BUSINESS WATCH

An economic guru in waiting

Peter C. Newman June 11 1990
BUSINESS WATCH

An economic guru in waiting

Peter C. Newman June 11 1990

An economic guru in waiting

BUSINESS WATCH

PETER C. NEWMAN

If the Canadian business community has a resident philosopher—a Marshall McLuhan of the bottom-line set—he is Thomas Kierans, president of the C. D. Howe Institute, a Toronto-based think-tank which, under his stewardship, is becoming the country’s most innovative policy research source.

Like his role model, his father, Eric, the former Trudeau cabinet minister who had too many good ideas to feel comfortable within any political context, the younger Kierans has drifted between the private and public sectors, leaving a considerable mark on both. Unlike most businessmen caught up in the daily whirl of attempting to improve their next quarter’s earnings, Kierans actually takes time to engage in an activity that seldom indulges the whims of his peers: he takes time out to do nothing but think.

After earning his MBA at the University of Chicago, he worked at three large brokerage houses: Nesbitt, Thomson & Co., where he quickly rose to be vice-president in charge of research, trading and syndicating; Pitfield, Mackay, Ross & Co., where as a senior vicepresident he specialized in government and utility financing; and McLeod Young Weir Ltd., where he spent a decade until last year as president, and in 1987 helped organize its sale to the Bank of Nova Scotia.

At the same time, he chaired half a dozen public policy committees, contributed thoughtful articles to academic journals and worked hard on behalf of private-sector cultural institutions; he is currently chairman of Toronto’s Royal Ontario Museum. Queen’s University’s School of Policy Studies held an all-day seminar specifically to discuss his ideas, and through his planned expansion of the C. D. Howe Institute’s activities, Kierans’s influence is sure to spread.

“The fundamental flaw associated with the entire Meech Lake debate,” he told me during a recent interview, “is the assumption in Quebec that English Canada doesn’t care and is prepared to see Quebec go, while in English Canada, the issue has numbed everybody into

‘We’re the only people who feel compelled every six months to dig up our roots and look at them, just to make sure we’re still there’

indifference. For one thing, nobody seems to be differentiating the feelings within English Canada—between Alberta, for the sake of example, and Ontario. We talk a lot these days about the imagery of Louis Riel being hanged, and the effect that had on the people of Quebec. I submit that parts of English Canada hold equally violent myths and images in their minds. Alberta will be as traumatized, for as long a time as Quebec was because of Riel, by the National Energy Program. That’s worth thinking about in terms of Meech Lake because it’s not just about Quebec, it’s about relationships in the rest of the country.

“Also,” he continues, “we must remember that Quebec is very rational, and rationality dictates that Quebec’s place is within Confederation, even if it turns out to be a more decentralized version of the country than Meech Lake anticipated. That’s why this crisis isn’t something we should spread our dirty laundry all over the world about.

“There have already been costs associated with the Meech Lake crisis. When we look at the spread between long-term Canadian interest rates and long-term U.S. interest rates, those spreads are historically high. That tells you that a lot of concern about the political

stability of Canada is already discounted in the marketplace nationally and internationally. I still believe that Canada is going to remain a safe haven for capital and that a series of political realignments within Canada is consistent with a vibrant and growing Canadian economy. In the extremely unlikely situation that Quebec decided to secede, Quebec is both rational and sophisticated enough to attempt the process with care and consideration for all the factors involved. Our challenge, in the aftermath of this incredible dustup, will be to organize ourselves equally efficiently. We shall have to be very sophisticated externally and tell the world to take it easy, that this is a highly civilized nation going through one of its internal periods of angst. We’re the only people in the world who feel compelled every six months to dig up our roots and look at them, just to make sure we’re still there.”

Kierans is also concerned about the future of Atlantic Canada, not because of what might happen in Quebec, but because inevitably it will be forced to deal with the agonies of change. “We’ve been transferring money to people in place,” he points out, “instead of dealing with the issues. That will be difficult to achieve in a civilized and compassionate way. What we have to figure out is how to work with Atlantic Canada through a transition that will be somewhat less difficult than that of Eastern Europe.”

Kierans is convinced that one of this country’s main problems is that so many Canadians can’t distinguish between economics, mythology and ideology. “The economics,” he thinks, “is always easy to get at, and the ideology is always a fairly reprehensible system just sitting out there. But the thing we tend to lose track of is that the mythology of any system or society is crucially important. It’s wrong, for example, to call the people who object to the RCMP wearing turbans instead of the hats they’ve worn since 1910, racist. They’re not. But those hats are an inherent part of the Canadian mythology which knits the nation together.”

Kierans predicts that those of us who worry about foreign takeovers and corporate concentration are due for a shock. He forecasts that while Canadians will continue to own roughly 10 per cent of the North American economy, their holdings will be spread much more evenly across the two countries, with many of our “heritage” firms—whether it be Polysar or the CPR, for that matter—falling into foreign hands. “Personally,” he says, “I’d let the biggies go. I don’t think large corporations have a lot to do with real economic growth. I would focus much more on small and medium-sized firms where the real growth, real development and real innovation take place.”

At the same time, Kierans preaches that under our Free Trade Agreement and the trend to globalization, the role of the federal government should really focus on being a social and cultural policy player. “Instead,” he charges, “the Brian Mulroney government seems immobilized by its fiscal problems, and that’s why he’s down to 18 per cent in the polls.” Tom Kierans has yet to be recognized on a national platform, but when his time comes, he’ll be well worth hearing.