An end to marketing boards...please

There is a chicken glut that has sent prices down 50% over the past year. But that news seems foreign to my Canadian ears. And it is. The prices the USDA publishes for poultry prices are a quite a bit different from the prices posted north of the border. Indeed, the wholesale price of skinless/boneless chicken in Canada is about CDN $14/kg (CDN $6.37/lb) - nothing close to the CDN $2.58/kg (CDN $1.17/lb) posted in the United States. If this is just one example of the consumer cost of agricultural marketing boards, then it is time Canadians wake up and push for policy change.

Too often the interests of consumers are ceremoniously tossed to the wayside, all in the ill-advised defence of producers. The livelihoods of certain sectors of our population depend on the protectionism that brings forth all manner of consumer taxes. This is indisputable. But it is imperative that policy makers understand the crippling effect of protectionism. Far better to deal with global trade head-on by dismantling protectionist institutions like marketing boards and help redirect producing assets toward industries with some level of comparative advantage. The economic rewards for the nation would be substantial. My family's annual chicken savings alone could be over $1,000 at the current prices. That is the kind of tax cut Canadians could use.

Time for Canada to be proactive on regulatory co-operation

The CD Howe Institute published an important article on the need for regulatory convergence in Canadian - American trade relations. Michael Hart's article "Steer or Drift: Taking Charge of Canada - U.S. Regulatory Convergence" (see http://www.cdhowe.org/pdf/commentary_229.pdf ) correctly puts the weight on Canadians shoulders to effectively face up to its fears regarding North American integration and tackle the regulatory framework head-on. Our economy would benefit greatly with regulatory convergence - or reducing the "tyranny of small differences". The more Canadians wrestle with the inevitable integration that must take place, the more we penalize our nation. As Mr. Hart concludes, Prime Minister Harper would do well to turn the focus of the upcoming meetings in Mexico with President Bush toward positive efforts that promote regulatory convergence.

 

I would add that it is critical to move on the security front as well. The commercial regulatory environment is highly dependent upon the shared security goals of the member nations. On this matter, too, it is imperative that Canadians maturely address the nations dependence on America and its shared economic interests. It is time to put aside nationalistic pride and work toward an integrated security perimeter, with shared or co-operating institutions that ensure that the security of North Americans are effectively and efficiently administered. Only then will the commercial interests of the two nations flourish.

 

The Canada - U.S. border should allow for free movement of goods and people. This implies much: shared immigration and refugee policies, regulatory and legal convergence or co-operation. All this may seem like a brave leap for Canadians, but it is far better to embrace the common values and interests we share as North Americans than to foolishly hang on to institutions that prevent the regional flowering that is so evidently nascent.

 

Yes, small steps are the political prescription, but what we need now is a voice - a strong voice - that bravely confronts the people of Canada with a plan for integration. There is no need for barriers to be drawn. No need for costly bottlenecks at the border. This may be far too much to ask of a minority government. For now, chipping away at "small differences" is the expedient option. But really...its time for the Canadian people to address the future maturely - and bravely. 

North American security

The Canadian tourism industry is starting to let its concerns be known about the effects of the proposed U.S. identity documentation required of travelers from America. It worries that Americans will forgo travel to Canada for business and pleasure because of these restrictions. Indeed, we can expect that this obstacle will result in reduced flows of money into this important part of our economy. This will affect many businesses and employees in the Canadian travel and tourism industry.

Understandably, the United States must take responsibility for the security of its citizens. They have every reason to make their border with Canada as secure as feasible. Unfortunately, until Canada embarks upon a harmonization of security and moves toward the ideal of a North American security perimeter, it will be forced to deal with unfortunate consequences for trade. It is important that the Canadian government tackle this vulnerability head on. That means clearly establishing a shared commitment to security and integrating North American security measures and forces. There is too much at stake to leave the U.S. government forced to invoke the documentation requirements. Better that Canada help offer alternative solutions. We are, irrevocably, partners in our own security. Canadians should take this relationship seriously.

Labour mobility

Recent newspaper articles about the surge in Maritime labour movements to Alberta and its high paying jobs reminds us of the importance of free movement of labour. Of course, Canadians are entitled and privileged to travel interprovincially to secure employment and to maximize their well being. We would not think of our Dominion in any other way. Certainly, the opportunities for labour to maximize earnings is an important cornerstone of open markets. Economic development is adversely affected by labour shortages. But more importantly, human resources are squandered when they cannot be put to their best use. While some people find it near impossible to pick up roots and look for a better life if their home region denies them that opportunity, we know that the New World was built on the very spirit of self preservation that guided our ancestors to this distant continent. Indeed, immigration is still a driving force of our economy. Inter-provincial labour mobility is an important conduit to economic growth.

This should remind us that such efficiencies are prevented from blossoming completely in North America. The border that separates Canada from the United States (and indeed the U.S. Mexican border that creates such fear in America) prevents individuals from maximizing their capacity to earn income and contribute to a more dynamic North American economy. One of the failings of the market system is that while capital moves relatively freely across borders, people do not. This puts individuals without capital at a disadvantage. Surely labour should be free to move to its best advantage. The U.S. - Canada border forces most human capital to take up opportunities that may be secondary in advantage - taking people even farther from their native regions than would be the case in a borderless North America. Would not an unemployed/underemployed native of Halifax prefer to relocate in Boston than in Toronto? The political boundaries give individuals poor choices sometimes. The result is often continued unemployment/underemployment. For others, it is a life far from where they were raised.

On a personal level, I know this well. I am celebrating my 20th anniversary of arriving in Toronto this month. When I first made the long trip from the prairies to begin a career in Canada's financial heartland I knew that Toronto was the place for a Canadian to find work in the financial services industry. And yet, my western roots were pure. I had never been east of Winnipeg previously. Indeed, my urban experiences were largely American as a young person. Cities like San Francisco and Los Angeles seemed to have more of a geographic affinity to my prairie homeland than Ontario's capital. I might well have made my way west to other financial centers, if only to be closer to my family. Instead I am in Ontario. It is a wonderful place, this place I call home now. But sometimes I wonder...

Energy exports to U.S. will shift balance of power in Canadian politics

The ascendancy of the west in the Canadian political economy is heavily weighted toward the development of oil & gas reserves. Energy exports to the United States will dictate a common interest between oil producing provinces and the American market. The value of energy exports is rapidly increasing, and the relative importance of energy in our balance of trade is growing. In 2001, energy products accounted for 13% of Canadian exports. Last year energy accounted for over 19% of exports. Indeed, the 16% gain in total exports to the United States recorded in December 2005 (vs December 2004) has much to do with the improved picture for the Canadian petro-economy.

This growing U.S. energy dependence on Canadian resources will eventually bring the interests of the oil-producing provinces into conflict with the political powers in the east. Federalist voices will be called upon to compromise the competing claims. This is a recurring battle in Canadian history, but the shear economic clout of the petro-economy of the west will force the federal government to accommodate the economic interests of the west. And those interests are tied to the United States.

Strong Canadian dollar - time to negotiate currency union

The irony of the moment for Canadians is likely lost on all but the most ardent advocates for currency union. But for those that see the ultimate forces toward union inevitably at work, the current commodity cycle is both beauty and bane. Yes, the heightened demand for commodities has elevated the loonie back toward respectability as the balance of trade clearly indicates the ascendancy of our resources. And the prospect for continuation of this bullish trend in energy and mineral markets is notably positive. But as the loonie now approaches 90 U.S. cents Canadian nationalist sentiment swaggers. Thoughts of weakness are long lost. No fear of depreciation here, not like a short few years ago when a 50 cent dollar seemed imminent.

 

Unfortunately, it is lost upon policy makers now that the time to negotiate is in times of strength. When businesses seek merger opportunities they do so when their stocks are strong. It makes for a much better deal for the shareholders. So too for the Canadian shareholders. Far better that Canada parlay the current business cycle into a favourable currency union agreement now. The terms of the merger, likely dollarization, are favourable enough now to enable a smoother transition for the regional economies of Canada. Ontario, specifically, would benefit from the timing of a currency agreement now. Unfortunately, the political vision, the political will, is no where to be found. Too bad.

Economic impact of currency union

The political impetus for Canada's adoption of a currency union with the United States rests on the cost/benefit analysis of economists who must provide the necessary backbone for political voices. They must produce convincing arguments about the effects of currency union on the Canadian economy. In the end, the question will come to Canadians: is it acceptable to give up monetary autonomy? An affirmative answer will depend on the economic return, the degree to which Canadian industry thrives and adapts to the move away from a flexible exchange rate - the currency regime in place now. Indeed, there would be winners and losers across the diverse Canadian economic sphere, but the heightened level of economic integration between the two countries has now put the balance toward currency union.

 

One study that looks at this matter concludes that we are much nearer to meeting the conditions necessary for optimal currency union, although it does not expressly prescribe union. Have a look at this case study: http://aix1.uottawa.ca/~scoulomb/pages/Beine-Coulombe-WE2005.pdf

 

This kind of academic study is an important starting point, and I would expect to find more analysis in the coming years.

Consumers of the World, unite!

The global economy showed its face in Giant Tiger today. For those of you not from rural or suburban Eastern Canada, Giant Tiger is a chain of discount stores. It's the sort of place you can pick up household items and clothing at dollar store prices. It's the kind of store that many Canadians pick up their weekly wares, their back-to-school clothes - even their groceries. I was tempted by the 99 cent flax bread, since I know the same loaf goes for $2.30 at my grocery. But if you are shopping for clothes, take a look at the racks in Giant Tiger. You will find a world in the labels of these wildly inexpensive clothes.

Jeans for $19, made in Bangladesh. Long-sleeved shirts, khaki pants, and jackets for $13. All made in China. And a well-made bunny hug jacket made in Jordan, of all places. That will set you back $6. The garment makers of the world in Port Elgin, Ontario. That my visit to my wife's parents home town would result in another visit to Giant Tiger is little surprise - there are not many places to shop there. But what are we to make of this consumer mecca. For Canadians who survive on limited or even lower-middle class incomes, the growing global trade has unleashed a wonderful anti-inflationary world.

Silly that economists laud Alan Greenspan and the Fed for controlling inflation. Silly that they would even think that the out-going Fed Chairman had a lot to do with the relative containment of the price level over the past decade. No, the truth about Greenspan is more that he fueled the economy with more paper than we really needed. What consumers really have to be thankful about is not the bankers who control our money supply, rather they should celebrate trade liberalization and the growing global economy. They need to thank the workings of the market economy that brings products from places we would never have imagined before. They need to thank WalMart! (And in Port Elgin they will soon finally get their own WalMart, too.)

Clothes from Turkey and Central America. Juice from Montenegro, boots from Latvia, and scarves from Pakistan. And then, there is China and India. The North American consumer now basks in the affordable choices in front of him. For a family of four, the benefit is very real. Were it not for the competitive price pressure afforded by the global economy and liberalized international trade, the prospect of meeting the non-discretionary expenses in the modern world would be daunting. Inflation would certainly be the primary economic concern.

So what of this consumer world? For the most part, consumers have not had to speak out to protect this burgeoning domain. The loud voices of self-interest, narrow-minded self-interest of the protectionist union forces that seek to dismantle global trade - these are the voices that have garnered the political wings. Their fear-based convictions worry about uncompetitive domestic industries and lost jobs. The media gives full attention to labour unrest whenever the producers feel threatened. But what of the consumer? The silent majority lacks a political champion in the global trade arena. We need a broad consensus that explicitly champions the benefits of unimpeded international trade. We need the customers of Giant Tiger to speak out so they can protect their wallets from the self-interests of the powerful minority.

North America must embrace international trade, and the best way for it to prepare for its impending reality is to formulate even stronger trading relationships on the continent. An economic union of North America would provide a strong base for embracing trade relations with other regions of the world. The competitive advantage of North America, disperse as it is, would deliver new found wealth and protect the North American economy from the ravages of inflation and the unintended deflationary times that so often impede economies when they choose more insular, anti-trade domestic policies.

Canada - U.S. trade first

The "multi-" in trade is as complex as it is in culture. There is no telling where the complex world of multi-lateral trade agreements can co, but the WTO's relative stalemate at the Hong Kong table instructs us: agreement by committee is no way to pursue aggressive trade liberalization. It is in individual countries best interest to seek bi-lateral agreements - and for Canada, the U.S. and Mexico the trade framework should be a heightened agenda to improve cross-border trade, to build upon NAFTA.

Michael Hart and Bill Dymond are senior trade policy experts, and their recent article found in the February 2006 issue of Policy Options (see http://www.irpp.org/) spells out Canada's need to step back from the multi-lateral framework and focus on trade issues with the United States:

"The simple fact is that Canada's most basic economic interests are now inextricably bound up with those of the United States and can no longer be addressed multilaterally in the WTO."

Their conclusion:


"Today, however, further multilateral negotiations can make at best a marginal contribution to the most pressing Canadian trade and economic interests. Instead, the opportunities lie in elaborating the bilateral Canada-US agenda and crafting an accommodation with the United States that is commensurate with the reality of deep and irreversible cross-border integration. That agenda involves creating a less intrusive border, pursuing a more deliberative strategy of regulatory convergence, and establishing institutional capacity to manage deepening and accelerating integration. None of these issues can be addressed multilaterally, but they will be at the heart of Canadian tradecraft for the next generation."

North American integration is our best hope for continued economic growth. Better we work on bringing down trade barriers that affect our most important trading relationship than wait for the utopian outcome that is so distant at the WTO table.

U.S. identity cards

Although the implementation of U.S. identity cards for land cross-border crossings is a degree better than requiring passports of U.S. citizens, the implication is clear: Canada should act progressively toward a mutual security perimeter with the United States. The alternative is the path that the U.S. security measures imply: obstacles to trans-border crossings. This is an unsavoury outcome for Canadians and Americans. I hope that the new Conservative government works toward better solutions to the U.S. security concerns.

Manifest Destiny

It pains me, for the most part, to participate in these federal elections. The hypocrisy of my participation does not escape me. Admittedly, I have succumbed to the doctrine of Manifest Destiny. Why else would I gleefully read the editorials of The Wall Street Journal every day? The charade of Canada has pained me for many, many years. And yet, I have a duty to vote. But for whom? Is there a party, a political voice for the continentalist? Is there someone brave enough to ask: why Canada? Really.

Yes, I know there is a long pedigree of Quebecers who have sworn to separatism. But they are not continentalists, to be sure. No, they are twice buried in the sand. The spirit of Manifest Destiny is one that seems lost on Canada. We don't even use the term anymore. And yet...We are now in a world that has seen a re-invigorated form of Manifest Destiny take hold. Most people see it in a very negative light. That is the consequence of fear. But what have we to fear? The doctrine of manifest Destiny is grander than the United States. It is about freedom. About liberty. About economic vitality wrapped in the values of a free world. And this world is in the mold of the America.

I accept this as a wonderful proposition. But to accept it one must first accept the responsibility that goes with freedom. The responsibility for ourselves. The challenge of life is great, but the capacity of individuals to overcome obstacles and thrive should not be underestimated. Individuals need not be administered. And governments should serve the people.

Enough proselytizing. The Canadian political landscape is a Thomson simplistic collage of raw wilderness. It is certainly not the inspiring grand tableau of the Hudson school. Where is the romanticism? Where are the ideals? Nope. This election remains a battle of school-yard bullies trying to assert their own patronage on the existing hubris. If only one of them had the political courage to present the truth about Canada. And if only that person had the charisma and vision to give Canadians the will to embrace a new future.

Let's talk about currency union

The Canadian dollar has benefited handsomely from the resource boom. Our petro main course, with a side of rocks, has fed the Canadian economy. But it has also put a strain on the industrial export sectors. Those industries that benefited from a weak currency now find themselves with new challenges to remain competitive. Indeed, some of these industries will have a hard time, as a floating exchange rate bites both ways. It can also be very disruptive to the efficient working of a national economy. The dislocation that occurs during a period where one group of sectors changes the terms of trade for another group of sectors can be difficult to manage, especially when the resource sector can be so cyclical. A short-term currency revaluation does shift labour and infrastructure, but the natural allocation of these factors would be better served with more exchange rate stability.

A fixed exchange rate? Some economists argue such. Nevertheless, my feeling is that a currency union with the United States would serve the ultimate purpose of adjusting the Canadian economy to its prime equilibrium. Given that the natural marketplace for the export markets is continental, the sooner the political will for pushing toward dollarization of the loonie, the sooner the nation builds a solid economic foundation. More political media deliberation on currency union is needed.

The call for currency union grows

The petro-dollar loonie has surpassed 85 cents U.S. and the murmur of public debate about the Canadian currency is spilling into the public realm, with economists worrying about the "Dutch Currency Disease" and talk of pegging the loonie. Fear has taken hold of the pussy Canadian commercial class - the one's who rode our woeful industrial policy of exchange rate development. Yep, that would be our manufacturers (and that would include those cultural producers - Hollywood North). These are the industries that developed handsomely behind exchange rate depreciation. These are the businesses that may not exist with a Canadian dollar at parity. These are the businesses that would be forced to improve productivity at the risk of bunkruptcy. These are the businesses that would shift capital to other cheap currency countries. And in my humble opinion, Canada would be much better off.

Yes, the resources that built this country are shining again. The commodity cycle, the surging global demand for what Canada has aplenty, is putting domestic industrial interests in a bind. That would be those damned Easterners, in the eyes of the flush Western Canadians, that ones that supplied the west with overpriced industrial goods after ramming a railroad into the region. But times have changed, and one would imagine in world of global economic integration that the politics of Canada is about to shift. The ascendancy of the West is dawning, and the best way to accommodate this fundamental challenge to regional balance is to ride the strength of the currency. It is time to push for currency union with the United States. It will be painful for the slacker commercial interests and the labour they employ, but in the end the economy will be stronger, and consumers will benefit immencely. Hey, how about union at parity?

The border mess

Not surprisingly the voices of discontent are building in the corporate world. The Canada-US border forces an increasingly costly tax on important flows of commerce. The time is nigh for a proper accounting of the costs of the border on our economy, and our people. A report by the Coalition for Secure and trade-efficient Borders was published today, to much media notice. The report, authored by major corporate interests states clearly that the current system of managing security and trade along the border is extremely costly, taxing trade efficiency and threatening the $2-billion-a-day cross border commerce. Thankfully, the report, entitled "Rethinking our Borders" quantifies this burden, most notably stating that it addds about $800 to the cost of a North-American made automobile. Of course, we know that this is only the tip of the proverbial iceberg. The misallocation of resources in almost every industry handicaps producers and consumers alike.

Clearly, the solution is to create a single perimeter security zone around the continent. The cost of impeding commerce is far too great, and it is important that Canadians in particular take special heed of the security needs of the United States. Security integration is an important step toward harmonizing commercial trade. In fact, as I have always maintained, establishing a security perimeter, integrating our security forces, will enable an opening of the border to cross-border flows of commerce. Further, the proper allowance for migration of labour flows across the border will elevate our economic efficiency. It is time for Canadians to embrace their future in a continental economy.

Sadly, there is much fear to overcome. An example of that fear, I suppose, is the current legal wrangling of CNR and its union. The union does not want to allow CNR to transfer maintenance jobs across borders. The "multinational" CNR, not so long ago a crown coporation, shows us that times have changed, and that we had best put in place the political framework that accommodates the the economy at work. Hopefully, the process of educating the population about the costs of confederation will make the political choices more clear. We need leaders to speak the truth, and be done with the nationalistic approach.

Greyhound bound

It has been almost 20 years since I first arrived "off the bus" in downtown Toronto. Having made the 48 hour bus ride from Saskatoon I remember well plodding up Bay Street with my backpack, happy to be rid of the tanker that brought me there. Prior to this grueling trip I had never been east of Winnipeg. Growing up in the west my family always traveled westward to the Pacific or south to the United States on our annual vacations. After the monumental bus ride across northern Ontario I then understood why. I challenge every Canadian to make that trip. The vast distances that separate east from west become ever so real when days of your life are lost in the confines of a motor vehicle. God knows how cyclists and ambitious walkers feel.

Two decades later I still yearn to travel back to Saskatchewan. And yet it it so far. It is, for all purpose, in another country. In fact, I can fly to Europe for cheaper fares than I can to Saskatoon. That has been my unfortunate situation for too long. I feel like an immigrant unable to visit my family for lack of resources. No doubt I have many Jamaican friends who have traveled back to their homeland more often than I have returned to Saskatoon over the years. And I know that they are able to fly there for much cheaper fares than I could ever hope on a milk run to Saskatoon. Am I sounding bitter? Perhaps. But it is a constant reminder that the bonds of this country are tenuous on many very real levels.

We can ask: how many Torontonians have been to the Badlands of the prairie? How many British Columbians have seen the shoreline of Cape Breton? How many Quebecers have seen the majestry of the Rockies? No, the tally would be shy, and who could blame the population? Indeed, my first year studying Canadian economic history at the University of Toronto taught me one thing I never once before considered: that eastern Canadians know very little about their nation. I learned that the "educated" elites of Toronto yearned not for knowledge of the provincial bretheren, but instead craved attention and a place on the world stage. Almost all of the students I went to school with at the U of T had traveled to Europe, to New York, to Florida. But to Vancouver? Winnipeg? Calgary? Not unless it was a consolation prize. Maybe a chance to earn some summer dough. Nope, these people - the ones that would aspire to be great "Canadians" - cared little about the Dominion. I learned that many years ago.

Canada Stong and Free

The Fraser Institute and the Economic Institute of Montreal released a policy paper this past week, authored by well-known conservative politicians Michael Harris and Preston Manning. Adding to the growing number of voices demanding a more proactive policy toward shaping Canada'’ future in the global economy, the paper entitled "A Canada Strong and Free", emphasizes wealth creation, democratic accountability and the creation of a Canada-U.S Customs Union. Hurrah for all!

The crisis of corruption that has the Liberal government on its heals – perhaps forced to go to the polls again – has brought upon a renewed questioning about the foundations of confederation. Political commentators are starting to to express more fervently the untenable situation our federal system faces. Regional interests are being promoted at the expense of the great federalist compromises of the past. The Adscam embarrassment, beyond bringing to light corrupt individuals, has shown that the federal bargain with Quebec is flawed. It has showed that Canada as nationalists envision is a charade, a frail marriage on the verge of dissolution. Indeed, if there is an election this June the end result will be a fragmented Canada with separatists in Quebec asserting newfound strength, and a growing power base out of western Canada. The regional interests will be heard, and the powers in Ottawa will be compromised.

From my point of view this is long overdue. It is time the regions started looking out for their own interests. Time for Quebecers to make their own fateful decision once and for all. Time for westerners to exorcise themselves from their colonial position in Canada. And it is time for Canadians to take a proper accounting of the costs of nationhood. A head on grappling of the healthcare system, of our state-centered economy, and our special relationship with the United States. It is clear the Liberal government is interested only in maintaining the status quo. Will Canadians demand broad and courageous new governance? They may be in for it regardless, as the fallout from an election this spring will surely bring the mirror to our face. Be brave, Canada.

North American Youth Exchange

Every generation of youth passes through a rite of passage. In one form or another this "coming of age" experience is often anticipated by young adults as they prepare for life upon completion of secondary school. Like many other parents of graduating teenagers, I have been witnessing the wonderful excitement of my child’s plans for travel abroad. Taking a year off before entering university studies has been a time honoured tradition of many generations of young Canadians who take on the world with their backpacks. They travel abroad to Europe mostly, but many take to Oceana. My daughter is heading to Australia and New Zealand. Intent to take to the other side of the planet, she eagerly awaits the chance to commence with her adventure. But I am wondering…why do not young Canadians take to traveling across North America. Does not the adventures of Kerouac and previous generations of youthful travelers who crisscrossed the great expanse of America captivate the imagination of today’s youth?

I think it would be wonderful if young North Americans were encouraged to travel and work freely across the continent. The people of every region would be that much more enriched by the exchange of youth. Canadians traveling to Louisiana and Mexico City. Americans discovering the old fortress of Quebec, and the lost cities of the Maya. Young Mexicans camping in Banff, and visiting the Art Institute of Chicago. Yes, there should be a universal program for young adults from all three member countries of NAFTA that facilitates an active mingling of our cultures, that encourages North American youth to see the vast community of culture here that is so sadly underestimated.

One of the chief objectives of leaders in North America should be to encourage cultural ties among the nations. Such ties are developed through travel. But more importantly, the youth
who are able to take their precious time and energy to risk on adventure should have the ability to live and work in the lands they travel to. Student Work Abroad Programs (SWAP) are popular for youth traveling abroad, but there should be a more institutionalized swapping of youth across the continent. Canadians would learn more about their neighbours, and like any exchange program the benefits would be reciprocal.

I find it sad that my daughter feels she must travel to Australia to live out her adventure. North America is full of much natural beauty, many cultural interests. And there is much fun to be had. It is unfortunate that we do not promote this kind of homegrown adventure. There would be such a wonderful expression of community if our youth discovered the world at their feet, the cultures at their doorstep. Alas, maybe it is just me in my advancing middle age. Perhaps it is I who simply wants to drive around the continent in a RV. Perhaps the grown adult in me has simply learned that there is much to see across this continent. But wouldn’t it be wonderful if there was great annual migration of young Canadians, Americans, and Mexicans across our continent. To see them traveling about with their backpacks, to see them all open-eyed and excited. I for one will always remember the Pope’s visit to Toronto for World Youth Day a couple of summers ago. There were thousands of young people from all over the world moving about the city - on sidewalks, and subways, in parks and restaurants, in museums and libraries. It was almost magical. It certainly was inspirational, too. I think we could use a lot more of that. And I think we would be much better off for it.

Dodging the issue - the failure of Canada's monetary regime

David Dodge, governor of the Canada’s central bank, spoke this week about issues pertaining to productivity levels and the importance of developing policies that improve education. Although Mr. Dodge has every duty to speak of productivity levels in relation to economic growth, he stepped too far into fiscal policy agenda with his direct suggestions pertaining to childcare. It is not the job of the central bank head to give such policy prescriptions – his domain should be strictly monetary policy. In fact, it is symptomatic that the root cause of our country’s chronic failures to keep up to the United States in labour productivity is the very monetary edifice Mr. Dodge heads. A country that depends on trade with America is ill served by the current floating exchange rate regime. Canadian productivity ailments are directly attributable to the effects of exchange rate depreciation.

Our export sector has been sweeping its failure to modernize under the carpet of a cheap Canadian dollar for a generation. Further, we have developed new export industries under the framework of a cheap dollar. This is the industrial strategy of a developing nation. It has served the economy with short-term gains at the cost – far greater cost – of poor capital allocation, research and development, education, and labour productivity. Exchange rate depreciation has also opened our export industries up to trade conflicts with our major market to the south. If the head of Canada’s monetary policy wants to improve productivity levels he need speak less of solutions beyond his purview and more of monetary policies that make exchange rate appreciation and par value a Bank of Canada objective. An even more progressive stance would be an open discussion of currency union with the United States. Of course, that may be too much to expect for a regime head to speak openly of its own demise.

Natural continental migration

By the end of the 19th century millions of European migrants had made their way to the New World. All were in search of opportunity and a better life. The great migratory patterns of the age created tremendous wealth, and the North American heritage was shaped by the human capital that flowed to this vast land. Indeed, the economies of Canada and the United States are still highly dependent on immigrant flows. Without immigrants our economies would be stagnant.

But in a world where increasing globalization is being fed by relatively unrestricted capital flows, our population is being handicapped by restrictions on labour mobility. Indeed, the national borders that cross the North American continent will be increasingly seen for what they are: fences that prevent human capital from maximizing value. The end result of is that North American economic development is being hindered and the human capital - that is in real terms our lives - is being misallocated and at times squandered.

The capacity for individuals to seek new or better opportuities is limited by the east-west flows enabled by the current national borders. But these flows are not the natural flows that would be the economic and cultural basis of a strong North America. Confederation, as our history tells us, is a construct of political will and engineering. It is a history of overcoming vast natural barriers to link disparate regions across a Dominion. It is a history of the CPR and commercial design on regional development. It is the history of creating an east-west axis across a continental divide.

But for those that know the regions of North America, those that know the sisterhood of the Maritimes and the Eastern seaboard, those that have traveled to the American midwest and seen the Canadian prairie too, and those that live in the Pacific Northwest, North America is a community the follows the geographic boundaries of the north-south barriers that sculpt the continent. As surely as Canada is divided by the the Precambrian Shield, the Great Plain, and the Rockies, the the pull of the communities along these divides is great. That is the nature of our shared continental history.

But what of our population now? What capacity have we to migrate as opportunity and self-interest allow? Unfortunately, only high value labour like Hollywood entertainers, rock stars, and professional athletes have true mobility in the North American divide. However, what of average Joe Canadian or average Joe American? Why cannot they enjoy the same labour mobility that allows Jim Carrey, Celine Dion, or Wayne Gretzky to maximize their human capital? It is ultimately the individual who suffers from the restrictions on labour movement but the drag on economic development in all regions commands a large, unseen opportunity cost. In what ways would our society benefit from increased labour mobility? In the most dynamic sense regional economies would be rejuvenated by inflows of human capital. Entrpreneurship and an efficient allocation of resources would enable even stagnant economies to renew economic development.

The United States faces a deep challenge in dealing with its relationship with Mexico, the border struggle representing a very real conflict of the issues spoken of here. But the resistance to migrant flows there, although charged by extreme fears in border states, is not so different from the fears and resistance that would develop when any two communities tear down walls between freedom and servitude. This would also be the case at the border of Canada and the United States. Fear of change, fear of the influx of new people has always made immigration a difficult policy for governments - despite the evidence that immigration is an extremely positive economic and cultural process. Nevertheless, Arizona fears the Mexican horde. The cultural protectionism at work in the nation state is anti-productive and violates the tenets of a free market economy. Better we embrace the community we live in, a community that should include all North Americans.

Why should we consider North American labour integration as an important and increasingly urgent policy? In a word: globalization. The net effects of globalization is a reallocation of resources to their most productive use. In our continental community we can facilitate a more fluid reallocation of labour if borders that prevented productive movement were eliminated. Labour mobility is the great missing component in our free market economies. We need to recreate the spirit of mobility that brought our parents and ancestors to the New World. This spirit will unleash new potential in the face of unfolding economic challenges. Canada would benefit from a more open border with migrants from the United States and Mexico just as surely as the United States would benefit from the same exchange. We need not depend on immigration from other continents to feed our economies. A reallocation of the current North American population would allow for greater optimization of the human capital already available.

Man for all seasons

Canada is admirable on different levels. Indeed, Canadians are very proud of the country. Proud for what it is, and proud of what it isn't. But sitting on the edge of capitalism, uneasy with Canada's dependency on the American benefactor, many Canadians are content to stand pat on a pattern of self-righteousness. Culturally incomplete, the nation is an amalgam of historical political economy - the curious result of man conquering nature in commercial enterprise and social compromise - and the determined counterpoint to American Manifest Destiny. Indeed, for all the different forms of Canadian cultural expression, a common thread is a sense of non-Americanism. Often this expression is delivered in the most fervent anti-Americanism we could allow in a free society. It all seems very curious.

I , too, was raised in such an environment of tepid acceptance of the American cultural sway. Indeed, there was a time when Pierre Trudeau inspired the most from my Canadianism. There was a time when Canadian social democracy stood as a supreme ideal in my young political mind. To be a member of the Liberal Party on the prairies, was, as I remember, a statement of commitment to confederation amid a society perhaps not so committal to the federalist agenda. Alas, that fantasy started to unravel in the most unlikely way.

In my early years of studies at the University of Alberta, I spent many an evening in my study den listening to political reporting on the state of the nation. It was 1982, and we had been suffering through a recession. For a young student, the r-word is a gloomy but remote expression. Unemployment beckoned, and the world seemed far less promising. There was a lot to be fearful of, perhaps no more than at any time, but enough to jar my faith in the system I was raised in. The unleashed potential of my youth seemed paralyzed by an economic world in crisis. Interest rates were phenomenally high and what came easy before - money, jobs - now was indeterminably impossible. It is no wonder I found solace in only Dostoevsky. Another existentialist born.

Alas, there came a prophet. Some people would have called him a puppet, and at the time, I too, would have accepted this preconception. But the arrival of Ronald Reagan in Ottawa was a revelation to me. It was a cold evening in my basement apartment, but the TV signal brought a strange moment that shifted my sensibilities of self. Addressing a joint session of the House of Commons and the Senate, before what surely would have been a hostile audience were it not for parliamentarian decorum (if that is possible), President Reagan delivered words of grand vision and hope. Unlike any politician I had heard speak before, the President challenged us all to achieve something much better. His delivery, his masterful oration was an epiphany. He spoke of freedom and liberty like I had never heard before.

In fact, as a Canadian I was certain that these terms were never mentioned to me before, nothing beyond archaic sermons of remebrance for lost veterens. No, the very idea that freedom was something I should cherish was foreign to me. In fact, the political constellations of Canada seemed to be rooted in something entirely different. Canada seemed to be a compromise of political expediency, a confederation of disparate regions bound by a constitutional formulation of family law. There were no guiding principles at work here. Exploitation, yes. The fur trade, the timber trade, the fisheries, the prairie bread basket. And the National Energy Policy! Yes, there was an agenda at work for the Dominion of Canada - not to mention the dangerous bargain with French Canada. These forces were becoming increasingly clear to me.

But Reagen, yes the Hollywood actor, the man so many Canadians had contempt for, stood as a beacon even in our most sacred Canadian chamber. Whether he spoke of the "City on the Hill" that day, I do not remember, but he spoke in such grand terms, in such forceful and hopeful terms that I was dumbfounded. In a moment I knew that the human spirit was indomitable. I knew that the future would be full of prosperity...if only we held true to the ideals of liberty. And I knew at that time that Canada would some day face up to this challenge because of the courage of the society to our south. There is no escaping this spirit because it is in us all. It only need be unleashed.