Wednesday Night #1320 – with David & Terry Jones OWN

Terry and David Jones OWNs will be with us this week from Washington, as they are on their annual pilgrimage to Canada (or at least Ottawa and Montreal) to take our pulse, find out whether we are still alive and if so, have we mended our ways and stopped criticizing the Great Neighbor to the South.
More seriously, they are keen to find out what the thinking is about the future of the Québec Liberals – in fact all parties in Québec-, the present minority governments in Ottawa and Québec, attitudes towards whatever legislation is pending or not. We are sure border crossing procedures will get some attention and no doubt, both Afghanistan and Iraq.
We invite you to bring your best guesses, latest polls of favorite taxi drivers, and above all, original thinking.
Experience has taught us that we often learn as much about what is happening in Ottawa from them as they do from us. They seem to maintain some extraordinary sources from the days when David was Political Counselor in Ottawa and Terry was Economic Consul in Montreal.
Be prepared to share your thoughts on such matters as the Conference Board Report of last week and, of course, the row over equalization payments. There are always the typically Montreal upheavals, like the current name-calling by Marvin Rotrand and the West Islanders. Should we run out of topics, or even if we don’t, there’s the new (at least to us) book the Myth of the Rational Voter by Bryan Caplan, an economics professor at George Mason University. It seems Professor Caplan makes the claim that voters systematically favour irrational policies. In a democracy, rational politicians give them what they (irrationally) want. Mr Caplan explains why this happens, why it matters and what we can do about it.
This sounds like a perfectly rational explanation for any Canadian political matters we may wish to explore with David & Terry.

The Report

We invented basketball You adapted it
We discovered the telephone You utilized it
We offered a lumber deal You axed it
We invented the snow blower and
the snowmobile You moved to Florida
We are a bilingual country You will be
We invented Standard Time You changed it
We sent a mad cow You rejected it
We had Marshall McLuhan You didn’t get the message
We invented Java You gave us Starbucks   Ron Meisels

A new OWN
Taking advantage of the presence of our two distinguished Washington-based OWNs, the Chairman conferred the Order of Wednesday Night on Anne Sophie Coleman, who, sadly, will leave Montreal in a little more than a month for a new assignment at the office of the State Department responsible for intellectual property rights in Asia, including China. Anne Sophie’s citation reads:

In recognition of your consistent contributions to Wednesday Night discourse, able defense of positions and policies that appear inexplicable to many of those present, willingness to assume with grace and charm the role of Leader [and Decider] of the Country which you represent evincing diplomacy and tact beyond your years By these presents we do appoint you Honoured Companion of said Order, Envoy Plenipotentiary to the Great Nation to the South and to any other nation where you may reside, and authorized Convener of the Washington Wing of Wednesday Night, and authorize you to hold and enjoy the dignity of such appointment together with membership in the said Order and all privileges thereunto pertaining

Prologue
It’s a Canadian tradition, especially in Québec, a tragicomic opera with scenes of beautifully choreographed dancing by overweight dancers, feigned bravado in the face of overwhelming odds and an unpredictable final scene. The white knight leads his rag tag army to success after success, dreams of being crowned monarch of his domain. The rightful heir to the throne, beloved by people who know him, speaks in tongues, his ultimate fate unclear. In a play within the play, the collective guilt of the peasants leads to the coronation of their beloved Queen, previously neglected because, while mesmerized, they had selected one of their own to govern them. Members of the audience, on the edge of their seats, eagerly await the climax, dénouement and the final curtain call of the season.

U.S.-Canada relations
The atmosphere of U.S.-Canada relations has greatly improved, especially since the replacement of the former Canadian Ambassador, Frank McKenna (in the opinion of one observer, probably the worst Canadian Ambassador to Washington – EVER) by Michael Wilson, who pursues Canadian objectives with grace and diplomacy, combined with firmness when required, thus fulfilling the role of a diplomat to defend (even the most indefensible) positions of his/her government with conviction and without allowing personal or political views to colour such advocacy.

• Now I can express views because I am convinced of them and not because I have to

Although there are differences between our countries on some international questions such as Iraq, on our bilateral issues, the hardy perennials like Pacific Coast salmon, softwood lumber, mad cows, etc. will continue to be active, but always under negotiation and the subject of flare-ups. Received wisdom (and experience) has it that the best match of administrations is a Democrat/Liberal and the worst a conservative Republican/Liberal

Canada
On the federal scene, to some, the Prime Minister has demonstrated his political astuteness by keeping his caucus on a short leash and making decisions that are popular in Québec, at times, to the detriment of the electors in other, politically less vital provinces. To others, his uncompromising, confrontational [abrasive] style as exemplified in the fight with the Maritime provinces over the offshore resources, his insistence on micromanaging when no matter how clever, no-one can know everything about every issue; his clumsy reversal on global warming; and his refusal to consider a timeline for the end of Canada’s military participation in Afghanistan are detrimental to the popularity of his party and his personal image as a good Prime Minister.
In contrast to Mr. Harper, Stéphane Dion is highly regarded by people who have an opportunity to meet him personally, or work with him; although he is known to be stiff, he is a good listener, empathetic, and determined to modernize the party. There is access to the Leader of the Opposition and his caucus is laid back and receptive to new ideas from all sources. The gigantic task ahead for Mr. Dion is to meet as many Canadians as possible so that they will be better prepared to gauge his ability to lead the country.
Meantime, no party wants an election and (almost) no-one in Ottawa or in the country, believes that the Conservatives could win a majority government at this time.

• This uniquely curious minority government could run until 2009

Québec
It was a flawed electoral system that saw André Boisclair elected as leader of the Parti Québécois. The telephone vote favoured the youth and urban vote, but the result gave rise to the popularity of the young, inexperienced A.D.Q. whose members are totally unprepared politically, to take over the reins of power in Québec. As for the Québec Liberal Party, Jean Charest has had, unfortunately, considerable time to demonstrate his ineptitude as leader and faces the prospect of opposing a bright, experienced, competent, popular Pauline Marois in the next election if, indeed, the party permits Jean Charest to lead them into the next election.Under Jacques Parizeau and André Boisclair, the party had drifted away from the philosophy of Réné Lévesque, pushing independence over good government. It is this orientation that some believe was responsible for the dramatic rise in support for the A.D.Q. Madame Marois represents a return to the original, more identifiable, distinguishable philosophy of the Parti Québécois. If her popularity were to result in the total independence of Québec, it would be more acceptable to Anglophones both within Québec and elsewhere in Canada than it has been in the past.
While some believe that the P.Q. is on the decline as the A.D.Q. rises in popularity, the new generation of Quebeckers has arrived without baggage, is highly educated and with an internationalist viewpoint, and hence will be in a better position than its predecessors to come to a rational decision. However, the political posturing, will, of course continue.

• Québec has become one of the most successful Francophone societies on the planet
• We are an independent culture by our language, by our education, economically we are growing stronger and stronger; we don’t need to separate from the federation that is supporting the multicultural community that we are
• Pauline Marois is a great disciple of René Lévesque – she will bring back the principles of social interaction that he espoused … without the necessity of a strong independence movement. The PQ will become a strong counter-weight
• It’s very hard for a Canadian political leader to exit politics gracefully
• He (Dumont) had a huge groundswell for lack of an alternative
• Over the past 15 years, there has been a great change amongst federalists some of whom are now saying that both sides may be better off if they go their separate ways

The U.S. political scene
Americans, however, will face an election in November 2008. The Republicans do not have a viable candidate at this point [today’s news of Michael Bloomberg’s departure from the party to become an independent is one more unwelcome twist and turn for Hillary Clinton and other aspirants] making it an election for the Democrats to lose unless the fortunes of the U.S. change in Iraq prior to then. The Americans would be ready at this point to elect an African American of the stature of Colin Powell but he is not available and Barack Obama has the charisma, but lacks the experience. Hilary Clinton has all the attributes to win the candidacy but also a lot of negatives.
It has been hypothesized that potentially good candidates are unavailable because they have been snapped up by industry.

• The Republicans’ viable candidate has Mitt Romney’s family values; Rudy Giuliani’s charisma; John McCain’s real heroism and courage; and Fred Thompson’s ability to deliver a presidential-style speech – unfortunately this requires conflating all four of these individuals
• Between Michael Ignatieff, Stephen Harper and Stéphane Dion, Canada is looking pretty good

Whatever the outcome, the bond between the U.S. and Canada will endure as it has through various disagreements throughout history.
Sadly, the U.S. increasingly appears to accept the improbability of eventual victory in Iraq and an early withdrawal appears likely, despite the fact that the current Commander is excellent and a victory, however improbable at this point would renew the possibility of breathing new life into the Republican Party. In retrospect, Saddam Hussein was a blowhard and his empty bravado led to his own personal downfall. The internecine fighting in Iraq may very well be the result of a common problem of borders drawn along geographic or geometric rather than ethnic lines, a problem that may very well painfully resolve itself following the withdrawal of Coalition troops. Examination of the situation with the benefit of hindsight suggests that it was one of the most outstanding intelligence failures in history.

The American and Canadian economies
It is usual for humans to predict the future by projecting past experience, frequently with inaccurate results. (To further explore the role of highly improbable and unpredictable events that have massive impact, The Black Swan by Nassim Nicholas Taleb is highly recommended.) The rising deficit in the U.S. combined with the slump in the housing market, negative rate of personal savings, and anticipated number of retiring baby boomers claiming old age and Medicare benefits has resulted in predictions of doom for the U.S. economy.

• North Americans are working longer than they have historically
• Retiring baby boomers have inherited a considerable amount of money from their parents and in cashing in their RRSPs, it is possible that they will provide government with additional revenue more than adequate to cover the increased medical costs involved in sustaining an aging population
• The average North American spends 90% of their health dollar in the last six months of their life
• We have a tendency to plan school closings even though there is currently a baby boom giving us a six-year lead time in school planning and a source of a future booming economy
• · As population declines, productivity, of necessity, increases
• · In the mid-twentieth century, only half the population was employed without long-term disastrous effect on the economy

The Canadian economy
The forecast is for continued growth in the stock market until mid-August at which time a mild correction of ten to twelve percent is anticipated. While we should continue to expect major fluctuations, the price of petroleum is heading towards one hundred dollars. The oil patch is unhappy about the recent tax ruling on income trusts, which hit the energy sector hard, but the income trust units are quietly being bought up cheaply in anticipation of their privatization and subsequent takeovers prior to the expiry of their tax benefit.
If the Bank of Canada is worried by the increased value of the dollar, David Dodge should do nothing in July, stand pat and not change the interest rates. As only Alberta is showing rising inflation, raising interest rates, would be a gesture to alleviate the situation there and of no benefit to the national economy. In an unrelated development in Alberta, it is noteworthy that the large emitters of CO2 are no longer debating the underlying logic, but are preparing for the new regime under which they will be paying for emissions.

The recently released Conference Board of Canada report How Canada Performs: A Report Card on Canada paints a dismal picture of Canada’s ability to keep up with the top performers in the new global economy. This gloomy outlook is supported by the lively new book by Andrea Mandel-Campbell, Why Mexicans Don’t Drink Molson, a stunning condemnation of Canada’s inability to seize an opportunity to go global, or at the very least, international. Ms Mandel-Campbell will be speaking next Wednesday at a luncheon meeting of the University Club. On the following day, The Canada Institute of the Woodrow Wilson International Center for Scholars and the Canada Institute for North American Issues is launching in Washington the latest issue of One Issue, Two Voices. Featuring: Glen Hodgson of the Conference Board of Canada and Jack Triplett of the Brookings Institution, this edition is devoted to Canada-U.S. Competitiveness: The Productivity Gap