McLeod Group, August 20, 2020
Dear Minister Freeland,
Please accept our sincere congratulations not only on being appointed Minister of Finance, but also for being the first woman named to that post in 153 years of Confederation. The road to gender equality is a long one indeed, and your name is in the history books. Bravo!
We write to you today to give you some unsolicited advice. Since you have been a Cabinet minister before, you will already have received lots of unsolicited advice, most notably in the form of the briefing books prepared by Canada’s professional public service whenever you took on a new portfolio. The officials in the Department of Finance being notoriously orthodox, we thought you might like some heterodox material to add as an annex at the end of your briefing book. Think of us as kindred spirits to the Chrystia Freeland who wrote so ably about growing economic inequality and the rise of the plutocrats.
If you know the McLeod Group, you will know that we would like Canada to spend more on official development assistance (AKA “foreign aid” in everyday parlance) and to close the gap between your government’s often progressive rhetoric and its sadly less progressive performance. We believe that increased aid and positive engagement with the rest of the world (not just our neighbour to the south, whom you know only too well) is in Canada’s long-term self-interest, properly understood. But this does not mean that we believe in the crass use of aid to prop up Canadian industries or its immediate geopolitical interests. A fairer, more equal and more stable world order is in all our interests.
Desperate times call for desperate measures, and the times we live in are extraordinary, and in some ways desperate. Orthodox thinking will not do in the present circumstances. Allow us to suggest a few areas where heterodox thinking will be useful.
1. It is time to take a stand against the increasingly toxic levels of socio-economic inequality that have grown unfettered in the last four decades in most countries. While many of the poor have become somewhat richer in developing countries, the working and middle classes in “developed” countries like Canada have stagnated. Almost everywhere, plutocrats (yes, those same ones) have used their obscene levels of wealth to distort everything from housing markets (hello, Toronto, Vancouver and Mumbai!) to political processes. The lesson of history is that the ultra-rich do not realize that this game cannot last forever, and that the endgame is likely to be a nasty reckoning. Please save them from themselves with a wealth tax, an inheritance tax, and a more strongly progressive income tax here in Canada – and encourage other countries to do so as well. Coordinate an international effort to impose a financial transactions tax to dampen speculation. Make the finance industry the servant of the real economy, not the other way around. Leading by example would be real global leadership.
2. Modify and make permanent some of the radical social and economic experiments that your own government has put in place. Could the Canada Emergency Response Benefit be the basis of a universal basic income, for example? Could you work with your provincial and territorial colleagues to find a better funding model for long-term care for our seniors? The old model of for-profit homes with niggardly provincial funding is literally a killer. And perhaps a sympathetic Minister of Finance could help her colleague the Minister of Health to fill the holes in the Canada Health Act (pharmacare, psychological services, physio- and occupational therapy, dentistry, podiatry…). Canada’s current welfare state is rooted in the realities and the imaginations of the 1960s. So much has changed since then (such as more women in the workforce and more single parents). Our welfare state needs a 21st century upgrade.
3. But reform need not stop at our own borders. Many of the international organizations and institutions (i.e., rules of the game) that Canada is most dedicated to were designed around 1945, and they still to a great extent reflect the power structures of that time. Think of the World Bank, the International Monetary Fund and (ahem!) the UN Security Council. Canada has vigorously defended and promoted these organizations, but they are showing their age. Canada is playing defence in trying to protect these organizations as bastions of the “rules-based international order”. Alas, the emerging economies no longer find these organizations suit their needs, and they are out there building alternatives. To date, Canada (and other traditional donor countries) have yet to develop a coherent response. Some creative thinking is required. In particular, we need to reflect on what is really important to preserve (universal human rights, constitutional democracy) and what is secondary (individual organizations, even if we have been members of them for decades).
4. Finally, as a G7 member, Canada has some clout in the international financial institutions, especially those headquartered in Washington. The IFIs too are stuck in fiscal and monetary orthodoxy. Your officials in Finance will tell you that the World Bank is the best way to spend Canada’s aid dollars. (We know, because we have heard them say it many times.) Do ask them for proof of this assertion. We are confident that they have none. In fact, ask them for a cost-benefit analysis of World Bank-funded palm oil projects in West Africa. The latest research says these projects inadvertently helped fuel the 2014-16 Ebola crisis. And, as the COVID-19 pandemic forces countries to pile up debts, ask a few pointed questions about the World Banks’s pandemic bonds (investors earning interest, with no loans made to developing countries). Why not push the International Monetary Fund to extend Special Drawing Rights to developing countries to help them with their debt load? Again, critical questions about established orthodoxies and a concerted push for reform will do a world of good, and burnish Canada’s reputation to boot.
If any of the above interests you, we would be pleased to brief you in person or virtually.
We wish you all the best in these challenging times.
Yours sincerely,
The McLeod Group