worth of Canadian governments, and it was a policy that had served us well. Nothing had occurred that had fundamentally shaken our confidence in what had been the traditional Canadian policy of a very light governmental hand on the economic tiller; it would quite likely have seen Canadians through the rise of the Boomers just fine. Confidence that huge expansion of government was not the only solution is further bolstered by examining the record of other Western industrialized countries with similar histories and traditions, such as the United States and Australia.10 Both countries dealt with baby booms of considerable size while keeping the expansion of the state within much smaller bounds than Canada did and enjoying, on the whole, relatively low unemployment.
We made a different choice. The first half of this book offers a way of thinking about why we made that choice, how different it was from the choices we had traditionally made, and what consequences flowed from the new direction we chose. It lays out the case for thinking of the New Canada built since 1960 as an abandonment of our own history and the values on which Canada was founded, an abandonment whose chief result has been to reveal the enduring value of what we left behind.
Where Were You in ’62?
A review of the profound changes in public policy over the sixties and seventies is like a pleasant stroll down memory lane for most Boomers, but we forget just how different the New Canada that was emerging was from its predecessor, where smaller government, fiscal rectitude, suspicion of dependence on government or charity, and a ferocious work ethic were the norm.
The minister responsible, Bryce Mackasey, and his colleagues in Pierre Trudeau’s first government, liberalized unemployment insurance in 1971,11 overnight creating the “UIC ski team,” as it was affectionately known, a brilliant shorthand for a system that essentially paid people an income for most of the year in exchange for a token work effort—in fact, a very thinly disguised form of workfare. Economists widely credited the UI reform with an increase in difference between the unemployment rates in Canada and the United States of around two percentage points. This system was made especially vicious because it gave to thousands of seasonal workers the illusion of paying their own way by charging them a token “premium” and calling their welfare entitlement an “insurance benefit.” But the intellectual dishonesty of this position is belied by these beneficiaries’ outrage at any suggestion that the benefits they receive and the premiums they pay should bear any serious economic relationship to one another.
Other social welfare programs were liberally enriched as well. John Richards12 and Ken Boessenkool,13 for example, have both shown that the purchasing power of social welfare in much of the country rose significantly between the mid-1960s and the mid-1980s. Contrary to what one would normally expect, while numbers of people on welfare rose during economic downturns, there was no corresponding decline in welfare numbers when the economy started growing again. Welfare dependency was an up escalator, not a roller coaster, at least until the provinces, largely due to cuts to federal transfers, got serious about welfare reform in the mid-1990s.
Many of my friends in those heady early days of the expansion of the state benefited from programs we all remember fondly, such as Opportunities for Youth (OFY), Local Initiatives Program (LIP), Katimavik, and so forth, programs that paid young people for being, well, young.
Soon our spending outstripped politicians’ willingness to raise taxes, and we entered a long period of deficit financing. Then-finance minister Edgar Benson tabled a balanced budget in 1969. There would not be another until Paul Martin’s fifth in 1997–98. In between, we ran up an impressive national debt at both the federal and provincial levels, to the point that the Wall Street Journal in 1995 said that the state of our public finances qualified us as an honorary Third World country.14 Yet in earlier post-war years, thanks to controlled spending and many budget surpluses, we had retired a huge amount of debt acquired to prosecute the war.
Net federal debt in fiscal 1968, just before Trudeau became Prime Minister, was about $18-billion, or 26 per cent of gross domestic product; by his final year in office, it had ballooned to $206-billion—at 46 per cent of GDP, nearly twice as large relative to the economy.... Only in Trudeau’s first full year in power, 1969–70, was the budget actually in balance.
Andrew Coyne, Trudeau’s Shadow
There was a massive ramping up of our universities, not only in the number of institutions (callow universities with no tradition behind them and an entire faculty recruited during the radicalized Vietnam era, such as Simon Fraser, York, and UQAM [Université du Québec à Montréal], were bywords for chaos, protest, and disaffection), but also in student numbers and dumbing down of standards. The vocation of the cultivation of the mind was quickly overwhelmed by that of entertainment provider to, and warehouser of, young people we scarcely knew what to do with.
Expectations of when and how one might hope to retire were pushed sky-high as we practically begged older workers to get out of the way and let the rising generation take their place, even though there is little evidence that older workers block the rise of younger ones, given the very different economic and other roles they play. One financial institution’s brilliant advertising slogan, “Freedom 55,” came to denote a widespread expectation of early retirement. Moreover, it was widely regarded as code for “Freeing Slots for Workers Who Are 25.” As a former member of the national political panel on Morningside, I well remember host Peter Gzowski’s chat one day with demographer David Foot. Foot had just been expounding on some of the economic consequences of the Boomer generation, and Gzowski suddenly sat up and said, more or less, “Wait a minute. You’ve just made me understand something. The reason that I could be the editor of Maclean’s magazine in my late twenties wasn’t because I was brilliant, but because I had the good fortune to be born at a time when not many other babies were being born. I didn’t have much competition. Now my children are lucky if, at the same age, they can be the obit editor on the paper in Swift Current, because there is a million of these kids.” Compulsory retirement became official government policy, and buy-out packages a major topic of conversation in the company cafeteria. The Canada Pension Plan (CPP) gave the first generation of its beneficiaries benefits disproportionate to premiums they had paid.
It wasn’t just spending programs that changed, of course. Immigration changed too, for example. I was a university student when the requirement became widespread that employers had to prove there was not a qualified Canadian available to fill a job before they would be permitted to fill it with an immigrant. This was a huge sea change compared to the comparatively liberal open-door policy we had operated for years. We also made it much harder to bring in temporary workers.
Laws affecting the workplace changed as well. Surprisingly, this was an era of trade union influence. Normally, unemployment weakens workers relative to employers. But the trade unions saw an opportunity, in a political climate of anxiety about unemployment, to get gains for their members through political action rather than collective bargaining. Minimum wages were driven up, labour standards legislation gnawed away at employer prerogatives while strengthening the hand of unions, and protections against firing became more stringent. To protect existing members’ wages and existing retirees’ benefits, unions threw up barriers to entry to their guilds.
In this same atmosphere, barriers to trade between Canadians and with the outside world, already significant, rose anew. Protectionism is a natural, if wrong-headed, response to growing unemployment, as those with a job organize to protect themselves from outsiders who might be able to do the same work more efficiently and less expensively. When I was young, doctors, engineers, and tradesmen from the United Kingdom, for example, were plentiful and found it easy to enter Canada and exercise their profession.
Today
