SURVEY: CANADA

Holding its own

Jul 22nd 1999
From The Economist print edition

Canada may be a midget tied to a giant, but it has no need to feel inferior. What it could do with, writes John Andrews, is some American self-confidence

“THE 19th century was the century of the United States; the 20th century will be the century of Canada.” With hindsight, Wilfrid Laurier’s prediction, made shortly after the 1896 election which made him Canada’s first French Canadian prime minister, looks hopelessly wrong. America is moving from this century to the next as the world’s only superpower, supreme in its technology, military power, commercial energy, even (dare disdainful foreigners admit it?) its culture.

As for Canada, its dollar has sunk against the mighty greenback; businessmen and workers alike complain of high taxes; the media obsessively monitor the “brain drain” southwards of the nation’s best and brightest; and at the back of everybody’s mind is the thought that one day French-speaking Quebec will secede, with incalculable consequences for Canada’s very existence as a nation. So forgive Sir Wilfrid’s present-day successor, Jean Chrétien, if his national pride seems a touch less strident: “We are North Americans but not Americans. We are different because of history and geography, but basically we have built a different society.”

The prime minister is right. Travel across the vast expanse of Canada, to windswept Newfoundland on the Atlantic coast, or cloud-covered Vancouver on the Pacific coast, or the ice-scape of Nunavut in the Arctic, and you discover that Canadians define their country not by what it is, but what it is not. The word they invariably use is “un-American”; the phrase they use is “kinder and gentler”—than America, naturally. They shudder at what one Canadian politician calls America’s “three Gs”: guns, ghettoes and gated communities.

Instead, there is unanimous support across the political spectrum for the publicly funded system of universal health care (“We don’t check your credit card in the hospital on the way to check your pulse,” says Brian Tobin, premier of Newfoundland, in a dig at American health care). So too with education, where Canada’s state schools, unlike America’s, are generally good, and where a local student at McGill University, for example, has to pay a mere C$1,668 a year for his tuition. Everyone in Canada, it seems, likes Americans—but few want to live like them.

Or do they? As John Kenneth Galbraith, a distinguished Canadian economist long ago embraced by the United States, once observed: “I was brought up in southwestern Ontario, where we were taught that Canadian patriotism should not withstand anything more than a five-dollar-a-month wage differential. Anything more, and you went to Detroit.”

The price of being different

There has always been a price to pay, in lower earnings or higher taxes, for resisting the magnetic pull of America, with its huge market and its seemingly boundless opportunities for an individual with energy and initiative. But at what level does the price become too great? In global terms the Canadian economy is performing well: inflation and interest rates are comfortably low; growth this year will be the second highest among the top seven industrial economies (G7), after America, and next year it may come joint first; when federal, provincial and local accounts are added up, the nation’s total government balance is in surplus; and unemployment has been falling, from a peak of almost 12% of the workforce at the end of 1992 to around 8% today.

But the global comparison is, for many, beside the point. What really counts is the comparison with America, where the budget is also in surplus; where economic growth has been faster; and where the unemployment rate is only half that of Canada. If there were an ocean between Canada and America, such statistics might not matter. Instead, they share the world’s longest land border, made ever more porous by ten years of a bilateral free-trade agreement and five years of the North American Free-Trade Agreement (NAFTA); and by the relentless bombardment by America’s TV and radio stations, channelled into almost every Canadian home. No wonder the typical Canadian, living within 200 miles (about 300km) of the United States, feels that his standard of living is slipping behind that of his American counterpart next door. Ten years ago a Canadian dollar was worth around 84 US cents; today it is worth about 68. In other words, the price of being Canadian—of being un-American—is rising.

This survey will argue that the price remains worth paying. In a sense Canadians have no alternative. No matter that some pundits, both Canadian and foreign, predict that Canada’s provinces and territories will be inexorably transformed into a new set of American states: a country cannot unwrite its history, and Canada’s history sets it very much apart from America. Whereas 18th-century Americans fought a revolution to free themselves from British rule, their Canadian contemporaries (even those who had once been French) were essentially loyalists. Indeed, in the aftermath of America’s war of independence, Canada was the obvious sanctuary for those Americans in the Thirteen Colonies who had kept faith with Britain.

That loyalty has had both political and cultural implications. Americans think of government as a necessary evil: the less of it, the better. Canadians think of government as a public good, to be judged by its efficiency rather than its size. That way of thinking makes Canadians, whatever their ethnic origins, “European” in a way that Americans inherently are not.

Moreover, the price of being Canadian still buys something worth having. The Canadian dollar’s purchasing power is well above its value on the foreign-exchange markets, giving Canada the lowest cost of living in the G7; housing is cheap; and health care (despite a few gripes) and schooling are good.

Once more, with feeling

But there are other, less tangible reasons too for paying the price. Canada is a less aggressive place than America at home, and shows a sense of moderation abroad (“soft power”, in the oft-quoted phrase appropriated by the foreign minister, Lloyd Axworthy). During the Vietnam war, young Canadians travelling the world would put the maple leaf flag on their backpacks, lest they be mistaken for Americans; a generation later, the maple leaf still conveys the same message. And, if the world competitiveness ranking produced by Switzerland’s IMD business school is to be believed, Canada is easily the safest place to live in the industrial world. It is certainly one of the most beautiful.

Is all that enough to close what one might call “the Galbraith gap”? It would be foolish to be complacent. Last April, when two gun-wielding Colorado high-school students killed a teacher, a dozen fellow students and finally themselves, Canadians expressed the usual un-American horror at their southern neighbours, certain that such things do not happen north of the border. Unhappily they do. A week later a 14-year-old boy in Taber, Alberta, walked into his former high school, shot one student dead and wounded another. Suddenly America and Canada seemed not so different after all.

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