The Free Market
Split and Prosper
The Free Market 13, no. 5 (May 1995)
When discussing the secession of Quebec from the Rest of Canada (ROC), many Anglo-Canadian economists become doomsday preachers of apocalyptic scenarios. They predict social calamities such as poverty, mass unemployment, civil war, and mass exodus.
They should settle down, try to be rational, and focus on the only real issue: the long-term economic well-being of Quebecois and Canadians.
Some people estimate that if Quebec secedes, it would bear a transition cost of 2% of its GNP. It's possible. But this price must be balanced against the huge tribute Quebec pays to stay in the union—among them the costs of political uncertainty. It would be better to pay the costs of separation one time, rather pay for an unworkable Canada every year forever.
The Fraser Institute tells us that "an independent Quebec would rival the Third World in terms of its all-government indebtedness." But as the same group pointed out elsewhere, Canada already ranks behind Burundi and just ahead of Morocco in indebtedness. There's nothing new in debt. What's new is the chance to get out of it. This is what separation offers.
It is demagoguery to compile the costs of sovereignty without addressing the costs of a unified Canada. People forget the $3 billion lost annually to Ottawa-Quebec feuding over jurisdiction and program duplication. Quebec is a small and socially cohesive entity. It is capable of reaching political consensus on key questions rather quickly. These gains of separation would be huge.
A cliche holds that "this country was built by government." Indeed, but again at what cost? The union has forced on Quebec a long line of government interventions, including protectionism, a huge welfare state, pricey railways and canals, largess such as Air Canada, and fantastic expenses in bilingualism and multiculturalism.
Under separation, all these costs would at least be negotiable. Today, Quebec has no choice but to pay them. Indeed, keeping the union together is a major purpose of these interventions in the free market.
More than ever, Canada is kept together by Government programs. The government's make-work spending, redistribution policies, and debt accumulation (which mortgages the future) concentrates benefits in the hands of privileged minorities. The costs of are spread onto all taxpayers. Can any serious economist argue that this dilapidation reflects economic efficiency? No program can repair the damage that has been done to Quebec.
Attempts to appease political tensions have cost billions of dollars. After being caught in an unworkable federation for 127 years, it is time to ask whether this battle is any longer affordable.
Quebecois and Canadians have an option. They can continue along this aimless and unprofitable path. Or they can give themselves two or more independent countries that would do less harm to economic common sense.
Without a central government bankrupting everybody else, Quebec and the Rest of Canada would have no choice but to trade, compete for capital, and be productive on their on terms. This competition between countries will drive down regulations and taxes within countries, and thus increase prosperity for all.
As for those who believe that the road to prosperity lies in protectionism instead of openness, welfare instead of productivity, they would at least be accountable for their own impoverishment.
Given the peaceful history of the Canadian experiment, there is no reason to expect fierce battles or acts of spite after separation. It is only continuing union which raises that specter.
Let's put political feuds behind us and recognize the obvious truth. The Canadian experiment has failed. There need be no recriminations. Instead, let's solve, in a durable manner, the constitutional mess, face the real challenges of our future, and get our economic houses in order. Let's split and prosper.
Cite This Article
Duhaime, Eric. "Split and Prosper." The Free Market 13, no. 5 (May 1995).