Canada already tried economic nationalism—it made us poorer

One of my favourite quotes of the era is from the late, great economist Harry Johnson, who spent about as much time drinking as he did writing. He may have been experimenting with a new drink at the time, but he wrote: “Economic nationalism is diverting Canada into a narrow and garbage-cluttered cul-de-sac.” Now, even if one thinks that that may have been alcohol induced, it’s fair to say by the early 1980s, there was a growing recognition, even on the part of Pierre Trudeau’s government, that something had to change. That these efforts to effectively engineer and protect different parts of Canada’s economy represented a downward pressure on investment and employment, and so on. People may remember—which brings me to my second anniversary—the prime minister of the day appointed Donald Macdonald, a former cabinet minister, to chair a Royal Commission on the Economic Union and Development Prospects of Canada. His report came out 40 years ago last month. People may be familiar with the recommendation that Canada pursue free trade with the United States, which, of course, the Mulroney government ultimately did. But it was more fundamental than that. The Macdonald Commission reflected a kind of ethos about the role of markets and the role of government, and the need for Canadians not to feel insecure, but to feel bold and ambitious about our capacity to compete in global markets. There’s a famous line in the Macdonald report where he says, “there are fewer places to hide,” and that was okay, because Canada can compete if we open ourselves up to competition—competition within our economy and competition globally. That economic openness, in other words, wasn’t a surrender. It was an expression of confidence. I think it’s fair to say that one way to understand the past 40 years or so of Canadian political economy is that we have taken steps to rid ourselves of a lot of the vestiges of that last episode of economic nationalism, including liberalizing parts of our economy, trying to create fair and open forms of competition, encouraging foreign direct investment from different parts of the world. Yet, in the face of Trump’s threat, we seem to be going through an episode of deja vu. Half a century later, a lot of those same ideas are finding salience. The language has changed a bit, but the underlying impulses are the same. We talk about “resilience,” and “security,” and “sovereignty.” And what’s interesting is that, while economic nationalism in the 1960s and 1970s was principally a progressive political project, it’s increasingly a conservative one today, inspired in part by the economic policy programme of the Trump administration and centre-Right governments elsewhere in the Anglo-American world. So it’s notable, for instance, that we’ve seen the Poilievre-led Conservatives calling for protection of different parts of Canada’s economy, calling on the government to block foreign investments, and so on. I think this is a mistake. We have to keep in mind that sovereignty isn’t isolation. It’s the freedom to choose in a world that’s interdependent. We’re forgetting what we learned through that experience from the Bricklin to the Maconald Commission report, which is that when we open ourselves up to competition, when we reach out into the world, Canadian companies, Canadian industries, and Canadian technologies can be successful—that we can compete and win. And so, as we face the current threat of the Trump administration, this instinct to turn inward, I think, is precisely the wrong reaction. We can’t out-Trump Trump. The best we can do is to have the kind of ambition and boldness and self-confidence that marked the 1985 Royal Commission and the decades of policy that ensued thereafter. Thank you so much for having me.