Ian Welsh

The horizon is not so far as we can see, but as far as we can imagine

Category: Canada Page 3 of 6

The Canadian Economy Under US Hegemony and Neoliberalism

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On July 19, 2021

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Canada’s economy is substantially resource based: minerals, wood, agriculture, and, before the collapse, fish. (The Maritimes were originally colonized largely to harvest trees for masts, which Britain had run out of at home.)

Resource economies are boom and bust economies; resource prices are cyclical, and sometimes resources get replaced. Brazil had a huge rubber plantation industry at one point, before chemists figured out how to make synthetic rubber.

Resource economies tend towards corruption because the profits are so high during good times, and they tend to not develop industry for the same reason, but also because the currency rate tends to be too high to  allow exports of manufactured goods during boom periods — so any industry gets destroyed during the boom.

For about a hundred years, Canada had a simple solution to these problems. We had a manufacturing sector, and during boom resource times, when the Canadian dollar’s strength made manufactured goods too expensive, we just subsidized the manufacturing and slapped on tariffs.

This was a fair deal, because when resource prices went bust and the dollar went low, manufacturing would boom and the taxes from that would be used to support people who worked in resource extraction.

Combined with some simple industrial policy along the lines of “don’t export raw logs or raw fish,” this created a nicely self-balancing economy, and it did so from about 1880 until the 1980s.

Neoliberalism and idiotic trade deals like NAFTA and the WTO put paid to that. It became very difficult to subsidize industries or to insist that processing be done in Canada; we started shipping raw logs and fish to the US, and we stopped subsidizing manufacturing during resource booms, so Canadian manufacturing got gutted.

This was, well, stupid, and a lot of blame is on Canada, Canadians, and the Canadian system, though, to be fair, most Canadians voted for parties opposed to the Free Trade Agreement (which later became NAFTA), but because of vote splitting in a third-party first past the post system, it went through anyway.

But it’s also because the US is, well, powerful. Canada’s economy is a little smaller than California’s, and Canada is a satrapy. Back in the 50s, Canada had a world-leading aviation industry and created the best fighter jet in the world: the Avro Arrow. The US government put on the pressure, and Avro (the company) was put out of business. The prototypes were sunk in a lake.

The threat was that if Canada didn’t give up its aviation industry, the US would take away auto manufacturing, and that was a much larger industry.

If the US wants Canada to do something, Canada generally does it. There have been exceptions, especially under Pierre Trudeau in the 70s, and in the early 2000s Prime Minister Chretien did refuse to invade Iraq, but they are exceptions.

Anyway, Canada’s economy is now much more fragile than it used to be, because it’s much more integrated into the world economy and much less able to adjust cyclically or insist on keeping a significant manufacturing sector.

This isn’t unique, or anything. It’s the shape of the world economy overall, where countries, especially under neoliberalism, mostly aren’t allowed to have an independent economic policy. Canada was never autarchic; we were always a trading state, but we were able to more or less run our own affairs and insist that resources mined, chopped, or fished here be at least primarily processed here.

Nations which do not make what they need are at the mercy of those who do. The US got around this by maintaining control of making, growing, and digging things without keeping them in the US, until they made the mistake of letting China industrialize.

That has lead to the rise of China/US tensions, and a realization that neoliberalism is a two-edged sword.

More on that later. In the meantime, the reason most of the world’s nations are poor and have to do what the US wants when push comes to shove, is exactly because they were not, and are not, allowed separate industrial and economic policies.

Canada, the near neighbour and satrapy, actually still has a pretty good deal, better, in fact, than is given to American peasants.

But all of that will be changing over the next couple decades.

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Canada Day, Canada’s Shame

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On July 1, 2021

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It’s a muted Canada day this year because of the discovery of dead children at residential schools for natives.

The residential schools were boarding schools for native children. The children were taken from their parents by force (some parents were killed for resisting). Once there, they were treated badly, not allowed to speak their native language, and inculcated in Christianity, which is why they were run by the Catholic Church.

The reasoning was that the only way to “civilize” the natives was to make them Christians, and to remove them from their culture.

So far, over a thousand children have been found in unmarked graves this year. More will be found. The BBC estimates 2,000 dead, but I’m betting it is more.

The children at these schools were abused, they were not treated with love, and when they returned to the reservations, many of them acted as adults who were abused children not treated with love; reservations have huge amounts of alcoholism, drug use, and abuse. This trauma, combined with the other generational trauma natives endured, plus the systematic mistreatment of natives on reservations, has lead to reservations being third-world enclaves in a first-world nation, and anti-native racism is rampant in Canada — especially in rural areas.

This has lead to a lot of canceling, some of it unquestionably justified, some of it less so.

The Atlantic Magazine wrote a good defense of John A. MacDonald (even if it was written by Frum), Canada’s first Prime Minister, for example: He supported residential schools, but in his time they were voluntary and his policies, for the time, were relatively enlightened towards the natives — including some attempts to feed them during the famine caused by the US genocide of the bison herds.

The key paragraph is:

This is not a “reckoning with history.” It’s a refusal to reckon with the actual possibilities open to the people of the past. This is not “moral responsibility.” It’s a flight from responsibility into rituals of self-purification through denunciation and destruction. It is easier to perform outrage than to improve outcomes in education, addiction, and economic development.

The real problem here is that modern day natives live in slums and are treated terribly. The simple fact of the matter is that a real attempt was made to genocide their cultures (that’s what compulsory residential schools were part of) and that putting them in reservations and treating even the adults like children (that was pretty much their legal status), then failing to care for them, makes Canada culpable for the state they are in.

There is no getting around this easily. What was done cannot be undone, but Canada could do what it can to make it right, and the simplest way to start would be with money. There are a million “status” Indians in Canada, and just giving them a boatload of cash is something Canada can afford to do, and should do. (We spend about $200 billion on various business subsidies, including for oil and gas; we can find the money.)

On their side, the natives need to understand that countries rarely self-dismember, and that turnaround (taking away the rights of non-natives) is a no-go, and would be stupid and self-defeating. Canada would have to give natives a fair bit of land, but that land would not be fully sovereign; they would not be separate countries. Something like provincial powers or even provincial status would be appropriate, but it must be done in a way that respects democratic and civil rights. If Indians want settlers off their returned land (settlers who have sometimes been there for over a 100 years), those people will need to be compensated, and it’s reasonable for the Canadian government to bear those costs.

The price tag for all of this will be in the hundreds of billions. Canada can afford it, and it is the right thing to do, but it must also come with genuine reconciliation over time.

In the meantime, Canada is right to be ashamed, and the Pope needs to get off his ass and apologize as well — because the Catholic Church are who perpetrated the actual administration and the actual, day-to-day abuse. (This reminds me of the dead bodies found buried secretly near Irish Catholic-run orphanages.)

Like every other state in the Americas, Canada is a settler state. We were built on conquest and genocide. I have little patience for constant self-whipping over the fact; it is what is, and most people still alive today had nothing to do with it.

But we are responsible for our behaviour today, which is still very bad, and we are responsible for making right what can be made right — things that were done by those who came before us, those who created and maintained this country on land stolen from the natives, while they continued to hurt those natives, pretending instead that they were caring for them.

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Happy Canada Day

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On July 1, 2020

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I like Canada, but it has its flaws. In particular, it’s been a shitty country to indigenous people.

Plenty of spreading disease in the early years, and the deliberate destruction of their ways of life and cultures through residential schools.

Back in high school, I learned about the Metis rebellion, but it was never clear WHY it happened, and I didn’t learn the reason until I was in my 40s. Until the Victorian era, the Metis were the trading caste among the first nations; they controlled much of the economy and were the people who tied together various hostile tribes.

When the Brits/Canada pushed West, they didn’t respect that, and threatened the existing power structures and economic arrangements. So the Metis rebelled. Bit of a damp squib, mostly because the leader, Louis Riel, was unwilling to fight properly. He was advised to cut the rail lines, which would have made it a real fight.

Everything after that has been a downhill slide for the indigenous peoples, who are treated terribly and discriminated against. The worst racism in Canada is definitely against the natives, not against blacks (which is not to say there is no discrimination against them).

Canada has a mixed record for a lot of others, good for many. For a lot of people, it’s been a very good place to live, better than most in the world.

It’s heading in the wrong direction, however, and has been for decades. That’s accelerated recently in two of the most important states, Ontario and Alberta, which are both slashing and burning public services and ownership. Both want to get rid of universal healthcare and so on. They won’t quite manage it this time around, but when the centrist liberals get in power they won’t roll it back, so I figure we’ve got ten to twenty years. If politics don’t radically change by then, Canada will turn into USA North.

One thing I particularly love about Canada is that we have lots and lots of wilderness, one of the few countries where that’s still true.

Overall, I’m pretty glad I was born here.

Hope you’re having a good day, feel free to use the comments as an open thread.

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Alberta’s Alienation from Canada

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On November 5, 2019

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So, for those of you who don’t know, Alberta is sort of Canada’s Texas: It has a lot of oil and a lot of farms.

Alberta is also the heart of the Canada’s Conservative Party. Virtually all of their seats go to the Conservatives every federal election.

Many Albertans feel isolated and disrespected by Ottawa (our capital) and the East. Back in the 70s, Pierre Trudeau (our current Prime Minister’s father) made them sell oil to Canadians for less than market price and even nationalized a little bit of the market.

Since they also have a lot of money, they make what are called “transfer payments” to the other provinces.

So, they feel like they put in more than they get back.

There’s a lot of truth to this, of course. This isn’t the same “Red State” BS like in the US, where they get more from the Feds than they put in and whine about it.

That said, Alberta has been sitting on black gold and fucked it up.

Fucked it up.

They decided that low taxes were more important than investment. They hardly taxed the oil companies pumping the oil, even the foreign ones, and even during boom times when there was no question those companies would pay.

So, they didn’t get as much money as they should.

They also misspent what money they had, and didn’t think about creating a post-oil future economy.

In Canada, we do have poor provinces. The poorest are the Maritime provinces–the ones up against the Atlantic.

Here’s a funny story: Those provinces used to be rich, a long time ago.

See, England needed lots of masts. You need good trees for masts, and the English cut down all their own, and other Europeans had either done the same or wouldn’t chop down enough of them.

Good masts were incredibly valuable. In addition, the Maritimes had the richest fisheries in the world. There are eyewitness accounts from the early days that you could literally dip a bucket into the Ocean and come up with fish.

So the Maritimes were prosperous.

Then the world moved to Steam engines.

Then the Maritimes, quite deliberately and before the advent of climate change, fished the Grand Banks cods to collapse.

Now, they are poor as hell, and always getting those transfer payments.

So, this is Alberta’s future.

The funny thing is that Alberta is also a big agricultural province, but, of course, since oil makes more money, they’ve gone ahead and polluted like hell, destroying vast swathes of land.

To summarize: Alberta did not invest enough in industries to take over when oil (a non-renewable resource) became less valuable. They did do what they could to fuck up their sustainable resource industry: farming.

Most of this is not the rest of Canada’s fault. Yeah, they would have had more money if Ottawa had given them a complete free hand, but they had plenty of money and wasted it on low taxes and tax cuts and didn’t bother to be good environmental stewards.

These decisions were made in Alberta, by Albertans, not in Ottawa.

Resource economies are always, at best, cyclical. They are always in danger of being destroyed by substitution (as is happening with hydrocarbons). A smart jurisdiction uses their resource-based wealth to buy a future not reliant on those resources.

There are lessons here for a lot of countries and regions. Canada as a whole has fucked up its economic balance over the last 20 years (a different article). Russia is way too reliant on resources. Various US states are going to take it on the chin when hydrocarbon prices collapse, and they too have been short-sighted, greedy, and stupid: They’ve been doing things like polluting their groundwater with fracking.

In the future, water is going to be far more valuable than oil. So is good agricultural land.

These places have gone out of their way to destroy both.

The problem with Ottawa isn’t so much that they interfered in Alberta, but that they interfered in Alberta in the wrong ways.

As for Albertan voters who always vote Conservative: You’re fools. Because they know you will always vote for them, they do nothing for you. When the Conservatives were in power for almost a decade, they sucked up to Ontario and Quebec, because they knew they needed their votes.

You? You got nothing, exactly because they know they don’t need to give you anything.

There are those in the US who might think on this lesson as well.

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Trudeau Decides to Run a Minority, Conservative Government

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On October 24, 2019

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Justin Trudeau

Justin Trudeau

So, Trudeau has announced he won’t form a coalition with any other party (really, not with the NDP, Canada’s left wing party), or a confidence and supply agreement (in which a party agrees to support them on confidence votes but not other votes), but instead to run a minority government.

His first order of business will be a tax cut.

I said in the last post that I thought Trudeau would be more comfortable working with the Conservatives than the NDP, given he’s a staunch neoliberal, and this indicates he’s de-facto going to do that: The Conservatives never saw a tax cut they didn’t like, after all.

Minority governments don’t tend to last, so there’ll probably be another election in about two years. Trudeau would rather take a shot at a majority, with the possibility of a loss, than run a coalition government.

More importantly, I’m reasonably sure that he’s just not willing to do the things the NDP would require in return for a coalition. They, after all, want to raise taxes on the rich and corporations, for example.

We’ll see how it plays out. My sense is that an NDP coalition, through which he did some genuinely left-wing populist things, would have been a better call for him from a practical perspective (and I think not just because I prefer the NDP). He could then take credit for the stuff he was forced to do and win a majority–as his father did when he joined a coalition with the NDP.

But unlike his father, Justin is genuinely conservative–he’s a neoliberal. He’s going to make decisions based on what he actually believes in, which is… good?

I suspect he’s risking a loss. If he’s going to play conservative, people may decide they might as well get the real thing. But I’m bad at electoral predictions, so I’ll just sit back and see.

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Liberal Party Wins a Minority in Canada

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On October 22, 2019

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Justin Trudeau

So, as the polls predicted, the Liberals win the most seats, but just short of a majority. The Conservatives actually got slightly more of the popular vote at 33 to 34 percent, but as their support is geographically clustered, they received less seats.

The NDP lost seats, taking them down to 24. The Bloc went from almost none to probably 32 of Quebec’s 78 ridings, making them the third largest party. This shouldn’t be taken as meaning separatism is roaring back, the Bloc downplayed separatism, but did benefit from supporting the “no religious symbols law” in Quebec (which includes hijabs and so on). The Quebecois, like the French, are still big believers in secularism and not fans of multiculturalism.

The most likely result here is a Liberal/NDP coalition government, though Trudeau could try to govern as a minority. He won’t want to ally with the Bloc as they are still officially separatists, and the rest of Canada wouldn’t like that.

My read of Trudeau’s personality is that he’s woke in the most performative sense; he doesn’t actually believe in anything left-wing, really, and he won’t like allying with the NDP. I read Trudeau right when he became leader, noting that there was no chance in hell of any electoral reform under him unless it was ranked ballots, and I stated that he was an empty shirt. His betrayal of his promises to Canada’s indigenous people and his buying a pipeline indicate I was correct.

Trudeau would be more comfortable working with the Conservatives, in my view, but that’s impossible for a variety of reasons.

So, we’ll see what he does. I’d expect him to suck it up and do a coalition, then like his father, after having been forced to do some left-wing things by the NDP, to use those as proof that he’s left-wing and not an empty shirt, and call another election. (His father, though many things, was not empty, mind you.)

However, we’ll see. Trudeau’s primary characteristic is near narcissism. He’s always been beautiful, rich, and loved. He has near divine confidence that whatever he does is right, and he’s a neoliberal at heart.

As for the longer future, nothing about this election is good. The NDP continue to slide. The Conservatives are getting stronger, and the Liberals are just neoliberals. There is no sign that Canadian politics is getting healthier, other than a minor surge by the NDP towards the end. The choice remains one between “bad” or “terrible.”

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Happy Canada Day

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On July 1, 2019

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Canada remains a good country to live in. There are a few countries– mostly northern European-that have better statistics, but not too many.

Outsiders tend to overestimate how good, however, and Americans, in particular, tend to idealize Canada a bit too much.

The key thing to understand about Canadian politics is that they are right-wing trending, the same as the US. This shouldn’t be a surprise; the country is swamped with American money, ideas, and political operatives.

The difference is mostly that Canada started this rightward swing in a far better position than the US: We were more left-wing, with more support for a safety net, universal healthcare, etc.

So we have farther to go to be as bad as the US.

But we’re hustling.

And, like most countries, there are people for whom Canada is not good. Mostly this would be the indigenous peoples.

Still, overall, there are few countries I’d rather live in. Among other things, Canada still has tons of wilderness, and though I don’t get to spend much time in it any more (something I hope to remedy), I did when younger, and I value it a lot.

So, Happy Canada Day, and may we stop running down this neoliberal path before it destroys us.

What the Huawei Row Portends for the Future of America, China, and Canada

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On January 14, 2019

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Huawei is a giant Chinese telecom company. It produces fifth-generation telecom equipment (5G), cell phones, and much more. Its 5G equipment is probably the most advanced in the world.

The US has accused it of espionage: Stealing commercial secrets. In the US, it is illegal for Huawei telecom equipment to be used for infrastructure, and the US is trying to convince other countries, especially European ones, to not use their equipment either. The rationale is that such equipment makes Chinese spying easier.

A while back, the US government asked the Canadian government to extradite a Chinese Huawei executive to the US. Her name is Meng Wanzhou, and she is the daughter of Huawei’s CEO.

Importantly, she was charged with fraud related to violating US-Iran sanctions, not espionage against American companies.

In response, China has mostly swung at Canada, arresting a number of Canadians and retrying a Canadian drug smuggler, increasing his penalty to death.

One of the US’s goals has been to separate the US and China: For example, the NAFTA rewrite, the USMCA, forbids any member from forming a trade deal with a “non-market economy” if either other member disagrees. (The US defines China as a “non-market economy.”)

It may or may not have been deliberate, but this request has made Canadian/Chinese relations much worse.

Note that the person being charged is pretty close to Chinese royalty. This is like if Steve Job’s daughter was a senior Apple executive and arrested. Imagine the furor.

But I want to highlight something else: This is about breaking Iran sanctions. (Which China did, though I have no insight into Meng’s involvement.)

The Iran sanctions were certainly legal under US law. They were not, however, in any way, shape or form, just. As with all economic sanctions they disproportionately hurt people not in the ruling class. They hit various medicines and caused a lot of suffering and death. The evidence that Iran had a nuclear weapon program was always dicey, and in any case, that America has the right to deny nuclear weapons to other countries is unclear.

So Meng is being prosecuted for a political crime. She is being prosecuted because her country decided not to obey US laws with respect to another country. US laws which are unjust on their face.

To me, at least, this is illegitimate. China’s counter-strikes are also illegitimate: Canadians should not be used as cats-paws in this, and China’s actual issue is with the United States, not Canada. That said, from a realpolitik point-of-view, I entirely understand China making the point that acting on behalf of the US in its near-cold war with China will have negative consequences.

This row has continued to accelerate. There is a fair bit of danger, in the medium-run, that the world is going to split into two economic blocs, and enter something close to a cold war again.

The US wants China to do what the US wants, which is for them to remain a regional power, not a great power, to not take control of its near abroad (as the US did in the 19th and early 20th century, in much more violent fashion than China has so far), and China, a rising Great Power (and potential superpower) will not be stifled in this way. No rising great power, certainly not the US, ever was or will be.

This road, though we are early on it, leads to war. There are things China does that are illegitimate, but its power will have to be accommodated, just as the US’s was. (Take a look at the map of the Canadian province of British Columbia, notice the Alaska panhandle: It is complete bullshit, and it was obtained because Theodore Roosevelt was willing to go to war to get it, and the British, preoccupied elsewhere, weren’t willing to fight him for it.)

As for Meng, she is clearly a political prisoner and pawn, as are all the Canadians that China has arrested in retaliation.

While it’s unlikely to happen, because Americans think they have the right to apply their law to anyone, anywhere and to kill anyone they want in most countries in the world, without even a trial, sensible politics would be to de-escalate this.

Locking up Meng, which is most likely (US prosecutors generally get their victims) will be a running sore. America is banking on Chinese fear outweighing Chinese anger. Maybe it will, for a time, but the Chinese strategic tradition also includes a hell of a lot of smiling at enemies until you can stomp them flat.

The US ought to think very carefully on that, and whether or not it really wants to go down this road, especially over such an unjust charge.

As for Canada, it is an American subject state, and, as the USMCA proved, when America gets serious, Canada does what it is told. I have explained this to Canadians for a couple decades now, including the need for an actual deterrent (it needn’t be nuclear), but Canadians think the US is Canada’s friend, not overlord.

This mistake, too, will continue to be punished.

The results of the work I do, like this article, are free, but food isn’t, so if you value my work, please DONATE or SUBSCRIBE.

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