by Conrad Black
The natural Liberal lock on the federal government was not all that had ended. So had Quebec’s hold on government. Quebec’s birthrate had collapsed in the post–Roman Catholic era, and hundreds of thousands of Quebeckers had departed, aggravated by restrictive language laws and the cost of socialist government. Quebec’s share of the population and of the federal Parliament had fallen from almost a third to less than a quarter, and French Canadians outside Quebec were opposed to Quebec nationalism, so the solidarity of French Canadians was broken. Stephen Harper was passably bilingual, but he could govern almost without Quebec. The dependence of 160 years on the Anglo-French double majority that began with Baldwin and LaFontaine had been strained when the Quebec establishment, having demanded reciprocal biculturalism for three-quarters of a century, attacked it as an attempt to assimilate the French Canadians. Now, a decade after Canada had refused more concessions to Quebec in the rejection of the Meech Lake and Charlottetown accords, Stephen Harper would return the favour, by governing with no animosity or disdain for Quebec, but independently of it. The country was in uncharted waters, but buoyantly so, and with a capable new leader.
3. Stephen Harper and the New Conservative Era, 2006–2014
Harper entered office with a series of strenuously proclaimed promises: to clean up government with the Federal Accountability Act; reduce taxes, starting with the Goods and Services Tax; strengthen the justice system, which essentially meant a straight pitch to law-and-order hard-liners; provide direct assistance to parents with young children and to daycare facilities; introduce special funding to remove health-care waiting lists; and attack the fiscal imbalance, which was a straight pitch for the decentralizers, as the imbalance referred to was the one created by the Chrétien and Martin budget-balancing gambit of piling expenses onto the provinces without any concessions of accompanying revenue-raising sources. Harper was an authentic conservative who wanted to strengthen the family, or at least win the hearts and minds of social conservatives, by strengthening laws against child pornography, raising the age of sexual consent, and providing choice in education. In earlier times, he had spoken out in favour of moderate rights of corporal punishment for parents. He was a low tax decentralizer, champion of community as well as family values, and a crime-fighter at home, a hard-liner in foreign policy, and a conservative in a way that Stanfield, Clark, and Diefenbaker, and even Mulroney, were not. He had long inveighed against the dangers of Canada being a second-tier northern socialist country.6
He stopped the Liberal practice of “buying change,” supplementing payments for provincial priority areas like health care on condition of conformity to detailed standards imposed by the federal government. Harper and his finance minister, Jim Flaherty, who had held the same post in the Mike Harris provincial government of Ontario, considered any devolution of authority to the provinces, including the simple handing over of block grants for provincial determination of spending programs, or tax reductions leaving more demand in the hands of the people, to conform to their plans for decentralization. There was also an ideological element in the reduction of the Goods and Services Tax: successor governments would not dare to raise the tax again, and in reducing it Ottawa was distributing its surplus to the people and putting constraints on the Liberal lust for spending increases. He was shrinking the Liberal and NDP “social engineering playground.”7
Harper undoubtedly won the gratitude of the country by putting a stop to the endless Federal-Provincial Conferences. These over-publicized and verbose photo opportunities in the Government Conference Centre (the old railway station in Ottawa) were always replete with play-acting and only occasionally with any eloquence (and almost never after the departure of Trudeau and the senior Johnson). And they always ended in an acoustically as well as circumstantially strained singing of “O Canada.” Harper had the premiers to dinner at his residence once and did not meet them again as a group after that. He made some yardage with Quebec by making a Quebec representative a member of Canada’s delegation to UNESCO and by co-opting a Bloc Québécois motion to recognize Quebec as a distinct nation by recognizing Quebec pre-emptively as “a nation within a united Canada.” It won all-party support. In the second Conservative budget, the main element was the five-year recalculation of equalization payments, and it was jigged in such a way as to give Quebec – with 24 per cent of the entire population, and French Quebec with about 19 per cent – 46 per cent of the entire increase in transfers. When Premier Jean Charest took advantage of this by cutting Quebec taxes in a close election campaign against Action Démocratique’s effort to revive conservative Duplessis non-separatist nationalism, Harper felt that Charest had undercut the provincial argument that the provinces had inadequate resources to deal with their spending responsibilities.
Harper and his entourage had anticipated an early Liberal leadership change and probably an early election, but the Liberals were exhausted and divided and took their time, only calling their convention for December 2006. As Martin had won 93 per cent of the votes on the first ballot of the 2003 convention, against Sheila Copps, who had retired from public life, there was no chance to continue with the new and not very successful Liberal practice of elevating the surviving runner-up from the last convention, as Turner had succeeded Trudeau, Chrétien had succeeded Turner, and Martin had succeeded Chrétien. The three main contestants in 2006 were Bob Rae, former NDP premier of Ontario, where he was thrown out very definitively after one term; Chrétien’s federal-provincial and then energy minister, the bookish and not very bilingual Stéphane Dion; and former international television commentator and Harvard academic Michael Ignatieff. In a sense, all met the Laurier, King, St. Laurent, Pearson, Trudeau criterion of outsiders, as none had been prominent in the Liberal Party before, and the only one with a lengthy political background was Rae, and that was from another party. Ignatieff was the front-runner, but he made a number of verbal blunders, including a flip-flop that had him accusing Israel of a war crime in Gaza, and he seemed an alarmist about Quebec and rather incomprehensible on the environment (which had been Dion’s last priority as minister). In the end, the Liberals were mistrustful of Rae as a party-changer and of Ignatieff as an amateur who had returned from twenty years outside Canada to take the leadership, and Dion came from far back, only 18 per cent on the first ballot, to win. This too was a first for the Liberals: all previous Liberal leaders elected by conventions, from King on, had led all the way.
The Conservatives greeted him with a series of attack ads, an unsportsmanlike innovation. As Dion was running as a cutting edge environmental zealot, Harper installed his energetic loyalist John Baird in the environment ministry with a mandate to steal Dion’s thunder. Harper soon unveiled a peppy campaign against greenhouse gases and air pollution, but Dion, who proved to be an owlish wonk lacking tactical leadership aptitudes, waffled on his former affection for a carbon tax. After a tremendous fanfare, the Harper enthusiasm for combatting climate change withered as the evidence supporting the need of such action came under intense re-examination and the political strength of the movement declined. Dion dramatically announced the Green Shift, a poorly thought out imposition of draconian energy emission standards on industry, including a modified cap-and-trade regime, but there would be no tax relief anywhere; the money harvested from industrial carbon users would be re-enlisted in authoritarian Liberal programs. Harper saw an opportunity for an election and began considering how to provoke one, having devoted his energies to enacting a program quickly that a Liberal government could not undo; he was very careful in presenting legislation and laboured under none of the illusions that had caused Joe Clark to govern as if he had a majority, assuring that he only governed for a few months.
On March 26, 2007, Charest limped back into office in Quebec with a minority government, the first in the province’s history, as the Liberals, Action Démocratique, and the Parti Québécois split the vote almost equally (previous election results in brackets): Liberals, 48 MNAs and 33.1 per cent of th
e vote (76 MNAs and 46 per cent); Action Démocratique, 41 MNAs and 30.1 per cent (4 MNAs and 18.2 per cent); PQ, 36 MNAs and 28.4 per cent (45 MNAs and 33.2 per cent). Charest could work with Dumont; the decline of the Parti Québécois, now led by André Boisclair, to 28.4 per cent of the popular vote was taken for a time as indicating that the party could be headed for the ash heap (there to join the Parti National, Conservative Party, Bloc Populaire, Action Libérale Nationale, Union Nationale, and Créditistes).
Dion was suffering serious expressions of concern within his ranks about his competence as leader, and this made the NDP and Bloc Québécois susceptible to the attractions of an election, as they both thought they could feast on the Liberals, even if the Conservatives held their position. Dion, to put some discipline into his party, said that he would lay the whips on for non-confidence motions, so the unofficial opposition could decide whether to have an election or not. This was enough for Harper, who saw the first stages of the economic meltdown of the autumn of 2008, and on September 7 caused the governor general, the rather glamorous Haitian-Canadian Michaëlle Jean, to dissolve Parliament for elections on October 14, 2008.*
It was a nasty campaign, replete with gaffes, minor dirty tricks, and, especially, mocking television advertisements in both directions. The results (2006 results in brackets) were: Conservatives, 143 MPs and 37.6 per cent of the vote (127 MPs and 36.3 per cent); Liberals, 77 MPs and 26.3 per cent (95 MPs and 30.2 per cent); Bloc Québécois, 49 MPs and 10 per cent (51 MPs and 10.5 per cent); NDP, 37 MPs and 18.2 per cent (29 MPs and 17.5 per cent): Greens, no MPs and 6.8 per cent (1 MP and 4.5 per cent). Harper had edged up to within twelve MPs of a majority, insulated himself against the economic crisis, which would be the most acute since the 1930s, and left the Liberals at their lowest point ever in the popular vote and again severely divided. Harper was not a stylish political leader like Trudeau or even Mulroney, and he was fortunate in facing the Liberals when they were, unusually, divided under Martin and ineptly led by Dion, but he had shown himself to be purposeful and consistent in policy terms, and very agile as a political tactician.
By the time the election had occurred, the proportions of the world economic crisis were becoming very clear. The U.S. banking system and allied financial institutions, under the original impulse of legislation and regulation by the Clinton administration, unaltered by the George W. Bush administration, had required heavy commitments by the mortgage industry and lending banks to mortgages that did not meet commercial criteria, in the name of increased home ownership. The American insurance industry purported to ensure these instruments in a way that compensated for their relatively high risk, and pieces of these sub-prime mortgages and the insurance on them were packaged together in what were called consolidated debt obligations, certified by the big credit-rating firms Moody’s, Standard & Poor’s, and Fitch to be of investment grade, and shovelled out by Wall Street onto the world’s banking system in the tens of billions of dollars. The yield was high, everyone was selling them and everyone was buying them. Capitalism again showed itself to be as stupid as Lenin had declared it to be when he opined that the “capitalists will sell us the rope we hang them with” in the later explanation of a senior U.S. banker: “When the music’s playing, everybody has to dance.” They didn’t have to, but almost everybody did, albeit in a coalition of idiocy founded and led by the U.S. government. When the music stopped, the U.S. political class locked arms from right to left and blamed it on private sector greed, but the real initial cause was their own quest for a political free lunch of rising family home ownership levels and fattened campaign donations from developers and the corrupt building trades unions at no additional cost to the taxpayers.
Except for Canada and a few other countries, almost all the world’s banking systems hit the wall at once, even those nationalities long culturally synonymous with prudent lending: the Swiss and Scots. It was the most complete American public policy disaster since the foreign, social, and economic policy trifecta of the 1920s and early 1930s which included isolationism, Prohibition, slamming the gate on immigration, the immense stock market bubble, raising tariffs and taxes, and shrinking the money supply. President George W. Bush, when inspirational language was required, warned, “The sucker could go down,” referring to the fourteen-trillion-dollar economy of the United States. It had come to this, a banal tocsin from the chief executive that mighty America was on the brink of economic ruin just seventeen years after gaining the greatest and most bloodless strategic victory in the history of the nation state with the implosion of the Soviet Union and the collapse of international communism. The world’s largest financial corporation, Citigroup, was effectively bankrupt, as were the country’s traditionally largest bank and securities firm, Bank of America and Merrill Lynch. Goldman Sachs, long the virtual junior partner of the U.S. Department of the Treasury and the British Exchequer, was revealed as having been selling billions of dollars of worthless real estate–backed securities to its immense client list while short-selling them out the back door for their house account, and had to seek a distressed infusion of capital from investor Warren Buffett. Mighty Deutsche Bank, in the long reign of Helmut Kohl the virtual partner of the German government in industrial ownership and foreign development projects, and connected intimately to the federal chancellor himself, required government assistance. Large parts of the British, Swiss, Australian, Dutch, Japanese, French, Italian, Spanish, and other banking systems would have failed and brought down all the equity holders and compromised the depositors if governments had not created money to invest in them. Canada, where no fully chartered bank had failed since 1923, suffered no such problems. Most of the six large banks endured some losses in the bursting bubble, but well within their officially imposed ratios and not on a scale to impair the stability of any of them. This was the result of a conservative national savings rate and regulatory climate, and the existence of only six large banks in a rich G8 country then of thirty-three million people. The bank executives of Canada themselves were not necessarily made of sterner stuff than those whose institutions went down like nine-pins in most of the rest of the Western world. The Canadian model of collaboration between the private and public sectors was vindicated. This was essentially the model developed to some extent by Jean Talon, and recreated by John Graves Simcoe, Francis Hincks, Macdonald, Laurier, Clifford Sifton, R.B. Bennett, and C.D. Howe.
The crisis was addressed everywhere by deluges of newly created money irrigating the system in the guise of debt, when much of it was simply money-supply expansion, what was formerly called “printing money” but now sheltered under the gratingly euphemistic rubric of “quantitative easing.” The most worrisome aspect of the entire episode was neither the damage nor the reflexive and almost hysterical response to it (starting inevitably with lame invocations of Herbert Hoover’s platitudinous falsehood that “the economy is fundamentally sound”) but the fact that almost no one except a few short-selling market sharks and academic kooks foresaw the onrushing crisis. Central bankers, lending bankers, merchant bankers, academic economists, financial journalists, industrialists, financiers, treasury officials, no one had any idea of the proportions of the problem. It was relatively insightful for Canada’s finance minister, Jim Flaherty, to refer in his 2006 budget to “the risk of a sudden correction in U.S. house prices.” What happened went well beyond a sudden correction, as it swept most of the banking system of the West into technical insolvency.
This sudden economic near-death experience from self-inflicted wounds, as well as the chronic American current account deficit of $800 billion annually, starting in the Clinton years, and the miring of almost the entire U.S. conventional military ground forces capability in the Middle East for nearly a decade, severely eroded U.S. prestige. George W. Bush was not internationally respected, culturally or in terms of policy consistency, and the man who threw his shoes at Bush’s head in a press conference in Baghdad enjoyed widespread assent, at least in spirit. It was unusual for the
person of the U.S. president not to be respected. The president elected to succeed Bush in 2008, Barack Obama, though as an articulate African-American he started out with great goodwill internationally, was a disappointing ally and policy-maker. Colossal budgetary deficits prevailed throughout his term and there was little real economic recovery despite increasing the accumulated federal debt from $10 trillion to $18 trillion in five years, an 80 per cent increase on where it had been in 2009, after 233 years of American independence. And much of the debt wasn’t bought at arm’s length but by the Federal Reserve, a subsidiary of the U.S. Treasury Department. It was paid for by specially issued notes, a shell game that would have been illegal in the private sector.
For Canada – which had lived, often precariously, on the edge of the great American project, conditioned to the rise and rise of that astonishing country, which after the U.S. Civil War operated on a scale unlike anything the world had seen or imagined before – these American reversals were especially shocking. The Civil War was a horrible agony, but the United States was led by its greatest statesman to the victory of the Union and the emancipation of the slaves. The Great Depression afflicted America as it did the whole world, but the country quickly elevated another of its greatest leaders, and in the balance of the 1930s Franklin D. Roosevelt was almost the only leader of an important country not to be ashamed of, neither a barbarous dictator like Hitler, Stalin, Mussolini, and the Japanese, nor an appeaser of them like Chamberlain and Daladier. Now, all the worst qualities of the Americans combined to inflict distinct humiliation on America: venal and ignorant politicians; vulgar and imprudent economic consumption; and foreign policy vacillations between over-hasty recourse to force in support of democracy in unpropitious places and a pallid attempt at realistic cynicism, leading to unrequited concessions to Iran and Russia. America’s greatest qualities – enterprise, generosity, courage in national policy – were obscured.
