade Agreement and the North American Free Trade Agreement, negotiated with the U.S. by the Mulroney government, Canada’s ability to control its own petroleum industry was dramatically curtailed.

The FTA, which came into effect on January 1, 1989, abolished the right of Canada to embark on a future NEP. Not only did it, in the “national treatment” provision, specify that Canada cannot tax Canadian and U.S. (later Mexican with NAFTA) companies at different rates, thereby negating a repeat of the PIP grant scheme, it also provided that Canada cannot institute a two price petroleum policy with a higher price for petroleum exported to the U.S. and a lower price for Canadians. On top of these measures, the trade agreement stipulated that Canada had to continue exporting as much petroleum to the U.S. as it had been exporting on a rolling average of the previous three years. This meant, among other things, that Canada would be required to continue its exports of petroleum to the U.S. even if imports of petroleum to eastern Canada from overseas were cut off as a consequence of a supply crisis generated by falling supplies or a geo-political conflict. This stipulation meant that Canada had to make the supplying of the American petroleum market a higher priority than meeting the requirements of Canadian markets experiencing a shortage.

If, as the Harper government hoped prior to the economic meltdown in 2008, the opening of new tar sands projects dramatically increased Canadian petroleum production, the country’s commitment to export more petroleum to the United States would rise in lock step. The whole point of more tar sands operations is to meet the oil requirements of the U.S.

The petroleum provisions of the FTA and NAFTA compromise Canadian economic sovereignty more gravely than any previous undertaking ever made by a Canadian government. Significantly, Mexico, also a major exporter of petroleum to the U.S., did not make a commitment to sustain the level of its oil shipments to the U.S. Moreover, Mexico retained its right to sell oil to American purchasers at the world price while keeping domestic oil prices regulated at a lower level. Mexican nationalism would have made a Canadian-style energy deal with the U.S. political inconceivable.

The provisions in the trade agreements the Mulroney government negotiated have been accepted without demur by both the Chretien-Martin Liberal and the Harper Conservative governments ever since. Canadians should recognize these agreements for what they are---“unequal treaties”---the phrase used by the Chinese to describe the treaties signed by China’s governments with the great European powers during the 19th century.

To the extent that the Harper government has an economic policy in addition to its basic inclination to let the free market operate unhindered, it has been to make Canada an “energy superpower” in the 21st century. What this means is that Canada should export an increasing amount of oil and natural gas to the United States.

Indeed, over the past couple of decades, the American reliance on Canadian oil has grown steadily larger. In July 2006, at 1.6 million barrels a day, Canada was the largest single exporter of crude oil to the United States. Rounding out the top five exporters to the U.S. were Mexico with just over 1.5 million barrels daily, Saudi Arabia at over 1.2 million barrels, Venezuela with nearly 1.2 million barrels, and Nigeria with just over 1.0 million barrels. These five countries were the source of sixty-six per cent of American oil imports. What these totals make clear is the high dependence of the United States on Canada and other Western Hemisphere sources of oil and its relatively low reliance on Middle Eastern sources.

The resource on which the Harper government’s vision of Canada as a major world petroleum exporter is based is the Alberta tar sands. As oil, national security and the war on terror have become tightly aligned in the thinking of American political leaders, Canada’s largest petroleum deposit, the tar sands, has been ever more closely scrutinized from Washington. Located across an enormous region of north-eastern Alberta---in three major areas spread over 140,800 square kilometers, an area larger than the state of Florida---centred on Fort McMurray about three hundred kilometers north of Edmonton---the tar sands contains almost as much oil as the conventional reserves of Saudi Arabia.

In the early years of this century, tar sands investments total nearly $200 billion. By the spring of 2008, oil sands production reached 1.3 million barrels a day, more than half of Canada’s oil production. Ten per cent of North American crude oil production already comes from the tar sands. Incredible as it may seem, the Alberta government produced one scenario that by 2050, the tar sands would produce eight million barrels of oil a day, transforming Alberta into a North American Saudi Arabia.

The problem is that this oil is very expensive to extract and that producing oil from the oil sands involves strip mining on a vast scale and the reduction of huge tracts of land to a scarred horror. In addition, the production of oil from the oil sands requires enormous inputs of fresh water and natural gas. Moreover, the industrial process by which the oil is separated from the sand results in the release of large quantities of green house gases into the atmosphere.

The oil sands has become by far the biggest source of emissions in Canada. It is no exaggeration to say that without a steep reduction in the production of synthetic crude oil from the tar sands, all other programs in Canada to reduce emissions will be fruitless. Tar sands development has directly shaped the environmental policies of the Harper government. In keeping with the lobbying position of the petroleum industry, which calls for what is euphemistically described as a “Made in Canada” policy, the Harper government has repudiated any Canadian effort to join the struggle against climate change.

The Harper government developed its policy approach at a time when oil prices were rising dramatically to a peak of U.S.$150 a barrel in the summer of 2008. As the oil price soared, the short-term economic prospects for the oil sands grew ever brighter. Capital investments by the companies in new oil sands projects skyrocketed. Calgary oil men and the members of the Harper government to whom they were closely tied looked forward to a time when Canada would be producing as much as four million barrels of oil a day, three quarters of it from the tar sands. Most of this production would be transported by pipeline to U.S. refineries specifically geared to refining heavy, dirty synthetic crude.

As tar sands production increased, as did the number of projects to enable higher output in the future, Fort McMurray was bursting with new development. The city’s labour shortage pushed up wages and the demand for workers who flooded in from across the country. Weekly non-stop flights from St. John’s, Newfoundland to Fort McMurray imported workers to toil at oil sands projects and then took them home a few weeks later, full of good cheer, their wallets bursting with the earnings to spend when they got back home. There were thousands of new jobs in the city constructing houses, roads, shopping centres and schools. The province hired construction crews to improve the notoriously dangerous highway from Edmonton to Fort McMurray.

The rise of Fort McMurray and the tar sands was not without immediately damaging consequences for other regions of the country. For one thing, as the price of oil rose and investments flowed into the oil sands, the Canadian dollar took off on a tear against the American greenback. The Canadian dollar peaked at U.S.$1.10 in the early autumn of 2007. The pace of the dollar’s acceleration negatively affected other sectors of the economy, particularly the manufacturing sector. The price of labour, relative to that in other countries, rose so fast that industries had little time to adapt to the shock. The auto industry and the industries that supplied it were among the casualties.

In the boom atmosphere of the times, these costs to other industries seemed minor in comparison to the new wealth flowing from a single sector. Later, when the global economy crashed, it would be seen that numerous industries were dangerously weakened on the eve of Canada’s descent into economic malaise.

Those who approved of Canada’s recent approach to economic policy making would make the argument that it has always been the case that one booming sector could derail other sectors, drawing labour away from them and pushing up their costs. What mattered, they have and continue to argue, was the overall performance of the economy. The Canadian story had always been one of rising and falling sectors. It was not the job of government to try to pick winning sectors; that was the job of the market.

The price of oil began to plunge from its high in the summer of 2008 to a low of just over U.S. $40 a barrel by the end of the year, before it began to climb again the spring of 2009. The collapse of the price of oil was a consequence of the general economic collapse. (In early September 2011, the price of crude oil is $86 a barrel, bouncing up and down on the receipt of economic news and forecasts.)

As with the storms that have washed the rainbows out of the skies of previous resource booms in Canada, the transition from boom to bust had its genesis outside Canada. New tar sands investments dried up quickly as the economic downturn took hold. Alberta’s economy was hard hit by job losses and lagging output. Over the past two years, as the price of oil has climbed, the prospects for the tar sands have brightened once more in the eyes of its promoters, petroleum companies and the members of the Harper government. With the American economy shaky (that’s a euphemism) and with projections that U.S. growth and job creation will be slow for years to come, the future of the tar sands is very iffy. It’s a very expensive source of petroleum and despite the nonsense about its “ethical” character, the world’s flinty-eyed investors are not driven by such non-material considerations.

If we retain the policy framework we have had in Alberta and at the federal level over the past quarter century, what can we expect in the future from our petroleum industry? As exports of oil to the U.S. rise, slowly in my opinion, so too will Canada’s NAFTA obligation to sustain the higher level of exports for the long term. Canada, as so often before over the centuries, will set forth on a course of development based on the excessive export of primary products at the expense of all else.

And Alberta, which has had a right-wing government, with one change of party label since 1935, will go on selling its oil while collecting peanuts for this in relation to the royalties collected elsewhere. With roughly the same population as Alberta, Norway has accumulated more than U.S. $500 billion from the sale of its North Sea oil production, compared to the $15 billion Alberta put aside----and is rapidly frittering away. Norway’s capital is not used to defray current government costs. It is invested to generate economic development in Norway long after its own oil reserves are depleted.

The tale of the petroleum industry today is a classic case of the dead-end Canadian approach to resource development. The country continues to do what it has done for four centuries---export the staple products other countries need without figuring out how to use this to further our own development qualitatively.

There are two ways to eliminate NAFTA’s intolerable intrusions into Canadian sovereignty in the future. The first would be by renegotiating NAFTA with the U.S. and Mexico to remove the offending clauses. The second would be by giving notice under the terms of NAFTA that Canada intends to withdraw from NAFTA.

The approach of the Conservatives to the economic crisis (the latest numbers show that our economy is not growing and we now have an over-all trade deficit) is to wait for the Americans to get their act together so that demand for the commodities Canada sells will increase and Canada’s economy can recover. It’s the old Canadian way, tried and not-so-true. It leads the country from one horizon to the next, but never to the promised land of qualitatively more advanced economic development. Those who have not learned the lessons of their country’s economic history are condemned to go on repeating them.


Monday, August 29, 2011

WHEN THE RICH AND THE POWERFUL OVERPLAY THEIR HAND



We are in the grip of a socio-economic crisis in which the rich and the powerful in the United States, the United Kingdom, the Euro Zone countries and Canada refuse to share the burden of coping with the economic disaster they did so much to unleash. A few among them---Warren Buffet and Liliane Bettencourt----get it. The rich can overplay their hand and can end up spoiling the whole party for themselves and their wealthy confreres.

The Republicans, and not just the adherents of the Tea Party----have elevated the refusal to countenance any increase in taxes for the super-rich----even through the closing of tax loopholes---to the highest level of principle.

Instead, the rich and the powerful, and those who speak for them and govern on their behalf in both parties in Washington, in London, Paris, Berlin and Ottawa, are imposing policies of austerity on their peoples, in the case of the Euro Zone, particularly on the Greeks, Spaniards, the Portuguese, and the Irish. The details of the programmes differ, but the common consequence is a sharp spike in long-term joblessness, particularly for the young and for racial minorities. Poverty, homelessness, and desperation haunt North America and Europe.

Governments, right-wing politicians and their media outlets have laboured mightily, and not without success, to divert the anger of people away from financiers and corporate bonus-recipients and onto public sector employees, union members, immigrants, and those who have pensions. It’s the old, old, divide and conquer story. Without such tales, the privileged would soon be toppled from their positions of power.

Today’s wealthy and their governments have forgotten the hard-learned lessons of the Great Depression. They have lashed their fates to the mast of bailouts for corporations and trickle-down economics for everyone else. They are condemning tens of millions of people to the miseries of years of economic stagnation.

What we are experiencing is no less than a revolt of the wealthy, being led by the political right. That revolt is rendering the socio-economic and political orders in many countries dysfunctional. The Tea Party is a genuine, populist, right-wing insurgency, heavily funded though it has been by billionaires such as the Koch brothers, and shamelessly promoted by the right-wing’s in-house network, Fox News. Overwhelmingly, Tea Partiers are middle class whites who fear African-Americans, Latinos, trade unionists, gays and lesbians, Charles Darwin, the usual suspects. Like the adherents of previous far right movements over the past two centuries, Tea Partiers long to return to what they imagine were the simpler times of the American past and the verities of the Fathers of the U.S. Constitution---small government and a laissez faire economy, which hasn’t existed in the form they yearn for since the 1840s.

The problem is that right-wing revolts can get out of hand and can create difficulties, even grave difficulties, for the rich and the powerful and the states that do their bidding.

The most overwhelmingly important such case was the French Revolution. The Revolution was preceded by a revolt of the rich and the powerful, known as the Revolte Nobiliare. That revolt, which sought to protect the privileges of the nobility, gravely weakened the French state. It opened the way for a transformative social revolution, a revolution that swept away the actors and institutions that had launched the Revolte Nobiliare, overturning the monarchy and the entrenched rights of the nobility in the process. What is significant for today is that a political upheaval begun by the forces of social and political reaction can end up generating an upheaval that is utterly different from the one the reactionaries had in mind.

The French state was vulnerable to the Revolte Nobiliare and later the Revolution as a result of a predicament with which we are all familiar today, government debt. The rich and the privileged refused to pay higher taxes. The French state was deeply in debt in the 1780s as a result of a long series of wars France had fought, most recently as the ally of the Patriots during the American Revolutionary War.

The showdown of the privileged with the state of Louis XVI began in 1787. The French government was desperately trying to raise taxes to pay its debts and to prevent default. As the ministers of Louis XVI were well aware, default would make future borrowing much more difficult. Government ministers sought to raise new revenues from all elements of French society, including the nobility, through higher customs duties, excise taxes and the raising of additional sums through state monopolies on salt and tobacco. Most of the new taxes would have flowed from the non-privileged, but that did not stop the members of the nobility from resisting heavier burdens for themselves, through all the institutional means at their disposal.

On the eve of the revolution, French society was formally divided into three Estates. The First Estate was the clergy, numbering about one hundred thousand members and ranging from wealthy bishops to poor parish priests. The Second Estate, the nobility, numbered about four hundred thousand members. Among the nobles were those who had inherited their titles, as well as those whose titles were bestowed on them by the monarchy. These were mostly wealthy merchants and lawyers. Technically, there were two orders of nobles, the Noblesse d’Epee (nobles of the sword) and the Noblesse de Robe (nobles of the gown, made up of wealthy functionaries, jurists, and merchants). The Third Estate included everybody else in France, about twenty-three million people, ninety-six percent of the population.

Although France was becoming a more urban, capitalist society in the late 18th century, it was still a largely rural country with peasants constituting the majority of the population. In some ways, the France of the late Old Regime was moving toward increased social rigidity, with top positions in the military even more reserved for the nobility than had been the case in the past. Closing the doors to new talents is dangerous in a class divided society in which a small proportion of the population enjoys enormous privileges.

The French state tried consulting the nobility. It called together an assembly of notables, among them great magnates, senior prelates, members of provincial Parlements, councilors of state, and members of provincial estates and urban municipalities. The government assumed that having hand picked this conclave, its members would agree to significant tax increases.

The notables dug in the heels and resisted, however. Some of them pointedly argued that only the Estates General had the authority to vote for new taxes. The Estates General, representing all three Estates, had last met in 1614. The notables were summarily dismissed, but agitation among the nobles continued. In various parts of the country, provincial bodies, grouping together the privileged, continued to protest the government’s proposals. Having tried consultation, the government resorted to arresting and exiling some of those who were resisting its power to impose a new fiscal regime. The Parlement of Paris, the most important of the Parlements (not to be confused with a modern Parliament), stood up to the monarchy, accusing the royal government of acting illegally. Louis XVI lost his temper with the assembled nobility and proclaimed that “it is legal because I wish it.” The monarch departed in a huff and a duke and two councilors were arrested and exiled.

Significantly, members of the Parlement of Paris and of the provincial Parlements condemned the arrests and declared that individual liberty was a natural right of the subjects of the king. They were using the narrative of Enlightenment philosophers and reformers---- invoking the rights of man and citizenship---as arrows in their quiver to fire at the government. This was playing with fire, using revolutionary concepts to promote the cause of a nobility, whose very raison d’etre was traditional. More arrests followed.

The revolt of the nobles, the Revolte Nobiliare, rendered the French state incapable of reforming itself, of coping with its fiscal crisis. The government was backed into a corner. Unable to negotiate a new loan in 1788, the French state called a meeting of the Estates General for 1789.

The summoning to the seat of government at Versailles of the Estates General required each Estate, most significantly the Third Estate, to convene meetings all over the country to select delegates. The Third Estate was to have as many delegates as the other two estates combined. The critical question was whether the estates would sit together as one body, in which case the Third Estate would dominate, or separately.

Most of the representatives of the nobility perceived the danger of being eclipsed by the Third Estate and insisted that the estates sit separately. In taking that stand, the nobility was, in effect, setting itself above and apart from the Third Estate, the vast majority of the population. Instead of being seen as championing the rights of the population, the nobles appeared in the guise of their oppressors, motivating the representatives of the Third Estate to speak and act for themselves. Organization began, first among the wealthy middle classes. These opponents of the nobility were joined by liberal nobles who favoured reform. Increasingly active were the political clubs which already existed in Paris and in many parts of France. The clubs corresponded with one another. Journalists did what they always do. They took to the cafes to chew over what was happening.

Conflict with the nobles radicalized the middle classes. In December 1788, the Abbe Sieyes issued his famous pamphlet titled “What is the Third Estate?” “Who would dare to deny that the Third Estate has within itself all that is necessary to constitute a nation?” he wrote. “Take away the privileged orders, and the nation is not smaller, but greater…What would the Third Estate be without the privileged orders? A whole by itself, and a prosperous whole. Nothing can go on without it, and everything would go on far better without the others…This privileged class is assuredly foreign to the nation by its do-nothing uselessness.”

In May 1789, the representatives of the three Estates assembled in Versailles. Feverish excitement was mounting in Paris and in provincial cities. On June 20, the representatives of the Third Estate met in an indoor tennis court. There they declared that the “National Assembly is in being” and took an oath “never to separate” until a new constitution had been established. The French state tried to find common ground with the Third Estate, now constituted as the National Assembly. But the king was mobilizing soldiers in Versailles and Paris, preparatory to dissolving the Estates. All France watched the coming showdown. In the newspapers and cafes in the meetings of the clubs, it was all consuming.

Thousands of Parisians traveled to Versailles to stop the government’s attempt to shut down the Estates. Troops, sympathetic to the demand for change, refused to fire on the crowds. Centres of opposition to the government had formed at the Palais Royal, the City Hall and other points in Paris. In Paris, fearful that the troops were about to enter the city, the people were mobilizing----wage-earners, master craftsmen, shopkeepers and women.

New political forces were making their power felt. The mass of the population in Paris and the peasantry in the countryside were about to change the course of history.

The revolt of the French nobility had rendered the French state dysfunctional. The revolution, directed against the nobility, was underway.

In the extraordinary weeks that followed, the revolution unfolded in Paris. The Bastille, symbol of royal autocracy, was stormed on July 14, 1789. In the countryside, in the wake of what came to be called the Great Fear, with the peasantry anxious that the authority of the nobility was going to be restored through the use of force, peasants stormed the manor houses in many parts of France. In some places, they burned them to the ground; elsewhere, they seized the documents that spelled out the obligations of the peasants, to pay sums to the local landlord or to provide labour. On the night of August 4, 1789, the National Assembly legislated an end to formal feudal privilege. In 1793, the obligations of peasants to landlords that had ceased to exist for all practical purposes in 1789, were abolished once and for all. The three Estates ceased to exist. All men (not yet women) became citizens.

We need not rehearse the phases of the French Revolution, the implementation of the Terror in 1793, the transition to the Napoleonic empire and the later restoration of the monarchy. The Old Regime in France was never resurrected. The revolution swept it aside and established, in its place, a new bourgeois order, with a different conception of citizenship and a new kind of state.

What is significant for our time is that the crisis that opened the way for the French Revolution began with a revolt on behalf of the strongest beneficiaries of the old order. Through their actions, they rendered the state incapable of adaptation.

Of one thing we can be sure, the social upheavals of the future will not resemble those in France prior to and during the revolution. The combustible materials that led to that transformation were of an entirely different sort from those that exist today. But combustible materials in contemporary society are readily observable to those who take the trouble to notice. And upheavals there will be.

The harsh policies being pursued in North America, the U.K., and the Euro Zone countries are pressing the ill effects of austerity down on the large majority of the population, while the wealthiest and most economically powerful see their incomes soar and are assured that the state will bail them out when necessary. This is their state and they know it. The young in the advanced countries are having their futures stolen from them. Opportunities shrink and the price of post-secondary education soars ever higher. Upward mobility, always the safety valve in capitalist society, is being choked off.

There is a real possibility that some of these regimes---driven on by dominant, even triumphalist, forces on the political right----will be rendered dysfunctional or partially dysfunctional. The fault lines in the countries on both sides of the Atlantic are all too easy to perceive. The United States has a dysfunctional constitution and deeply entrenched class divisions that often coincide with racial differences. Canada is reverting to the status of a supplier of raw materials to the U.S.---becoming an energy superpower in the eyes of the government as a consequence of the tar sands----while the manufacturing sector recedes. The Harper government is content to exercise its majority rule while turning its back on Quebec. Not since the Conscription crisis of 1917 has Canada had a majority government with so little representation from Quebec. The Cameron government is shedding half a million jobs in the public sector, trebling post-secondary tuition fees, and imposing savage class rule on the U.K. on a scale that would have made Margaret Thatcher envious. The German and French governments, at the centre of the Euro Zone, are forcing tens of millions of Europeans to live in depression conditions because Merkel and Sarkozy refuse to complete the monetary union with a social union that redistributes capital in the form of tax revenues across Europe. It is a regime of, by, and for, bankers.

History does not run along a linear path as people, including political leaders, often assume. Even the most imposing political and state structures are much more fragile than is normally thought. It is easy to forget that events now long in the past were once in the future. During the two years leading up to the outbreak of the French Revolution, contemporary observers would likely have concluded that a new age of privilege and political reaction was in the offing in France.

Those at the helm on both sides of the Atlantic are playing dangerous games. It is far from certain that they will be able to control the forces they are unleashing. Some may believe that we live in the eternal present of neo-liberalism. History shows us that that is not a good bet.

The old spiritual is almost certainly a better prognosticator: “No more water, the fire next time.”

Monday, August 22, 2011

WE’LL MISS YOU JACK



To lose Jack Layton at the height of his capacity as a person and as a political leader, is especially sad.

When Jack walked into my graduate course at York University in the early 1970s, it didn’t take me long to see that this was someone very special. The energy and the luminous intelligence were on full display, as well as his respect for others, and the joy he took in meeting people.

Through the decades, he joined every political battle with unique optimism. In municipal politics, in the fight for environmental reform, in his support for the homeless and the poor, he threw himself into what he did with the conviction that he could be on the winning side. Jack had no use for fashionable pessimism.

When he became NDP leader, he took a party that had seen better days and led it to become a force that can win the next election. His breakthrough in Quebec is historic, a transformative event in Canada’s political history.

We’ll miss Jack’s energy and his capacity to rise from setbacks and carry on. We’ll need to take those qualities to heart in the days ahead. We’ll miss you Jack.

To Olivia and the members of his family, I offer my condolences.

Sunday, August 07, 2011

Half Way Onto Twitter

I launched myself onto Twitter yesterday, but only halfway. After signing up, I tweated a few times into the great vault of cyber-space. I even established a new rating agency along the lines of Standard and Poor’s, to be called the James Laxer Rating Agency. It will specialize in rating empires. In its first rating, the Agency downgraded the American Empire from a double D+ to a triple E.

But I’m only halfway onto Twitter because I don’t know any elegant way to tell anyone that I’m there. I spent hours trying to get a Twitter button onto my blog, but failed. I have now handed that task over to someone who was born when the American Empire was healthier, but not nearly as healthy as it was when I was his age.

So, maybe we'll encounter each other in the Brave New World of Twitter.

Tuesday, August 02, 2011

WE DON’T NEED A LECTURE FROM ALBERTA “FIREWALL” HARPER

The Conservatives pride themselves on their ability to throw opposition leaders under the bus. And they’re at it now with NDP interim leader Nycole Turmel. She is a self-proclaimed federalist and always has been. She was a member of the BQ and of Quebec Solidaire and the Conservatives are trying to use this to prove that she and the NDP have serious questions to answer about their commitment to federalism.

You’ve got to love the Conservatives.

Look at Stephen Harper whose commitment to federalism was a lot shakier than that of Ms. Turmel ever was before he became leader of the Canadian Alliance. He was on the record with views that were intensely hostile to Canada, something you cannot say about Nycole Turmel.

In 1997, Harper delivered a speech to a U.S. conservative think tank in which he said that “Canada is a Northern European welfare state in the worst sense of the term, and very proud of it.” He further stated that “the NDP is kind of proof that the Devil lives and interferes in the affairs of men.”

Following the federal election of 2000, along with other right wingers, Harper co-authored a document called the “Alberta Agenda”.

It called on the provincial government to “build firewalls around Alberta” to stop the federal government from redistributing the province’s wealth to less affluent regions. That year Harper also wrote that Canada “appears content to become a second-tier socialistic country…led by a second-world strongman [Jean Chretien] appropriately suited for the task.” He advocated a “stronger and much more autonomous Alberta.”

This guy is the Conservative idea of a federalist!

If the Conservatives are going to start demanding loyalty oaths from political leaders, they are going to have to delve into the past and check out the late Richard Hatfield who was Conservative premier of New Brunswick for many years. Not only did Hatfield seek electoral advice from the Parti Quebecois while Rene Levesque was the sovereignist premier of Quebec, on the theory that they both hated Liberals, in a moment of enthusiasm he even took out a membership in the PQ. Hatfield a separatist! Who knew?

Monday, July 04, 2011

Rob Ford: It’s Safe to Come Back to Toronto Now

Rob Ford has nothing to fear. Pride 2011 is history. He can slink back to his office at City Hall.

I can report to the Mayor that nothing untoward happened at the great Pride Parade. A million plus people packed the streets on a brilliant day to celebrate humanity, and diversity. So much more than tolerance---it was a celebration, a proclamation of love and respect.

I spent most the time calling out for the marchers and those on the floats to spray us with much needed water, which they happily did.

At a time like this, when the narrow-minded and the dividers rule in Ottawa and at Nathan Phillips Square---soon to come to Queen’s Park I guess---we got a chance to see the true face of this civilized city. I was among those who received a stirring short lecture from a postal worker on the need to protect social services.

It was wonderful to bask in the energy of all the people who came out to represent a very broad range of organizations, from gay hockey players to Catholic high school kids, to the magnificently attired in all their finery.

But I’m sure Rob Ford will get a briefing from City Councillor Giorgio Mammoliti and his camcorder. The Councillor skulked around the Dike March on Saturday with his camera seeking evidence on which to base his conviction that Pride Week should receive no city funding next year. He found a few marchers who proclaimed that Israel is an Apartheid State. If he’d come back on Sunday, he would have found a happy, celebratory contingent of gay Jews, who carried Israeli flags and touted the benefits of Israelis and Palestinians enjoying cafes together.

Gotcha Mammoliti is like one of the censors in Elizabethan England who checked out the London theatres to prove that the women characters on stage were being played by actual women. And when they got the proof on their camcorders, they shut down the shows.

Rob Ford should be warned that Toronto has changed since he took off for his cottage last week. He provided the punctuation at the celebration on Sunday. His face leered out from every body part.

In the months to come, he’ll have to face up to the fact that we know what he did last summer.

Thursday, June 23, 2011

NDP REPRIEVE: SOCIALISM LIVES TO FIGHT ANOTHER DAY

In my last post, rumours of Socialism’s death were greatly exaggerated.

At age 215, Socialism had its neck on the chopping block at the recent NDP convention in Vancouver when a last minute reprieve spared it.

The fate of Socialism was referred to the NDP executive where its future will be deliberated and a recommendation will be made to a future convention at an unspecified date. The mere thought of having one’s fate referred to the unblinking, steely gaze of NDP executive members gives me a fit of the horrors.

Instead of having its neck on the chopping block, Socialism now has one foot on a banana peel. It could still roll through the streets on a tumbril in the not too distant future to a place of execution.

(Meanwhile, word has just been received that the United Church has put Jesus Christ on waivers. He may be sold to a rival denomination.)

Saturday, June 18, 2011

BULLETIN FROM THE NDP: SOCIALISM, 1796-2011, IS DEAD. RIP.

The NDP leadership has announced that Socialism, aged 215, is dead. “Nobody uses the word ‘democratic socialism’ in contemporary terms. It is very rare,” an unnamed senior party official told the press on the eve of the NDP convention in Vancouver. The convention was expected to remove the word “socialist” from the preamble to the party constitution. When unnamed NDP officials speak they get their way.

As these things go, socialism had a good run before the NDP brass consigned it to the dustbin of history.

In its modern form, socialism put in a first appearance in 1796 in the latter stages of the French Revolution. In truth, it was the foundling of the revolution, unanticipated by the Revolution’s most illustrious figures who ushered the tenets of liberal capitalism onto the stage of history as a transformative force.

Up popped the first socialists during the revolution to proclaim that the liberal conception of equality was incomplete, that it bestowed the rights of citizenship on all men (not yet women), but that it did not come to terms with the social and economic inequality that is intrinsic to capitalism. Capitalism establishes a new ruling class and capitalists control those who work for them and reap the profits of their labour, the socialists declared, before being dispatched to the guillotine.

The capitalists had managed a great revolution, the socialists said, but there was another giant step toward equality that remained to be taken. With that step, social and economic exploitation would end and those who worked for a living would gain the fruits of their labour and would set the priorities for their places of work. Economic and social democracy would exist side by side with political democracy.

Equality of condition and not merely equality of opportunity would be the goal.

In Canada, the greatest achievement of those who espoused equality of condition has been medicare. Tommy Douglas knew that medicare must serve all people who need health care on an equal basis, regardless of their income or wealth. Barack Obama is mired in a liberal muddle, trying to introduce fairness to a health care system that leaves private insurance companies in charge.

During its 215 year lifespan, socialism took many forms and socialists fought long and hard internecine battles. In the totalitarian Communist regimes that called themselves socialist, dissent was a capital offence. (Capitalism had its own dark side, I should add. Nazi Germany, Fascist Italy and militarist Japan, not to mention today’s China, have all been capitalist societies.)

Democratic socialism proved a hardy breed and took multiple forms in the industrialized countries. Some sects were small enough to meet in a telephone booth; others could have held their conclaves in psychiatric institutions.

Socialist parties in Europe have often achieved more that their sisters and brothers in Canada---in some cases including free university tuition, strong job protection and termination benefits, higher minimum wages, better pensions, pharmacare, free full day early childhood education, state funded family vacations, worker participation in the management of industry, generous parental leave, a shorter work week, rent subsidies, and in a few odd cases, free firewood, and free access to municipally owned ski lifts and ski runs.

The Party of European Socialists in the European Parliament, one of the two largest groupings in the EP, includes member parties from across the EU including the French Socialists, the Spanish Socialist Workers’ Party, the British Labour Party, the German Social Democrats, and the Swedish Social Democrats.

The early 18th and 19th century socialists would not have been surprised to learn that for the past several decades the gap in income and wealth between the rich and the rest of the population, including wage and salary earners and the poor, has been yawning ever wider, that greater inequality is a fact of life in all industrialized countries. That’s capitalism for you, they would think. Time to roll up our sleeves and carry on the socialist struggle, they would have concluded.

But I’m not one to argue with the NDP leadership, especially its unnamed officials, who have announced that socialism was dead.

Word of socialism’s death will still have to be broken to the millions of Europeans and their parties who haven’t yet heard the news. Perhaps a top, unnamed NDP official should be sent on a mission to let the laggards know that at the age of 215, socialism has gone belly up.

Saturday, May 07, 2011

Who is Stephen Harper and Where did his Party come from: The Remaking of Canadian Conservatism

As in the piece I posted on the historic demise of the Liberals, this piece deals, not with the recent election, but with the transformation of Canadian conservatism and the rise of the Conservative Party of Canada.

Brian Mulroney’s success in leading the Progressive Conservative Party to a second majority victory in the general election of 1988 was the last hurrah of the old Conservative Party, the party whose lineage extended back to the great days of the Liberal Conservatives of the 19th century, under the leadership of Sir John A. Macdonald. It is ironic that the party’s final electoral victory was in aid of the implementation of the Canada-U.S. Free Trade Agreement that had been negotiated between the Mulroney government and the Reagan Administration. The last great fight of Macdonald’s life had been to sustain the National Policy and to block the Liberal Party’s drive for a renewal of reciprocity or commercial union with the United States.
The 1988 federal election campaign pitted multinational and Canadian business on one side against trade unions, social movements and much of Canadian civil society on the other. The Liberals and the NDP declared that, if elected, they would tear up the FTA; the Conservatives committed themselves to implementing the free trade deal if they were returned to office. In the election, between them, the Liberals and the NDP won 53 per cent of the votes cast by Canadians, while the Conservatives won 43 per cent of the popular vote. Under the nation’s “first-past-the-post” electoral system, however, the Conservatives won a majority of seats in the House of Commons and the Canada-U.S. FTA came into effect on January 1, 1989.
By the time the Mulroney Conservatives had won their second majority, the political and social forces that would tear the party apart and open the way for the reconstruction of the Canadian right, were already making themselves felt. Mulroney’s party consisted of an uneasy coalition among three groupings, conservatives----themselves divided between free-market, pro-American right-wingers, and a shrinking number of traditional Tories---Alberta right-wingers, coalescing around Preston Manning, who had more in common with the Social Credit tradition than that of Macdonald conservatism, and soft Quebec nationalists, whose pre-eminent figure was Mulroney’s Minister of the Environment, Lucien Bouchard.
In the 1988 election, Preston Manning, the son of Alberta’s longest serving premier, the Social Credit’s Ernest Manning, entered candidates for his newly founded Reform Party, but failed to win a single seat. The previous year, Manning had led fiscally and socially conservative westerners who resented special deals for Quebec, and opposed bilingualism and large-scale immigration, to form the Reform Party at a founding meeting in Winnipeg. Stephen Harper became an early policy advisor. Although the party was shut out in the 1988 general election, Deborah Grey was successful in winning the Reform Party’s first seat in a 1989 by-election for an Alberta seat.
As the Reform Party got underway, so too did the other major challenge to Mulroney’s party, this one from Quebec.
One of Brian Mulroney’s major initiatives was to try to complete the unfinished constitutional changes that had been launched by Pierre Trudeau. Mulroney sought constitutional reform, satisfactory to all provincial premiers that would recognize Quebec as a “distinct society.” Known as the Meech Lake Accord, the amendment would also limit the power of the federal government to initiate shared-cost programs in areas of provincial jurisdiction without allowing provinces to opt out while receiving full financial compensation.
Mulroney was able to attract Lucien Bouchard, a long-time friend and Quebec nationalist, to join his government in support of his decentralist agenda. Bouchard had joined the Parti Quebecois in 1971 and had supported the “Yes” side in the Quebec constitutional referendum in 1980. Bouchard served in Mulroney’s government as Minister of the Environment as the Meech Lake struggle reached its climax. Time ran out on the Accord when Manitoba and Newfoundland failed to ratify it before the deadline of June 30, 1990. As Meech Lake was going down in flames, Bouchard left the Progressive Conservative Party and the Mulroney government to found a new sovereignist party in federal politics, the Bloc Quebecois.
When the highly unpopular Brian Mulroney stepped down as PC leader and PM in 1993, he was replaced by Kim Campbell, a politician from B.C. who was chosen leader by a PC Party convention. She was Canada’s first female prime minister.
Campbell called an election for October1993. The result was a transformation of Canadian politics.
Jean Chretien led the Liberals to a substantial majority victory, winning 177 of the 301 seats in the House of Commons. In second place came the Bloc Quebecois with 54 seats and in the third place the Reform Party with 54. Running fourth was the NDP under the leadership of Audrey McLaughlin with 9 seats and fifth with only 2 seats were Kim Campbell’s PCs.
The great political party of Confederation had disintegrated. Underway was the struggle to rebuild the political right in Canada.
Macdonald's party had been the great nation-building political instrument that fashioned Confederation and elaborated the National Policy, the economic doctrine that created a transcontinental Canadian economy. The Canadian Tory tradition, inseparably linked to the culture, ideas and policies of John A. Macdonald, shaped Canada in its formative decades. Macdonald's deepest commitment was to the creation of a Canadian nation that would be able to sustain itself separate from the United States.
While pragmatic and capitalist, Macdonald's political philosophy contained an element of paternalism and the belief in the large state that was strange on a continent where individualism and the market were the true deities. The state Macdonald constructed was imbued with these Tory notions. To build a railway across the country and to have institutions in place to receive hundreds of thousands of new settlers would require strong government intervention.
The Tory idea proved highly useful to Canadians for generations in their efforts to compete with the powerful nation to the south. In the first decade of the twentieth century, under the leadership of Adam Beck, a manufacturer from London, Ontario, the province of Ontario drew on the Tory creed when it created a publicly owned hydro-electric system. The inspiration behind Ontario Hydro, at the time the largest public utility on the continent, was that a public corporation could provide electricity at cost to consumers and businesses alike. Later, Tories established the Canadian National Railway, the Bank of Canada and the CBC.
To free market purists, the idea of the state acting to improve Canadian productivity and the promotion of Canadian culture is incomprehensible. They cannot help but see this as a statist heresy, or even as a diabolical leftist scheme. In truth, the idea had everything to do with the Tory view of the proper relationship between the state and society.
The Reform Party, after 1993 the dominant force on the right, shifted the politics of conservatism out of what little remained of the Macdonald heritage to a more sharply right-wing American style ideology, much influenced by the Social Credit tradition in Alberta.
Before returning to the remaking of Canadian conservatism in the 1990s and beyond, we will turn briefly to a discussion of the evolution of Alberta politics and the role played in the province by the Social Credit.
In southern Alberta, the social landscape is as unique as the physical. In the last years of the nineteenth century, southern Alberta was the "last best west," the frontier that was still open to settlers after the American frontier was officially designated as closed. A much higher proportion of those who settled in this region of Alberta came from the United States than had been the case in Saskatchewan and Manitoba. After Confederation, Manitoba's first settlers had come from Ontario. To these were added Ukrainians, Icelanders, Finns, and Jews from eastern Europe. In Saskatchewan, the influence of Ontario was not as great as in Manitoba although it was not inconsiderable. Settlers came from the British Isles, as well as from western and eastern Europe. Many of the Americans who settled in southern Alberta brought with them an evangelical Protestant outlook. That outlook served as the cultural foundation for the development of important political movements that had an impact on Alberta and national politics.
Both on the left and the right, Alberta had its own brand of populist politics, heavily spiced with the views of American immigrants. One of the first to put his stamp on Alberta farmer politics was Henry Wise Wood who hailed originally from Missouri. He arrived in Alberta in 1905, the year Alberta became a province. More than any other person, Wise Wood helped shape the philosophy of the Alberta farmers' movement. His critique of Canadian politics was that the party system naturally favoured the wealthy and the powerful at the expense of other segments of society and the domination of the country by central Canada. Dismissing the Liberals and Conservatives as unprincipled parties seeking power for the sake of power, he called for the creation of a party to represent farmers alone. While his ideas had little impact on the country as a whole, they were ideally suited to appeal to the particular conditions of Alberta at a time when the largest single occupational group was farmers who owned their own farms. He was the guiding force behind the United Farmers of Alberta, a movement that became a highly successful political force when it won power in the province and governed Alberta from 1921 to 1935.
The movement that succeeded the UFA in power and then held it for three and a half decades also had important roots in southern Alberta. The charismatic leader of the Alberta Social Credit was William Aberhart, a native of Ontario. Aberhart moved to Calgary where he taught mathematics in a major high school and then became its principal. What he shared with many southern Albertans was Protestant fundamentalism. With his "Back to the Bible" broadcasts, Aberhart became Canada's most successful radio evangelist in the mid 1920s. In 1932, when Alberta suffered as a consequence of the collapse of grain prices during the Great Depression, Aberhart became a convert to the ideas of a Scottish engineer by the name of Major C.H. Douglas. Armed with the idea that Alberta needed an injection of "social credit", in the form of a dividend to be paid by the government to Albertans, Aberhart built a movement that propelled him into the premier's office in the 1935 election. The former UFA government lost every seat it held in the legislature. Alberta's populism had shifted from the left to the right where it has remained every since. With Alberta's major oil discoveries, beginning in the late 1940s, the province shifted from being Saskatchewan's economic twin, to becoming a mighty petroleum power.
A new populism, tailored to Alberta's metropolitan stature as Canada's petroleum power, emerged in the 1970s with the election of Conservative Peter Lougheed as premier in 1971. From Lougheed, with his wars with Pierre Trudeau over oil revenues, to Ralph Klein's struggles against Jean Chretien over health care and the Kyoto Accord, Calgary and rural southern Alberta have been the locus of power in the province.
And out of the culture of southern Alberta emerged the newest power in Canadian federal politics, the Reform Party, en route to the Canadian Alliance and the present-day Conservative Party of Canada. Here the link goes straight back to the populism of William Aberhart and the Social Credit. Ernest Manning, a young man from a rural family in Saskatchewan, walked into Aberhart's Prophetic Bible Institute in 1927 and enrolled in the Institute's one-year course in bible studies, becoming its first graduate. It was the most fortuitous choice of a course ever undertaken by a student in Canada. When Aberhart died in 1943, Manning succeeded him as premier and held that post until 1968.
His son Preston, a skilled and original political thinker, was the mastermind behind a new political vision of Canada and the place of the West in Confederation. His brainchild, the Reform Party, pushed aside the Progressive Conservatives, to become the leading vehicle of the Canadian right. It is no accident, given its origins and its history in the "last best west" that the Reform Party was the political party with the most natural affinity for American values and was the most pro-American party in Canada.
Preston Manning’s Reform Party merged a number of political streams. It featured the Alberta regionalism of the old Social Credit with its suspicion of Central Canada, its rejection of Quebec nationalism and bilingualism, and its promotion of provincial rights. In addition, the party adopted a strongly neo-conservative view of the economy, and had no sympathy for the historic Tory backing for state intervention and crown corporations. The third stream in the mix was social conservatism, closely aligned to the views of evangelical Christians, who were opposed to abortion, were negative to rights for gays and lesbians, and later to same sex marriage. As well, social conservatives opposed multiculturalism and favoured a reduction in the level of immigration to Canada.
The Reform Party’s problem was that it won only one seat in Ontario, its only seat east of the Manitoba-Ontario border in 1993, a seat it subsequently lost in the 1997 election.
In the meantime, the PC Party was struggling to recover from its 1993 electoral disaster. Jean Charest who held one of the party’s two seats in the House of Commons was chosen interim leader in the autumn of 1993 and then the party’s leader in April 1995. In the 1997 federal election, Charest led the PCs back to 20 seats in the House of Commons. The following year, he stepped down as party leader to accept a draft to become the leader of the Quebec Liberal Party (a party which had no organizational link to the federal Liberals.)
At a convention in 1998, the PCs turned to former leader Joe Clark, the voice of the Canadian right’s dwindling force of Red Tories, to once again take up the reins of leadership. Clark’s party won only 12 seats in the 2000 election, the minimum number needed to form an official party in the House of Commons. Clark held onto his own seat of Calgary Centre, but in 2002 he announced that he would step down as party leader.
By this time, the larger side of the divided right had gone through a further process of evolution. Anxious that Preston Manning’s Reform Party, which won 60 seats and the official opposition in 1997, was too narrowly based and would never achieve a breakthrough east of Manitoba, right wing thinkers and activists sought a way forward, creating the United Alternative as their vehicle.
This initiative resulted ultimately in the formation of a new party, the Canadian Alliance into which the Reform Party folded itself. At a founding convention in 2000, the CA chose former Alberta Provincial Treasurer Stockwell Day, in preference to Preston Manning, to lead it.
Stockwell Day, an evangelical Christian, garnered scant support east of Manitoba in the 2000 election---the party did win two seats in Ontario---and managed to win 66 seats in the House of Commons, a gain of six over the Reform effort three years earlier. Discontent with Day’s leadership boiled up in the ranks of CA. Splits in the party’s parliamentary caucus led Day to step down as leader. At a leadership convention in 2002, the party chose Stephen Harper, ahead of Stockwell Day, as its new leader.
Born in Toronto in 1959, Harper moved to Alberta as a young man and became one of the founding members of the Reform Party. In 1993, he won the seat of Calgary West as a Reform candidate. Harper, who found himself increasingly at odds with Preston Manning, resigned his seat in January 1997, leaving parliament to join and soon to head the National Citizens Coalition, from 1998 to 2002.
A Canadian conservative lobby group, founded in 1967 by Colin M. Brown, to promote right wing political ideas and policies, the NCC was originally established to oppose the creation of a national health care system. Among the positions of the NCC are:
• Privatization of government own entities
• Tax cuts
• Government spending cuts
• Opposition to laws limiting spending by non-party organizations during election campaigns
Over the course of its existence, the NCC has campaigned against:
• The Canada Health Act
• The Canadian Wheat Board
• The admission to Canada of Vietnamese refugees in 1979-80
• Closed shop unions
• The mandatory long form census
Prior to re-entering federal politics and assuming the leadership of the Canadian Alliance in 2002, Harper adopted a highly decentralist view of Canada that was harshly critical of Canadian social policy. In 1997, Harper delivered a speech to a U.S. conservative think tank in which he said that “Canada is a Northern European welfare state in the worst sense of the term, and very proud of it.” He further stated that “the NDP is kind of proof that the Devil lives and interferes in the affairs of men.” When the comments were quoted during the 2006 election campaign, Harper explained that they were intended as humour.
Following the federal election of 2000, along with other conservatives, Harper co-authored a document called the “Alberta Agenda”. It called for Alberta to:
• Reform publicly funded health care
• Replace the Canada Pension Plan with a provincial plan
• Replace the RCMP with a provincial police force
It concluded by calling on the provincial government to “build firewalls around Alberta” to stop the federal government from redistributing the province’s wealth to less affluent regions. That year Harper also wrote that Canada “appears content to become a second-tier socialistic country…led by a second-world strongman [Jean Chretien] appropriately suited for the task.” He advocated a “stronger and much more autonomous Alberta.”
In his maiden speech in the House of Commons as Leader of the Opposition on May 28, 2002, Harper made the case for an Alliance motion that charged the Liberal government with failure in its management of relations with the U.S. Harper’s thesis was that the Chretien government had been insufficiently staunch in its support for the positions adopted by the U.S. administration.

Harper accused Chretien of “open meddling in U.S. domestic politics prior to the 2000 presidential election when the Prime Minister stated his preference with regard to the outcome of that election.” He quoted the comments of the former political counselor at the U.S. embassy, David Jones, who said in January 2001 that Chretien exhibits “a tin ear for foreign affairs, especially those involving the United States.” Harper’s conclusion: “It is no secret that this poisoned the relationship between the government and the new American administration.” Quoting an unnamed source in the National Post to the effect that the Prime Minister is not a player with the Bush administration, Harper cited this anonymous authority as saying that “the Americans could not care less about the views of the current Prime Minister. This is particularly evident in President Bush’s passivity in dealing with the softwood lumber dispute.”

Harper directed no criticism at Washington for its failure to seek a solution on the softwood lumber issue. All the blame was laid at the door of the Prime Minister. Apparently it did not occur to Harper that taking the side of the government in its tough negotiations with Washington on the issue could make it clear to the Bush administration that Canadians were united on the question. Instead, Harper made it appear that Canadians were hopelessly divided and that the Official Opposition was delighted with the anti-Canadian position of the U.S. on softwood lumber.

Harper then broadened his attack on the Chretien government, beyond trade issues, to attack it for its entire foreign policy stance vis a vis the United States. “Downright hostility to the United States, anti-Americanism, has come to characterize other dimensions of Canadian policy,” he declared. “In 1996-97 Canada aggressively pushed forward with the treaty to ban landmines without giving due consideration to U.S. concerns about the potential implications for its security forces in South Korea. What did we end up with? We ended up with a ban on landmines that few major landmine producers or users have signed,” Harper charged. Having dismissed an anti-landmines treaty signed by most of the nations of the world in Ottawa, Harper went on to tow the Bush administration’s line on the development of an anti-ballistic missile defence system. “Most recently we have been inclined to offer knee-jerk resistance to the United States on national missile defence despite the fact that Canada is confronted by the same threats from rogue nations equipped with ballistic missiles and weapons of mass destruction as is the United States.” Harper’s litany of complaints against the Chretien government ended with this nod to those who allege that Canada’s refugee system makes it vulnerable to terrorists: “The government has not adequately addressed the matter of security in the context of continental security. Because of the unreformed nature of our refugee determination system, we continue to be subject to unique internal security and continental security dangers.”

Having dismissed Jean Chretien as a leader who was always anti-free trade, Harper commended Brian Mulroney for having “understood a fundamental truth. He understood that mature and intelligent Canadian leaders must share the following perspective: the United States is our closest neighbour, our best ally, our biggest customer and our most consistent friend.”

Harper concluded with his own peroration, his set of principles for dealing with the United States. “Not only does the United States have this special relationship to us, if the United States prospers, we prosper. If the United States hurts or is angry, we will be hurt. If it is ever broadly attacked, we will surely be destroyed.”

In 2003, Harper condemned the Chretien government’s decision not to participate in the 2003 invasion of Iraq.
During 2003, the long sought unity of the political right was finally achieved. To choose a successor to Joe Clark, the PCs held a leadership convention in May 2003. To secure the leadership, Peter MacKay signed a written agreement with Red Tory candidate David Orchard, pledging that as leader he would not seek a merger of the PCs with the CA and that in the next election the Tories would field a full slate of 301 candidates. Orchard then swung his delegates to MacKay thus assuring his victory.
With the convention barely behind him, MacKay began negotiating a merger between his party and the CA. Later, with the negotiations well underway, a plebiscite held among PC members resulted in a 90 per cent vote in favour of the proposed merger. A plebiscite among CA members yielded a 96 per cent vote in support. In December 2003, the two parties held a joint convention and founded the new Conservative Party of Canada. The following month, Stephen Harper resigned the leadership of the CA and in March 2004, he won the leadership of the Conservative Party of Canada.
By the time Harper became leader of the united right, Paul Martin had replaced Jean Chretien as Liberal leader and prime minister of Canada.
In the winter of 2004, Canada’s Auditor General, Sheila Fraser, issued a report that exposed to public view a series of revelations that consumed the Liberal government in what came to be called the Sponsorship scandal. Fraser’s report revealed that:
Senior government officials who were in charge of the federal government’s advertising and sponsorship contracts in Quebec, as well as five Crown Corporations, the RCMP, Via Rail, Canada Post, the Business Development Bank of Canada and the Old Port of Montreal, had wasted money, violated rules, and mishandled millions of taxpayer dollars since 1995. More than $100 million was paid to communications companies in the form of fees and commissions. While some elements of the scandal had been bubbling to the surface for a couple of years, it was Fraser’s report that made it a major political issue.
The sponsorship program had been designed to highlight the role of the federal government in Quebec through support for community events and programs in the aftermath of the Quebec referendum of 1995, in which the “Yes” pro-sovereignty side fell less than one per cent short of winning.
As the details of the scandal were unearthed over the course of the next couple of years, it became crystal clear that the communications companies receiving the contracts had close ties to the federal Liberal Party and that in return for the contracts, they paid kickbacks to the party in the form of cash offered up in restaurants in Montreal in brown paper bags.
To cope with the immense political fallout from the scandal, Prime Minister Paul Martin appointed retired justice John Gomery to head up a federal Royal Commission inquiry into the sponsorship scandal.
Long favoured to win another majority electoral victory for the Liberal Party, Paul Martin’s political prospects were blighted by the scandal.
It took two elections for Stephen Harper’s new party to push the wounded Liberals from office. In the first election, which took place on June 28, 2004, the Liberals won 135 of the 308 seats, putting them in minority territory. The Conservatives won 99 seats, the Bloc 54 seats, the NDP 19 seats and one independent was elected. While the Conservatives made major advances over the results for the CA four years earlier, winning 24 seats in Ontario, pollsters concluded that many voters who had been leaning Conservative on the eve of the election, changed their minds and switched to the Liberals.
From the start of his new ministry, Paul Martin was under constant pressure from the continuing fallout from the Sponsorship scandal and faced the prospect of the opposition parties uniting to vote him out of office. The way the numbers totaled up, a combined vote of the Conservatives and the members of the Bloc would put these two parties just two votes short of being able to topple the Martin government. This meant that to stay in office, Martin would have find common ground with the NDP and even with Chuck Cadman, the BC independent who had previously been a Conservative MP.
During one of the dramatic parliamentary crises, in May 2005, Belinda Stronach, a Conservative MP from Ontario who had run for the party leadership, crossed the floor to join the Liberals. She was rewarded with the portfolio of Minister of Human Resources.
The Martin government survived that showdown, only to be brought down in a vote in the House of Commons on November 28, 2005, when the Conservatives teamed up with the Bloc and the NDP to vote No Confidence. In the aftermath of the first report of Justice Gomery on the Sponsorship scandal on November 1, the three opposition parties argued that the Liberals no longer had the moral authority to govern. New elections were called for January 23, 2006.
The campaign featured repeated attacks on the Liberals from all three opposition parties. The Liberal position was further damaged by reports of an RCMP investigation into allegations of insider trading within the Finance Department, a unique occurrence during a Canadian election campaign. (The RCMP investigation later exonerated the Liberal Party and the Liberal Finance Minister of the day, Ralph Goodale, but by then the political damage had been done.) On election day, the Conservatives, with 36 per cent of the vote, won 124 seats and went on to form the most narrowly based minority government since Confederation in its share of seats and votes. The Liberals won 103 seats, with 30 per cent of the vote, and Paul Martin announced that he would step down as party leader. The Bloc won 51 seats with just over 12 per cent of the vote, and the NDP won 29 seats with 17.5 per cent of the vote.
In office, the Harper government emphasized corporate tax cuts and cuts to the GST as measures to stimulate the economy. Government ministers spoke of Canada as an “energy superpower” and placed a strong emphasis on the role of the development of the Alberta oil sands as a key to Canadian economic development. The Harper government abandoned Canada’s commitment to the Kyoto environmental accord, and instead pursued a policy of hewing closely to the U.S. in taking steps to reduce greenhouse gas emissions.
On matters of foreign and military policy, the Harper government strongly supported Canada’s engagement in the war in Afghanistan, ultimately agreeing to end the country’s combat role there on July 1, 2011, but deciding, with the support of the Liberals, to continue a major non-combat, training role there after that date. The Harper government tied itself closely to the United States and the United Kingdom in matters of foreign policy. It shifted Canada’s Middle East policy to one of stronger support for Israel.
During its first ministry, the Harper government introduced an amendment to the Canada Elections Act (Bill C-16) to establish fixed election dates so that federal elections would be held on the third Monday of October, four years after the previous election. The amendment passed the House of Commons and Senate and received Royal Assent on May 3, 2007. That would have put the next election on October 19, 2009. (The bill did not restrict the authority of parliament to vote No Confidence in a government and to trigger an election on another date. But it was intended to restrict the right of the sitting prime minister to choose the election date.)
Despite the fixed election law, Stephen Harper asked the Governor General to dissolve parliament on September 7, 2008 and to hold new elections on October 14, 2008. Harper calculated that Stephane Dion, the new Liberal leader, did not command strong support from Canadians and that the opportunity had arrived for the Conservatives to win a majority of seats in the House of Commons.
The Conservatives did make gains in the October 2008 election, but fell short of a majority. Harper’s Conservatives won143 of the 308 seats, taking just over 37.5 per cent of the vote. The Liberals won 77 seats, with 26.25 per cent of the vote, the Bloc won 49 seats and just under 10 per cent of the vote, and the NDP took 37 seats and just over 18 per cent of the vote.
The newly re-elected Conservative government soon faced a major political-constitutional crisis. On November 26, 2008 Finance Minister Jim Flaherty released an economic statement, which among other things announced a significant reduction of public funding for political parties. This measure, along with what the opposition parties called the failure of the government to launch an economic stimulus package to deal with the onset of the global economic crisis, pushed the discontent of the opposition parties to a head. The Liberals and the NDP with the support of the Bloc agreed that following a successful vote of No Confidence in the Harper government, they would go to Governor General Michaelle Jean to indicate to her that they were in a position to form a coalition government that would enjoy the confidence of the House of Commons. According to the plan, three quarters of the ministers in the new government would be Liberals and the other quarter, not to include the ministers of finance or national defence, would be NDPers. The Bloc would agree not to vote No Confidence in the new government for at least eighteen months. Stephane Dion would initially serve as prime minister, to be replaced by the new Liberal leader when he or she was selected at a party convention.
In aid of this, the 162 opposition members---Michael Ignatieff the last and most reluctant among them---signed a letter to the Governor General, pledging their support for the coalition to follow the defeat of the government.
In this political emergency, to prevent the House of Commons from voting No Confidence in his government, Harper went to the Governor General and demanded that she immediately prorogue the House of Commons. Prorogation is normally used as way to punctuate work in parliament during the life of a government. It halts the work of one session of parliament to open the way for another session, begun with a new Speech from the Throne.
In the next few paragraphs, I will summarize my views on the prorogation crisis of December 2008:
During the crisis, the members of the Harper government and their supporters promulgated the idea that since the Conservatives had “won” the election in October 2008, they had a right to govern.
In fact, in the election, the Conservatives won a minority of seats in the House of Commons, 143 out of 308.

Our system of government, known as “responsible government”, holds that for a ministry to hold office it must enjoy the confidence of the House of Commons, i.e. the support of the majority of the members of the House.

In Canada, we do not directly elect our prime minister. The prime minister is an elected member of the House of Commons (in theory, he or she could be a Senator, but this has happened only twice, the last time under Mackenzie Bowell from 1894 to 1896.) The Governor General asks the leader of the political party that commands the support of the majority in the House to form a government. In the case of a minority government, the critical issue is which party or combination of parties can command the support of the majority in the House.

When the leaders of the Liberals, NDP and the Bloc, whose parties held the majority of seats in the House announced their intention to defeat the Harper government and replace it with a Liberal-NDP coalition government with the support of the Bloc, they were playing out their roles within the system of responsible government. And since this move came early in the new parliament and held out the promise of stable government for at least eighteen months, it would have been almost certain that the Governor General would have called on the coalition to form a government if the Conservatives had been defeated. (The Governor General does have some discretion here, under the rubric of royal prerogative, but considering how recent the election had been, it is highly unlikely that she would have acceded to a request by Stephen Harper to dissolve parliament to call another election.)

The Conservatives appeared on news shows, talk shows and organized rallies putting out the word that what was happening in Ottawa was an attempted “coup”. At the centre of this claim was the proposition that Canadians had just re-elected Stephen Harper as prime minister and that he had a mandate to govern.

It is true that the Americans directly elect their president and therein lies much of the public confusion. The American Constitution (in my view grounded on a poor understanding of Montesquieu and the British Constitution following the Glorious Revolution of 1688) rests on the notion of “separation of powers”. The Executive Branch, the Legislative Branch (Congress) and the Judicial Branch each occupy their own hermetically sealed space and are protected from undue interference with each other much the way Vestal Virgins were protected in Ancient Rome. To their credit, the Americans have managed to make this ungainly system work with only one Civil War marring its record to date.

The Canadian prime minister is not a quasi-king in the manner of the American president. He or she rises or falls depending on the votes of the majority in the House of Commons.

Stephen Harper was successful in convincing the Governor General to prorogue parliament on December 3, 2008.

The period of prorogation continued until late January 2009, when the House resumed, its first order of business the consideration of the budget presented by Finance Minister Jim Flaherty on January 27. By that time, Dion had been replaced as Liberal leader in a vote of the party’s parliamentarians, and replaced by Michael Ignatieff as the party’s interim leader. (He was endorsed as leader by a subsequent Liberal Party convention.)

Never keen on the idea of the coalition, Ignatieff led his party to support the Conservative budget, in return for an amendment requiring the government to present occasional reports on the progress and costs of the budget. The Conservatives were happy to agree to the amendment.

Flaherty’s budget declared that the federal government deficit would total $64 billion over the next two years. Much of that projected deficit was accounted for by the impact of the tax cuts the Harper government made before the economic crisis took hold with a vengeance. Some of the rest was as a consequence of proposed new tax cuts. The budget included across-the-board income tax cuts, which not only benefited lower income earners but all income earners. Although the finance minister presented the tax cuts as measures to stimulate the economy, they were unlikely to have much effect in lifting the economy. A sizeable portion of the cuts would go to paying down existing debts or replenishing lost savings. A further and very large chunk would be spent on imported goods. Canadians import over $400 billion worth of goods a year, close to thirty per cent of our GDP. By way of contrast, Americans import goods equivalent to about fifteen per cent of their GDP. A huge portion of the tax cuts announced by Flaherty were bound to leak out of Canada in the purchase of additional imports. They might stimulate the Chinese, Japanese and American economies, but they would do precious little to stimulate the Canadian economy.

Depending on how you interpret the budget, the government committed itself to direct new spending of about $10 billion to $12 billion, on infrastructure and housing, over a two-year period.

By the time, the G8 and the G20 held their meetings in Canada in June 2010, the Harper government had adopted the view that the time had come to shift away from stimulus to cuts to government spending to reduce the government deficit and return to a balanced budget within a few years.

During the winter of 2011, the opposition Liberals reached the conclusion that it was time to vote No Confidence in the government, which would mean provoking an election if they were joined by the NDP and the Bloc. In addition to the Liberal position that Canada should forego a planned further cut to corporate taxes, on the grounds that this would swell the deficit, Ignatieff wanted to take on the Harper government on a range of ethical issues. Taken as a whole, the Ignatieff accusation was that Stephen Harper presided over a government that was highly centralized, secretive, had little respect for parliament and was undermining Canadian democracy.

The rest, they say, is history.