By David Warren, The Ottawa Citizen January 27, 2012
Apparently, we must go to Davos, Switzerland, to find out what’s on Stephen Harper’s mind. This, anyway, is the impression given in Canadian media reports, which splashed his remarks to the World Economic Forum about yesterday as if they amounted to a blueprint for our national future. Yet I don’t think any of the themes he touched upon were new.
The general problem of funding “entitlements” — and in our case especially an Old Age Security program which is the loss-leader among government services (funded directly out of tax revenues) — is shared by every other western nation. The political fix is also the same everywhere. Programs that no country could ever afford were launched in an era of unreasonable optimism. But only the first generation could be paid off handsomely for their votes.
Our “next” generation contains vastly more elderly people, and at this moment costs for the OAS are on track to double in the next decade or so. There is no national economy in the developed world that can keep up with that. And at present, none that can afford a heavier tax burden, which would compound upon an ever-smaller proportion of working-age people.
In the last drying wharks of the optimist generation, “immigration” was cited as the solution to this problem. The doors were thrown open — without much attention to the quality of immigrants, from a mean, self-serving, cost-benefit point-of-view. Suddenly we, like everyone else, want to be sure our immigrants are more likely to generate wealth than absorb welfare. So, suddenly we are competing for the same kind of immigrants with everyone else.
Harper will be condemned, even execrated, for what he must do, and what any government must do, in the national interest. For as we have seen from Greece, balancing the books is in the national interest.
I think everybody who knows anything, knows what I have written above, though not everyone will admit to knowing. Soft love is easier than hard, and the easiest thing is compassionate posturing. We elected Harper because we, the people, do not think like Wall Street occupiers. But the people who stand to receive OAS have no intention of being cut off, either.
The only practical solution, beyond nipping and tucking wherever possible, is to move the age of retirement sharply higher, while gradually shifting the actuarial principles to within sight of land. This makes sense, given a population not only aging, but living longer in relatively good health. Yes, one generation benefited at the expense of another, but so what? We’ll live.
On another front, Harper came close in Davos to speaking aloud what he has been saying previously only in mute gestures.
For many generations, it made sense to count on the United States, alike for security and for our economic well-being. Trade with the U.S. has entirely dominated our foreign trade, indeed our whole economy. Long before Brian Mulroney’s North American free-trade agreements, we had shifted from our dependence on preferential terms throughout the old British Empire. Our dependence on the U.S. was paradoxically accelerated by Canadian nationalism; but in truth, we didn’t have a choice. Britain abandoned us more than we abandoned Britain.
Today, it is the U.S. in economic decline, and abandoning us to turn inward, as Britain once did. Unfortunately, the old Left anti-Americanism of our chattering class blinds us to this reality.
The U.S. was already in trouble, but the new America of Obama is “exceptional” among western countries in refusing to address entitlement issues, in attacking wealth-creation head on, in vastly expanding government participation in the economy. Moreover, the U.S. military is now being slashed: a signal to all allies that the days of American “hyperpower” are over.
The natural comparison would be to Clement Attlee’s administration in the years immediately after the Second World War, when Britain made an almost conscious choice to fold up as a world power, and self-immolate as an economic one.
The recent Keystone pipeline decision — to indefinitely delay a huge and vital energy project on the basis of vague environmentalist neuroses — makes the situation plain. We need new trading arrangements, especially to sell our resources.
Security and economic considerations combine in making China less than an ideal trading or investment partner. My impression is that while the Harper government is waving China as a red cape, to get attention in Washington, China is not the principal object of our current outreach.
India and Europe are the alternative major customers, and our salesman-diplomats are further persistently cultivating Korea, Japan, Taiwan, Thailand, etc. — resource-hungry countries vividly aware of potentially catastrophic instability in the Middle East.
In addition to the tarsands, we have Atlantic coast resources, and customers in Europe currently ill-served by Russia.
The wall we’re up against is not insuperably high, but as Harper knows, and we must understand, there is no time to waste in climbing it.
David Warren’s column appears Sundays, Wednesdays and Saturdays.
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