As the year end approaches, one reflects on the recent past. One must. It’s like a law. Every TV station on the boob tube is reflecting on the year that was, and so, it must be the right thing to do. And let’s face it, it has been an unsettling year.
We’ve been cursed with a pandemic. It has affected our physical and mental health, strained the capability of our health care systems, impacted our economy, changed the way we work, and strained our social fabric to the limit. Supply chain problems and surging inflation arising from pandemic impacts on the economy are hitting at our confidence and belief in the future.
We heard of the blistering heat that settled over British Columbia, and with a sense of disbelief we watched the town of Lytton go up in flames overnight. Poor BC – they scarcely had time to catch their breath before they were devastated again, this time by flooding. We saw a sustained drought in the Canadian prairie provinces, forcing many farmers to send their livestock to slaughter early because they had no way to feed them through the winter. And problems weren’t confined to Canada. We saw tornadoes wrack the United States, and flooding in Europe and a typhoon killing hundreds in the Philippines. All these things we blame on climate change and we’re coming to a belated and grim conclusion that this phenomenon threatens our homes, our shelters, and our food supplies.
Perhaps most unsettling is the feeling that world is becoming a more and more unsettled and threatening place. We’re already in an undeclared war with the Russians who are launching cyberattacks at every target they can find. We should all understand that the hi-jacking of the Newfoundland medical system is an alarm bell that we ignore at our peril. The next attack might be worse. And we watch as Russia mounts aggression against Ukraine and wonder whether they will drag us all into conflict.
We’re also not on great terms with China which held Canadians hostage as a result of the Meng Wanzhou detention. We watch their oppression of the Uyghurs. We see the deep erosion of freedoms in Hong Kong. And we’re concerned about their mounting military capability and the threat that they will invade Taiwan.
In fact, the world is filled with crackpot leaderships and governments. Belarus is bellicose. There’s a nut at the helm in Brazil. Civil war is underway in Ethopia. Iran is poised to obtain nuclear weapons which ought to drive fear into the hearts of everyone in the region, especially Israel. North Korea is…North Korea, led by the only politician in the world with worse hair than Donald Trump.
Ah yes, and then there’s Donald Trump. In the USA, the orderly transition of power was threatened by an insurrection driven by the US’s own nut-case. The thought that an unsuccessful Trump bid for election in 2024 might lead to a more carefully planned and deliberate insurrection is scaring some American observers. It’s not beyond belief that the next election in America might result in military coup.
In fact, of all the portents of war that were visible in 2021, the most disturbing one, in my opinion, is the disintegration of American society. It is one thing to watch nations that you don’t trust act like nations that you shouldn’t trust. It’s quite another to watch your staunchest ally grappling with their identity and threatening to slip over the border into madness.
Let’s face it, that country is teetering on the brink. It’s possible that wisdom and prudence will win out, and that the country will once again assert the values of freedom and liberty. But what are we seeing? We’re seeing a growing coalition of evangelical Christians, white racists, gun toting militia, and lunatic conspiracy theorists threatening to take control, and the dominant theme of their discourse is oppression. Voter’s rights are under attack. Abortion rights are under attack. Black Lives Matter is a slogan that is largely rejected by the right wing. Disinformation is the order of the day. And in November of this year a Texas law-maker proposed a list of some 850 books that he wanted to ban from public libraries. Book banning? Not a sign of a really healthy society.
The four horsemen of the apocalypse are commonly named as War, Pestilence, Famine and Death. Let’s leave death aside for the moment, because I don’t want to debate the hereafter just now. But those other three grim riders are riding the face of the Earth in 2021. Is Canada well-positioned to deal with the potential for war, pestilence and famine?
When the Covid-19 pandemic hit Ontario, we were surprised to find that we were short of medical necessities like surgical grade masks and ventilators. Doug Ford then said the most (only ??) intelligent thing we’d ever heard him say, which is that he vowed that Ontario would never again rely on another nation for critical supplies.
I’m not sure he’s made terribly good on that claim, but the thought behind it is worth examining in some detail. What happens to us if an aggressive China takes actions that shut down our supplies from their primary zone of influence? What would happen if we weren’t able to import from China, Indonesia, Thailand and Vietnam? We’ll be naked, footsore and stupid, because we have virtually no home-grown capability to make shoes or clothing or computer chips among other things.
The problem, as I see it, is that we have a great capability gap. MacLeans magazine predicts that fewer than 20% of your articles of clothing were made in Canada. Our major trading partner and ally, the US, makes only 12% of the world’s computer chips. In any serious conflict situation, it’s hardly likely to be enough. If we were suddenly cut off from world supply of most of our consumer goods, I think we’d be in serious trouble because so much of our manufacturing capability has disappeared with the growth in free trade.
Canada is party to something like 101 trading agreements around the world. Some of them are “free trade” agreements. Others are reciprocal arrangements protecting investors who choose to invest in places like Russia or China. Really open free trade might be a fine thing in a cooperative world where we all trust each other not to seek unfair advantage and where bad things rarely happen. In a world where war, famine and pestilence are growing threats, we should take concrete action to re-establish capability to produce important products ourselves.
I think that we should, as a matter of national security, establish a list of things for which we will not be dependent on another nation. We might be willing to trade for some of those goods, but we should make enough of them that we have the capability to scale up if we need to. A second list would be those things for which we could be dependent only on friendly nations – our strongest and best allies. And even in that list, I would suggest that we need to ensure we have diverse and dependable supplies. If we are dependent on the USA and they continue their slide into madness, we might regret that. So, let’s ensure that we encourage supplies from the UK, France and Germany, for example as well as supplies from the US and Mexico.
The foregoing means that we need to re-negotiate a great many trade agreements. We need to have quotas and tariffs protecting those home-based industries in which we desire a high degree of independence and self-sufficiency. It might mean that we need to establish some grants and subsidies to get those manufacturing entities on their feet. It might mean that we suffer an increase in consumer prices as we struggle to stop using low priced goods produced by near-slave labour in some of the world’s poorest countries.
The alternative is to rely on supply lines that stretch all around the world, that are subject to unstable and/or hostile governments, climate catastrophes and disruption due to disease or famine. I think we should try to become a little more self-reliant, so we can ride out and challenge those four horsemen when they appear.
11 responses to “Preparing for the Apocalypse”
I recall reading somewhere that if we properly priced in carbon, economics would get us back to producing a lot of our own goods again as the cost of transportation would offset the advantages of scale and cheap labour enjoyed by far off places. Combine this with a bit of strategic thinking and you probably wouldn’t have to have too many protectionist policies regarding trade.
Yes, I agree that a fair and universally applied carbon price is needed to make a level playing field for fair trade. I’m not sure it’s enough though. I think it’s OK for us to trade with countries half-way around the world if the price is right, but we ought to be very careful about getting overly reliant on that trade, fair price or not.
Right on Dennis! All sad but true. – Rosemary
It’s funny. 25 years ago I was all for free trade. Now I’m all about playing defence first- more safe trade than free trade.
“North Korea, led by the only politician in the world with worse hair than Donald Trump.” Sorry, but I have to dispute this – Boris Johnson arguably has the WORST hair in the world, not just amongst politicians.
I also have to point out that you failed to include Erdogan of Turkey amongst the list of lunatic leaders that you cited. This Islamist lunatic has singlehandedly turned Turkey from an advancing economic and political power into a dangerous near-failed state.
Well, now the easy part is finished! With respect to free trade, I have to agree with pretty much everything you’ve said. Of course, there will be a serious cost if we are planning to provide financial supports to industries that we would like to foster at home. And the potential for political skullduggery goes up exponentially. As a first step, we should identify critical technologies, raw materials (rare Earth minerals), and/or services that we feel we need to have more guaranteed access to. Computer chips come to mind first; most processors are manufactured in Taiwan and there is a diversity of companies/countries that make memory chips and other components. China may be assembling iPhones but they are not the only game in town, so I’m not worried about that issue; we can all switch to Samsung phones, or LG, or…As for shoes, socks, and golf shirts, we could tool up to make those rather quickly, I suspect, if Vietnam decides to embarrass us by making us wear last year’s fashion. (Full disclosure: I have a closet full of stuff, so I’m OK for a year or two! 🙂 )
To wrap up, I think we really need to look at what comes from China, and then take immediate steps to China-proof our supply chains. China is the biggest concern because they are hell-bent on world domination, and they are making huge in-roads very quickly. The USA on the other hand may fall apart, but there’s not much we can do about that possibility.
Thanks for the comment Terry. I think you’re more generous to Vietnam and other countries of Southeast Asia than I would be. The analysis that is required is a combination of what’s the critical impact of being on able to import from this country for a period of six months, one year, two years and an analysis of what is the risk of them being unable to deliver because of pandemic, catastrophic weather or hostile neighbours. And there is a significant risk of any of those countries coming under economic or military pressure from a hostile China.
Re “I think that we should, as a matter of national security, establish a list of things for which we will not be dependent on another nation.’”, agreed but why would we be so naive to believe there’ll ever be the political will to actually implement this once we’re through the current supply issues?
Re the U.S, they’re stuck in a two party system, with one party that has given up on capitalism and one which has given up on democracy.
Thanks for the comment Peter. Well, building political will is all about starting a conversation. I’d love to see a think tank like the CD Howe institute do a study on the issue of how vulnerable we might be to trade disruption.
That’s an interesting take on the US political parties.I honestly think that a Trump-led America in 2024 scares me more than China does.
The following comment was received by email:
Dennis: I love starting the New year with a little pick me up ! Are things really that different, I could argue there have always been screwed up wackos leading various countries ,all the different forms of media has just made us more aware of it. The U.S is as f—ed up as ever, think of the 60’s ,lynchings ,Detroit riots , Kent State , Draft dodging, Cuban Missile Crisis and many more. In any event, I hold more hope for the world and think we will find our way through the issues and improve as a result of it. The only thing that is going to hell in a bread basket is my golf game.
My response to that comment is this: You’re right, the fact that the world is a dangerous place is not news. All I did was offer some reminders of that truth. But what has changed, in my opinion, is our ability to deal with that dangerous world. When we bought into Free Trade in 1988, the assumption was that we would do the things we were efficient at and trade for goods that someone else was good at. Thirty years later, the trade off doesn’t look so good. The “few inefficient industries” we might lose has turned out to be a loss of a lot of manufacturing jobs, and the unseen factor, that we would agree to become dependent to an excessive extent on a potentially fragile supply chain was never part of the calculus back in 1988. So my argument is that we should pull back from free trade to the degree required to ensure that we are self-sufficient, or can readily achieve self-sufficiency in critical materials.
And wait for the inevitable time when the US wants our water. Quite apart from the legitimate fear of essential products becoming unavailable due to the deteriorating international situation, Free Trade, as we have discovered, is only as free as the dominant trading partner makes it. Witness the current potato wart controversy on PEI. In order to protect American potato farmers suffering from miserable yields in many places — by jacking up the price of potatoes — the US has persuaded our OWN govt to shut down PEI potato exports to the US. But it will be the US that will decide when to re-open that border — and it won’t be decided by science; it will be kept closed as long as it serves America’s purposes. People talk about the last potato wart outbreak, but, really, we are replaying the PVYn episode from 30 years ago all over again. That artificially sustained crisis effectively killed our seed potato export industry. We’ll see what this one does. Meanwhile, Ottawa cares about PEI’s potato export industry, but not as much as it cares about electric car subsidies and softwood lumber, so it is willing to sell us down the river, offering tea and sympathy as the raft drifts past, while it fries its larger fish.
All of which is beside the point Dennis is making, which sounds like an argument in favour of a sort of neo-mercantilism re-calibrated for the new millennium. Will Canadian consumers weaned on capitalism be willing to put price point before economic security? Especially as the gap between rich and poor steadily widens and lower income Canadians struggle to make ends meet? Only fear will overcome convenience and cost considerations.
Hello Ed. Your example of the PEI potato exports is quite apropos. And I think it perfectly illustrates the big learning for me, which is that the bloom is off the Free Trade flower. I’m sure it has done good things for us, but I think we know enough now to get into a more defensive stance. And your point about Americans wanting our water is chilling. One would not want to bet too much on the good will of the US government after 2024.