October 16, 2018

by on November 3, 2010
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The Last of the Big Time Spenders


California is the birthplace of trends. Countless innovations and ideas got their start in the Golden State and quickly gained hold across the U.S. and elsewhere. Popular political trends are no exception. Property tax revolts. Gay marriage. Medical marijuana. Ronald Reagan. Many a national political movement began in California.

With yesterday’s election, California confirmed a new trend:  American austerity. Billionaire Meg Whitman, the Republican candidate for Governor, was soundly defeated by Democrat Jerry Brown after spending a record $140 million on her campaign. A former Ebay executive with no political experience, Whitman outspent her opponent, the politically experienced Brown, nearly seven times over.

By all traditional accounts, it should have worked. In U.S. politics, it is usually the candidate with the most money that wins. Whitman blindly embraced this notion (Brown, who ran a shoe-string campaign, seemed content to coolly reject it). Also, Whitman’s Silicon Valley success story had a distinctive, California appeal that, combined with her onslaught of advertising, served as an effective counter to Brown’s name recognition. Indeed, Brown’s legacy in California — he was the Governor from 1975 to 1983– is mixed at best. Certainly, Californians have not spent the last thirty years yearning for a return to the “Brown Era.” Also, if ever there were an election where a Republican stood a good chance at seizing political office, it was this one. This year’s mid-term vote was widely seen as a referendum of the Obama Administration and the Democratic Congress. As expected, the Democrats suffered heavy losses across the country.

Yet, with all she had going for her, Whitman lost. To be sure, there were missteps during the campaign. Her debate performances were unsteady. In what has become a sine qua non for Republican candidates, it was revealed she had employed an illegal immigrant housekeeper. And many voters described her personality as Hillary Clinton without the warmth and tenderness.

But mostly, it was the money. With each report that Whitman’s spending had reached a new record – $50 million, $75 million, $100 million – came comments showing that Californians were increasingly disgusted. The triple whammy of recession, job loss, and the housing crisis hit California particularly hard and no California voter was left untouched. With everyone tightening their belt, Meg Whitman’s excess, while once admired and applauded, was now ugly and unacceptable.

Whitman’s defeat, along with similar losses by HP exec Carly Fiorina and wrestling mogul Linda McMahon, has solidified this new American austerity. Since the economic crisis hit, Americans have made some significant lifestyle changes. Personal savings rates have increased. Credit purchases have (been) declined. Business and leisure travel has been curtailed. However, like wartime rationing, all of these changes were believed to be temporary. Americans viewed themselves as merely hunkered down waiting for the all clear to spend again.

However, with the U.S. economy stagnant and unemployment numbers stubbornly high, Americans now realize that their change must be a fundamental one. Once seen as economically superior, if not invincible, Americans now admit they are mired in the same economic muck as everyone else, even more so compared to some (read Canada). Americans now begrudgingly accept the premise that the U.S. can neither solve the world’s problems by itself nor even solve its own problems by itself.  President Obama has been saying as much since he was elected and Americans are finally starting to get it. While American potential, ingenuity, and spirit have thankfully not dimmed, and never will, the American character has definitely changed. California’s repudiation of Whitman’s high profile spending reflects that change.

This is good for Canada. Despite globalization and Canada’s success in establishing other valuable trading partners, the consensus remains that Canada’s economic well-being is tied to that of the U.S.. In other words, Canada must continue to exploit and nurture its economic relationship with the United States. As for that relationship, while the U.S. does not quite have hat in hand, the playing field has leveled significantly. Americans are much more willing to negotiate. This was evidenced recently when Secretary of State Clinton announced her support for the Keystone Pipeline project and acknowledged, despite intense pressure from environmental groups, that Canada’s oil sands remained the best choice to meet U.S. energy needs.

As for the world stage, Canada’s success at weathering the economic storm has already bolstered Canada’s presence. America’s willingness to share the spotlight has further strengthened Canada’s international role. Last month in Korea, G20 Finance Leaders, including Treasury Secretary Geitner, looked to Canada for leadership in fighting the currency crisis. U.S. acknowledgement that Canada can make significant contributions to the issues of the day will provide the imprimatur to further aid Canada’s ascendancy. For Canada, therefore, the trend is up.

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