A fiddler for the national fire

Peter C. Newman November 1 1982

A fiddler for the national fire

Peter C. Newman November 1 1982

A fiddler for the national fire


Peter C. Newman

Right string, wrong yo-yo. Anybody else delivering Pierre Trudeau's television message might have been believed. There he was, looking like a dauphin of the late French empire, telling his court of defeat on distant battlefields. But anyone with even a room-temperature IQ was not fooled.

There was not a single note of contrition, no recognition of the fact that the real target of Trudeau’s complaints should have been the policy vacuum of a government headed by himself.

That Canada is in trouble is hardly news; that “we cannot afford to be divided” is a cliché; he prescribed nothing that “would restore Canada’s fitness to survive economically.”

Because we have no resident monarch, no pope or head of state with meaningful authority, prime ministers in this country have traditionally been elevated in public consciousness to spiritual leaders, expected to set an example for the rest of us. Trudeau forfeited this ability to rule by moral suasion long ago. It is not so much what he has done or not done during his interminable time in office as what he might have done with the four mandates from Canada’s voters. Each time we have aligned our aspirations with his promises; each time he has let us down.

The real story of this mini-series to end all mini-series was that Trudeau’s handlers simply did not have the confidence in their man to put him on the road with his “let’s face the holocaust together” message. (There is this little problem with his non-trigger finger.

when he’s on the loose----)

While the Trudeau sermonettes lived up to their advance billing of not announcing any new policies, there was one significant exception. In this business climate, not opting for wage and price controls amounts to a major economic decision. “Controls,” he said, “could not create a trust in each other and a belief in our country that alone would serve our future. Controls would declare, with the force of law, that Canadians cannot trust Canadians.” Maybe. But that is not the view of an increasing number of informed citizens on both sides of the political spectrum.

An influential group of 80 professional economists, headed by Prof. Abraham Rotstein of the University of Toronto, has come out strongly for controls as part of a program to reduce

interest rates. “The whole international economy is teetering, and we in Canada have the worst record of industrial performance among major Western countries,” says Rotstein. “We are the most vulnerable to being hit hardest, and we may be on the edge of a major 1930sstyle depression by the end of this winter.”

Interestingly enough, at least a couple of Canada’s most conservative businessmen have broken with the private sector’s traditional opposition to controls as the only way out of a desperate

situation. Cal Knudsen, chairman of the embattled MacMillan Bloedel forest products empire in British Columbia, has come out squarely for wage and profit-margin controls as a way of decoupling our interest rates from those of the United States. “I’m not saying it will be painless,” he says. “I’m saying it’s better than the alternatives. We need controls to help ensure that Canadian financial institutions survive until economic recovery occurs.” Knudsen wants foreign exchange controls implemented on speculative savings at the same time, so that investment funds do not flow out of the country as interest rates drop. The MacBlo chairman also advocates a form of compulsory credit allocation so that money goes into new

investments instead of takeovers.

The toughest prescription for restoring the Canadian economy comes from Art Child, who is Alberta’s largest private employer. As chief executive officer and a major shareholder of Burns Foods, he rides herd over annual sales of $1.5 billion, as well as presiding over the Canada West Foundation. A linguist, author of a PhD thesis in economic history (and a former Tiger Moth stunt flyer), he is as influential as any Calgary businessman and a lot more interesting than most. His confidential forecast is that unemployment will hit 1.8 million by the end of this winter.

“The full economy has to be restructured before we can think of moving back up again,” he told me in a recent interview. “That’s not the popular conception, which holds that we are on a bit of a downslide and, before we hit bottom, we can somehow turn it around. The trouble with this simplistic approach is that there is still a lot of inflation in the picture. Despite Ottawa’s Six-and-Five policy, wage costs are still climbing. The Canadian economy can only be restructured through a mandatory wage and price freeze, followed by tough controls. We have to have a lot more bankruptcies and plant closures to get all the extra plant capacity out of the system. Only then can we start feeding in new investment incentives to help reindustrialize the country.”

The weakness of Child’s position is that he sees little problem in getting organized labor to accept a realistic wage freeze. “Union leaders will fight us every step of the way,” he admits. “But many of them will welcome controls because it will resolve their main problem. Right now they are sitting at home stewing about how many members they are going to lose next week. If wage controls had been in place this spring, there would be a lot more people at work than there are today. The enlightened union leaders know that.”

That may be dreaming, but Child is right about controls. Only a government with the courage and credibility to slap on mandatory wage and price controls can get us out of this mess.

Thinking back again on those dreary Trudeau sermonettes, one interesting thread does emerge. He kept pointing to Sweden, Germany and Japan as economies we should emulate.

What they have in common is that their leaders recently were defeated or resigned. It is an example we should follow.