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History Table of Contents
1998 Summer Conference
 
Summer Conference 1998
Rethinking Canada for the 21st Century

Global Challenges: What global forces will affect Canada
over the next generation?

Peter Cook, European columnist and Chef de Bureau,
The Globe and Mail

In talking about this subject we have to define what we’re talking about when we’re talking about the 21st century.

The 21st century is either 500 days away or 100 years away. If we’re going to talk about the global forces that are going to be operating then, a realistic time frame to look at that is the one nearly chosen by Paul Martin. He went to 2026.

I’m going to go to 2020 on the strength that much has been said and written in various reports, including one by the OECD, on the year 2020.

In looking ahead, if you’re going to look at 2050 it’s pretty impossible to say what the world is going to be like and the impact that will have on Canada. I will attempt to have 2020 vision.

Even when you’re talking in those terms the subject is immense and the possibility of being wrong about what is going to happen over the next 22 years is also.

If we look backward 22 years, to 1976, then we would probably not have done a very good job at predicting August 7,1998.

Look at the political changes that have taken place.

Who would have thought then that Poland, a democracy for nearly 10 years, would be negotiating to join the European Union. Or that the only thing standing between a bigger crash on Wall Street would be a stable China and the fact that the Chinese have, as yet, not devalued their currency, the renminbi and in doing so created a second Asian financial crisis. Nobody would have predicted those two things in 1976.

That is politics.

In 1967, the Hudson Institute under Herman Kahn tried to guess what life would be like at the end of the century, which is roughly now.

They got some things right. They talked about automation, high-speed data processing, cellphones, and universal banking. But they also predicted inter-planetary travel and personal flying platforms. Few of us. I suspect, travelled to Orillia on our personal flying platforms.

There is another side to this.

We tend to be mesmerized by the millennium. But if we are looking ahead, as we are in this exercise just 22 years, that is not a lot of time for global forces to change our lives as individuals.

We are told very often that we live in a time of global change, that globalization and technology are the masters and we are the servants. Yet, if we do small polls of Canadians this is not always true.

Wrenching change, that most talked about phenomenon, often happens around us, not to us. Some of us are of an age when we will get wrenched about more in the next 20 years than the last 20. But we cannot blame global forces for that.

The other part is that, as Canadians, — rich first worlders — we are to a large extent immune to change from global forces when we compare ourselves with other people who are more disadvantaged in the world. It is those people who cannot cope. We are not going to in the next 22 years run out of food or energy or clean water. Nor is the Canadian dollar as poverty inducing as the Thai baht or the Indonesian rupiah.

Still the issue of global forces presumes that we are not an island. And this is going to be true over the next 22 years, when the divisions between peoples on this planet become sharper, more poignant and more explosive.

The historian Paul Kennedy, who has written a book called, Preparing for the 21st Century, was asked about the year 2020 by the Wall Street Journal. His reply was that when people talk about the future, you have to ask, whose future?

In his case, he said, are you talking about poor youth in Africa and the plight of those people over the next 20 years, or are you talking about my graduate students at Yale who within two years or leaving the university will be earning more money than I do?

We may also be talking about the future of people who are in the same situation but living in different countries.

Recently a conference in Geneva looked into the question of global treatment for AIDS sufferers, 90 per cent of whom live in poorer countries.

The cost of drugs for treating HIV victims is $10,000 per person per year — an unattainable sum for the 90 per cent. AIDS has killed 12 million, is killing 2.3 million a year and, in a report for the conference, was described as something akin to the black death. In Botswana and Zimbabwe and parts of East Africa, one quarter to one third of all adults are HIV positive.

In Western Europe, on the other hand, AIDS cases are falling. Plainly there is no issue that more clearly justifies the question: whose future?

In 2020 there will be two billion more people in the world. If we take that elusive concept the global village as it exists today, then we don’t find In it much Canadian content, North American or developed-world content.

The UN has gone through the exercise of profiling a global village of 1,000 people. And within that village of 1,000 people, something like 584 of them are Asians, 124 Africans, 95 Europeans, 84 Latin Americans and only 52 are North Americans. Two-thirds of those 1,000 would be adults. Only one-third would be literate and only one-third have access to clean water.

In a village budget of $3-million, the biggest item would be spending on weapons and warfare; that would come ahead of health, education and community welfare.

And next year’s population of this global village would be 1,020.

So, if you first ask the question, whose future? then attempt to quantify the deprivation that is around us, you face what is the biggest global challenge; that is the consequence of having a disproportionate number of people who have no hope of a decent life in a world of high expectations.

And, of course, the expectations are being raised by all the new technologies and the instant communications we have around the world.

What we can say about the present situation is that in a region where population density is highest and growing fastest and expectations are also highest and growing fastest — which is Asia — there is an economic crisis going on that is pushing more people into poverty.

Where you have expectations that go unmet, and conditions, perhaps, of economic and social stagnation, you are obviously likely to have social unrest or violent change. And there are plenty of examples of that. But it doesn’t always end with an explosion.

The time frame in which such things happen is uncertain. Who, after all, predicted the event that has changed our world most in the past 20 years and which is the result of political-economic stagnation, which was the fall of the Berlin Wall?

What we can say is that with Asia now we run a big risk. Just look at what has happened to a country like Indonesia, which is the fourth most populous country in the world just over the past year. And reconciling successful Asian nations — and they’ve been very successful over the last 20 or 30 years — to the abrupt fall in their economies is not going to be easy.

There are other global forces that can create crises.

The increasing possibility of a nuclear confrontation on the Indian sub-continent is one. Another, less obvious, is that the world is living with a single superpower, the United States, that is dominant to a degree that was not true during the Cold War. Yet that hegemony on the part of Americans seems to have produced a feeling that they really aren’t much interested in the world.

For them the Evil Empire is gone and the challenge is gone. Asia Is in crisis; the IMF is in need of funds. But don’t count on the Congress to do anything at all.

Let me turn from these global challenges to challenges that are more specific to Canada.

Since these do not involve challenges like our survival as a nation, which to the extent that it is in doubt is not put in doubt by global forces, but by us, or risks to our health and well-being except again at the margin, the main standard by which we will measure the future, just like the past, is economic.

How are we doing relative to others in what Adam Smith called, "the natural progress of opulence?"

We are judged to be one of the world’s best places to live, with one of the world’s highest living standards. Obviously most Canadians would be disappointed if in 2020 this was not the case.

Huge changes are taking place in the world. By 2020, in Europe where I live, there could be a common market of 25 or 30 countries; that is a market without restrictions on the flow of money and goods and people, which is also governed by a single currency.

New market systems will by then be sufficiently developed to make economic giants of five large countries, Russia, China, Brazil, India and a recovered Indonesia.

None of these five are at the moment counted as developed countries, none are members of the OECD, but all have populations in excess of 100 million and a gross domestic product, which is over $100-billion and rank as regional leaders.

The United States will remain the richest country in per capita terms in 2020, but Europe may have a stronger currency and China a bigger economy overall.

Meanwhile there will be open trade arrangements rivalling those in Europe across the Pacific and between North and South America.

In a sense there is nothing new about this. It is part of a development that has been happening over a number of years.

It is more of the same in the sense that the market-based economic system, with its capacity to create wealth, went global in the late 19th century. And it went global on the basis of developments in areas such as transport and telecommunication when, as a result of those changes, it became possible to move goods and money and information and people around the world.

Then you started having a global influence on all the individual national economies.

Now, because of advances in these same technologies, we operate in a far more sophisticated way. We also compete as nations to attract a share of global wealth.

Countries like Canada have to make sure that they are part of a regional market, in our case North America, that offers sufficient economies of scale to compete and that they have done enough to liberalize their economy, create an entrepreneurial climate with high standards of education and skills, and maximize the flow of technological information in and out of their borders.

What is different is that now everyone now plays by these same rules.

We have had a confused century when other ideas and creeds, such as communism and socialism and Third World doctrines of self-reliance and import substitutions, got ahead of a belief in a market-based economic system.

Many countries went off in a different direction.

This is not the case today. I was recently at a London investment conference when a Swiss financial analyst made the sweeping claim that for Europe, which still clings to a lot of social market thinking, the destination was now known: Though politicians might deny it or get in the way, the continent was moving toward the American model.

Why? Because it had produced full growth and full employment, while interventionism had not.

Investment analysts, even from Switzerland, do not know everything, so let me also quote a politician called Oskar LaFontaine, whose reputation is of a socialist of the old school and who may very likely in the next few weeks become Germany’s next finance minister.

The U.S., he says, has shown that its economic policies work. They have a sensible mix of monetary, budgetary, tax and wage policies, which have contributed to strong growth and employment.

The point of mentioning this is that, with all the -isms, apart from capitalism gone, and with everyone from Berlin to Beijing to Buenos Aires on the same track, the competition to be an averagely good-looking, market-based economy is pretty intense.

Canada is in the race and not doing badly in terms of its overall competitiveness —but there are some signs of weakness. One which is evident at the moment is the failure of Canadian investment and productivity to respond to the challenge of an enlarged North American free trade area.

Instead, we choose the soft option of staying competitive by devaluing our currency or sending that signal so that markets do it for us, which means lowering our living standard. Do that often enough, and it becomes a habit, which it probably already has.

And it means Canadians get poorer relative to others.

The benefits of trade and investment liberalization are immense. Combine them with the development of a global information society and poorer countries have a chance to become what the OECD calls a driving force in the world economy for the first time.

Since the population of India and China will be each by 2020 about 1.3 to 1.4-billion, what other option is there?

By contrast, the developed world will have to spend much more on looking after an aging population, which means slower growth unless, that is, countries become far more receptive to taking in immigrants.

But the blessing of the shift to the poorer from the richer countries is not a universal one.

As economic weight shifts from not only richer to poorer, but also from small-population countries to large ones, so these large ones will account for a growing share of environmental problems: through consumption of fossil fuels and emissions, through hazardous wastes, through crowding people into mega cities, through exploitation of land and forests and fisheries, and demands on water resources.

So these new strivers after prosperity have to become part of a whole new politics that takes sustainable development seriously — when, in 2020, eight billion people are striving to make their mostly marginal lives a little better, it will put a lot of stress and strain on the finite resources of the planet.

What of Canada in all this?

Plainly the emergence of new regional power centres, the Brazils and Indias, means Canada will have less influence and count for less on the international scene. We are slipping in terms of relative economic strength anyway. Look at GDP in purchasing power parity terms and between 1995 and 1996, the latest figures available, we slipped from 11th place to 13th place.

One of the implications of a stable new European currency, which will start to have an effect in January, is that other countries from there may well start to overhaul Canada. And with a falling currency, this is already happening in nominal terms.

Then, too, there is the problem of high public debts and high taxes and the effect this has on personal initiative and on driving talented individuals out of the country.

It is possible to make a long list of Canada’s handicaps.

However none of them are overwhelming, provided the country stays competitive enough and wealthy enough and is well enough managed to keep growth going and tackle the new issues, such as the environment, and also adequately looking after an aging population ..

It seems to me there is a fair chance Canada will muddle through and do this. That is not a ringing endorsement.

I’m not predicting personal flying platforms for all. Merely that we will be successful in staying relatively prosperous.