- The Washington Times - Sunday, July 4, 2004

The Canadian election results June 28 prove four cherished theories:

(1) Deeply imbedded in the Canadian electorate is a social democratic ethos which inhibits the growth of any Reaganlike conservatism.

(2) The country is still strongly divided between the French Canadian Quebec secessionists, for the moment a quiescent minority but still a Damoclean threat to Canada’s territorial integrity, and the rest of Canada.

(3) From a U.S. standpoint, it really doesn’t matter very much which of the two major parties — the victorious Liberal Party or the newcomer Conservative Party — is in power. The economic-financial ties between both countries are so positive and rewarding it is hard to foresee any serious rupture in bilateral relations.

(4) A period of benign neglect (to use the late Daniel Patrick Moynihan’s phrase) by the U.S. about Canada’s internal and external problems is in order.

The incumbent Liberal Party won its fourth consecutive election in 10 years, albeit with insufficient votes to establish a majority government in the 308-seat House of Commons. It will have to form a Cabinet with the backing of the socialist New Democratic Party (NDP) and that Cabinet will do little to change the Liberal government’s statism.

And of interest to Washington, the Liberal Party’s traditional anti-Americanism, cheered on by the NDP, will be greater than ever, especially in foreign policy. The NDP tail will wag the Liberal dog. As for any increase in Canadian defense spending, not a chance. So what?

For the first time in Canada’s modern history, there was a genuine conservative party unlike in decades past where its defunct predecessor, the Progressive Conservative party, behaved with the same statist passion as the Liberals. Both parties, adhering to a “tax-and-spend” formula, were wedded to massive state intervention into all aspects of human life, especially health care, the third-rail issue of Canadian politics.

Not even the new Conservative Party, making its first electoral bid, dared infringe on Canada’s health program though that program has been widely criticized as failing to meet the needs of citizens with all deliberate speed. It is not unusual for Canadians who can afford it to enter the U.S. for an immediate hip or knee replacement rather than wait in Canada for what could be two years or more.

Stephen Harper, the young, personable leader of the new Conservative Party making his debut on the national stage, tried — and with reason — to make an issue of Canada’s high taxes. The Fraser Institute, Canada’s premier policy institute, has calculated that Tax Freedom Day in Canada was June 28 as against April 16 in the U.S. (The Tax Foundation defines Tax Freedom Day as when taxpayers have finally have earned enough money to pay off their total tax bill for the year.)

But Mr. Harper’s antitax campaign never really inspired the voters. Turnout at 60.5 percent was the lowest since 1867, when the Canadian Confederation was founded. (The comparative U.S. turnout for the 2000 presidential election was 51.3 percent.)

Perhaps the reason Canada’s high taxes are not a big political issue is that Canadian taxpayers have learned to live with them. Or avoid or evade them. For example, Canada’s underground economy is estimated at between 4 percent and 15 percent of gross domestic product. Bartering of services — free dentistry for free carpentry — reportedly is quite common.

In an attempt to estimate the size of the underground economy, Therese Laflleche, a Bank of Canada economist, focused on what she called the “monetary” approach. This approach is based on the assumption the demand for bank notes — that is, cash in hand — provides a clue as to the size of the underground economy.

But all the above is mere speculation. Even though unemployment is 7.6 percent, the Canadian economy is flourishing thanks to the North American Free Trade Agreement that allows $1 billion (U.S.) a day of goods and services to cross the border without difficulty except for the truck traffic problem due to fear of terrorism.

It’s important to remember Canada and the U.S. enjoy the world’s largest bilateral trading relationship. Canada buys more U.S. goods than all 15 European Union member countries combined plus Latin America. And most important, as individuals, Canadians and Americans get along as they tour each other’s country. But what George Bernard Shaw once said, “Americans and Britons are cousins separated by a common language” might equally apply to Americans and Canadians.

So congratulations to Prime Minister Martin on his re-election. He will have to test his incumbency in a year or so because a minority government in a country torn by socialist ideology on one hand and ethnocentric separatism on the other cannot last very long.

Arnold Beichman, a Hoover Institution research fellow, is a columnist for The Washington Times. His updated biography “Herman Wouk, the Novelist as Social Historian,” will be published next month.

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