Comforting ourselves to death

A guest column on the decline of Canadian ambition

Hi everyone. Today’s post is written, at my invitation, by Alex Usher, the President of Higher Education Strategy Associates. As one of Canada’s leading analysts of the post-secondary education sector, Alex thinks deeply about public policy issues. And the other day on Twitter he was in a lousy mood, so I asked him to explain why. I think Alex’s column gets at some of what ails us as a country — especially how pervasive the country’s problems are, and how rarely our leaders sound ready to address these hard issues. He touches on a lot of themes I try to address in this newsletter. — pw

Alex Usher

You can tell a lot about a country by the way people dress.

In Canada, our national dress is fleece. A sartorial disaster, but boy is it comfortable.  And as a people, that’s what we crave: comfort over challenge, comfort over change. 

We can do the difficult things, but for the past 20 years we have simply chosen not to.  And the negative consequences of that preference are becoming progressively more evident.

It is hard to remember, now, how many advantages Canada had just 20 years ago.  The federal government was running regular budget surpluses. It still evaluated programs relatively rigorously and was investing in things like skills, education and research —  initiatives that often would take a decade or more to pay off. 

We had a functioning public service that could help develop new programs, if not at the speed at light, then at least at the speed of the public interest, as one former Clerk of the Privy Council put it.  We still had a system of Commissions that could be called upon and were, particularly for health care.  Perhaps even more incredibly, we had a functioning system of federalism, built around (constitutional nerd alert!) the Social Union Framework Agreement. 

None of this was an accident.  It was the product of the 1990s, an absolutely brutal decade by any definition.  It was the worst decade economically since the Great Depression.  At one point, just servicing the national debt took up a third of all taxes paid.  We had a 64-month constitutional crisis, from the failure of Meech Lake in June 1990 to an extra-inning come-from-behind 50.5% squeaker of a federalist win in the Quebec referendum of October 30, 1995.   In more than one way, we nearly lost the country in that decade.

But we came back strong.  In retrospect, it wasn’t so much the miracle of Paul Martin’s harsh austerity budgeting (though few today would deny the necessity of most of it) as it was the huge rise in tax revenues due first to the dotcom boom (1997-2001) and then later the massive commodities boom (2001-onwards).   And, at least in the early years of that boom, we hadn’t yet forgotten the lessons of austerity.  Money was dished out parsimoniously.   Surpluses grew.  We were meeting long-term challenges, such as the solvency of the Canada Pension Plan, head-on.  Inter-governmental consultation and joint policy-making was vigorous if not always harmonious.  

By the early 2000s, our international reputation was such that The Economist dubbed us “cool Canada.”  We might not have been perfect, but we were showing sustained improvement. 

But then we got lazy.  

It’s hard to pinpoint the beginning of the slide, but gradually over the course of the mid-2000s the list of policy failures began to strongly outweigh the list of successes.  For instance, we allowed public services (both federal and provincial) to atrophy to the point where they were clearly inadequate to take on complex challenges like the pandemic.  No effort was really made to try to bend the cost curve in health care, which was rising at 6 or 7% per year. Why bother, when provinces could blame the federal government for “underfunding” even though expenditures were rising far faster than inflation?  Despite promising developments in post-secondary education and research, we chose to reduce real public funding to those sectors, freeze domestic tuition fees and rely instead on international student dollars to fund the system.  And the less said about our attention to basic issues of adequate housing support and functioning public transport systems the better.

Even the mere idea of co-operative federalism began to fade.  The Harper government’s theory of watertight federalism was widely seen as a rupture with the practices of inter-governmental practices.  But while the Trudeau government has been more active in areas of provincial jurisdiction than its predecessor, it has not for the most part restored SUFA-era levels of co-ordination.  In short, although nearly all of our most pressing problems require some co-ordination between levels of government, the muscle memory of how to make federalism work began to atrophy, making solutions to all these problems that much more difficult. 

Even as we saw new challenges arise, we did little to prepare for them.  Even the emergence of a more dangerous and multipolar world — moreover one in which our most trusted ally was potentially at risk from a fascist take-over — wasn’t enough to encourage the feds to raise investments in defence or foreign policy.  Neither of these areas were doing well even in that golden age around the turn of the millennium: our investments in these areas now look even more ludicrously inadequate.  Could our military pull off another Medak Pocket today?  Hard to say, but I suspect few Canadians — and more to the point, even fewer of our NATO allies — would want to put it to the test.  Certainly, we know that our anemic and diaspora-driven foreign policy has made a return to the UN Security Council, where we last sat in 2000, almost unimaginable.

Why did it all happen?

Maybe it was because we grew tired of austerity.  Maybe it was because the country wasn’t facing an existential threat from Quebec anymore.  Or maybe it was because, in the mid-2000s, with wheat at $10/bushel, oil at $100/barrel and gold at $1000/ounce, money was pouring into government coffers and we all felt unimaginably rich (remember the summer of 2006, when the dollar was at $1.10 US and it felt like you were losing money every second you weren’t at a Nordstrom on the other side of the border?  Good times, if brief).  Whatever the cause, all the things that made us “cool Canada” started to go into reverse.

For many years, thanks to the commodity boom, we thought we were richer than we actually were.  So we awarded ourselves tax cuts under Conservative governments — the most egregious of which by far was the two-point cut to the GST in 2006 — and higher levels of social benefits under Liberal ones. Always in the name of “affordability” or “middle-class living standards.”   Little by little, the policy bias increasingly came to favour jam today over jam tomorrow, and individual pocket-books over the long-term health of systems and institutions.

Meanwhile, the commodity boom slipped away and we found we had not done the work to prepare for anything to come after it.  Cue five years of flat-lining growth, followed by panicky multi-billion dollar subsidies for foreign battery plants to pretend we had a plan all along.

We now see where this has led us:  dysfunctional government, unaffordable cities, economic stagnation, post-secondary institutions reliant on funding from India, and a foreign policy manifestly unfit for the increasingly dangerous world we now live in. 

Twenty years ago, we were a serious country, which met challenges in a serious way.  Today, we are but a shadow of that country. 

We can blame politicians if we like. Lord knows there is enough blame to go around.  But fundamentally the problem is us.  Canadians.  It’s not that we are incapable of dealing with big challenges: our return from the brink 30 years ago proves that we can.  But instinctively, we seem to shirk from challenges and hard choices until is absolutely necessary to make them.  We have come to dislike talking about trade-offs. And over time, we have come to reward the politicians who tell us that they do not exist.  The politicians who know how much we love fleece.

Though we’ve wasted a lot of time in the past few years indulging the less attractive side of our national character, it’s never too late to change costume, roll up our sleeves and make the necessary hard decisions on things like housing, defence, foreign policy, health, education, science and more besides.  We’ve done it before and we can do it again.   

But first, we need to abandon the fleece.