Minority Rule
“We must populate or perish.” So said John Diefenbaker in 1958. The former Prime Minister was a staunch advocate of a Canadian Century and believed the only thing Canada lacked was enough Canadians. Certainly, he relished Canada’s geographic advantage. Canada’s size and its location on the map practically scream superpower. Also, even back then, the richness of Canada’s natural resources portended a leading role for Canada. Still, Diefenbaker worried that Canada’s vast territory and all it contained would be for naught if we remained merely a sparse population strung along the U.S. border.
Yet, it turns out that Canada’s small numbers are a key Canadian asset. Together with its geographic good fortune and precious resource riches, Canada’s nimble populace represent a Canadian triumvirate, capable of leading Canada through the current global economic malaise, past the preordained superpowers of China and India and on to dominant form on the world stage.
Everyone knows now that Canada escaped the brunt of the economic crisis. No Canadian banks failed. Unemployment numbers remained respectable. There was no mortgage meltdown. Now comes the realization that, because of this, Canada also gets to miss out on implementing painful austerity measures that are all but certain to relegate the United States, the U.K. and most of continental Europe to decades of slow growth.
The IMF estimates that U.S.’s 2010 Debt to GDP ratio, considered the best measure of a country’s debt, will hit 97% by the end of the year. Economists equate anything over 90% with significantly lower economic growth. The average for advanced G20 countries is 109%. Canada meanwhile, slots in with a comparatively sunny 77%.
And the belt-tightening has begun. France, the U.S. and the UK have all either passed or proposed laws to raise the retirement age. The U.K. is bracing itself for cuts across the board to its hallowed entitled programs. The recent elections in the U.S., seen as a rebuke of stimulus plans, has the Obama administration scrambling to come up with debt reduction measures. One thing is certain; cutting the U.S.’s $13 trillion debt will take decades.
Compounding the U.S.’s problem in particular are crises related to its large population. They include a near-bankrupt social security system; an overburdened and unworkable health care system; and a crumbling infrastructure unable to accommodate 300 million people and requiring a $2.2 trillion overhaul. The U.S. is forced to contend with these problems as it simultaneously struggles with its crippling debt load. With 34 million people within nearly 10 million square kilometers, and with more energy resources that you can shake a stick at, Canada will be burdened with none of this.
Meanwhile, the economic awakening of large populations in China and India presents an even more troubling situation. While both countries’ economies have grown at a tremendous pace, scarcity of critical resources in these countries will stop them dead in their tracks. China has long practiced food self-sufficiency. Growing enough grain to sustain its population however consumes massive amounts of water that China just does not have anymore. Primary aquifers in Northern China have all but dried up. At the same time, to support its spectacular growth, China continues to divert precious water resources to manufacturing. And China does not conserve. Industry in China uses up to 10 times more water than industries in the West. China is already scouring the globe for critical resources such as oil, steel, and precious metals. Simple math establishes that China will soon be forced to significantly increase grain and other food imports. It is hardly likely that a country that cannot even feed itself would be considered a dominant world power. In this respect, a billion Chinese can be wrong.
While China and countries like it scramble to produce or import the resources necessary to sustain billions, resource-rich Canada can casually provide them and remain safe in the knowledge that it can do so without effecting its own sustainability. Moreover, the world will never again see boom and bust cycles in commodities. The only time demand for Canada’s resources will wane is when they are all gone. Until that day, not only does Canada possess tremendous intrinsic power with respect to these resources, because of its small population, it has the flexibility to wield that power.
Recently, Canada has shown the world its ability to do just that. Two weeks ago, the Canadian government blocked the $40 billion sale of Potash, Inc. to Australian company BHP Billiton. Approval was seen as a foregone conclusion. Since 1985, the Canadian government had approved over 1600 previous foreign purchases of Canadian Companies. Just last February, in his throne speech, Prime Minister Harper emphasized that Canada was “open for business” and his government adopted in wholesale fashion the recommendations of the Competition Policy Review Panel that advocated for increased foreign direct ownership. Yet, faced with the largest ever such foreign direct purchase, Canada rejected it. In so doing Canada signaled that its natural resources would be treated as part in parcel with its national security.
Another key moment for Canada was last week’s G20 meeting in Seoul. The U.S.’s proposals on trade and currency agreements were rejected by the rest of the G20. The consensus in Korea confirmed what was hinted at six months ago at the Toronto G20: the United States no longer dictates the world economic order. Small countries do not fall in lockstep behind larger ones. Such realignment benefits Canada and increases its ability, small country though it is, to set the global agenda.
By definition, a superpower is a nation that does more than just survive. It succeeds. Many of Canada’s superpower competitors are now in survival mode. With their increasingly unwieldy populations, these countries will likely remain so. Canada is not so hampered. Pared down to the essentials, Canada stands ready to succeed, just as it has done so these past painful years. Perhaps in Diefenbaker’s day, bigger was better. Today though, for countries seeking superpower status, a large population is less a rung in the ladder as it is a nail in the coffin. As the former Prime Minister also said: “I am so excited about Canadians ruling the world.”