Canada, the United States, and the European Union: Neglected Lessons in Building a Currency Zone out of Separate States

25 08 2013

AS: This paper was presented at the EBHA.  You can read the full paper here. I’m going to publish a lengthy blog post with some thoughts on this paper in the next few days.

Christopher Kobrak, ESCP Europe/Rotman School of Management, University of Toronto
cpkobrak@aol.com (Contact author)

Joe Martin, Rotman School of Management, University of Toronto

Donald S. Brean, Rotman School of Management, University of Toronto

Abstract:
Recent tensions in the Eurozone have elicited relatively little public discussions of how large  federal systems grappled over time with forging a common financial and monetary system.  This paper draws on the disparate experiences of two North American countries from similar  traditions – Canada and the United States, with a view to putting that process in historical  context. Despite advantages which Europe does not enjoy, these countries’ efforts to build  their national banking systems and common currency as well as unify their national debt  followed a long and varied path. The paper argues that Europeans would profit from the  lesson that the process required many difficult political steps in order to build the necessary  consensus for these systems to function, with all their flaws, as a binding rather than divisive force. We contend that those who supported and implemented the introduction of the Euro  ignored much of the institutional and organizational infrastructure required to successfully run  an “optimal currency area.”


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Canada’s Accomplishments At the Olympics: Even Greater Than the Numbers Would Suggest at First Glance

28 02 2010

Canada’s Accomplishments At the Olympics Are Even Greater Than the Numbers Would Suggest at First Glance

Earlier this week, there was a lot of hand-wringing in the media about Canada’s alleged underperformance in the Olympics. I would imagine that the two gold medals in hockey will have dissipated this negativity, so perhaps posting these stats is now a moot point. However, one thing that bugged me about the complaints that Canada was third or fourth in the medal rankings is that so many of the complainers have overlooked an incredibly obvious fact, namely, that Canada’s population is rather small. In terms of medals per capita, Canada’s performance has been quite respectable. I was left wondering whether the give gold medals out to countries for having statistically illiterate populations.

Here are the medal ranking at 18:00 ET Sunday, 28 February.

Country Gold Silver Bronze Total
United States 9 15 13 37
Germany 10 13 7 30
Canada 14 7 5 26
Norway 9 8 6 23
Austria 4 6 6 16
Russia 3 5 7 15
South Korea 6 6 2 14
China 5 2 4 11
France 5 2 4 11

Here are the populations of these countries, courtesy of the CIA Factbook.

Country Population
United States 308,772,000
Germany 81,757,600
Canada 34,017,000
Norway 4,860,500
Austria 8,372,930
Russia 141,927,297
South Korea 49,773,145
China 1,336,090,000
France 65,447,374

It seems to me that the following are the stats we should really be paying attention to:

Country Medals Per Million Inhabitants
Norway 4.732023454
Austria 1.910920072
Canada 0.76432372
Germany 0.366938364
South Korea 0.281276178
France 0.16807397
United States 0.119829518
Russia 0.105687914
China 0.008232978

Or, if you prefer to focus on gold medals

Country Gold Medals Per Million Inhabitants
Norway 1.851661352
Austria 0.477730018
Canada 0.411558926
Germany 0.122312788
South Korea 0.120546933
France 0.076397259
United States 0.029147721
Russia 0.021137583
China 0.003742263

What does doing well in the Winter Olympics say about a country aside from suggesting that it has lots of snow? Canadians now need to have a debate about how what the most successful Winter Olympic countries have in common and what Canadians can do better in the future. My concern is that the excellent performance of a few dozen Canadian athletes at the Olympics will cause Canada to rest on its laurels. We really need to address the problem of our sedentary population.In 1973, Canadian TV stations carried a very controversial ad showing that the average 30-year old Canadian was about as fit as the average 60-year old Swede. The ad was soon pulled because it was deemed to be offensive to Canada. Since 1973, the problem of couch potatoism in Canada has only become worse. So what are the Norwegians doing right? What are the Americans, who have 300 million people, doing so wrong?


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Flawed Globe and Mail article on the far right in Europe

9 06 2009

Doug Saunders has published a deeply flawed article on the alleged rise of the far-right in Europe. The danger is that the Globe’s Canadian readers  will accept Saunder’s flawed interpretation as accurate.

I normally like Doug Saunders’s work, but his article on the recent EU elections is a travesty of the facts. I will speak about the UK situation, which I know best.
First point: the BNP, which is clearly a racist and fascist party, saw its share of the popular vote fall in this election from the 2004 election.  Saunders wrongly suggests that the BNP is rising in popularity. Moreover, the BNP’s share of the vote is small.

Second point:  Saunders suggests that UKIP is, like the BNP, a racist party and that the jump in support for UKIP shows that Britons are becoming more racist. This is not the case. UKIP is a hard-right party like the old Canadian Reform Party. It believes in tax cuts, deregulation, is against the minimum wage, and it wants to pull out of the EU. UKIP admires the free market economy of the USA. It is not, however, a racist party, although it is opposed to the open immigration policies that have allowed many Polish and other Eastern European workers to come into the UK.

Third: European countries can’t really be compared to Canada, which is very much an immigration country. Britain is a densely populated island that has been inhabited by the same ethnic groups for many centuries. It isn’t Canada, which is sparsely populated and proud of its cultural diversity. One of the things I like the most about Canada is the sheer tolerance of Canadians. Canadian multiculturalism is a great success, something of which I am very proud.


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The New GM and the Redefinition of Nafta

1 06 2009

We now know who will control the equity of the new General Motors. Ownership will be divided as follows.

60 per cent U.S. government.

12.5 per cent The Canadian and Ontario governments.

17.5 per cent United Auto Workers.

10 per cent Unsecured bondholders.

0 per cent Existing GM shareholders.

0 per cent– government of Mexico.

I’m wondering what the implications of this arrangement for Nafta are. During the 1990s, Canadians got used to the idea that North America consists of three countries, not just Canada and the United States. These three countries shared an integrated automotive market. (The three amigos summit, an annual meeting of the leaders of the three nations, was premised on the  idea that North America really was part of North America). Mexico lacks even a token stake in the new, reorganized GM. The symbolism is striking. Moreover, because the Mexican government hasn’t a seat at the table, it will be powerless to prevent manufacturing jobs from being repatriated back to the USA by the new, more politicized management of GM. (Canadian governments acquired an equity stake largely to avoid such job losses– I don’t know if it will work. Americans are, sadly very nationalistic. When push comes to shove, they may well prefer to save jobs in Michigan at the expense of non-Americans in Ontario).


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Newfoundland and the EU, or, is Canada a Country or a Collection of Semi-Sovereign States?

12 05 2009

CanWest is reporting that Newfoundland (and Labrador) Premier Danny Williams “nearly derailed” the Canada-EU trade agreement. I have two reactions to this story. It’s odd that the province in Canada that is closest to the EU geographically is acting as a barrier to a Canada-EU trade deal. Moreover, this story just reminds us of just how powerful Canada’s provinces are: despite the fact that external affairs are a matter of federal jurisdiction, even a small province can expect to exercise veto power over a major international trade deal. Can US states veto Washington’s agreements? Did Rhode Island have a veto over the Iraq War?

Newfoundland isn’t the only provincial government to try to get involved in the making of Canadian foreign policy.


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Chrysler Past and Present

2 05 2009

Today’s Globe and Mail had an excellent article summarzing the recent history of Chrysler.


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Canada-EU Trade Pact in Works: Trudeau’s “Third Option” Rises from the Grave

29 04 2009

It appears that Canada and the European Union are ready to begin negotiating a trade pact.

My wife, who knows that I am troubled by Canada’s reliance on the export of unprocessed natural resources, asked me whether free(r) trade with the EU would be helpful in getting Canada to transition from a natural resource based to knowledge-based economy?

I replied that I didn’t think that a Canada-EU trade agreement would encourage Canada to move from natural resources to a knowledge-based economy, but it would reduce our economic dependence on the United States, which is also a very good thing.

I must say that while I heartily approve of the opening of these negotiations, I doubt whether a significant agreement will be concluded, since each of Canada’s provincial governments has a veto over the agreement, as does each EU country. There are too many people at the table to satisfy. I can see the government of Newfoundland torpedoing the agreement over the issue of seal pelt exports or something like that. For more on the seal issue, see here.

I suspect that the outcome of these negotiations will be a very modest agreement that reduces a few trade barriers but which has a minimal impact on Canada’s overall trade pattern. Those Canadians who believe that this pact will somehow lead to Canada becoming part of the Schengen area are dreaming in Technicolor. (I admit it would be nice if Canadians had the right to live and work in the EU, but this isn’t on the table).


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