Montreal, February 12, 2006 • No 166




Harry Valentine is a free-marketeer living in Eastern Ontario.




by Harry Valentine


          Canada's recent federal election brought to office a Prime Minister whose understanding of free market economics surpasses that of most of his predecessors going back several decades. During the election campaign he actually defended ideals that were the antithesis of a free market. The question now remains as to whether any of the libertarian concepts he once stood for will make an occasional appearance in Canada's new government. Libertarians, classical liberals and Canada's new Prime Minister are all acutely aware that state intervention in a national economy ultimately has very negative repercussions over the long term.


Evolving sectors of the economy

          He may not get much of a chance to implement any libertarian economics given that political realities in Canada will likely restrict Mr. Harper's stay at 24 Sussex Drive to a brief period of perhaps eighteen months. Quebec's next provincial election will occur within two years and if a Parti Québécois electoral victory appears imminent, a sovereignty referendum would be a foregone conclusion. Either the opposition would table a non-confidence vote or Mr. Harper himself could precipitate a federal election that would occur prior to the Quebec provincial election. It would otherwise be quite unusual for a minority federal government to champion a pro-Canadian unity campaign in Quebec at such a time. The campaign for Canadian unity would then need to be undertaken by a temporary conservative-liberal coalition. Such an alternative may be unavoidable if yet another minority federal government is elected to office in Ottawa.

          A Harper-led government could retain popularity during its brief term in office if its economic policies kept Canada's economy functioning while the American economy begins to stagnate. Some subtle libertarian influence that would be the antithesis of a government enacting an endless array of economic regulations to control the economy could instead provide the necessary economic freedom that would keep the economy functional. Ministers in a Harper-led government could refuse to sign any new economic regulations into law during its brief term in office. Bureaucrats who have been employed to formulate new economic regulations that are then signed into law through an order-in-council could find their mandates becoming temporarily redundant.

          Evolving sectors of the economy like telecommunications are continually developing new products and services for the consumer market. That sector would develop along a different path in a regulation-free environment than it otherwise would develop under a regime dictated by state economic regulation. The collective purchasing decisions of thousands of that sector's customers would determine the direction in which the telecommunications industry would evolve. This approach would likely ensure more stable economic growth in the telecommunications sector and subsequently reduce the propensity for regulation-induced malinvestment.

"A Harper-led government could retain popularity during its brief term in office if its economic policies kept Canada's economy functioning while the American economy begins to stagnate."

          Quebeckers may actually respond positively to a moratorium on new federal economic regulations in the telecommunications sector. Many of those regulations have long been contentious issues in Quebec. If Quebeckers gained new economic freedoms under a Harper-led government, more of them would likely support Canada during a referendum. During an earlier campaign across Western Canada, Harper advised that he would be willing to consider allowing western grain farmers the freedom to sell their wheat independently of the Canadian Wheat Board. If he follows through on that promise, he may defuse support for the Western Independence movement. The existence of the monopolistic Wheat Board is one of the reasons why support for that movement still attracts supporters.

          Transportation is an area that remains subject to extensive economic regulation from the federal level. The roadways of central Canada are clogged with truck traffic at a time when Canadian railways are still over-regulated. A moratorium on new economic regulations that pertain to the railways could coincide with a moratorium on their taxes so as to enable them to upgrade their infrastructure and facilities for the purpose of attracting a greater share of the freight market. If more freight transfers to the rails and the public in central Canada perceives that fewer trucks are clogging their highways, the Harper government would likely attract voter support in that region. The deregulation of the intercity bus industry could attract new participants who could offer a range of new travel services to consumers.

          Time will tell as to whether the Prime Minister who was once a libertarian will uphold the foundations of a free market economy during his tenure in office and thus make it a success.