I had a conversation yesterday with a U.S. official who shared with me the gossip that shpilkis roiled the lower intestines of other officials who were awaiting Sy Hersh’s newest New Yorker piece. Huh, I said, what’s it about? My interlocutor hadn’t seen it yet, but rumors traveled: it seemed to concern possible U.S. plans to secure Pakistani nuclear weapons.

My source sighed in frustration. Why was Hersh writing this stuff, if he was in fact writing it? We probably have plans to invade, I don’t know, Canada, my interlocutor continued, since we plan for fucking everything on the planet, and so reporters of Hersh’s stature ought to be able to distinguish between what’s purely hypothetical and what’s real. And now what do we do? We have to say WE HAVE TOTAL CONFIDENCE IN THE PAKISTANIS TO SAFEGUARD THEIR NUKES when no sane human being has *total confidence*. But if they don’t hear that, all this ill will built up from the Kerry-Lugar-Berman missteps and the Waziristan operation and the drones and all the rest will boil over, and we’ll be digging ourselves out of this for weeks…

This turns out to not really be what Hersh’s piece is about. That said, this seems like as good a time as any to talk about War Plan Read, the 1920s-vintage US military plan for an invasion of Canada:

The scenario envisioned involved the U.S. going to war with Britain, and thus attacking Canada as the most realistic short-term way to damage the empire. The important thing was to seize the ports in Atlantic Canada to prevent re-enforcement from Britain of Canadian forces, or resupply of Britain by resource-rich Canada. In probably the most exciting scenario, the Red-Orange plan, we were fighting a British-Japanese alliance. Canada in turn had “defense scheme one.”

Harry Turtledove’s American Empire series envisions a world in which Confederate victory in the Civil War leads to a geopolitical order in which the rump United States is aligned with Germany against a Britain/France/Confederacy/Japan alliance in two world wars.

Toonie

A cheaper US dollar is almost certainly in the short-term interests of the United States as it will boost employment and help us get out of the recession. But perhaps more importantly, it’s in the medium-term interests of just about everyone, since it would set the stage for a rebalanced global economy. The problem is that it’s very hard to find any examples out there of “matching” countries whose leaders are excited about the prospect of more-expensive currencies and the enhanced consumption possibilities that would be opened up. For example, the Canadian economy has been a good deal stronger than the American over the past 18-24 months so the Loonie has shot up relative to the Greenback. This means Canadian citizens can afford more goods and services than would otherwise be possible, but it has PM Stephen Harper worried:

Some of the Canadian dollar’s sharp climb is justified by fundamentals but too rapid a rise could damage the country’s economic recovery, Prime Minister Stephen Harper said Tuesday.

“Obviously, it is a concern,” Harper told reporters, noting that Bank of Canada Governor Mark Carney had also worried about volatility in the currency.

He’s not wrong, exactly. Unfortunately with employment looking weak in pretty much every country around the world, no leader anywhere seems to believe that his country can withstand a large short-term increase in value. But eventually the shift has to happen, and I don’t really see what the way out is.

Bloc Québécois leader Gilles Duceppe (wikimedia)

A very interesting Globe and Mail article by Lawrence Martin about the paradoxical success of the Bloc Québécois in Canada does a good job of illustrating some of the ideas about political legitimacy, reconciliation, and cooptation that you see a lot in counterinsurgency talk these days. His point is that the BQ, seen as short-lived novelty party when it was launched in 1990, has actually been wildly successful:

Since its debut election campaign in 1993, the Bloc has never been beaten by a federalist party. Not in six elections. The demise of the Bloquistes is often predicted. It never happens. They are entrenched. In the next campaign, they are on course to rout the Liberals and Conservatives in Quebec again.

But this success has actually wound up undermining the cause of Québec nationalism. The BQ does such a good job of wielding influence at the federal level that people are losing interest in separatism:

Benefiting from the shrewd leadership of Gilles Duceppe and a smart, disciplined caucus, the Bloc has been able to address many of Quebec’s grievances. But its steady progress now sees it scraping the barrel in search of meaningful injustices to fortify its underlying pathology (witness its current election advertising planning).

This sort of dynamic is precisely what makes Canada a successful, stable, liberal society rather than a war-torn wreck of a country. As Francophone Canadians grew increasingly disgruntled with federalism, a new separatist political party was formed. But rather than separatism swiftly sweeping the province and taking over, the separatist party sent a bunch of MPs to Ottawa and has been able to robustly represent Québécois interests there. Consequently, people aren’t as interested in seceding as they once were.

But this only works because the Anglophone community in Canada is politically divided. If there were some kind of Anglo-Canadian nationalist party that had as much appeal outside of Québec as the Bloc has in-province, then it would achieve a position of permanent electoral dominance. Then suddenly the BQ’s relatively good electoral showings still wouldn’t leave it in a position to accomplish anything. And Québec nationalist sentiment would find its energies channeled in the direction of secession. But that’s not the world we live in. Of course we also live in a world where Canada is a wealthy liberal democracy with a long tradition of political stability, and basically no tradition of political violence. So what works in Ottawa may not have such hot prospects in Kabul.

Embassy of Canada, Washington DC (cc photo by mastermaq)

Exciting news on the Canada beat, as our neighbors to the north are going to blow stuff up in Washington, DC:

The Taliban will attack an Afghan village set up in the heart of Washington courtesy of the Canadian Forces, who will send in a medic in a dramatic effort to save a civilian crippled by the explosion.

At least four times over two days this month, simulated IED blasts will bring the Afghan war — and Canada’s combat role in Kandahar home to Americans if an elaborate scheme based on modern training realism attracts widespread attention, as is hoped.

In other Canada news, Conservative Prime Minister Stephen Harper just took the interesting step of appointing a new Ambassador to the US, Manitoba Prime Minister Gary Doer. This is noteworthy because Doer is not a Conservative. Instead, he’s head of the Provincial branch of Canada’s left-wing New Democratic Party. This is perhaps tied in with some intrigue at the federal level, where the center-left Liberals are trying to topple Harper’s minority government and force a new election. This is forcing the Conservatives into a kind of tactical cooperation with the federal NDP, but neither really wants to admit this is happening.

Obviously, there are a lot of details and ins-and-outs. But it’s basically pretty easy to keep straight. Canadian Medicare is pretty similar to American Medicare, but our Medicare is for old people and there’s is for everyone. So if you like Medicare, you’d also like Medicare. And if you hate Canadian-style socialism, you ought to favor dismantling Medicare.

Chateau Frontenac, Québec City (cc photo by Joe Shlabotnik)

Mark Krikorian visits Québec City (lovely, as I recall) and comes back with some typically bizarre thoughts:

Quebecois are a distinct people, a nation, who should have an independent state (though, I hasten to add, it’s none of our government’s business one way or the other). But what they have now seems better than that — all the advantages of independence without any of the responsibility, kind of like Puerto Rico. And the destructive effects of efforts to keep Quebec in the Canadian confederation (official national bilingualism and the attendant rise of bilingual, deracinated elites) should be a warning of the disaster that would result were Puerto Rico to become a state. Vive le Quebec libre! Viva Puerto Rico libre!

So . . . bilingualism clearly creates a lot of practical problems and Canada’s had various headaches around it. But the fact that many elite Canadians speak two languages hardly strikes me as a social and cultural crisis. The United States is a very big country and English is the world’s dominant language, so it’s totally viable for American elites to be monolingual. And good for us. But it’s actually quite typical for people to have multiple language competencies without becoming “deracinated” in any troubling way.

Meanwhile, it’s worth noting that it’s hard to solve these issues through secession. Canada has a large Francophone minority. But if Québec were an independent country, it would be a country with a large Anglophone minority. Either way, human rights and a decent respect for the legitimate claims of minority groups winds up being indispensable. Krikorian’s dream of slicing the world into neat, tidy, perfectly homogeneous political units just bears very little resemblance to reality.

Needless to say, it doesn’t work like that at all. Japan, which has considerably more people than Canada, has an even higher life expectancy.

The merits of this particular case aside, I think Henry Farrell is right to say that a win for Canada would probably spell big trouble for WTO fans. When foes of trade liberalization are able to make adorable baby seals the face of their cause, it’s hard to oppose them. This makes me wonder why the seal issue is being handled as a trade policy matter in the first place. In other words, why ban the import of seal products rather than simply ban selling seal products? Clearly the EU’s concern here is with the existence of a commercial market for dead seals rather than with the transnational flow of seals per se.

A Tim Horton's in Calgary, Alberta; could your town be next? (wikimedia)

Back in April I said “somehow Tim Horton’s can be very popular in Canada but not make it big in the states.” And today I read on the Planet Money blog:

By now, you’ve probably already heard about the big Canadian news of the week: Tim Hortons, the venerable Canadian coffee-and-donuts-shop, expanded into New York City, opening 12 locations in Manhattan and Brooklyn on Monday. More locations are coming to the city in August.

Apparently Tim Horton’s is already pretty popular in some Canada-proximate parts of the country such as Detroit and Buffalo. And if you want to keep your eye on the creeping Canadification of the American economy note that the “TD” in “TD Bank” stands for “Toronto-Dominion.”

Stephen Harper

David Frum writes that what he deems poor U.S. economic policy could be good news for Canada:

At recession’s end, the U.S. will be forced to raise taxes heavily just to pay the interest on Obama’s debts; Canada will be positioned to maintain and even reduce taxes. Obama’s indebtedness will exert unending downward pressure on the U.S. dollar, while higher energy prices and superior economic management cause the Canadian loonie to rise.

A decade ago, incomes per capita, even in wealthy Ontario, trailed those of every U.S. state except Mississippi. Obama’s poor economic management offers the opportunity for a stunning reversal of fortunes.

For one thing, I think Frum’s wrong about the merits of the Obama economic agenda. But beyond that, if you grant Frum that premise it strikes me as extremely unlikely that poor economic performance in the United States could possibly be good news for Canada. Exports account for $461.8 billion of Canada’s $1.3 trillion economy. Of that $461.8 billion, 79 percent—or $365 billion—goes to the United States. Unless Canada wants to go through a truly wrenching transition to a completely different economic orientation (ask the Finns about this) then Canada’s economic prospects are going to be very closely linked to America’s. It’s true that poor economic performance in the U.S. could lead to an improvement in Canada’s relative standing (though if I were number three on the Human Development Index the way Canada is, I wouldn’t be too upset about it) but ultimately a rising America is likely to lift Canadian boats, and it’s very hard for Canada to sustain robust growth in the face of a sluggish United States.

Hugh Segal (official photo)

Canadians who are interested in politics tend to be fairly well-informed about U.S. political debates, so I’ve sort of been waiting for the day when some right-wing Canadian politicians would step up and defend their fair land’s health care system from the smears of the American right. Now it seems that Conservative Party Senator Hugh Segal is doing just that.

Now as it happens the Canadian Senate is not a very important policymaking body. But irrespective of what lurks deep in the hearts of Canadian Tories, all leading right-of-center politicians in Canada understand that their health care system is far too popular and well-loved to seriously propose replacing it with an American-style system in which whether or not you receive treatment for an illness is determined by the whims of a for-profit insurance company. Indeed, the Conservative Party of Canada lists as one of its founding principles the idea “that all Canadians should have reasonable access to quality health care regardless of their ability to pay.”

All of which is to say that one fun way to shake up the somewhat stale health care debate would be to have a right-wing Canadian politician debate a right-wing American politician. On substance, what does this prove? Well, I think it’s noteworthy that where national health care systems exist, nobody ever seems to want to dismantle them. By contrast, you have lots of examples of countries lacking a national health care system and deciding to build one.

Stephen Harper

Jim Henley offers a modest proposal for improving the caliber of Presidential leadership:

But because of the bizarre eligibility rules, the vast majority of our candidates have no experience at what matters, running a large, rich country. It’s fashionable to blame voters for the poor quality of American leadership, but it’s not like the candidates have much track record for the voters to judge. The US presidency is not an entry-level job. We should change the constitution and only consider applicants with a proven record of successful leadership of pretty big, pretty rich nations. Like, conclude two successful terms running Canada and then come talk to us. (Or, France!)

Indeed, it does seem to me that you could imagine the leaderless Republican
Party being well-led by Stephen Harper. Canada’s already sending us a lot of its conservative political pundits (Frum, Krauthammer) so why not politicians? And back during the 2004 campaign, if the Democrats were destined to nominate an Iraq War supporter why not a charismatic one like Tony Blair?

Toronto General Hospital (Wikimedia)

Someone was on Fox earlier this morning arguing that including a robust public plan in health care reform would lead the United States to a Canadian-style health care system, which would be terrible. This is closer to the mark than Oklahoma Senator Tom Coburn’s insistence that a public plan would be like the Veterans Health Administration, which he (also falsely!) claimed would be bad. Advocates of a public plan are proposing something very different from the Canadian health insurance system. But if a public plan were introduced, and then it succeeded in delivering consistently higher-quality, lower-cost care than all private insurance companies all across the country, US health care could evolve in a direction that would in some respects resemble Canada’s. How likely that really is is up to debate. But it could only happen if customers were to show a consistent and overwhelming preference for the public plan, in which case the public plan coming to dominate probably wouldn’t be such a bad thing.

Meanwhile, how’s health care in Canada? According to actual research it’s about the same as in the United States:

Objectives: To systematically review studies comparing health outcomes in the United States and Canada among patients treated for similar underlying medical conditions.

Methods: We identified studies comparing health outcomes of patients in Canada and the United States by searching multiple bibliographic databases and resources. We masked study results before determining study eligibility. We abstracted study characteristics, including methodological quality and generalizability.

Results: We identified 38 studies comparing populations of patients in Canada and the United States. Studies addressed diverse problems, including cancer, coronary artery disease, chronic medical illnesses and surgical procedures. Of 10 studies that included extensive statistical adjustment and enrolled broad populations, 5 favoured Canada, 2 favoured the United States, and 3 showed equivalent or mixed results. Of 28 studies that failed one of these criteria, 9 favoured Canada, 3 favoured the United States, and 16 showed equivalent or mixed results. Overall, results for mortality favoured Canada (relative risk 0.95, 95% confidence interval 0.92-0.98, p= 0.002) but were very heterogeneous, and we failed to find convincing explanations for this heterogeneity. The only condition in which results consistently favoured one country was end-stage renal disease, in which Canadian patients fared better.

Interpretation: Available studies suggest that health outcomes may be superior in patients cared for in Canada versus the United States, but differences are not consistent.

If you ask me, health care in the United States is not so great, so Canadian health care—which turns out to be of similar quality—is not so great either. But it’s a lot cheaper, so that’s nice. Alternatively if, like most conservatives, you deny that our system is broken and want to maintain that we have “the best health care in the world” then it turns out that Canada’s is probably slightly better, almost certainly no worse, and definitely cheaper.

It’s looking increasingly clear that the right’s strategy for attacking the Obama administration’s health care proposals is to attack totally made-up ideas that have nothing to do with what Obama has proposed. Steve Benen fills us in:

There’s a project, for example, called “Patients United Now,” organized by the same outfit that sponsored Sam “Joe the Plumber” Wurzelbacher’s anti-EFCA efforts. The group, Americans for Prosperity, has a new television ad featuring a Canadian woman who said she came to the United States to be treated for brain cancer, because in Canada, she would have had to wait six months to see a specialist, a delay that would have killed her.

To hear the woman tell it, Canada’s system is a dystopian nightmare, in which the government forces taxpayers to “wait a year for vital surgeries,” and bureaucrats restrict access to medicine and treatments. She concludes by telling the viewer, “Now Washington wants to bring Canadian-style healthcare to the U.S., but government should never come in between your family and your doctor.” She encourages Americans, “Don’t give up your rights.”

Jonathan Cohn has a good rundown of the basic falseness of this ad. But I think it’s worth zeroing-in on the specific issue here. The way Canadian healthcare works is basically that if you want to see a doctor, you go see a doctor and the government pays the bill. This is a “single-payer” system (with the government as the single payer) and it in no way resembles what Obama has proposed. But it is what they do in Canada. A system like this can either cost a ton of money (sort of like our Medicare) or else you can control the costs by giving the program an explicit budget and then rationing access to care. And in Canada, they essentially have opted for the latter route. Sometimes a person wants treatment but the government won’t pay.

But why is it that in that instance a person would travel to the United States for health care? Obviously, the Canadian government won’t pay for that either. So if you’re going to have to pay privately, why do it in the USA? Why not just do it in Canada? Well, it turns out that in addition to its system of government-financed health insurance, Canada does a lot to curtail people’s ability to purchase health insurance and health care services privately. This is done for basically reasons of egalitarian ideology—they’re all in it together. But it’s also politically viable in part because the vast majority of Canadians live very close to the United States. So prosperous Canadians who are theoretically disadvantaged by this system can, in practice, take advantage of the American “safety valve” and go south of the border. This helps keep the Canadian ruleset politically sustainable.

But not only is Obama not proposing anything like Canada’s single-payer system, he’s really not proposing any restrictions on people’s ability to buy private health insurance. Much as Canadians have the option of going to America to buy health services, Americans will always have the option of going to America to buy health services. But for most Americans, buying health services is difficult because health care is expensive. Obama’s proposals are aimed at making it possible for more people to afford health care. If what you have instead is money burning a hole in your pocket that you desperately want to spend on health care, nobody is going to stop you.

Yesterday there was an interesting outbreak of libertarian praise from a couple of Cato scholars for our neighbor to the North, citing not only Canada’s more liberal policies on cultural issues, but touting Canada as a libertarian economic model. It’s worth noting, however, that one important driver behind Canada’s ability to adopt this policy model is that the Canadian health care system, much-derided by the American right, is much much cheaper than the American system. If we had Canadian-style health care costs and Canadian-style trajectory of cost growth, we wouldn’t be facing nearly the same upward pressure on taxes.

It’s also worth considering that the guarantee of equal health care no matter what happens to you probably helps build political support for measures that Cato and I both support like liberalized trade and immigration policies. Another thing that’s alluded to in the Cato post but not really spelled out is that though Canada has cut tax rates recently, they have far fewer tax loopholes and deductions. In this regard, I think Canada really is a good model for the United States to follow. But the congress hasn’t exactly been leaping at the opportunity to adopt Barack Obama’s proposals to trim deductions for high-income individuals or to close loopholes for corporations.

Definitely worth checking out the movie if it’s playing somewhere near you.

Jonathan Hiskes reports for Grist that Gordon Campbell and the British Columbia Liberal Party have gotten themselves re-elected in a campaign in which BC’s carbon tax was a major issue. An important piece of context to have here is that despite the name “Liberal” and their support for a carbon tax, the BC Liberal Party is the major right-of-center party in British Columbia provincial politics. The opposition New Democratic Party is the local left-wing.

It’s easy enough to understand why members of congress don’t want to go within a 100 miles of the words “carbon tax,” but I’m a bit surprised that you don’t see more interest in carbon taxes in jurisdictions that are already heavily dependent on consumption taxes for revenue. Nobody likes to say “tax” and regressive taxes—which a carbon tax would be—are in some ways especially dicey. But insofar as you’re already relying on a regressive value-added tax (VAT) to raise revenue, as most advanced democracies around the world are, it seems to me that swapping VAT revenue for carbon tax revenue should have green appeal without political toxicity. In principle, you could imagine the same thing at the state level for states that have high sales tax rates.

Unfortunately, as applied at the level of a small jurisdiction, a “green tax shift” is likely to do a lot of pushing polluting activity into other jurisdictions rather than actually eliminating the polluting activity. Still, it seems like good policy to me. You could actually imagine this, as in British Columbia, being something a right-of-center politician finds appealing.

David Leonhardt, interviewing Barack Obama, asked the president about trying to limit the scale of banks to which Obama replied “I’ve looked at the evidence so far that indicates that other countries that have not seen some of the problems in their financial markets that we have nevertheless don’t separate between investment banks and commercial banks, for example.” Leonhardt intervened and said “Like Canada?” And then Obama said “Canada being a good example. And they’ve actually done a good job in managing through what was a pretty risky period in the financial markets.”

This is all well and good, but aside from being financial supermarkets, the Canadian banking situation is really extremely different from ours.

The Canadian financial sector is dominated by the “big five” banks that all enjoy “tier one” regulatory status. And while these banks are financial supermarkets, and they’re quite big relative to Canada, Canada is a relatively small country so the banks themselves are modestly sized compared to the largest American financial institutions. So when considering the relevance of the Canadian model to the question of whether or not the United States is interested in limiting bank size we need to try to be clear on what we’re envisioning. The US is about ten times the size of Canada.

If we’re envisioning a sector dominated by fifty financial services supermarkets each of Canadian-style size, then we really will need to break up some of the existing conglomerates. But if we’re talking about consolidating the United States into five financial supermarkets, then we’re talking about making some banks much bigger than current American institutions. Alternatively, if we’re not talking about doing either of those things then we maybe need to ask ourselves how relevant this Canadian example is.

Another point is that one issue any country is going to face if it implements Canadian-style levels of regulation is that bank managers will complain that they’re being rendered internationally uncompetitive. In Canada, this is addressed through regulatory limits on the extent to which foreign banks can compete with Canadian banks, on restrictions on foreign ownership of Canadian bank equity, etc. I haven’t heard anyone in the United States talk about doing anything like that. Which is, I suppose, fine. But as I understand it those limits on international competition are integral to the sustainability of the Canadian banking model. So if we’re going to reject them, then we need to put it aside as a good analogy of what we’re aiming at.

Looks like Chrysler will wind up in a pre-packaged bankruptcy before becoming a firm jointly owned by Fiat, the United Auto Workers, the United States of America, and Canada. The point of passing through bankruptcy courts is (a) to force a handful of holdout bondholders (mostly hedge funds, it seems) to take a haircut and (b) to be able to put the hammer to Chrysler dealers.

Another element of this is that Chrysler’s financial arm will not be bailed out. Instead, GMAC—GM’s financing arm, now restructured as an independent bank holding company—will take over.

Given the status quo as of two weeks ago, I think this is a good resolution. But I still wish that back in late November when this issue first come up that we’d moved directly to the government putting up money to do debtor-in-possession financing and but the company through the bankruptcy courts. Fiat could have bought Chrysler’s productive assets in a bankruptcy process, and instead of spending billions keeping Chrysler operating for a few additional months more funds could have been made available for direct relief. I suppose that, politically, it may have been necessary to go through the motions of showing that it wasn’t possible to get all the concessions needed short of bankruptcy.

Meanwhile, how much precedent is there for state-owned enterprises to be jointly owned by two different countries?

ZAKARIA: But it sounds like there is very little support in Canada for an extension of Canada’s mission, which expires in 2012, am I right?

HARPER: Yes. It expires at the end of 2011. The issue in Canada, Fareed, I don’t think is whether we stay or whether we go. The issue that Canadians ask is, are we being successful? And—

ZAKARIA: —what’s your answer to that right now?

HARPER: Right now, we have made gains. Those gains are not irreversible, so the success has been modest.

ZAKARIA: So then, why leave?

HARPER: We’re not going to win this war just be staying. We’re not going to — in fact, my own judgment, Fareed, is, quite frankly, we are not ever going to defeat the insurgency. Afghanistan has probably had — my reading of Afghanistan history, it’s probably had an insurgency forever, of some kind.

I think this illustrates a few points. One is that there’s no more patience among our allies for an indefinite military presence in Afghanistan than there is among the Afghan people. The moral of the story is that rather than setting lofty war aims and then deciding it’ll take decades to achieve them, we need to envision a presence that ends in the not-too-distant-future and then frame some war aims that are plausibly achievable on that schedule.

Harper’s view that we’re never going to defeat the insurgency reflects, in some ways, nothing more than the Obama administration’s repeated assertions that there’s no purely military solution in Afghanistan. In a larger sense, though, Harper is pointing to the endemic nature of political instability in Afghanistan and raising doubts—doubts that I think should be taken seriously—about the feasibility of establishing a Kabul-based central government that’s capable of exercising effective control over 100 percent of the country. It’s worth noting that the absence of such a government is potentially quite compatible with Western security interests. In a scenario where instability and factional violence continues to be endemic, the key issue for us is that all substantial factions must feel that there is more to be lost from allying with international terrorists (in terms of provoking western ire and western support for rival factions) than there is to be gained from such an alliance.