The West will lead the way
Published in the Ottawa Citizen, January 31, 2009
Stephen Harper peered into Nouriel Roubini's The Twelve Steps to Financial Disaster and his conversion on the road to Damascus was complete.
Given the negative reaction to his budget, including Conservative, the prime minister is likely experiencing Gulliverian levels of frustration only made tolerable by the knowledge the Lilliputians, not having read their Roubini, aren't making runs on the banks.
But then even the New York University economist who accurately predicted the global economic meltdown concedes Canada's status as a G7 country with the lowest debt-to-GDP ratio. This surely means last-in first-out of the downturn, even with multi-billion-dollar deficits.
Better still, and to the extent $42 a barrel will allow, Canada is still drilling for oil and gas and developing domestic natural resources while, as Michael Berry of Discovery Investing notes in a recent morning newsletter, the U.S. is instead "printing money with nothing backing it."
Experts agree that little will change until the vastly overvalued U.S. housing market with persistent foreclosure rates stabilizes, perhaps by 2010.
Only then will Americans resume consumption habits that keep the world's economies afloat. In the meantime government stimuli will keep the wheels of industry grinding and, who knows, set the stage for greater economic heights than hitherto known.
Nowhere is that more possible than in Canada where last year's commodities boom has positioned its western provinces to kick start an economic recovery.
As provider of energy, food and fertilizer to a world that will soon grow cold, hungry and immobile because of downturned supplies, the West is also changing the political and economic dynamics of the country.
Gordon Pitts' recently published Stampede!: The Rise of the West and Canada's New Power Elite argues this westward shift is the most important economic phenomenon in Canada's 140-year history. At a time when the oilsands alone can add $1 trillion to the Canadian economy (that is, the entire economy of Russia), new powerhouse corporations such as Calgary-based Encana are creating the tallest edifices west of Toronto and Alberta universities are promising bumper crops of Nobel laureates.
To complete the shift, only the relocation of a major Canadian bank's headquarters remains.
As Pitts explains, headquarters are both symbol and substance of corporate, and ultimately civic, health. Not only do corporations create jobs, they build stadiums, sponsor galas, and commission monuments.
After Halifax, for instance, Montreal became Canada's corporate epicentre. But following the election of the Parti Québécois in 1976, Montreal was reduced to a lifestyle city boasting entertainment exports such as Cirque du Soleil and Céline Dion. Crumbling infrastructure and fading architecture tell the rest of the story.
Ditto Vancouver. Once powered by the forestry and tangible foods industries, Vancouver is now home to 1,100 media companies and Canada's richest cultural export -- the $2 billion Electronic Arts Need for Speed video game. But the land of Gore-Tex, fleece and Lululemon lost 30 per cent of its head offices, the most in Canada, between 1999 and 2005.
Now Toronto is hurting. Hollowing out of Canada's corporate sector has affected Toronto directly, and if the auto industry was down and the tech sector limping, not even the world's first BlackBerry president will save the ailing manufacturing sector of Canada's newest have-not province.
That leaves Edgary. The Edmonton-Calgary corridor -- where, Pitts says, hockey is the only religion -- would be well served by a high-speed bullet train, joining the cities that were built by self-made millionaires driving pick-up trucks and making wild-cat strikes.
Not content with creating winning sports franchises and global corporations, however, the great engineers and agriculturalists of Alberta, Saskatchewan and Manitoba are finding in great hockey the parallels that can make Canada also great.
"(P)lay to your strength," says Murray Edwards, founder of Canadian Natural Resources, "and if you have a Sidney Crosby on your team, you don't work on how to play without your star player"
Indisputably, Canada's star is its resources.
It's a winning strategy, one that augments the legacy bestowed by Canada's prudent bean counters and pragmatic visionaries. And if today market bottoms are being tested, so too is the resilience of the world's economies. By this measure and with the West ready to take its leadership turn in Confederation, Canada may soon claim one century, the 21st, as its own.
MARGRET KOPALA’s column on western perspectives appears every other week.