Federalism On Trial in Canada

With all of the focus on the U.S. Supreme Court last week, it’s interesting to note that Canada’s top court found itself at the center of that nation's national drama at exactly the same time. The Supreme Court of Canada held a two-day hearing on the Trudeau Government's federal carbon tax scheme. And the stakes for the nation as a whole, and the nature of Confederation, are potentially quite high.

You’ll recall that Trudeau’s Liberals, appealing to Canada’s Paris Agreement commitments to drastically reduce the nation's carbon emissions, passed a law nearly two years ago which forced a carbon tax on provinces that didn't already have one of their own. The law has been described as a “backstop," which is to say it requires provincial and territorial governments to put a price on carbon that meets minimum standards. Provincial governments can choose how to meet this benchmark, but they have to do something, and if their proposals are deemed insufficient, Ottawa will impose one on them directly.

From the beginning, Canadian conservatives -- especially Brad Wall and Scott Moe of Saskatchewan, and Alberta premier Jason Kenney -- have stood firmly against the law. They've argued, first, that the carbon tax is bad for Canadian consumers and industry, and second, that it is an unconstitutional usurpation of provincial authority.

The first of these points was put before the voters in last year's election, contributing to the Liberal's losing the their majority (along with, for what its worth, the popular vote), while maintaining a minority government. Meanwhile, the second point has been put to the test before three provincial appellate courts thus far, those of Alberta, Ontario, and Saskatchewan. In split decisions from each, the courts of Saskatchewan and Ontario found the law to be constitutional, while that of Alberta held that it was not. The appeals of those decisions is what is now being considered. 

Carbon pricing is not the only available option.

Unlike the American Constitution, whose 10th amendment stipulates that any power not specifically delegated to the federal government automatically falls under the purview of the states, Canada's Constitution Act of 1867 details which "matters" fall under federal jurisdiction (s. 91) and which under provincial jurisdiction (s. 92). Of course, constitutional grey areas arise when the “matter” wasn't an issue at the time of Confederation (carbon taxes, for instance) and is therefore not assigned to federal or provincial power.

Moreover, Canada's constitution does grant the federal government “residual powers” to pass laws for peace, order, and good government, in emergency situations or for matters of national concern. Supporters of Trudeau's carbon tax argue that it falls under the latter.

Consequently, the court must classify this matter as falling under either federal or provincial jurisdiction, and in so doing answer the question of whether the reduction of greenhouse gas emissions qualifies as a matter of national concern such that it justifies the implementation of a federal carbon tax, and in the way the Trudeau government has chosen to implement one.

Interestingly, counsel for both sides admitted that carbon pricing is not the only available option. A suite of pricing and non-pricing policy measures is at the provinces’ disposal to address this issue.  Several provinces have already put their own carbon pricing measures into place, which lends support to the argument that the federal carbon tax intrudes on provincial jurisdiction. In fact, one of the criteria of the national concern doctrine is "provincial inability," which holds that if the provinces don't have the jurisdiction to act in a matter that has extra-provincial effects, then the door is open for the feds to step in.

But the limiting factor of provincial inability is an important part of this debate. Does it refer only to constitutional inability -- that the jurisdiction to act is lacking; or is it a practical inability -- that is, that the political will to act is lacking. My reading of the relevant jurisprudence and Canadian history suggests that it is the former. As you would expect, however, counsel for the government took the opposite position, while arguing that precedent was split between the two. Even so, common sense seems to land on the constitutional side. Not acting on an issue can be an intentional choice. If the federal government can step in and legislate simply because a province has not done so -- in the case of a carbon tax --  this turns our whole understanding of federalism on its ear.

And -- a related point -- the very fact that the law is structured as a backstop, both implies that it is firstly the prerogative of the individual provinces to act, and makes a farce of federalism by penalizing provinces who act contrary to the will of the federal government.

And, listening to the hearing, it is clear that fear of being seen to support climate skeptics weighed on the justices. Justice Russell Brown made it a point to stress the issue is not whether the federal government can regulate greenhouse gas emissions but whether how it has chosen to do so is constitutional. Justice Rosalie Abella noted that the provinces “do not have plexiglass at their borders” to keep out greenhouse gas emissions. Justice Michael Moldaver expressed concern that if one province “goes rogue” and takes no action that would moot the efforts of the others.

At the same time, Justice Malcolm Rowe voiced serious concerns from the other side of the spectrum. Throughout the hearing he reiterated the danger of the law creating “winners and losers," punishing industries that use larger amounts of energy. Counsel for the appellants agreed with this view, suggesting that the law gives undue discretion to the federal cabinet to set sector-by-sector emissions costs, and thereby represents an unprecedented "federal power grab." 

The hearing has now concluded, and we will probably have to wait several months to find out which way the Court will rule. Its decision will likely affect the relationship between federal and provincial governments going forward, and at a time when the tension between them is shakier than its been in decades. I'm hesitant to guess which way they will go, though I often have occasion to think of the wise words of a professor of mine, speaking in an American context: "Never trust the Supreme Court to make the right decision."

But the justices would do well to remember two things. First, that their role is simply to faithfully interpret the constitution, and not to meddle in political questions or ensure particular policy outcomes. And second, that federalism cannot be a fair-weather friend. It is the bedrock of Canada’s constitutional structure and the courts must weather this commitment through any storm. We might not always like the outcome these two require, especially in hard cases. But as the appellants' counsel put it, “That’s federalism and that’s democracy.”

In Canada, Between a Sponge and a Soft Place

Ottawa’s orchestrated vendetta against Canada’s energy sector, located primarily in the province of Alberta, is an instance of sublime indifference to the laws of physics, the math behind energy realities, Canadian living standards and the national welfare. It is part and parcel of the campaign to bring Canada in line with the U.N.’s anti-capitalist, globalist wealth-transfer program advantaging the Third World—in actual fact, benefiting only the ruling class of these nations.

And it is, of course, a scheme for enriching investors and "green" industrialists for whom the Green Technology adventure has become a government-fed cash cow, abetted by public gullibility and self-righteousness. Conservative Alberta is now at risk of bankruptcy. 

(Wikipedia).

Canada’s great conservative thinker, George Grant, wrote in Lament for a Nation that "Canada was predicated on the rights of nations as well as on the rights of individuals.” He might also have written “the rights of provinces.” The book’s subtitle, The Defeat of Canadian Nationalism, bespeaks Grant’s abiding fear that the country had forgotten its conservative origin in communal solidarity and had sold its future to a managerial elite wedded to the notion of unmitigated “progress.”

A devout traditionalist, Grant was skeptical of unrestrained capital markets and of what he called, in Technology & Justice, “technological ontology.” Liberals—and some Conservatives—consider him out of touch with modernity, a throwback to a pre-modern age. But his emphasis on individual responsibility and commitment to the values of truth and justice remain the core of conservative thinking. In the “Afterword” to Lament, his widow recalls one of Grant’s “simplest statements: ‘It always matters what each of us does.’”

Modern Canadian conservatism owes much to Alberta-born Preston Manning, founder of the Reform Party, which was succeeded by the Canadian Alliance and ultimately by the Conservative Party of Canada. As articulated in his The New Canada, Manning believed in fiscal prudence, the need to control the deficit and to live within our means, in doing away with redistributive economics and progressive taxation and relying instead on market forces and job creation. He believed in the reduction of federal power and in the provincial management of political and economic responsibilities. For advocating such ideas, Manning said, “We were called everything under the sun, from fascists to traitors to racists.” How such a sensible and mature platform can be condemned as “far right,” extremist, or as some sort of nascent fascism boggles the mind. 

Preston Manning (Wikipedia).

Manning understands energy and its crucial importance to priming the engine of prosperity, facilitating job creation and strengthening the Canadian economy across the board. He urges provincial cooperation to “put enormous pressure on the Federal government to get pipeline rights of way to both the Pacific and the Atlantic.” In his new book Do Something!: 365 Ways You Can Strengthen Canada Manning writes: “[W]e need unobstructed transportation corridors to the Atlantic, Pacific and the Arctic to move our resources to tidewater and world markets. We need a federal government that’s supportive of these kinds of measures rather than one that obstructs.”

Manning is also deeply concerned about the corrosive prospect of growing Western alienation. “The problems with the energy sector,” which he lays at Ottawa’s door, “and the inability to get resources to tidewater and world markets are all fueling Western alienation.” He is right. Wexit is picking up momentum and Wexit Canada is now an official political party.

Former Conservative PM Stephen Harper (aka “Harperman,” as the socialist rabble and environmental scientist Tony Turner maligned him) was often tarred as “far right” for his fiscal prudence (which steered us through the 2008 financial meltdown) when, to be accurate, he was a “conservative centrist” some of whose policies—maintaining high immigration rates from Muslim countries, or refusing to re-open the abortion debate—consorted with Liberal positions. Some have criticized him, too, as being somewhat ambivalent on the oil patch, neglecting to build a sufficient pipeline distribution network. Harper did not govern as effectively as he could have, but as a trained economist he understood the industry that contributed massively to the country’s prosperity.

Prime Minister Justin Trudeau, who is leading Canada to an Argentinian-type default and economic collapse, setting his sights on net-zero in more ways than one, is no friend of George Grant, Preston Manning or Stephen Harper; he is much closer to his father’s socialist influence Harold Laski, who was Pierre Trudeau’s mentor at the London School of Economics. Laski held that capitalism inevitably led to internal contradictions, economic crashes and depressions, and proposed the socialist control of natural resources and property to be shared by all of society’s stakeholders.

Harold Laski (1893 - 1950), circa 1940.

The predictable irony, of course, endemic to all socialist regimes, is the splintering of society into warring interest groups, the eventual imposition of top-down single party rule, and the disintegration of a common culture once based on historical precedent and loyalty to one’s neighbor. As we see in the Western world today—Canada is no exception—the sense of unity has been replaced by entitlement categories like ethnicity, race, gender, creed, class and selective political persuasion.

Indeed, in opposition to Grant’s sense of national unity, which inspired both Manning and Harper, Trudeau has stated that Canada is a “post-national state” that has no “core identity.” A country that has no core identity is not a country preoccupied with issues of national unity and the economic foundation on which it rests. Trudeau is not interested in the oil patch but in the national patchwork. He is an outright socialist—perhaps Marxist is a better term—and an aspiring globalist who lusts for a seat in the United Nations’ bloated hierarchy

Notwithstanding his sentimental effusions about the country he leads, Trudeau is, to put it bluntly, anti-Canadian, and his animus against the energy sector and the economic stability it provides is par for the course. Like a good Marxist, he is busy steering the nation into monumental debt and abject penury. Tex Leugner, one of the lay leaders of the Wexit movement and editor of the ActionAlberta newsletter, is very clear on this. “Each day,” he writes, “Canada loses between $80 and $100 million because of the failure of our Federal Government to allow pipelines to be built. At this rate, over the next 12 months that amount could balloon to as much as $36.5 billion lost to the Canadian economy! As this money is lost, our Federal debt continues to increase.” And that’s only for starters. Statistics Canada reveals that the “poverty gap” under Trudeau has grown—in figures for 2018, two years before he had a chance to do even more damage. 

The question now, following the election of the waffly Erin O’Toole to the Conservative Party leadership, is whether the Conservatives can be counted on to pursue a sane, nation-restoring agenda. O’Toole is committed to net-zero emission by 2050; if he ran an online journal, it might be called The Pipedream. Indeed, he has just signed on to the Paris Climate Agreement in a doomed attempt to out-Trudeau Trudeau. Considering that there is no hard scientific evidence that the globe is warming, that the U.S. as major signatory has pulled out of the Accord, and that, in any case, China and India, the world’s largest polluters, have no intention of reducing emissions, the Agreement is not worth the paper it is written on, though it will cost its adherents dearly. O’Toole is merely virtue-signaling for electoral purposes. 

The only leadership candidate reliably true to the tradition of Grant and Manning was Derek Sloan, who may find himself cast into outer darkness for, among other things, voicing justifiable suspicion of Canada’s chief health minister Theresa Tam’s loyalties. Hong Kong-born Tam was all over the map in her COVID recommendations, hewing closely to the China-inspired line of the World Health Organization while sitting on one of its prestigious boards.  

Justin & son.

The fact that she happens to be Chinese was (and is) irrelevant, but it was enough to generate accusations of racism from the Asian community and from Conservative MPs Gordon Chong and Pam Demoff. “[T]he Conservative Party that I know does not stand for this kind of garbage,” Chong blustered. Demoff for her part accused Sloan of “racism, misogyny, and bigotry.” The attempt to “cancel” Sloan and destroy his political career is evidence, once again, of how easily people can be duped into taking offence at reasonable skepticism—or how cynical they can be in trying to score political points. I have indicated in a previous article for The Pipeline that Tam’s behavior was highly dubious, lying about the mode of viral transmission and even removing vital information from airport message screens regarding flights from China into the country. O’Toole has not come to the defense of Sloan and is cannily playing the popularity game, which seems to make him, at best, a Diet Conservative. 

Clearly, the Conservative Party has some trouble aligning itself with true-blue conservatism represented by a genuinely conservative politician like Sloan, an upholder of traditional usages and institutions, a stringent anti-socialist, a Canadian patriot, and a vigorous supporter of the energy industry. Alberta is where the country’s energy resides. Sloan is where the Party’s energy lies. It is by no means surprising that both have come under the shadow of repudiation. 

Erin O'Toole (left).

There can be no doubt that a mushy O’Toole would make a better Prime Minister than a spongy Trudeau, but this does not change the fact that Canada’s two major energy fields have been suffering catastrophically and, barring a miracle, will likely continue to do so. One field is obviously the oil/gas/pipeline sector, which is in process of being phased out. The other is Canada’s political energy zone, presumably a national endowment, which has been going increasingly woke. With these two sources of revivifying energy—generated power and political intelligence-and-integrity—seemingly moribund, Canada would have little future to speak of.

Conservative Energy, or Canada at the Crossroads

Now that scandal-prone Liberal Prime Minister Justin Trudeau’s approval rating has taken something of a hit, placing the Conservatives at least potentially within striking distance of forming the next government, the question that confronts Canada is whether a Conservative administration could honestly face the shambles that the Liberal government has made of Canada’s most important resource industry, energy production. Would it rescue the energy sector, located primarily in the province of Alberta, from its dormant condition and, at the same time, render unnecessary the budding secessionist, or Wexit, movement in a justifiably resentful Alberta, thus saving Confederation? 

The platform of the newly-elected leader of the Party, Erin O’Toole, seems at first blush encouraging for the energy sector and Alberta’s future prospects, but O’Toole is a noted flip-flopper—not particularly good news for either energy or Alberta. As John O’Sullivan writes in The Pipeline:

O'Toole has been all over the place on the resource sector, initially calling for an end to fossil-fuel subsidies…before backing away from that pledge.

How O’Toole can claim in his platform that “Climate Change is a global problem, that requires a global solution,” while at the same time stating that “Domestic energy production – including oil and gas – is an important part of making our country more self-reliant and more resilient in future” remains a conundrum. Which is noise and which is information? In other respects, his platform seems promising, but the jury will be out for some time. 

A pumpjack in a canola field keeps the lights on.

Leslyn Lewis, whose strong finish in the leadership sweepstakes may earn her a shadow cabinet position, has a Master’s degree in Environmental Studies from York University in Toronto—one of the country’s notoriously woke institutions with little professional stature—where actual climate science yields to a highfalutin iteration of cultural studies. It is, according to its mission statement, “a community that respects and values insight, creativity, justice, and diversity,” but leaves real science at a discount. Although lauded for her environmental expertise, Lewis, as a graduate of Environmental Studies, is a mere dilettante in the field. She has taken many principled social and political stands, but regrettably understands neither energy nor economics.

With the exception of failed leadership candidate Derek Sloan, who is pro-life, a believer in family and parental rights, emphatically anti-socialist, and a muscular supporter of the energy industry—and who is in danger of being expelled from the Caucus on the ludicrous grounds of  “racism, misogyny, and bigotry”—the Conservative Party as a whole, to this point in time, has been more or less devoid of positive initiatives.

Indeed, it appears to have forgotten its founding principles, as adumbrated by Canada’s great conservative thinker George Grant in Lament for a Nation: love of country, the rule of law, civil responsibility, an enduring moral order, freedom of speech, economic prudence, and restraint upon the sweeping exercise of government authority. Unfortunately, conservatism and the Conservative Party in its current incarnation do not always speak the same language. Whether O'Toole represents an answer to the Party’s dilemma remains to be seen.  

Erin, go bragh.

Meanwhile, Alberta is still holding the short end of the stick. It is for the first time in living memory a have-not province. After sending $630 billion in transfer payments to Quebec and the other provinces since 1961, it has received a federal transfer supplement (or so-called equalization payment) of $22 billion for 2020, misnamed as a “net gain.” This is total nonsense.

To begin with, in the current economic context $22 billion is a mere sop; moreover, the supplement is borrowed money that will have to be repaid with interest as part of the $350 billion Canada is borrowing for this year.

Ottawa is not re-distributing domestic wealth to disadvantaged provinces, as envisioned in the national Equalization Formula, but transferring borrowed wealth. Things need to be called by their proper names. Alberta’s $22 billion does not qualify as a “net gain” but a net liability. Wexit does seem to be the only hope for Alberta, whether as a bargaining chip or a realized outcome, but the trouble is that there are too many Canadians and not enough Albertans in the province. 

A sane reclamation of the energy sector will be a difficult slog—not least because an acceptable conservative in leftist Canada, as geologist John Weissenberger writes in The Laurentian ‘Elite’: Canada’s Ruling Class, is “one who can be counted on to lose gracefully”—but Canada will reap the whirlwind in scuppering the energy industry and bankrupting Alberta in the process. Energy is gold and it resides mainly in Canada’s west. 

It will take a surge of conservative energy to restore the country to its former viability. If Erin O’Toole remains true to his commitment to revive domestic energy production, without equivocation, the future may not be entirely dismal. Perhaps we will see a strong pushback by patriotic organizations intent on restoring the energy sector. The threat of Wexit may help to awaken a sleepy Canadian electorate, who may also be galvanized by mounting unemployment, rocketing prices, extortionate taxes, social anarchy and a failing power grid. But by then it may well be too late.

Dance with the One That Brung Ya

As John O'Sullivan has mentioned, the Conservative Party of Canada has just selected a new leader: Durham, Ontario M. P. Erin O'Toole. O'Toole succeeded in edging past former Progressive Conservative leader Peter MacKay, as well as the more right-wing candidates, Leslyn Lewis and Derek Sloan.

O'Toole himself ran as essentially the "Buckley Rule" candidate, referring to the founder of National Review's mid-'60s proclamation that his magazine would support "the rightwardmost viable candidate" in a given election. Despite his not-particularly-conservative voting record, O'Toole leaned hard on his military service during the campaign to sell himself as "True Blue O'Toole," manly patriot, not like progressive pretty boy like MacKay (who was famously named 'Canada's Sexiest Male MP' by The Hill Times in the early oughts, a fact which should have disqualified him from the start), who can actually hold Justin Trudeau to account in opposition (unlike Lewis, who doesn't yet have a seat in parliament) but is moderate enough (unlike, according to some, Sloan) to win a general election.

There's a lot of balancing going on in that pitch, one that sticks close to the political consultants' standard playbook: right-wing enough to win out west, centrist enough to pick up a few more seats in Ontario and then form a government.

That is, of course, a tenuous balance. That playbook also advises conservatives to go all-in on green initiatives to win in the Greater Toronto Area, and offer Western Canada... well, nothing. Except not being Trudeau that is. But western Canadians have a fiercely independent streak, and they've acted on it before, breaking off from the Progressive Conservative Party in the '80s (in rebellion against a Tory leader who they felt was unresponsive to their interests) to form the Reform Party, which supplanted the the P. C. Party within five years.

The "unite the right" movement of the early 2000s healed that divide and led to the creation of the modern Conservative Party, but it would be foolish for O'Toole to assume that's the end of the story. Consequently, O'Toole made it a point to launch his leadership campaign in Calgary, and he's racked up western endorsements, including from Alberta Premier Jason Kenney, who proclaimed that O'Toole is "committed to a fair deal for the West and a strong future for our resource industries."

Only time will tell whether that is an accurate assessment. O'Toole has been all over the place on the resource sector, initially calling for an end to fossil-fuel subsidies -- a questionable description of industry-specific tax deductions for one of the largest contributors to Canada's economy, especially since the so-called renewable energy industry against which it is competing wouldn't exist without massive government subsidies -- before backing away from that pledge. He's also advocated repealing the Liberal's carbon tax, which he pledged to replace with "a national industrial regulatory and pricing regime," essentially a carbon tax by another name.

Alberta's support was definitive in O'Toole's beating out MacKay, and as much as he's likely being told to break left right now to appeal to the Toronto suburbs, he should heed the advice of a fellow Ontarian, and "dance with the one that brought" him. Because Alberta's economy has been hit harder by Covid-19 and the lockdowns than any other, and western discontentment have the potential to tear the party and the country apart.

Getting to Net-Zero: Is It Worth It?

At the end of last week two men were selected as the leaders of the main opposition parties in North America—Joe Biden as the Democratic presidential candidate in the U.S. and Erin O’Toole as the leader of the Conservative Party of Canada. They’re very different people with very different ideas, but if both of them are elected, each is likely to exert a decisive influence on the other on the central political issue of energy policy and climate change.

But look, first, at who they are and what they’ve done. Biden has been a professional politician for almost all his adult life. After graduation and four years of lawyering, he became a U.S. senator in 1973 and has since remained in Washington for seven senatorial terms and two terms as U.S. vice-president. He is usually defined as a moderate Democrat, which in practice means he has an acute sensitivity to the shifts of opinion in his party and an unrivaled ability to adapt to them without apparently moving his feet.

That means at present he is being dragged leftwards by a Democratic party that is rapidly moving from liberalism to a more radical progressivism. Thus, when his party’s radicals demand to “defund the police,” he is described by an AP as wanting “some of the funding for police [to] be redirected into different programs, such as mental health counseling” which might or might not be a difference depending on the amount re-directed.

Joe and Jill.

O’Toole had a more varied career as first an officer in the Royal Canadian air force and then as a corporate lawyer until he was elected to Parliament in Ottawa eight years ago. Because he served in the RCAF sea rescue missions, he’s one of the few politicians anywhere who, like lifeguard Ronald Reagan, can claim to have saved lives. He’s a moderate conservative in an avowedly conservative party, but one who wants to broaden its base without throwing principles overboard. That’s a risky game to play, as Biden’s zig-zagging career illustrates, but O’Toole has found two ways to play it.

The first is to make policy into a balancing act. As a Catholic who supports choice on abortion, he also defends a conscience clause that would enable health professionals to refuse to assist in abortions if they have moral/religious reasons for doing so—and respecting conscience is an important principle. The second is to look for and elevate new issues that attract new supporters without alienating old ones. He was an early supporter of the idea of CANZUK—warmer and better trade and migration relationships between Canada, Australia, New Zealand, and the U.K.—which seems to be an increasingly realistic policy now that the U.K. is making trade deals with CANZUK members.

It isn’t hard to tell Biden and O’Toole apart, and if it were, the policy packages that appear in their manifestos would make it very clear. They are separated by a vast ideological gulf—except in one key respect. Both men and their parties have committed themselves very firmly to one particular extreme policy outcome: they are both committed to the principle of making their economies “carbon neutral” by 2050—indeed, Biden has upped the ante on this with a revamped plan to spend two trillion dollars in making all of electricity production carbon-neutral by 2035. (I think that looks like this: $2,000,000,000,000—its cost to you we’ll come to in a moment.)

Now, no one thinks of this policy as extreme because it’s supported overwhelmingly by most Western governments, most mainstream political parties (and, as it happens, most “populist” parties too), most of the media, most cultural institutions, the United Nations, and all the great and good around the globe. When a bill reflecting an earlier version of this was passed in the U.K. Parliament, only five MPs voted against it.

There’s been a slight down-tick in popular support for the policy since the policy response to Covid-19 both imposed heavy costs on ordinary people—with the prospect of many more to come—and weakened the credibility of scientists and computer modelling. A recent opinion poll showed that it ranked only fifth in the table of national problems facing the voters.

That will have little effect on elite opinion unless it takes the form of voting out MPs and Congresspersons respectively. As yet we’re quite far from that. Because its costs are in the future, a policy of saving the world is bound to be popular. And so, for the moment, making their economies “carbon neutral” by a given date is supported by both leaders.

But there is a vital distinction that politicians repeatedly ignore—and that I have repeatedly stressed in vain—between the popularity of a policy and the popularity of the consequences of a policy. The classic example is government control of prices and incomes which is always popular because it seems “fair” and advantageous to the poor, but which always becomes extremely unpopular because it leads to shortages of goods with controlled prices, black markets with much higher “real” prices, and exemptions for key workers who multiply in numbers the longer the policy lasts.

Carbon neutrality has enormous costs—so enormous that governments do their best to suppress their own estimates of what they are likely to be.  Only New Zealand has been honest or rash enough to do so. As the Danish economist and head of the Copenhagen Consensus, Bjorn Lomborg, pointed out recently in a New York Post oped, adapted from his new book, False Alarm: How Climate Change Panic Costs Us Trillions, Hurts the Poor, and Fails to Fix the Planet:

It will cost 16 percent of its GDP each and every year by 2050, making it more costly than the entire New Zealand public expenditures for education, health, environment, police, defense, social protection, etc. (My italics.) 

New Zealand, however, is an energy superpower only in hydro- and thermal power. Both the U.S. and Canada, however, are at present energy superpowers across the board—in oil, gas, hydro, and nuclear power since they have both fossil fuels and uranium galore and in recent years they have invented ways of accessing them more economically, such as fracking. The impact of carbon neutral policies would be far more damaging to Canada and the U.S. than to any other countries in the world except Australia and the Middle East for that reason—far more damaging, that is, than a 16 percent annual fall in GDP.

Erin O'Toole and American friend.

Biden and O’Toole have faced this dilemma—choosing a popular policy that has catastrophic economic consequences—in somewhat different ways. Biden, “an old man in a hurry,” has gone for broke. He’s adopted the most extreme version of an extreme policy and hoped that its dire results would not be noticed or, if noticed, not believed by most voters in the heat of an election campaign.

That’s certainly a risk. Already, a Trump campaign spokesman, Hogan Gidley, has described the policy as "like a socialist manifesto that promises to massively raise taxes, eliminate jobs in the coal, oil or natural gas industries, and crush the middle class. There is no way he can sell this radical agenda to union workers in energy-producing, manufacturing, or auto industry states like Pennsylvania, Ohio, Michigan, or Wisconsin.”

In this election, however, maybe the policy will sneak through under the smokescreen of all the rest of the hellzapoppin shenanigans in both campaigns.

O’Toole is taking no such risks. True to his strategy of balancing, he opposes a federal carbon tax—carbon taxes are the main unpopular element in the carbon-neutral strategy—but will assist the Canadian provinces if they adopt such taxes on their own.  Along the same lines, he promises “a plan to get to net-zero emissions in the oil and gas industry through the use of technologies like electrification generated from sources such as nuclear and wind and carbon capture, with the government providing incentives similar to those that were used to stimulate the early development of the oilsands.”

In other words he’s hoping to be able to save Canada’s energy industries—and his own political prospects if he becomes prime minister—by relying on technical breakthroughs like “carbon capture” that would allow oil and gas (and presumably coal) to continue to be the basis for electricity generation. That’s not unreasonable as a political strategy—it’s traditionally known as “waiting for something to turn up”—but technical breakthroughs can’t be guaranteed to arrive on time. What about the interim?

Well, O’Toole may be helped by a deus ex machina in the modest form of Joe Biden. He is facing an election in just ten weeks on November the 3rd whereas the date of O’Toole’s rendezvous with destiny is more uncertain. Canada’s election must be held no later than October the 19th, 2023, but Canada’s scandal-hit minority Liberal government could fall at any time.

If Biden were to be elected in November, he would be unrolling his energy policy in early 2021 and its economic and industrial costs would begin to be apparent no later than Spring 2022. (Its benefits, being invisible, will never be apparent.) If they are as disastrous as the policies are bold, Biden will be a marvelous negative example of the economic consequences of courageous carbon neutrality.

On the other hand Trump may win—in which case Biden will provide a marvelous negative example of the political consequences of courageous carbon neutrality.

I don’t see how O’Toole can’t not enjoy the 2020 US presidential election.

Fitch Downgrades Canada's Credit Rating

Fitch Ratings, one of the big three global credit rating agencies, has announced it's downgrading Canada's credit rating from AAA to AA+. This is due to the tremendous debt -- roughly a quarter of a trillion dollars -- the Canadian government took on to prop up the economy during the COVID-19 lockdowns.

Though the Trudeau government was quick to argue that Canada's economy remains strong and that the country in an ideal position to turn things around, this does have the potential to significantly increase the cost of government borrowing and of doing business. That danger, moreover, will be amplified if, as some think, there are further downgrades to come:

David Rosenberg... has been predicting a downgrade on Canada’s sovereign debt since late April and thinks this won’t be the last. “The real question is: What took so long?’ .... Canada’s excessively leveraged national balance sheet has looked a lot like China, Italy and Greece for quite a while.” While Ottawa may appear to be in “solid” financial shape to some, this has “masked bloated debt ratios” in households, business sectors, and most of the provinces, he said. “This won’t be the last ratings cut, I can assure you,” said Rosenberg.

Now, it is true that governments worldwide have responded to the pandemic by racking up what would normally be unthinkable amounts of debt. Consequently, it is likely that Canada won't be the only country to have its rating downgraded.

But one thing that makes Canada unique is the shame that its governing elite feels about one of the pillars of its economy. As Dan McTeague of Canadians for Affordable Energy said the other day in an excellent piece on Erin O'Toole's environmentalist pitch in the CPC leadership contest,

Rather than championing Canada's hydrocarbon industry and creating economic growth with our country’s wealth of natural resources, O’Toole’s policies seem most focused on maintaining the what-seems-to-be-required, green-is-god image of so many politicians.... Our natural resources are an asset to this country, not a liability. They keep energy affordable, and give us one of the highest standards of living. O’Toole and other political candidates seem determined to remain blind to that fact.

You would hope that this turn of events would cause Canada's governing class to thank its lucky stars for the energy sector, a potential launchpad for recovery. But unfortunately they'll probably keep just hoping for pats on the head from similarly green-obsessed organizations like the UN  -- and how's that been working out for them?

Eventually someone is going to have to grow up and start taking things seriously.

Erin O'Toole, Environmentalist

Back in March I drew your attention to an article by Canadian Tory insider Ken Boessenkool which argued, in the wake of an election which saw the Conservative Party of Canada (CPC) pick up 26 seats, that the party needed to go all in on environmentalism.

Vote for us, the Conservatives said, and we’ll cut your taxes.

Vote for us, the Liberals said, and we will address climate change.

This worked wonders across western Canada, in rural Ontario, around Quebec City, and in a smattering of ridings in Atlantic Canada. But new polling for Clean Prosperity conducted by Conservative pollster Andrew Enns from Leger suggests climate change was a key reason why the Conservatives failed to gain ground in the 905.

I pointed out at the time that this was specious reasoning, since the Conservatives are less likely than ever to win in the Greater Toronto area because of the collapse of the New Democratic Party as a viable electoral (and vote-splitting) force, not to mention the fact that the polling he cited was done by the carbon-tax activist group Canadians for Clean Prosperity. It isn't that surprising that their conclusion was Canadians Love Carbon Taxes!

Shockingly, Erin O'Toole, purported co-front runner in the CPC Leadership race, seems not to have read my post. (He must have skipped his press clippings that morning). That is, he sounds like he's going all in on the Boessenkool theory. At last week's leadership debate, his opponents hammered O'Toole's plan to introduce a "national industrial regulatory and pricing regime" as being a carbon tax-like scheme that would harm consumers and the oil and gas industry alike.

O'Toole [replied that] the party needs a serious environmental platform for the next election. "I'm the only one who has a detailed plan. It's disappointing to see Mr. MacKay attack that. If we're not clear on the environment in the next election ... we're not going to be able to get pipelines built," O'Toole said.

It's a surprising tack for True Blue O'Toole to take. His whole campaign is built upon contrasting himself with Mr. Progressive Conservative, Peter MacKay, but here he is going all in on alienating the west.  Maybe he figures he can get away with it because they have no where else to go -- what are they going to do, vote Liberal?

But O'Toole is counting his chickens before they're hatched. He isn't leader yet, and western Canadian party members can still give that title to someone else, perhaps Derek Sloan or Leslyn Lewis.

Hopefully they do something to make it clear to O'Toole or MacKay or whoever wins that the party's base can't be ignored.