Business·Analysis

Can Canada avoid the economic damage that comes with a U.S.-style political split?

Economists worry the great divide in U.S. politics shown in this election will have dire economic consequences. Is Canada destined to follow the same path?

A divided electorate will make it harder for the U.S. to make good economic decisions

The White House is seen behind posters reading 'Loser' on Wednesday, the day after the U.S. presidential election. At many levels, the election south of the border has descended into uncivil behaviour, which may make it impossible for the winner to lead the economy to success. (Erin Scott/Reuters)

It Can't Happen Here, a 1935 novel by U.S. social critic Sinclair Lewis, portrays a United States sliding into a Nazi-style autocracy.

Some modern critics have suggested Lewis's book predicted what they currently see as a breakdown in democracy in our southern neighbour.

While most of us stand by with fingers crossed hoping the novel was a warning to be heeded rather than a prescription, the same book title might be applied to Canadians observing the current election uncertainty in the United States. Could it happen here?

Economic observers fear that even well short of the dystopia Lewis sketched, once a president — whether Joe Biden or Donald Trump — has finally been selected, the country will be so sharply divided between two opposing ideologies that it will not be run well.

Economics 'seems to be getting political'

Christopher Cochrane, a political scientist at the University of Toronto and author of the book Left and Right: The Small World of Political Ideas, worries that by following their impulse to play to the outrage of their backers, politicians may be setting aside a long-accepted rule of good government.

"There would be a debate about economics, but it would always be about what is the best way for growing the economy," he said in a phone interview.

But now, Cochrane said, that single-minded focus — where the economy was put on a pedestal — has been fractured into a series of other political debates that are not in the country's economic best interests.

"Economics is no longer where it used to be as an overarching consensus," he said. "Now it seems to be getting political in a way that it hasn't been in recent memory."

Hundreds of people line up outside a Kentucky Career Center hoping to find assistance with their unemployment claims in June. The COVID-19 pandemic has led to job losses and a recession that economists fear will be hard to fix while parties engage in a 'messy blame game.' (Bryan Woolston/Reuters)

That was a concern expressed Tuesday by economist and business analyst Mohamed El-Erian, currently president of Queens' College, Cambridge and adviser to the German financial giant Allianz.

With the U.S. facing a series of problems that need immediate attention — including a growing income gap and an economy weakening in the face of a pandemic — the country requires a focused economic policy that everyone will back. El-Erian said that is not happening.

In an article titled "A Divided Electorate Spells Trouble for the U.S. Economy," he worries that not only will groups fight over their share of the pie, but without a clear consensus on economic direction, the entire pie will shrink.

"It will also fall short of what the two sides of the political divide believe is possible under their different approaches, fuelling a messy blame game that will further undermine the social fabric," El-Erian wrote in the Financial Times, as Democrats and Republicans squabbled over who had actually won key states.

Can it happen here?

But for Canadians watching the political, economic and legal mess emerging in the U.S., the question remains: Can it happen here?

Jeffrey Roy, a professor in the faculty of management at Dalhousie University in Halifax, is worried that it could. Roy, who studies and advises governments on political polarization, including in the context of social media, says what the University of Toronto's Mark Kingwell discussed in an article called "The Shout Doctrine" — where people go online to shout at their opponents — transcends the border.

"The nature of technology is certainly polarizing rhetoric and polarizing political debate," Roy said. "It's enabling people to go to forums in the media outlets that basically match their own values."

Some say that so far, forums such as Twitter are not so nasty here as in the U.S., and Roy suggests that Canadian politics — while not proof against polarization — tends not to be so bitterly divided.

Roy said that when Canadian politicians such as Kevin O'Leary tried to adopt parts of the Trump-style populist message, it did not take as well here. He credits the reduced power of religion in Canadian politics, a smaller influence from wealthy donors and a greater respect for democratic values and institutions.

Saskatchewan Premier Scott Moe makes his victory speech at a campaign event in Saskatoon on Oct. 26 after the Saskatchewan Party won its fourth consecutive majority government. Canadians seem to have greater respect for democracy. The U.S. used to have that, too. (Liam Richards/The Canadian Press)

Ominously, however, Roy points out that respect also existed not long ago in the U.S. as well.

In his research on the historical concept of political "left" and "right," the U of T's Cochrane has found that the absolute location of the two poles is constantly shifting and may actually be a way of intentionally creating a division. And while the concept of "we" and "they" exists in many political systems, as observed in Britain's Brexit debate, U.S. politics seems structured to foster it.

"The American system institutionally seems almost built for the purpose of generating polarization," Cochrane said. "You've got partisan control over electoral boundaries. You've got partisan-affiliated Supreme Court judges. You've got a two-party system institutionalized right down to the level of voter registration."

In Canada, by contrast, elections are controlled by a chief electoral officer and an electoral commission that by tradition pride themselves on being non-partisan. There may be other structures built into Canada's multi-party parliamentary system that also help, such as the governor general, who has no party affiliation, and the auditor general and Parliamentary Budget Office, which are responsible not to a party but to all of Parliament.   

But how can Canada avoid the kind of U.S.-style political stalemate that could lead us into an economic gridlock that stops trying for consensus? At an individual level, Cochrane insists we must all be constantly on guard to avoid the kind of unbending political attitudes we have seen in the recent U.S. context.

"Things are complicated," he said, something we must constantly remind ourselves of. "Reasonable people will see things differently."

Voters arrive to cast their ballots at a polling station on federal election day in Shawinigan, Que., on Oct. 21, 2019. Unlike in the U.S., elections in Canada are controlled by a chief electoral officer and an electoral commission that by tradition pride themselves on being non-partisan. (Graham Hughes/The Canadian Press)

But as we've seen in the United States, leadership also matters.

"I think it's extremely important that political leaders put the well-being of democracy, of the institutions, of fairness and so on ahead of their own electoral calculations," Cochrane said.

"And I think in Canada, we have been extremely fortunate that we have had leaders that do that to a significant degree."

Maybe, so far, we've just been lucky. But at least now we will have an idea of the consequences as we watch them unfold across the border.

Follow Don Pittis on Twitter: @don_pittis

About the Author

Don Pittis

Business columnist

Don Pittis was a forest firefighter, and a ranger in Canada's High Arctic islands. After moving into journalism, he was principal business reporter for Radio Television Hong Kong before the handover to China. He has produced and reported for the CBC in Saskatchewan and Toronto and the BBC in London. He is currently senior producer at CBC's business unit.

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