The Future of the Canadian Establishment

MR. STALDER:

Distinguished members and guests, ladies and gentlemen: Our guest of honour is in his fifties, was born in Europe, and raised in Canada. He attended Upper Canada College, the University of Toronto, and McGill University. He holds a Master's Degree in Economics.

He started his career as Assistant Editor of The Financial Post in 1951, after which appointment he became Maclean's Ottawa editor. He then joined the Toronto Daily Star where he was promoted to Editor-in-Chief. He returned to Maclean's in 1971 and was elected a Director of Maclean-Hunter Ltd. in 1972. Ten years later he became Senior Contributing Editor and today, I guess, he is a free man.

But I would say that years ago Peter Newman had already gained his intellectual and material liberty through his books: Flame of Power, Renegade in Power, The Distemper of Our Times, Home Country, The Bronfman Dynasty, The Establishment Man, and, of course, The Canadian Establishment, parts one and two.

A man of many talents he is indeed: a Commander in the Royal Canadian Navy, a gold miner and a sailor, an Officer of the Order of Canada, but first and foremost, he is a writer. As such, he has been awarded the National Newspaper Award for Feature Writing in 1966; the CBC's Wilderness Award for Best Television Documentary of the year in 1967; the Michener Award for Journalism for the CBC television series The Tenth Decade in 1971; the President's Medal of the University of Western Ontario for the best magazine article of 1973; an honorary doctorate of Jurisprudence from Brock University in 1974; an honorary doctorate of Letters from York University in 1975; the Quill Award as Journalist of the Year in 1977; and, in 1981, the ACTRA Best Television Program of the Year for two programs on The Canadian Establishment.

The Empire Club of Canada has followed all these exploits and it has become almost a tradition to see Peter Newman among our speakers every ten years or so--in 1963, in 1972 and again today in 1982. Not too many have been invited thrice. I looked at his last speech and must add to his list of qualifications one that I have not mentioned: Peter is an outstanding ornithologist. I base this on his finding that "Pierre Trudeau, of course, is a bird of a very different kind."

But let me get away from derogatory political remarks and concentrate on matters pertaining to our club and to Peter's remarks on clubs in general. In the 1975 edition of The Canadian Establishment, Peter remarks: "These clubs function as sanctuaries, protecting their incumbents, however briefly and artificially, from the distasteful realities of contemporary society." Hear, hear!

Of course, you were referring to the leather-armchair houses but I am convinced that in a volume to come we are bound to read about the closets of The Empire Club and the low rumblings at our board meetings.

To be dealt with by Peter Newman makes one proud and apprehensive at the same time, for he is Canada's foremost chronicler of power, the top political and business writer in our country.

Ladies and gentlemen, please welcome Peter C. Newman.

MR. NEWMAN:

Ladies and gentlemen: Allow me to split my subject in two: to talk first about these 1980s in which we find ourselves, and then to speculate on the future of the Canadian Establishment.

What forms the perception of any decade, what gives urgency to the expectations of its survivors and allows its participants a rationale for their actions, is some deeply shared, common experience.

It was the excitement and agony of World War II that formed the forties; the somnambulism of prosperity that symbolized the fifties; the nerve-wrenching detonations of social, sexual, and political change that shook us up during the sixties. The tumble of events of the seventies added up to no discernible pattern of structure. But at least we survived. Back when that decade started, we had a freshly minted leader in Pierre Elliott Trudeau, a cool man in a hot world doing his grainy thing, maintaining a sense of inner repose and outward excitement, reminding us that we were a young nation with unexploited possibilities. The Mounties and their musical ride were still our finest international ambassadors. We counted for something in world councils. The OECD in Paris proclaimed that our economic future had few limits. Sir Wilfrid Laurier's long-awaited pledge about the twentieth century belonging to Canada seemed about to be fulfilled. In Quebec, on January 17, 1970, Robert Bourassa, who billed himself as a reformer (at least that hasn't changed) became leader of the Quebec Liberal party and 102 days later swept the polls on a straight federalist ticket.

Now, a little more than a decade later, René Lévesque's government is firmly ensconced in power, poised to call an election on its separatist intentions.

The most dramatic change has, of course, been in the state of our economic health. The intractable dual phenomena of high unemployment and rising inflation are draining our economic vitality.

Inflation always takes a social as well as economic toll. J. H. Plumb, the British historian, has noted that "one of the ironies of inflation is that it forces governments to attempt complex remedial measures that rarely have any effect except to intensify class bitterness on the one hand and distrust of government on the other."

Price revolutions always bring in their wake the breakdown of faith in institutions, a loss of belief in the future, and an end to optimism; the middle classes feel squeezed, and the children of the middle class feel dispossessed.

In Canada at the moment we have no viable political options. Pierre Trudeau and Joe Clark have both reduced their parties to little more than organized appetites for power. Clearly, the realization of Canada's full potential--the salvation of our remaining patrimony--lies not so much between these Bobbsey Twins as beyond them.

No surge of insight intrudes into the conscience of either man. In judging which future politician might be suited to the task of shaping our tomorrows, it seems to me that a relevant rule of thumb might be the "men and the boys" theory once put forward by Eric Sevareid, the American political commentator. According to Sevareid, the "boys" in politics are those individuals who want position in order to be something; the "men" in order to do something.

There is one way to replace the "boys" we now have in Ottawa with "men" who could do the job.

Having exhausted our viable political options and rapidly running out of the time necessary to reverse the economic catastrophe threatening to engulf us, I suggest that the only course of action is to constitute a national government that would recruit the best talents available in the country and mobilize public opinion in an all-out effort to reverse the existing business climate.

We have had limited forms of national coalition governments before, during the exigencies of wartime and this, surely, is no less an emergency. Why not, for once, forget partisan considerations and place into power in Ottawa a group that will dedicate itself not to politicking, but to governing? This, it seems to me, may be the only way to salvage this country's magnificent potential. I believe it can be brought about by the simple means of good men and women standing up to declare their defections from traditional political alliances.

They would enlist themselves in the formation of a federal administration that would represent the compassionate talents of this country's best brains genuinely dedicated to seeking a way out of the worsening economic dilemma in which we find ourselves.

Reflecting the state of emergency that exists, Ernane Galveas told the International Monetary Fund meeting here last month: "If the industrialized countries who determine the future of the world sit as if paralyzed--how long can the social fabric endure?" As Brazil's Minister of Finance, he should know.

What I find really scary about the current state of affairs is the dramatic deterioration in social behaviour which the worsening economic climate may bring about. The lenten conformity and soothing instinct for compromise that characterized the Canadian way in the past are no guarantee for the future. The craving for order and obedience, historically so dominant in this peaceable kingdom of ours, is being replaced by confusion and anarchy reminiscent of the swaying bleachers at a Rolling Stones rock concert.

This widening dichotomy of trust between the governors and the governed is not limited to the radical young or the financially strapped. Pent-up resentment of authority burns across the land, with ordinarily placid middle-class citizens accusing politicians and bankers of lies and damned lies.

It is a socially bruising process, a time of lost touchstones and besieged institutions--the unruly passage from acceptance of closed-shop authority to a militancy questioning traditional power groupings.

The once-smug burghers of a once-smug country are staging a silent coup d' etat against the notion of having the big personal decisions made for them by self-selected hierarchies. This is

true not only of governments, but of business, unions--and even families.

It was probably Pierre Trudeau who inadvertently set off the process. His insistence on drafting a new Charter of Rights prompted many Canadians to re-examine past dues, present entitlements, and absent powers. In gaining their own constitution, Canadians came of age in a curiously uncharacteristic way.

It was not pride of independence that dominated the national conscience of a country suddenly and very belatedly untied from Mother Britannia's apron-strings. It was a scream of defiance against usurious interest rates and spirit-crushing inflation. Unemployment in Canada has already created a horde of jobless far greater than the ranks of the country's entire armed services during World War II. Things are bound to get worse before they get better.

Like a debutante who strayed into an abattoir, Canada finds herself in a bitch of a decade.

During most of our brief existence as a nation we were all but exempt from the terrors of modern history, a lucky people inhabiting a wonderful hunk of geography. For a hundred and fifteen years the superstructure of Canadian society remained relatively undisturbed. But now, as we begin to grapple with the economic fire storm threatening to engulf us, it seems to me that only one direction offers any hope of success: rallying Canadians from all provinces into a non-partisan movement dedicated to the idea of preserving the Canadian economy and Canadian society--even if in radically altered form. This new-style nationalism (or better to call it patriotism) would promote in a thoughtful manner the many ways in which Canada's business community and consumer society can be revived.

The most important question Canadians are asking themselves these days is this: are we in a recession or a depression? The difference is mainly one of degree. A depression is nothing more than a long recession. If you get bad news long enough, attitudes change and the prospect of an economic upturn keeps being postponed. This produces a difference in attitudes. When a factory is closed during a recession, for example, it's mothballed. In a depression, it's allowed to rust.

Even if comparisons are odious, sometimes they're relevant. Argentina has an inflation rate of 100 per cent. Zanzibar has an unemployment rate of 60 per cent. Obviously, the Canadian economy is relatively healthy--even now.

What is really happening here is what the economists call "a self-feeding liquidity crisis." In English, this means that unlike a recession, which has within itself correcting devices so that as inventories drop, people start buying again and factories reopen, a depression feeds on itself, with each downturn accelerating the plummeting spiral. This means also that eventually our banks may not be able to carry their ballooning debt loads.

We have a well-run and relatively safe banking system, but if enough companies and countries to which they have made loans go broke, even our banks will not be safe.

This is the most frightening prospect of all. It must not be allowed to happen. Only the declaration of a full-scale economic emergency, with a national government which has deliberately jettisoned petty partisan motives, can stop it.

Speaking of high debts and the inability to pay off loans, of course, brings me to the acquisitors, that brave and fascinating group of entrepreneurs who peopled my last book. Their corporate appetites knew no bounds: between the summer of 1975, when the first volume of The Canadian Establishment was written, and October 1981, when the second volume appeared, companies worth more than $55 billion were swallowed up during the greatest wave of corporate cannibalism in Canadian business history. Nobody seemed immune from the riptide of takeovers, and some bizarre corporate marriages were consummated. A major distiller (Hiram Walker), for instance, formed an unwieldy combination with Consumers' Gas. (The only way the merger might have worked was to pipe Canadian Club into peoples' basements.)

If I were to write The Acquisitors today, it would be a much thinner volume, titled The Survivors.

But the Canadian Establishment is and always will survive. As the economy entrenches itself on the downside of Canada's greatest period of sustained growth, the ancient concept of commercial proprietorships is being reasserted in high-yield, beatinflation investments. Against all odds, old entrepreneurs are begetting new entrepreneurs. In the face of a narrowing range of economic opportunities in a country with fewer and fewer independent corporations and significantly declining manufacturing output, new fortunes are still being minted. Men like Conrad Black, Ken Thomson, Galen Weston, Doug Bassett, Ted Rogers, Hal Jackman, the Eatons, the Sobey brothers of Nova Scotia, the McCains and Irvings from New Brunswick are all surviving very well indeed. Unlike most élites, who drive themselves into oblivion through the congenital profligacy or genuine idiocy of their offspring, Canada's Establishment has managed to spawn an impressive clutch of inheritors.

Members of an enduring power network, they possess a dominant ethic easily distinguishable from that of their more acquisitive cousins: feeling themselves secure within the establishment's hermetic confines, the inheritors recognize that however elusive and abstract the precise quality of their adherence might be, their style is more easily envied than copied. Their self-confidence remains rooted in the notion that their way of doing things is the enemy of pretence; that unlike fashion, grace can never be purchased. Character and elegance, so their prevailing wisdom goes, ultimately depend on inner conviction--which is why, unlike the acquisitors, the Establishment's very own inheritors can command attention without appearing to crave it.

The appreciation of the audience was expressed by Joseph H. Potts, Q.c., a Past President of The Empire Club of Canada.