The 9/11 attacks and the financial crisis that started in 2008 damaged the economies of Canada and the United States, and accelerated the decline of most wealthy democracies. Throughout it all, emerging economies, led by China and India, did not skip a beat. Between 2000 and 2010, they grew by an average of 6% per year, while developed nations posted an average of only 3.6%, according to The Economist’s “Power shift” report. By 2030, Brazil, Russia, India and China could overtake the U.S., Japan, Germany, Italy, Britain, France and Canada in economic size. And these seven nations, the original G7, cannot catch up because of debt, demographics, resistance to change and an inability to recognize and counteract the strategies of their rivals.
This unprecedented transfer of wealth, from richer to poorer nations, will only escalate because the free-market/free-trade/free-enterprise model does not work as well as controlled and planned economic models such as China’s. The methods employed in such countries will beat developed economies to resources and economic growth. In his book Losing Control: The Emerging Threats to Western Prosperity, Stephen D. King, the global chief economist of the Hong Kong and Shanghai Bank, said the pursuit of scarce resources such as energy or food may lead to war, hoist prices and impose a “redistribution of wealth and power across the globe [that] will force consumers in the U.S. Europe to stop living beyond their means.”
Nations in distress, and facing uncertainty, must behave like businesses and weigh all options; they must also think laterally and outside the box. The problem for Americans as well as Canadians is that foreign governments, and their vassal corporate entities, have established themselves in Canada and are nibbling away at resource assets or using Canada as a backdoor entry to make direct foreign investments in the United States, sometimes without detection. Their targets include resources, farmland, market access and iconic corporations, assets that they do not allow Canadian or American individuals, corporations or governments to acquire in their own countries. This non-reciprocal and sly strategy is aimed at acquiring assets, undermining competitors and gaining political influence in host countries.
The best option for the U.S. and Canada to survive the new economic reality would be to alter course by devising protective policies and to merge into one gigantic nation. This book, a thought experiment, details the economic benefits of joining forces, the way a deal could be structured in fairness to both nations, the political obstacles littering its path and, lastly, strategies if a merger is impossible. This book is written from my viewpoint, as a dual citizen and business writer, that the interests and values of the two nations are aligned and that a merger makes good business sense.
Many Canadians will be shocked at the notion of being united with America, given how that nation is perceived in the world, its mass murders, gun laws, gangsta rap, movie-star antics, televangelism and political dysfunction. For instance, the U.S. had 9,146 gun deaths in 2007, while Canada, with 10% of the population, had proportionally fewer — a mere 173 gun murders instead of 914. Such statistics are worrisome, but Canadians have few choices but to park their prejudices and figure out how to meet the future together with the Americans.
Besides, the United states is not the dangerous, wacky place depicted by Hollywood or by television shows, as the millions of Canadians who study, work, retire, travel or live there can attest.
If they merged, the countries would become an energy and economic powerhouse, occupying more land than Russia or the continent of South America. They would control more oil, water, arable land and resources than any other and would enjoy the protection of America’s military
Frankly, the U.S. is as safe as Canada if you live in one of the majority of neighbourhoods removed from the drug and gang wars. I would argue that Canadians, like Americans, despite challenges, cannot afford to miss the opportunity to pull off what would become the Merger of the Century.
As for a sheltered and safer Canada, the party is over. It has “snacked off ” the United States by tapping into its capital and technology to build companies that produce goods or commodities that, in turn, are mostly exported to the United States. In absolute numbers, most of the two-way trade is made up of transfers between U.S. parent companies and Canadian branch plants, known as intra-trade. But after 9/11, even this trade has slowed and won’t grow in the future as the border becomes a problem and Canadian costs escalate.
Canadian demographer David Foot provides another reason a merger might be a good idea. He believes economic success can be forecasted based on whether there are too many young people or too many old people in a country. The United States and Mexico have the right population mixes to sustain future growth, but Canada is aging as rapidly as European nations, even at immigration levels proportionately higher than America’s. At the Global business Forum in Banff, Alberta, in September 2012, he forecast that by 2026, “Canada will have more old than young people, and no amount of immigration can change the figure.” This means slow growth, labour shortages and higher pension or health-care costs.
Likewise, the United States needs to recalibrate. The country has prospered, without peer, since the Second World War as the world’s largest economy thanks to its resources and little competition. But those days may be over too. Trade deficits have been ruinous and are mostly due to oil imports ($379-billion in 2012, or 78% of the total based on the September 2012 average). Forecasts by the International Energy Agency project that the United states may reach energy self-sufficiency by 2035, but only if a new controversial technology called fracking, which taps deep deposits, becomes more successful and if at least 4.5 million barrels a day of oil can be imported from Canada’s oil sands, nearly double current amounts. The U.S. also has much to learn from Canada about keeping banks safe and health-care costs reasonable.
If they merged, Canada and the U.S. would become an energy and economic powerhouse, occupying more land than Russia or the continent of South America, and equivalent to 12.25% of the world’s total landmass. Better yet, Canada is virtually empty, thus providing enormous development opportunities. The two could better tackle environmental challenges together through science and by replacing coal, the biggest culprit worldwide, with shared hydro, conservation and alternative energy sources. Combined, they would have a larger economy than the European Union or than the economies of Japan, China, Germany and France combined. The merged nations would control more oil, water, arable land and resources than any other and would enjoy the protection of America’s military. They would be able to eliminate trade and even government budget deficits, and would share a strengthened currency. The merged country’s people would have more options, too, in terms of jobs, climates, studies and lifestyles.
Japanese business guru Kenichi Ohmae argues that maps have become ‘cartographic illusions’
The idea of joining countries and erasing borders is not unique, by the way. Many countries around the world are continually debating mergers or forming important regional economies. Networks of people and corporations are replacing the nation-state. In April 2012, a Gallup poll found that 13% of the world’s adults, or 640 million people, want to leave their country permanently. Another 214 million have already left home, according to the United Nations.
That means roughly one in seven people in the world are dissatisfied with their country. In End of the Nation State: The Rise of Regional Economies, Japanese business guru Kenichi Ohmae argues that maps have become “cartographic illusions”: “Traditional nation states are unnatural and impossible business units in a global economy. As industry, investment, individuals and information flow relatively unimpeded across national borders, the building-block concepts appropriate to a 19th-century, closed-country model of the world no longer hold.”
Arguably, the U.S.–Canada border is, in fact, simply the line that the British were able to hold against the expansionist and aggressive Americans. It’s interesting to note that most of the borders established by Britain centuries ago are anachronisms. The borders between the U.S. and Canada, or Australia and New Zealand, could disappear while, at the same time, the Québécois and Scottish nationalists in their respective countries could vote to secede and erect new borders. In 2010, New Zealanders and Australians were surveyed about New Zealand becoming a state of Australia. About 48% of Australians were in favor, but 52% were opposed. Some 41% of New Zealanders said the issue should be debated, 29% rejected the notion and 37% said the country would be better off as part of Australia. The similarities between New Zealand and Canada are striking. Each is politically, economically and militarily dependent, on Australia and the United states respectively. Australia has dominated with its bigger economy and benefited from a brain drain of New Zealanders. The opening clauses of Australia’s constitution still state that New Zealand is part of Australia and can opt to join at any time as a single state. And in 1776, the articles of Confederation written by the Americans included a provision to the “Canadian” colonies to join the new republic if they chose. Even today’s U.S. constitution includes an accession clause that allows entry of territories by Congressional approval. But the issue of a merger between Canada and the United states has never been formally raised.
Excerpt from Merger of the Century by Diane Francis. © 2013 by Huntress Company. Published by HarperCollins Publishers Ltd. All rights reserved. Visit Diane Francis’ website.