The Weekly Wrap: Is this finally the end for Justin Trudeau?

Its understanding of the country was rooted in as series of bad trade-offs: redistribution over growth, the symbolism of identity politics over slow yet steady egalitarian progress, a knee-jerk skepticism of Canadian history over a considered patriotism, and a soft power view of the world over the hard power realities of today’s geopolitics. The Liberal Party’s departure from its historic centrism has of course manifested itself in public policy including, most recently, the Trudeau government’s reversal of the Chrétien government’s capital gains tax reduction. But it’s also reflected in its people too. Think of John Manley, Martha Hall Findley, Bill Morneau, or my good friend, Robert Asselin, who’ve become isolated from the party that they dedicated so much of their professional lives to. The question, then, is whether the post-Trudeau era will double down on the party’s leftward trajectory over the past decade or restore a centrist equilibrium that has served it so well over the decades. There’s a good chance, to be honest, that it continues to the lurch to the Left. One gets the sense that the party’s centre of gravity has fundamentally shifted. The old “blue Liberals” constituency is smaller and less galvanized than its more progressive wings. From my outsider’s point of view, that would be a regrettable development. Although I’ve worked in partisan politics, I’ve never been much of a partisan. Partisan victories come and go but shifts in ideas can be far more durable and significant. Think for instance of the Chrétien government’s continuation of the market reforms started by the Mulroney government. There’s a good case in fact that the 2000 Fall Economic Statement (which lowered the capital gains tax rate) is one of the most conservative policy documents in modern Canadian history. There’s a reason why the Fraser Institute and other market-oriented think tanks refer to the 1990s as the era of the Chrétien consensus. The point is if it’s Liberals or Conservatives implementing good policy, we ought to be indifferent. We should be in favour of good policy. Period. One hopes therefore that in the eventual post-Trudeau era, the Liberal Party can shift back to the sensible centre and restore itself as a voice for competitiveness, growth, and balanced tax and fiscal policy. Time will ultimately tell whether such hope is misplaced. Poilievre is right to prioritize the public over high-paid lobbyists When Conservative Party leader Pierre Poilievre first set out the expectation that those advocating for government policy must persuade the Canadian public before he would act on their priorities, it received a somewhat mixed—and even skeptical—reaction. There was a sense that this might subject good policy ideas to lowest-common-denominator politics. Globe and Mail columnist Andrew Coyne warned for instance that it represented the abdication of any political risk. While there’s potential that a more democratized policy process discards good ideas, these concerns underestimate the extent to which current policymaking enables the adoption of bad ideas free from proper public scrutiny. The explanation can be found in Public Choice theory. Public Choice economics (which one of its founders James Buchanan famously described as “politics without romance”) points to the political tendency towards “concentrated benefits and dispersed costs.” It’s a simple concept but it has profound implications for public policy and politics. The basic point is that small yet well-organized groups, including corporations, industry associations, unions, and non-profit organizations, can effectively lobby the government to enact special preferences for them with limited democratic scrutiny and that policymakers are likely to be responsive since the special interests will be appeased and most voters won’t know or won’t care. At its best, Poilievre’s call out to lobbyists and interest groups is an insistence that the distribution of the benefits and costs of government action ought to be more reconciled. If they want the government to enact something in their favour, then the rest of us ought to be persuaded that it’s worth doing or even have broad-based benefits. In practice, it has the potential to serve as a blocking mechanism against rent-seeking. Policymakers can effectively say “If this is such a good idea, Canadians ought to support it and if they don’t, then it’s not worth doing.” This may come with trade-offs. There is a risk of course that it filters out good policy ideas. But it’s just as plausible—and in fact, more likely—that it subjects bad policy ideas to greater public scrutiny. Democratic capture in my mind is a smaller risk than regulatory capture. The Trudeau government is a case in point. Think for instance of the unprecedented corporate business subsidies that we’ve seen over the past decade. The government has now given billions of dollars to the electric vehicle industry with limited public debate or popular support. The industry’s lobbyist was even named to the Order of Canada for his efforts. This type of rent-seeking may win one awards but it’s hardly a good model for policymaking. It would instead be healthier though perhaps a bit messier if the public’s voice was a greater input into the policy process. Yes, both models may come with risks but I’ll ultimately err on the side of those without lobbyists. Canada was once an important global leader—and we can be again Earlier, this month The Hub commemorated the 80th anniversary of D-Day as the beginning of the end of the Second World War. Next month marks a key moment in determining what would come after the conflagration. From July 1 to 22, 1944, Allied delegates met at the Mount Washington Hotel in Bretton Woods, New Hampshire, to hammer out the details of the post-war economic and monetary arrangement with the goal of facilitating a well-functioning global economy and protecting against the autarky and protectionism that had worsened the Great Depression and, to some extent, contributed to the war itself. This week, Edward Greenspon, the CEO of the Public Policy Forum, and I visited the Mount Washington Hotel in preparation for some writing that we’re doing to commemorate next month’s anniversary. It was a great experience. The Mount Washington Hotel remains a wonderful place with a beautiful landscape and splendid amenities. What made it really special though was its rich history. We did an official tour with the hotel’s well-informed director of marketing and sales to see the rooms where the Bretton Woods agreement was negotiated and hear the stories of what happens when you cram hundreds of delegates (including several eccentric characters) into a semi-isolated hotel for nearly a month. He can tell you about the strained working relationship between U.S. Treasury Secretary Henry Morgenthau and Secretary of State Cordell Hull. But he also has stories about how John Maynard Keynes’ ballerina wife woke up Morgenthau early every morning by practicing her craft in the room above him. Greenspon slept in the room of Harry Dexter White, the chief American architect of the agreement, who ultimately proved to be something of a Soviet spy. We think that I was in the room of Louis Rasminsky, the former head of the Bank of Canada, who played a disproportionate role in the reaching of an eventual compromise between the Americans and the British. Learning and reading about the conference is a reminder of the significant role that Canada in shaping the post-war international order. I don’t want to say too much more here now—I’ll save it for my forthcoming essay with Greenspon—but we shouldn’t merely assume that due to its size and capacity our country must be a marginal global player. There’s nothing predetermined about our current isolation. As Andrew Coyne wrote in the Globe and Mail this week in advance of the forthcoming NATO summit, it’s ultimately a reflection of leadership. The Canadian delegation at the Bretton Woods and the politicians like Finance Minister James Ilsley to whom they reported understood that. It’s a lesson that our current political leaders would be well served to rediscover. Maybe they should visit the Mount Washington Hotel. I’d recommend it.