As an undergraduate, I was against free trade -- residual Barlow-style nationalism, I guess. As I got older, I thought it wasn't an issue anyway. It seemed obvious that no Canadian government would agree to free trade because of the consequences it would impose on politicians. You couldn't continue to make policy decisions that were relatively more assinie than the Americans. You'd have to start thinking about why you were collecting tax dollars, and to start using them at least as well as the Americans (which shouldn't be that tough, but hey, we are talking about Canadian politicians). If you were reckless enough to enter into free trade without accepting these limitations, the dollar would tank. Pure and simple.
I wrote this in a letter to my father shortly after I'd started working in Ottawa, in 1987. I came across it in his things, and was struck by how naive I was. I was sure that free trade was a sure non-starter, because I assumed that politicians would understand the consequences. But of course they chose to try to have their cake and eat it too.
For the record, I came around on free trade. Now that we've suffered the adjustment, it's a sunk cost (like eliminating inflation was). Let's reap the benefits. But as long as we have a disfunctional pretence at fiscal policy, the currency isn't going to align with PPP or anything else.
JMO, of course. |
