Crises are no time for timidity: Response to Trump’s economic attack requires imagination and audacity
[The following piece was originally published in Canada’s National Observer here.]
I’m loving the political tough talk and newfound social solidarity in response to Donald Trump’s attack on our economy and sovereignty. The collective impulse that has propelled the public to “buy Canadian” and cancel travel to the US lifts my spirits. I’m inspired by the “elbows up” zeitgeist and by leaders across the political spectrum resolving that Canada will “never be the 51st state.”
And yet, is it just me, or does our concrete policy response to Trump’s attack feel incongruous with the threat we face? Removing US alcohol from liquor stores, some initial counter-tariffs, speeding up permits for new projects, easing applications for Employment Insurance, removing inter-provincial trade barriers, some targeted funds for Canadian auto manufacturing – all good, but the impact is minimal, and in the case of inter-provincial trade barriers the benefits are greatly overstated.
Too often in a crisis moment, there is a panicky impulse on the part of leaders to grasp for well-worn default options. Governments gravitate to budget austerity; a tightening up of spending given “economic uncertainty.”
As the federal election campaign gears up, the parties are all-in on tax cuts, a response that is extremely costly to the public treasury, but so widely dispersed (including to the wealthy who don’t need it) that its economic benefit to both households and the overall economy is largely inconsequential. Even worse, too many politicians reflexively turn to expediting approvals for new fossil fuel projects, a rejoinder that sees us deepening one crisis as we wrestle with another.
The response feels plagued by a failure of imagination and vision. Moments of crisis should not see us doubling-down on the stale “solutions” of the past (particularly those that worsen inequality and the climate crisis). Rather, times of emergency should be viewed as a portal – a rare opportunity to leap into the new. We should be seizing on this moment to delink our economy from the US and from the fossil fuels that are harming the people and places we love. For progressive leaders, crises are exceptional moments – an invitation – to rapidly transition our economy and society in ways we’ve known are needed for some time.
Listening to Liberal leader Mark Carney, the message feels half right. He’s stated Canada needs to become less reliant on the US and achieve “economic autonomy.” Carney’s mantra has been, “It’s high time we built things we’ve never imagined, at a speed we’ve never seen.” That’s inspired language, and exactly right.
But, as with his climate plans, Carney remains largely stuck trying to incentivize our way to victory; trapped in a model that is far too incremental and almost entirely reliant on the private sector to do the actual building. Many find Carney’s calm demeanor a great comfort in the face of Trump’s assault. Now if only he can break free of the banker’s curse to suck the lifeblood out of what’s urgently needed.
Yes, the private sector has an important role to play in the transition before us. But if we are really going to expedite the transition to a “made-in-Canada” economy at speed and scale – a true green industrial strategy – then we are going to have to do much more if it ourselves, through our public institutions and crown corporations, with brash direct investments in public infrastructure, Indigenous economic sovereignty projects, renewable energy, an east-west electric power grid, high-speed rail, zero-emission vehicle manufacturing, and zero-emission non-profit housing, to wean ourselves from the fossil fuel industry once and for all. (Notably, Carney has announced a Liberal plan to create a new agency, Build Canada Homes, that would act as a public developer to “get the government back into the business of homebuilding” and “build affordable homes at scale.” Details are sparse, but this could represent a promising pivot.)
In a terrific piece in the Winnipeg Free Press a few weeks ago, political-economists Fred Wilson and Robert Chernomas urge our leaders to embrace Trump’s attack as “Canada’s new C.D. Howe moment.” Howe was the minister in Mackenzie-King’s Second World War cabinet who oversaw Canada’s extraordinary wartime military production (dubbed “The Minister of Everything” at the time).
Like Carney, Howe came to government with an extensive background – and had amassed considerable personal wealth – in the private sector. But he was seized with the imperative to ramp-up wartime production. If the private sector couldn’t quickly do what needed doing, he established a new crown enterprise to do so, ultimately establishing 28 crown corporations to meet the supply and munitions requirements of the war effort. Howe’s department undertook detailed economic planning – carefully coordinating supply chains – to ensure wartime production was prioritized.
So how about we establish a new generation of crown/public corporations (or subsidiaries of existing crown corps) that can hasten our transition off fossil fuels and re-localize manufacturing. These public enterprises can be federal, provincial, municipal or Indigenous.
What if our provincial utilities had subsidiaries mass-producing and installing electric heat pumps and rooftop solar? What about new neighborhood energy utilities doing geothermal heating and cooling? What about a new public housing corporation (or a subsidiary of the Canada Mortgage and Housing Corporation) to mass build zero-emission non-market housing? What about a new public corporation to manufacture electric-battery ships, buses and farm equipment? What about a new public zero-waste corporation that keeps our “waste” in Canada and directs it to remanufacturing up the value chain? These corporations can be money-makers, even as they employ local people.
How might we finance such initiatives? Wilson and Chernomas helpfully enumerate many of the public assets we already have at our disposal; federal crown enterprises and agencies like Export Development Canada, the Business Development Bank, CMHC and Farm Credit Canada that are already “capable of deploying billions of dollars in strategic investments.”
They also note that the Canadian corporate sector is currently sitting on an extraordinary $727 billion in cash deposits; “There are 27 Canadian companies with more than $1 billion in cash. Brookfield Asset Management is sitting on over $11 billion in cash, Air Canada has just under $6 billion, Teck Resources has over $5 billion, and Shopify just under $5 billion.”
Wilson and Chernomas offer the ironic reminder that it was Carney himself, when still Bank of Canada governor in 2012, who described all this idle cash as “dead money.” The last thing these corporations need is to be rewarded with tax cuts. Rather, that dead money should be pressed into service, “legislated back to work” if you will. If corporations don’t voluntarily re-invest that money into the urgent collective task of repatriating the Canadian economy, then that cash can and should be conscripted into service via taxation.
Additional new revenues can be raised through new taxes on wealth and windfall profits, and from an export tax on oil and gas exports to the US – a 15 percent export tax could raise $25 billion a year, money that could finance massive new just transition efforts.
Now is also the perfect time for the federal government (ideally in partnership with provinces) to quickly deploy a chunk of such income to launch a Youth Climate Corps – an idea purpose-built for this moment – giving young people a chance to find shared purpose as they mobilize in our collective defence.
We need an audacious new public program that invites anyone 35 and under to enlist in a two-year training and employment program that will set them on a career confronting the crisis of our time. The program would place young people in jobs responding to extreme weather events (wildfires, floods, heat domes); building community and ecological resilience to climate-induced events; and driving down carbon pollution (renewable energy projects, building retrofits, public transportation, etc.).
As we deal with the repercussions of the Trump attacks, young people – often the last hired, first fired – will be facing rising unemployment. A YCC that trains them up in the work needed to delink from the US and from fossil fuels is exactly what this moment calls for.
If Trump has indeed declared “economic war” on Canada, as many of our leaders rightly say, then our response must be commensurate with the threat. This is a time that calls for economic and political imagination.