Nothing wrong with a little informed populism

Don Newman on how to clarify the rules for Investment Canada.

When it comes to formulating public policy, what weight should be given to expert or "elite" opinion?

Another way of looking at this is to ask: In a democracy are the people always right?   In 1969, after losing an election he called before he had to — one he had thought was going to be an easy victory for his Progressive Conservative government — then Manitoba premier Walter Weir famously told his supporters: "The people have spoken. And the people are wrong."

Shorly after, Weir wisely retired from politics.

I have been thinking about Walter Weir and what he said in the context of the new foreign takeover rules Industry Minister Tony Clement has promised to announce before Parliament rises for its Christmas break.

The statement that Industry Minister Tony Clement read in Parliament, killing the BHP Billiton takeover of Saskatchewan's Potash Corp. (Chris Wattie/Reuters)

These new rules became necessary after Clement turned down the $40-billion bid by Anglo-Australian mining giant BHP Billiton for control of Potash Corp., a flagship resource company and an anchor of the Saskatchewan economy.

Clement killed the bid because it had not met the "net benefit to Canada" test that the government agency Investment Canada applies to foreign takeovers.

But no one really knows what the test is, or how it is applied.

All that is known is that only twice in the past 25 years have foreign takeover applications been turned down on these grounds.

Not everyone is happy

For blocking the takeover of Potash Corp., Clement and Prime Minister Steven Harper have been cheered by many Canadians, particularly in Saskatchewan.

Saskatchewan Premier Brad Wall and his government had opposed the takeover, largely because they were concerned that tax and other provincial revenues would be seriously reduced.

Saskatchewan Premier Brad Wall, taking his anti-takeover cause to Bay Street in October 2010. (Mark Blinch/Reuters)

Many others, including me, argued that it did not make sense to approve the sale of a company that controls half the world's known reserves of potash when the demand for the product is skyrocketing. Particularly when that sale was to be to an offshore conglomerate with its own agenda for how potash would be sold in the future.

But clearly not everyone has been happy with Clement's decision. Many trade experts, free marketers and Conservative supporters in the party's core constituency outside Saskatchewan are annoyed.

They argue that Harper and Clement gave in to "populist" pressure from uninformed people who were wrongly stirred by outdated economic nationalism.

They also charge that the Conservatives killed the proposed Potash Corp. takeover for crassly political reasons. Harper's Conservatives hold all but one of the 14 Saskatchewan seats in the House of Commons and, with an election that could come any time, don't want to rock that boat.

These economists, experts and other so-called elites, claim Harper and Clement listened to the people — and that the people are wrong.

Informed debate

Now, it is clear that while some of those who opposed the Potash Corp. takeover had specific expertise and knowledge a great many were not experts. 

But they are Canadians. Investors perhaps. And they are voters. They are the "people."

So what should those who claim to have more specific knowledge do in the face of populist reaction to this or any of the many other issues that crowd the public policy agenda.

They should join the debate. They should seek to convince the less informed.

That's what happened in the Free Trade debate of the 1980s and the constitutional and the deficit confrontations of the 1990s.

The so-called elites went down into the trenches and got their hands dirty and usually — although not always — carried the day.

We are not seeing much of that these days. Just sniping from the sidelines after the fact.

But if we truly want to encourage more informed debate then it is up to those who claim to be in the know, including those who make the foreign takeover rules, to give people the right information and encourage some real back and forth.

That's the only way to make sure that no matter what poor, disappointed Walter Weir said on the heels of defeat 41 years ago,  "the people" are right in fact as well as principle.