Lament for the Ioonie

Ross Laver July 5 1999

Lament for the Ioonie

Ross Laver July 5 1999

Lament for the Ioonie

Ross Laver

Pay close attention to the debate over a single North American currency and you'll notice something curious: even many of those who

strongly oppose the idea acknowledge that, a decade or two down the road, it may be inevitable. If that's the case, perhaps we should forget the soulstirring nationalist rhetoric for a momentߞCanada Day notwithstandingߞand contemplate what it would mean in practical terms to give up the already battered and weakened Canadian dollar.

In reality, not very much would change, for the simple reason that the Canadian and U.S. economies are already closely intertwined, and becoming more so with each passing year. Free trade has hastened that process, and a customs union would ac-

celerate it even more, but the emergence of a single North American economy was already well under way before Brian Mulroney decided to dance the two-step with Ronald Reagan. Why? Because, as every successful business owner in the country already knows, Canada is nothing more nor less than a satellite of the vast American market. And we need them more than they need us.

Perhaps the strongest argument for keeping the loonie is that Canada needs the fine-tuning capacity of its own central bank to stabilize the economy in times of international turmoil. Not surprisingly, Bank of Canada governor

Gordon Thiessen is a strong proponent of this view. Canada, he points out, is far more dependent on natural resources than is the United States. Hence, he says, we need a separate currency to cushion the shocks when, as happened two years ago, commodity prices go into a tailspin.

There's an obvious flaw in this line of thinking, however. Carried to its logical conclusion, it suggests that British Go lumbia would be better off using a different currency than Ontario, since the former depends heavily on resource ship ments to Asia and the United States while the latter relies principally on exports of manufactured goods such as cars, auto parts and machinery. The truly profound economic dif ferences aren't between Canada and the United States, they're between southern Ontario and the B.C. Interior, Toronto and Come-by-Chance, Nfld. This isn't just a theoretical point. In the late 1980s, the Bank of Canada jacked up interest rates to cool down the booming Ontario economy, with little regard for the impact on other, less economically buoyant parts of the country~ If

Thiessen and his crew believe it is possible to devise a single monetary policy for a coun try as regionally diverse as Canada, why is it such a

stretch to contemplate something similar for North America? The truth is that Canada's dollar is more important as a token of national sovereignty than anything else. And like most other such symbols-the CBC, the Canadian Football League and Eaton's, to name a few-its real-world signifi cance has declined sharply over the past decade.

This is a difficult thing for Canadians to admit, but the evidence is all around us. Without federal subsidies and a few remaining regulatory and ownership restrictions, there would be no Canadian television industry to speak of, hardly any Canadian film industry, little in the way of a

domestic book trade and fewer distinctive Canadian magazines. The NBA looms as large in the lives of many young people as the NHL, and the latter is almost wholly Americanized. We eat at American-owned fastfood restaurants, shop at Americanowned stores and surround ourselves with American brands to a far greater extent than was the case 15 or 20 years ago. Nike and the Gap mean much more to any 12-year-old than do the Bay and Canadian Tire. Parents who can afford it routinely send their children away to U.S. universities, knowing it will improve their chances

of landing a well-paying job in New York City or California. Many large and midsize companies across the country already conduct their business entirely in U.S. dollars and trade their shares on U.S. stock exchanges. On pay day, they convert into loonies only as much money as is required to compensate their Canadian workers. The same workers then march off to the shopping mall to buy U.S.made goods from U.S.-owned retailers, who promptly convert those loonies back into U.S. dollars.

The point here is simple: whether we choose to acknowl edge it or not, commerce trumps national identity nine times out of 10. We heave a sigh of regret when MacMillan Bloedel Ltd. sells out to a U.S. forestry giant, then hop in the minivan to buy a set of patio chairs at Wal-Mart. Shame on us? Not at all. But the closer we get to achieving North American economic integration, the less it makes sense to maintain a separate Canadian currency, other than for purely sentimental reasons. That's why the loonie's extinction is almost a foregone conclusion.