Wednesday, June 17, 2009

Canada Owes Much of it's Success to Paul Martin Man of the Year

In December of 2008, the Toronto Star named Paul Martin Man of the Year for his handling of the economy during his tenure, and for putting safeguards in place that would help Canada weather the latest economic storm.

Jim Flaherty attempted to remove some of those safeguards, but quickly pulled in the reins before steering us toward a crash.

I never voted for Mr. Martin, though I have always said that he was the best finance minister that Canada ever had. I just got turned off by his attack ads, so cast my ballot for the NDP.

For staying cool during the bubble
Toronto Star
Stephen Marche
Our derided ex-PM set a fiscal course that could save Canada from the worst of this meltdown
December 27, 2008

Last week Time selected Barack Obama as its Person of the Year, a decision that must have taken the editors somewhere in the vicinity of three-quarters of a second to make. North of the border, the choice will be more difficult. Over the past 12 months, our politicians have competed with each other to underwhelm us, and, aside from a couple of Olympians, the "news-makers" of the year didn't make enough news.

However, if we're going to judge the person of the year by the size and scope of his or her successes, then the decision becomes easy. This was Paul Martin's year. It was the year in which it became clear that he has been Canada's greatest public servant since the Pearson era.

The Goldman Sachs report on global financial currencies, which the company released in mid-December, read like a list of Martin's accomplishments. Our economic situation hardly makes for cheerful reading, but the news is less bleak than anywhere else in the world. The Canadian economy has "deteriorated less" than other industrialized countries, according to Goldman. Our banking system is doing well "in comparison with the rest of the G10," and the federal surpluses provide "some cushion" against the credit crunch that is eviscerating prosperity the world over. We are in this enviable position compared with other countries mainly due to Martin's vision and his toughness as finance minister and prime minister.

His 1998 decision to halt proposed bank mergers has been utterly vindicated. In a recent interview with Foreign Policy magazine – an interview about why he knew what others did not – Martin explained the health of Canada's banks as the result of restraint: "It was very clear to the superintendent of insurance and me that we simply couldn't afford the risks if one of our banks defaulted. We resisted the siren call of deregulation and in fact tightened up on loan-loss requirements and reserve requirements."

The smart-est government economists in London and New York – and Reykjavik and Paris and Moscow – failed to take these essential precautions.

At the time, the argument from the bank chairmen was that, if they didn't merge, the Canadian financial sector was simply not going to be competitive in the face of globalization.

Not only did Martin see through this argument, but he had enough confidence to shrug it off.
A lesser man would have arrived at some kind of compromise with the heads of the banks – increased deregulation or some other sop.

Almost exactly 10 years ago, on Nov. 29, 1998, Martin invited Royal Bank chairman John Cleghorn to his house in Montreal for a chat. Cleghorn asked him straight out whether the mergers would be allowed to proceed.

"No," was all Martin said.

Reports differ on whether Cleghorn then replied "No, but ...?" or "Unless what?" but either way Martin's response was the same, without qualifier: again, "no."

This snappy bit of dialogue, while not exactly the Gettysburg address, was exactly what the banks, and the country, needed to hear, though it has only become clear 10 years after the fact.

Martin was disliked even more by the left than by the right. They thought his approach to deficits was savage and inhumane. Now we know that because of his discipline in the 1990s we are about to go into a recession from a position of strength. The real source for the left-wing hatred of Paul Martin was petty aesthetics, that he looked and acted like the centimillionaire businessman that he was. This distaste has had unfortunate consequences: If we had elected Paul Martin to a majority, we would now have nationalized early child care.

The social program that should be the foremost priority of progressives would have already come into existence, and would be doing more for working families, more to increase access to opportunity for underprivileged communities, more to maintain the social fabric, than any other potential government policy.

So, to sum up the legacy of Paul Martin as seen from 2008. From the right wing: He possessed a better combination of long-term vision for growth and fiscal responsibility than any other person on the planet. Martin kept his head while all those about his were losing theirs during the irrational exuberance of the 1990s. From the point of view of the left wing: He kept our economy stable enough that it could support the social programs we love, and he was about to enact what would have been the single most important social policy achievement since Universal Health Care.

So why did we kick this guy out of power again? Sure, he was a failure as a politician.

But Paul Martin has never received his full measure of appreciation because his vision for the country has been so thoroughly assimilated that we barely recognize it as his anymore
. He saw that a robust capitalism was the only way to produce enough wealth to pay for the social programs that we cherish, and that strong social programs and regulation were necessary to keep capitalism from destroying itself.

He saw how to make these opposed dimensions of modern society complementary rather than competitive. I believe that the vast majority of Canadians, from every region of the country, understand the necessity of this balance. The Martin Compromise became the Liberal Compromise, which, in turn, became the Canadian Compromise.

Martin will never achieve the hero status he richly deserves because he is insufferably dullI mean, there needs to be a new shade of grey to describe exactly how grey this man is – but his blandness should be to his credit. The prime ministership is not an icon of our identity like the office of the American president, nor should it be. The prime minister is chief bureaucrat, and for a while we had the finest bureaucrat in the world in power.

It is perhaps the ultimate testament to his statesmanship that it's taken until 2008 for his vision to be justified.

So while I too was not overly impressed with Mr. Martin as a politician, I do have the utmost respect for his abilities as a financial manager and statesman. I guess I couldn't see that in 2004 and 2006, but I sure can see it now. Look what we've got instead.

More Postings on Liberal Party:

1. Everything I Wanted to Learn from Scott Brison But Was too Afraid to Ask

2. My First Official Liberal Meeting and I Only Embarrassed Myself Once

No comments:

Post a Comment