We also need to talk about the political entity we call Canada.
It was formed in 1867 when five colonies were patched together into one "Dominion" but the Canadian colonies were united for England's benefit, not theirs. England wanted them to unite because it was afraid that individual colonies might join the United States. That was a real possibility because many Canadians liked the American idea and historians tell us that, around the time of Confederation, more people moved from Canada to the United States than came to Canada from England. Further, England had backed the south in the American Civil War and now she was worried that the North might retaliate by taking Canada.
No one of the Canadian colonies could support an army big enough to control the colonists or deter the Americans, so the British had to keep their own troops here. If the colonies confederated they could raise and maintain their own army, and the British army could be brought home.
Confederation also gave England a claim on the land we now call the Canadian west. It's cut off from Canada's west coast by mountains and from the east by the Canadian shield and geographically it's a natural extension of the American west, but if the east and west of Canada were united they could claim the land between them.
The supposed advantage of Confederation for Canadians is that it ties ten provinces and two territories together into a single large "nation." Conventional wisdom tells us that having a big country gives us some kind of economic benefit -- but does it? Around the world some of the most prosperous countries, including Sweden, Holland, Switzerland, Singapore and Hong Kong, have very little territory and about the same population as the province of Ontario. On the other hand most countries with big geographic area, like Russia, China, Brazil and India, are poor.
In fact history shows us no large geographic area that has ever become uniformly developed and wealthy with a centralized economy. The one apparent exception to the rule is the United States but that is an illusion, rather than an exception.
As noted before, the United States grew wealthy as an alliance of 48 local economies. Now, as a huge national economy, it supports poverty that would not be tolerated in other developed countries and it does well only in time of war or when it is preparing for war.[1]
Europe did very well as an amalgam of relatively small economies but now the European Economic Community is trying to form a single big economy and problems are already showing. Thirty years ago most European countries had labor shortages and they had to import "guest workers" from the middle east and North Africa. Now, even Germany has unemployment.[2]
Granted that economic union is not shown to be the only cause of Europe's woes, it is still a major event that preceded them. If it did not cause them, it certainly did not prevent them. In June of 2005 the EU began to fall apart when the people of France rejected its constitution. Civil servants who depend on it for their jobs will keep something going, but the people have spoken and their answer is "no."
Small countries are easier to manage than big ones, and it may be impossible to manage a country as big as Canada. That was no problem for England in 1867 because the English did not want to develop a country, they wanted a colony that would supply them with raw materials and buy their manufactured goods. Sir John A. Macdonald was knighted for uniting the colonies in Confederation but English knighthoods are granted for services to the British Crown, not to the Canadian people.
Federal politicians and civil servants like a big country because it provides a big tax base for big government to extract big money from. When our leaders promote national unity they are not trying to preserve a great country, they just want to maintain the trough at which they feed.
Some of the testimony heard in 2005 by the Gomery commission into the AdScam scandal raises even more serious questions. The owner of the Groupaction advertising agency that received millions of dollars from the government testified that much of the money was given back to the Liberal party but some was passed to the Parti Quebecois. Employees of the federal government, in fact, used federal money that was supposed to promote unity to help fund the separatist movement.[3]
For a cynic that makes sense because if the separatist movement is well-funded then federal anti-separatists need money to counter their program. If separatism were to die, many federal sinecures would be redundant.
Federalism is a gravy train, and the government and the news media collaborate to keep it rolling. While the AdScam hearings were in the news the Toronto Star ran a front page story to inform us that few women are known to be involved in the AdScam scandal, but I have yet to see anyone remind us that there were no Anglophones.[4] Criticism of men is part of the Canadian media's program but criticism of Quebec, or of Francophones, is not.
Confederation has been very good for separatists and for big business, politicians and civil servants, but it's not so good for the rest of us. One problem is that the federal government collects most of our taxes and passes some of the take along to the provinces in the process they call "re-distribution." In a further re-distribution municipalities get up to half of their revenue from provincial governments.
The excuse for federal taxation and re-distribution is that it is supposed to ensure that Canadians everywhere get the same level of public service but in fact it doesn't work that way. Ontario Premiere Dalton McGuinty notes that Ontario contributes $23 billion a year more to the federal coffers than it gets in federal services.[5] Ontario is the richest province and the one that makes the biggest contribution to the national wealth but, because so much of Ontario's wealth is redistributed to other provinces, Ontario can't afford the same level of funding for health and education that other provinces enjoy.
Even where re-distribution improves services, the more important effect is that it makes the provinces dependent on the federal government and municipalities dependent on the provinces. That's good for the senior governments because it gives them power, but it's bad for Canada because it encourages waste.
If all taxes were spent by the government that collected them citizens could hold each level of government responsible, and we could expect civil servants and politicians to try to get value for every dollar.
WASTING TAX DOLLARS
With re-distribution one government collects money that it does not spend and others spend money they do not collect. If municipal governments could save money for their taxpayers by being more efficient they would have a reason to be efficient, but that's not the case. The federal and provincial governments are going to collect taxes anyway and common sense demands that local governments claim and spend all the federal and provincial money they can, even for projects that are obviously wasteful.
Suppose someone in Toronto wants to dig the world's deepest hole, as a tourist attraction. It will cost a billion dollars and be of no use to anyone and no responsible city council would spend a nickel of city money on it -- but what if he can dig it with federal or provincial money?
The money will be taken from the citizens anyway and it will be spent somewhere, so the question for city council is whether it will be spent in Toronto or somewhere else. Even though the money will be wasted, it's better to have it wasted in Toronto than elsewhere so City Council will approve the hole. It will be a total waste of money, but it will create jobs.
This example is intentionally ridiculous but sometimes fiction is hard-pressed to keep up with reality. In the winter of 1995-96 the federal government offered grants to help municipalities develop "infrastructure."
That sounds like a good idea because we certainly need to upgrade our infrastructure. Ontario needed the Highway 407 bypass around Toronto so much that a socialist provincial government begged private investors to build it as a toll road.
Any municipality in Canada could put a federal infrastructure grant to good use but the grants the federal government offered in the winter of 1995-96 came with the condition that they could not be used for works already planned. That was dumb because any responsible organization makes some kind of plan for everything it really needs, whether it has the money to build it or not. Because the new "infrastructure" grants could be used only for projects that had not entered the planning stage, municipalities had to shelve projects they really needed and find new ones to benefit from the federal "giveaway."
The City of North York spent $31 million dollars to build courts on which to play an Italian bowling game called bocce, and Edmonton spent $10 million to put luxury boxes in sports arenas. The city of Shelburne Nova Scotia needed a municipal water system but it got underground wiring. Lunenburg needs sewers but it got a golf course. Montreal spent $9 million for a circus school, Toronto spent $180 million on a "trade center," Hamilton spent $12 million on a museum that displays old military aircraft and Mississauga spent $55 million on a "living arts center."[6]
Interviewed on TV, North York Mayor Mel Lastman (who later became mayor of Toronto) said contractors charged premium prices for their work because the federal government was paying most of the bill.
Billions of dollars were wasted, and municipalities were still desperately short of money to pay for infrastructure they actually needed.
THE RAILWAYS
In most ways Confederation has been a disaster but, to be fair, it looked like a good idea in the 1860s. In those days Canada consisted of a few small islands of civilization and a huge hinterland that cost nothing to administer and that could be plundered for natural resources. In the context of the 1860s, Confederation made very good sense for people who lived in the east and plundered the west.
And it gave backers of the Canadian Pacific Railway access to a virtually bottomless pork barrel. The CPR got 25 million acres of land as a down payment and for more than 100 years after Confederation it was able to tap Canadian taxpayers for huge subsidies. Between them the Canadian Pacific, the Grand Trunk and several smaller railway companies got about 25 percent of all the land in the Canadian west.[7] Most of the small railways failed and, in 1923, their remains were merged into the Canadian National Railway.
Supporters of the CPR like to pretend that it made Confederation possible because it provided cross-country transportation, but in fact it made it harder for the east to rule the west.
Before Confederation the west was a remote and wild land, to be plundered by anyone who could get there, but it was hard to get there and few people came to stay. After the west was settled the needs of people who lived there had to be considered, and they had a lot of problems.
One was the CPR, which held a monopoly on transportation and which charged monopoly rates. The railway held western settlers to ransom until the 1890s, when American railways threatened to move in to new mining districts in the Kootenay Mountains.
Rather than build new lines with its own money the CPR asked for federal aid. In exchange for $3.3 million in cash the railway agreed to hold eastbound rates on wheat and flour and westbound rates on specified "settlers' effects" at the 1897 level forever. The fixed rate made mass settlement of the west possible and the "Crow Rate" was enshrined in Canadian mythology.[8]
The agreement was suspended and the railways allowed to raise rates during the inflation of World War I, and the CPR resisted attempts to re-impose it after 1922. In 1927 the rates for grain and flour were reinstated on all CPR lines.
In 1983 the Crow Rate agreement was replaced by the Western Grain Transportation Act which allowed rates to increase gradually, and, until 1995, the federal government paid hundreds of millions of dollars to subsidize the shipment of grain.
Both the agreements were supposed to be for the benefit of Canadian farmers but the actual effect was to tie the farmers to Canadian railways and Canadian grain merchants.
Then and now the obvious way to ship grain from the Canadian west to world markets was and is through the United States, because that's the way the land lies.
To ship grain from the prairies to the west coast you have to haul it over the five ranges of mountains that make up the Western Cordillera. The route to the east crosses nearly 500 miles of the Canadian shield -- some of the toughest railroading country in the world -- to Thunder Bay. There grain can be stored in winter and shipped by lake freighter in summer to Toronto or Montreal, or it can go on by rail over another 800 miles of the Canadian shield to the cities. Either way is expensive.
The shortest route from the prairies to tidewater heads north from Winnipeg to the port of Churchill, on Hudson's Bay. It's a short run to the water but often a long wait for a ship because Churchill is frozen solid much of the year. When the port is open shipping is still a problem because the sea route to Churchill crosses the Labrador Sea near the head of "iceberg alley" -- the route icebergs take south from Greenland to plague warmer waters farther south.
But south of the Canadian prairies the land rises gently for a few miles, then slopes down the Mississippi valley to New Orleans. A railway train can almost coast most of the trip, and a barge could drift down the river. Either way, it's cheap and easy access to a big port that never freezes.
Long before the railway was built, grain from the Canadian west could have been shipped to New Orleans by river boat. In 1872 the Red River Transportation Company, later to become a partner in the CPR, ran river steamers on the Red River from Grand Forks North Dakota to Fort Garry, Manitoba. There was no regular traffic between the Red River and the Mississippi but some steamships did make the trip, via the Minnesota River which is a tributary of the Mississippi and which connects with the Red River through a swamp south of Lake of the Woods. The route through the swamp was not easy, but it was passable to river steamers and it could have been improved.
West of Winnipeg, river steamers sailed the North and South Saskatchewan rivers from Lake Winnipeg to Calgary and Edmonton. Steamers could not sail up the Grand Rapids between Lake Winnipeg and Cedar Lake, but they could winch themselves up. After the service was established, steamers above and below the rapids exchanged cargo and passengers.
The year before the CPR reached Calgary a steamship from Winnipeg sank at Medicine Hat and, until the wreck of the "City of Medicine Hat" at Saskatoon in 1908, the coal that fueled railway locomotives at Saskatoon was shipped from Medicine Hat by river steamer. Edmonton had steamer service from Lloydminster until 1923, when several steamers burned at their docks in a sensational fire.[9]
Riverboats reached most of the west before the railway was built and, almost any time after about 1820, western Canadian farmers could have shipped grain to New Orleans by river steamer. They didn't because, until the railway was built, grain farming was not encouraged in the Canadian west.
The railway promoted farming and the Crow Rate subsidy kept western grain in Canada. It made the trading posts of Fort William and Prince Arthur into cities -- now amalgamated into the city of Thunder Bay -- and it made a fortune for the railways but it stifled industry in the west.
PROBLEMS
The problem for the west was that the Crow Rate subsidized the shipment of grain and flour, but not of other goods.
Major distilleries in the United States developed in Tennessee because it takes several pounds of grain to make one pound of whiskey. Farmers could not afford to ship grain very far through the hills, but distillers could afford to ship whiskey.
In Canada the shipment of grain was subsidized and the shipment of other products was not. Canadian distilleries developed in the east and taxpayers across Canada paid the subsidy that robbed the west of industrial development.
Feedlots, slaughter houses and packing plants for Canadian meat should also have been built in the west -- where the calves were born and the grain grown -- but again the Crow Rate upset the scales. Because the shipment of grain was subsidized and the shipment of meat was not, calves born in the west were shipped to the east. There they were fed grain grown in the west, then slaughtered and packed -- and some of the meat was shipped back to the west. Because of the Crow Rate, the west lost the feedlot and other industries.
When the Crow Rate was replaced by the Western Grain Transportation Act the federal government paid the subsidy direct to the railways, and western industry still had a handicap. Eventually the west did develop feedlots and packing houses, and even distilleries, but development was stifled for years.
Now the Crow Rate is gone but the federal government still controls western grain. Many western farmers would rather sell their grain in the US than in Canada but, by law, they must sell their wheat and barley to the Canadian Wheat Board. If they want to sell it in the States they must first sell it to the Wheat Board, at the Wheat Board's buying price, then buy it back at the Wheat Board's selling price before they re-sell it in the States.[10] That's a good deal for the Wheat Board, but a bad one for western farmers.
Confederation also strangled most of Nova Scotia's industry. At the time of Confederation Nova Scotia and New Brunswick were about as heavily industrialized as Ontario, with established markets in the Caribbean. In 1865 12% of Nova Scotia's exports and 13% of New Brunswick's were manufactured goods. In 1871 the per-capita industrial output of New Brunswick was about the same as that of Ontario and Quebec.
Most of the Maritimes' trade ties were with the United States, Europe and the Caribbean and there was no significant trade with Ontario and Quebec. The Maritimes didn't want to join Confederation because they were afraid Canada would demand high tariffs, which would damage their manufacturing businesses, but they did want a railway to Upper Canada. Upper Canadians did not want the railway, but they did want Confederation.[11]
After Confederation the Intercolonial Railway was built, through the United States, as a combined government/private venture, but it never covered its costs.
Confederation did not change the Maritimes' markets but it did change their finances because Canadian banks were given national charters and, eventually, they concentrated their head offices in Toronto.
Taxpayers across the country pay billions of dollars in subsidies to restore the balance but, with a federal system that centralizes the economy in Ontario, Nova Scotia and other maritime provinces are still at a disadvantage.
In modern Canada Newfoundland is a have-not province, but it was once one of the richest parts of North America. It was bankrupted by British decisions that were intended to give Canadian fishermen an edge over Americans and Europeans.
The island's problems began when England rejected the Bond-Blaine Treaty that would have given Newfoundland fisherman the right to sell their catch duty-free in the United States, and American fishermen the right to buy bait in Newfoundland.[12]
At the request of Canada, which wanted to maintain an advantage for Nova Scotia fishermen, England also refused to allow foreign ships to buy supplies or repairs in Newfoundland. For more than 75 years, while the biggest fishing fleet in the world worked the Grand Banks and sheltered from storms in St. Johns' harbor, Newfoundland shipyards and ships' chandlers were not allowed to repair or supply them.
Confederation also created a continuing monetary crisis because of conflicting economic needs. Manufacturing economies like Ontario need a cheap dollar to make imported manufactured goods expensive and help local goods compete in home and world markets. Resource economies like the west need an expensive dollar to make their exports worth more and their imported goods cheap.
For years Canada's monetary policy wavered one way or the other as different politicians gained or lost power and, as the policy was adjusted to benefit one part of the country at the expense of another, the federal government tried to balance the books with subsidies. That never worked because parts of the country that benefit from the policy of the day are taxed to pay the subsidy, and the subsidy is never enough to compensate the other parts of the country for their losses. The one part of Canada that always benefits from transfer payments is Ottawa.
SOME WINNERS
Through the years some Canadians have done very well from Confederation. The railways, because they were subsidized to make it work, and other big companies because it offered them a bigger market. The Bank of Nova Scotia, for example, had more room to grow in Canada than in its home market of Nova Scotia.
Confederation is a bonanza for civil servants. With two levels of government to co-ordinate and dozens of assorted subsidy programs to administer, federal and provincial governments have developed huge and very comfortable bureaucracies. Some body counts suggest that more than half of all federal and provincial civil servants are there to co-ordinate the workings of the two levels of government.[13]
Among the provinces the big winner in Confederation is Quebec, especially since a federal government headed by Quebec nationalist Pierre Trudeau forced bilingualism on English Canada but not on Quebec. Now Francophones have a distinct advantage over Anglophones.
The first advantage is in Ottawa, because federal employees must be bilingual. Because most Francophones are bilingual and few Anglophones are, Francophones get first run at federal government jobs. The advantage continues, partly because Francophones control the federal civil service. We know that they are completely impartial and that they give no more consideration to Francophones than to others, of course, but we also know that politicians are honest.
Across Canada Francophones make up 25% of the population but hold 30% of federal government jobs. In Quebec, Anglophones make up about 10% of the population but hold only 5.4% of federal government jobs. In most provinces Francophones hold a higher percentage of provincial government jobs than the percentage of Francophones in the provincial population, but in Quebec there are virtually no Anglophone provincial civil servants.[14]
Even if there were no bias in the civil service bilingualism would still give Francophones an edge because it's much easier for a Francophone to learn and practice English than for an Anglophone to learn and practice French.
Most Canadians live hundreds or thousands of miles from any French-speaking center and the few who live close to the Quebec border don't cross it often, because much of Quebec appears to be hostile to English Canadians.
Most Quebecers live within a few hours' drive of either the Ontario or the United States border and tens of thousands of them go to the States for winter vacations or shopping. Most Francophones can practice English in an English-speaking environment, but few Anglophone Canadians have much opportunity to practice French.
Given Francophone dominance of the federal civil service and the federal government's policy of "helping" selected Canadian businesses, it would not be surprising if some Quebec-based companies found it easier to get federal help than companies based in other parts of the country.
The Federal government also makes it easier for immigrants to settle in Quebec rather than in Ontario. According to Ontario Premiere Dalton McGuinty the federal government spends $3,800 to support each immigrant who lands in Montreal, but only $800 to support an immigrant who lands in Toronto.[15] On April 1, 2005 CBC news reported that 60% of all immigrants come to Toronto. In the spending spree of early May/05 Prime Minister Martin promised to increase Ontario's funding, but at press time there was no actual increase.
We saw another aspect of Quebec's special status, and the cash value of Quebec nationalism, in the AdScam scandal of 2004-05 when it was revealed that Francophone civil servants in Jean Chretien's Liberal government funneled hundreds of millions of dollars of public money to Francophone advertising agencies in the pretense that they were working for "national unity."
The Federal government pretends that French and English have equal rights but it does not enforce equal rights for English-speaking people in Quebec. Quebec's Bill 101 is a clear violation of human rights, but Canada's federal government allows Quebec to opt out of the provisions of the so-called "Bill of Rights" and to trample the rights of minorities.
In the fall of 1999 the owner of a video-game franchise in the English-speaking Montreal suburb of St. Laurent was charged with a "language violation" -- which carries fines from $75 to $1,400 for a first offense -- because the address of his store was listed on his business card as "Decarie Blvd." instead of "Boul. Decarie."[16]
Quebec's suspicion of the rest of Canada is also a unifying force and it gives the people of Quebec an economic and cultural advantage. As a Canadian I resent Quebec's privileges and the way it abuses minorities, but my resentment is partly envy.
If Canada were more cohesive Quebec's divisive tactics would not work, and we would gain some advantages.
But French or English, all Canadians lose from Confederation. The economy of the Maritimes was destroyed by it and the economy of the west was not allowed to develop. Even Ontario and Quebec suffered because they were taxed for the subsidies that in some cases harmed the people they were supposed to help, and we all have to support a bloated civil service that serves mostly its own ends.
The last straw for the Canadian economy and for Confederation may have been the election of one-time Quebec nationalist Pierre Trudeau as Prime Minister in 1967.
Born rich and educated by priests, he was a dilettante dreamer with no practical experience. Unfortunately for Canada he was also a charismatic speaker and a master manipulator.
His pro-French policy loaded the federal civil service with Francophones, who now make it virtually impossible for a prime minister from any province other than Quebec to hold office.
Politicians from Quebec already had a head start at the prime minister's office because Quebec voters tend to vote for the Quebec candidate, while the rest us vote for the best candidate no matter where he comes from. After Trudeau's French-first policy loaded the federal civil service with Francophones, politicians from Quebec had a second edge because the civil service could help get rid of a prime minister from any other part of Canada.
When Alberta's Joe Clark won the office in 1979 he managed to hold it only nine months before Trudeau came back for another four years.
When Trudeau retired the Liberal party -- which has a tradition of alternating French and English national leaders -- elected Ontario's John Turner to replace him. Turner won the election in 1984 but Trudeau double-crossed his own party by openly supporting Quebec-based conservative Brian Mulroney. With Trudeau's knife in his back Turner lasted only three months, to be replaced by Mulroney.
British Columbia's Kim Campbell was an obvious sacrificial lamb because no-one could have seriously expected the Conservative party to win an election on Mulroney's record. After Campbell was disposed of the prime minister's office returned to Quebec and the Conservatives chose Quebec Francophone Jean Charest as leader.
Liberal Prime Minister Jean Chretien was a Quebec-based Francophone with a staff of Francophone civil servants. Is it any surprise that when he negotiated with Quebec; Quebec seemed to win every point it wanted? Since Chretien left office we have heard of hundreds of millions of dollars his government paid Quebec-based companies for work they did not do. Chretien was eventually replaced by Paul Martin, who represents the Quebec riding of LaSalle-Emard.
DECONFEDERATION
Given all this, what should we do? We have to separate but before we agree to break up Canada we have a moral obligation to protect the minorities in Quebec whose civil rights are trampled even while they are supposedly protected by the Canadian Bill of Rights.
I agree with Quebec nationalists that English Canada has no right to hold the French-speaking area around Quebec City as part of Canada but, by the same token, Quebec has no right to control the English speaking areas of Montreal, the Ottawa and the South Shore, or the First Nations Territories of the north. These must all be separated from Quebec before Canada withdraws what little protection Confederation offers to minorities.
Indian nations claim almost half the land area of Quebec and, as we saw in the summer of 1990, when the Canadian Armed Forces had to intervene in a 78-day armed standoff between Indians and the Quebec Provincial Police near the town of Oka, the Quebec government does not respect the rights of the First Nations. If the Indians were left at the mercy of the Quebec government, we can assume that armed conflict would result.[17]
If anyone wants to leave the parts of Quebec that choose to separate, the Quebec government should be required to buy their property at fair market value. By the same token if anyone in an area that chooses to separate from Quebec should prefer to move to an independent Quebec, the federal government should buy their property.
Then we would be free to gradually break the political bonds and find new working agreements that would be better for all. The Atlantic provinces would lose the subsidies that keep them dependent on Ottawa, but they proved before Confederation that without federal interference they are well able to support themselves. Ontario would lose control of western resources, but it would also lose the millstones of the federal government and Quebec.
With local sovereignty all parts of Canada could hope to join Switzerland, Hong Kong, Sweden, Singapore, Holland, and the other wealthy nations of the world. As one large country we must expect to join Brazil, Russia, China, Nigeria and India -- and perhaps some-day the United States -- among the poor nations of the world.
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