Inflection point

From the October 2021 print edition

Canada has been the luckiest country in the history of Western civilization. We separated peacefully from Great Britain when it was the world’s most powerful and influential nation.

Geography placed us beside the United States of America. From the end of the Second World War onwards, it was indisputable that America was the globe’s foremost economic and military superpower. Canada has been a “free rider” when it comes to protecting itself, which makes all thinking Canadians very grateful, allowing us an almost unimaginably good standard of living and quality of life.

That said, my guess is that historians will look back at 2020-2021 and realize that it was an inflection point in world history.

A combination of the West’s response to COVID-19 and America’s retreat from Afghanistan has signalled something important: The US is in decline, both economically and militarily. And because nature abhors a vacuum, it is likely that China will assume the role of world leader and will project its power and interests in a more robust manner. That will have myriad impacts on us, including economic ones.

I want to start with the response to COVID-19. In 30 years from now, North Americans will look back and realize that what we termed a “pandemic” was just a slightly more virulent strain of the flu. We will have learned to live with it. If we’re smart, we’ll focus our efforts on living healthier lives which means eating better, moderate exercise and more sleep. But in our panicked response we shut down the economy and burdened ourselves and future generations with a mountain of debt. If history tells us anything, it is that great empires generally collapse in on themselves because of their inability to restrain their spending.

Then there’s Afghanistan. When the US went into that country 20 years ago, it was with a clear mission, which was to bring Osama Bin Laden to justice. That effort failed and then the reason for being there changed. It became about nation building. America poured a tremendous amount
of resources into Afghanistan and immediately upon withdrawing, its puppet government collapsed. The US appeared both weak, ineffectual and, more important, the rest of the world looked at it and realized that it could not be trusted in a way that say, China can be.

China’s interests
There’s an important reason for this. Western democracies largely fashion their foreign policy to serve their domestic political ends. In the aftermath of the pullout from Afghanistan, I heard the current US administration urge the Taliban to be “inclusive” when it formed its coalition. It sounded ridiculous to any thinking person but it is instructive. This is what the base of the Democratic Party cares about. It is the core of the coalition that propelled Joe Biden to victory in the recent presidential election. But in its foreign policy, China is not similarly encumbered. It will happily work with any government if China’s national interests are served.

Then what will define China’s vital national interests? I’m an outsider, of course, but it seems
to me that their leadership doesn’t even pay lip service to “values” like inclusiveness or equal rights for minorities. This makes it a much more reliable partner. China will ask other countries
to keep their borders open for trade and the quid pro quo will be that you will not criticize what we do internally, and we will not criticize what you’re doing. And that’s a very popular proposition for authoritarian regimes which remains the dominant global governance model.

Here’s what this means for Canadians and the way we’re going to live in the future. There are certain freedoms we’ve taken for granted in my lifetime: freedom of speech, freedom of association, and control over your own body. Those freedoms will increasingly be threatened as the elites look at the Chinese model and see its success. I found it telling that rapper Nikki Minaj was suspended from Twitter because one of her tweets ran contrary to the “party line” around COVID-19 vaccinations. I mean this unironically, if Nikki Minaj can be silenced, all of us can.

But here’s the trade-off. We will continue to be supplied with cheap manufactured goods which means we will continue to be reliant on China in a way we used to rely on the US.

I don’t see Canada addressing its national debt in any serious way, which means that we’ll look to inflate our way out of it. Property is going to become increasingly expensive. This is
a secular trend that will mean that home ownership will become increasingly difficult. It will effectively be the end of what was once understood as the North American dream.

This is not a particularly optimistic vision of the future. But history isn’t always pleasant.

Toronto-based Michael Hlinka provides business commentary to CBC Radio One and a column syndicated across the CBC network.