The future seems to come with the sunset, not the sunrise. It is the west coast that heralds the future, while the east feels like the past. That can be a frightening thought, should California — debt-ridden, dysfunctional, decadent — be where we are all headed. 

It’s not like that in British Columbia, but the shape of the future is apparent here. With a provincial election here next week, Canadians will be paying more attention to B.C., and may glimpse their future.

 

B.C. had something of a meltdown in public trust in government after the 2009 provincial election. The Liberals under Gordon Campbell campaigned for re-election on the back of a monstrous lie. The premier repeatedly, deliberately, brazenly and spectacularly lied to the people, saying that he had no intention of bringing in a harmonized sales tax. Safely re-elected, he did not even wait a decent interval before reversing himself. To their great credit, the people of B.C. did not take kindly to their body politic being infected by a truth-eating virus and so, in a great act of restoring political hygiene, forced the government to reverse itself and the premier to resign. Subsequently, Campbell was appointed high commissioner to the Court of St. James, where presumably his ignominious exit from Victoria does not compromise his ability to represent Canada in the place where Queen Victoria’s ancestors resided.

 

Campbell’s successor, Christy Clark, was thought a sure bet to lose the 2013 election to the NDP’s Adrian Dix, but polls here indicate a tightening of the race. Regardless of who wins, B.C. politics prefigures the future.

 

Here in the Okanagan, a pleasant landing ground for retirees from both sides of the Rockies, the future is grey. Last fall, a cardiac surgery centre was opened here, so no longer do the aged and sick of the B.C. interior have to travel to the lower mainland for surgery. B.C., a net importer of retirees, will age into the sunset quicker than most. Health care, publicly-financed, is to be a growth industry. Can that be managed without busting the budget?

 

Immigration can be a way of dealing with an aging population, and B.C. has embraced mass immigration. Wednesday’s National Household Survey data revealed that there are almost 1.2-million foreign-born residents living in the province, the second-highest tally for any province. Vancouver and environs are largely an immigrant success story, with few of the entrenched problems found in European cities that have taken in large numbers of Asian immigrants. Indeed, Christy Clark stumbled badly in the run-up to the election with the disclosure of her “ethnic” strategy. Nevertheless, no party has a future without an “ethnic strategy” or, as I prefer, something to offer Canadians who vote with values and interests shaped by a global experience.

 

Global forces are also shaping debates here in B.C., especially in regard to the competing claims of economic development and the environment. Both in the lower mainland and in the Okanagan, there is an enthusiasm for environmentally-friendly practices — cycling, for example, in this temperate climate — not found elsewhere. Yet the potential of Canada as an “energy superpower” depends on Canadian oil and gas getting out of Canada to Asia at world prices, rather than discounted American prices. As America moves toward energy self-sufficiency — previously thought unimaginable — Canada’s economic future will depend on getting to Asia, which is rather hard to do if you don’t go through B.C.. The NDP has made it clear that pipelines will not be easily approved, and they are cool to the port of Vancouver becoming a superhub for energy exports.

 

Demographics — age and immigration — health care, energy, environment, public trust. All this is on B.C.’s plate, in addition to the after effects of the world’s financial crisis, where cheap money has sloshed up on the shores, fuelling a real estate and condo boom — or bubble?

 

B.C.’s political culture has always puzzled the country on the other side of the Rockies, from the 20-year reign of “Wacky” Bennett in the 1950s and ’60s, to Bill Vander Zalm in the ’80s, and then the revolving door of NDP premiers in the ’90s. The downfall of Gordon Campbell showed the flexibility and creativity of that culture, given that prevaricating politicians are not exclusive to B.C. — but their solution was.

 

The incumbent B.C. Liberals are casting this as an election between their own fiscal prudence and supposed NDP profligacy. That’s convenient for them, but there is more going on here than old slogans. The dominant issues in Canadian public life for the next generation are being worked out now in B.C. Whether that heralds a sunrise or sunset for Canada may be seen here first.

 

Over at the CBC, Neil Macdonald has done a documentary this week on the “monarchs of money,” accusing the world’s central bankers of pushing pensioners into penury, and bringing chaos to European countries through crushing austerity. In his interview with Carney, Macdonald clearly got under the preternaturally cool governor’s skin, who insisted that whatever the risks of the American and European central banks massively expanding their balance sheets — “printing money,” in the vernacular — the alternative would have been worse. Such are the lessons of the financial crisis, a reminder that the innocent suffer for the sins of the guilty.

 

The governor, for his part, is putting his farewell to good effect, with a series of major speeches exploring those lessons. Yesterday, in Edmonton he addressed the future of monetary policy. He has another speech planned for later this month in Montreal.

 

Perhaps his most important address though was in February at the Ivey business school in London, Ont. Entitled “Rebuilding Trust in Global Banking,” it summarized his prescription for financial-sector reform. It was striking that his prescription was less regulatory than exhortatory. Restoring trust to the financial sector is largely a matter, Carney argued, of bankers and their colleagues becoming more trustworthy. It is a task of moral (re)formation.

 

“Bonds of trust between banks and their depositors, clients, investors and regulators have been shaken by the mismanagement of banks and, on occasion, the malfeasance of their employees,” Carney said in February. “Over the past year, the questions of competence have been supplanted by questions of conduct. Several major foreign banks and their employees have been charged with criminal activity, including the manipulation of financial benchmarks, such as LIBOR, money laundering, unlawful foreclosure and the unauthorized use of client funds. These abuses have raised fundamental doubts about the core values of financial institutions.”

 

“What is required to rebuild [that trust?]” Carney continued. “The G-20’s comprehensive financial reforms will go a long way but will not be sufficient. Virtue cannot be regulated. Even the strongest supervision cannot guarantee good conduct. Essential will be the re-discovery of core values, and ultimately this is a question of individual responsibility. More than mastering options pricing, company valuation or accounting, living the right values will be the most important challenge.”

 

Some years ago, I wrote in this space that the governor had become something of a preacher, calling for prudence and modesty in taking on debt, a sense of public duty in the financial sector, and for remorse and contrition from those who malfeasance brought such pain to so many. Tomorrow in Toronto, the governor and this preacher will be together to discuss just these matters, along with Roger Martin, dean of the Rotman school of management. My new magazine of faith in our common life, Convivium, is hosting a panel discussion on Carney’s February speech, wherein Professor Martin and I will respond to the issues raised by his call for both regulatory and moral reform in the banking sector.

 

Of course, we are honoured that Carney has elected to address our forum in his last days as governor in Canada. Besides our proprietary pride though, it indicates that effective reform of the financial sector, and the broader culture of capitalism, cannot be accomplished without calling upon the deeper resources of ethics, philosophy, morality and, yes, faith.

 

“Integrity cannot be legislated, and it certainly cannot be bought. It must come from within,” Carney said.

 

“From within” does not necessarily mean religion. There is a long tradition of ethical reflection that is not religious. I expect Martin will indicate how that tradition applies in business education today. For many though, that “within” — the interior sanctuary of conscience — is inextricably related to the sanctuaries of the spirit in our tradition and culture, all of which is related to the question of faith.

 

“When bankers become detached from end-users, their only reward is money, which is generally insufficient to guide socially useful behavior,” Carney said. “Few regulators and virtually no bankers saw these limitations. Beliefs in efficient, self-equilibrating markets fed a reliance on market incentives that entered the realm of faith.”

 

Faith, indeed. The question for the future of finance is what will replace the faith that failed — that of self-equilibrating self-interest? Perhaps faith in God might have something to offer.

As the Stanley Cup playoffs beckon, fans in Edmonton might envy those here, where the Minnesota Wild is ahead of the Oilers in the standings and fighting for a playoff spot. Yet there is another reason the citizens of Edmonton might pay attention to what is going on here, for both cities are the most recent players in the game of professional teams hoovering up public money.

In Edmonton, the city council is finalizing this month the arrangements for a new hockey arena for the Oilers. The deal cut with Daryl Katz, owner of the Oilers, commits the city of Edmonton to pay $140-million of the arena’s $480-million cost (there are another $121-million of associated projects, of which the city will pay for $79-million).

The city will fund its $140-million contribution through something called a “Community Revitalization Levy.” Everyone insists this is not an increase in property tax rates, but anticipated increases in property tax revenue, against which the city borrows today. And if the increased tax revenues don’t materialize? It’s rude to ask.

Where will the remaining $340-million come from? The city will administer a surcharge on tickets at the new arena. The new ticket tax will be used, over the next 35 years, to repay another $125-million the city is contributing to the arena.

Then the city has designated $45-million in provincial funding from the “Municipal Sustainability Initiative” for the arena. That initiative is a provincial pool of money for municipal infrastructure. The province is then expected to kick in another $55-million, on top of allowing the MSI funds to be used.

That leaves $115-million, which the Oilers will pay, though not exactly. The city will own the new arena, but Katz will operate it and get all operating profits, including parking revenues and payment for naming rights. In return for this, Katz will pay his $115-million as rent over 35 years, during which time he promises to keep the Oilers in Edmonton.

It is entirely conceivable that, over 35 years, the operating profits on the arena, parking and naming rights will amount to at least $115-million, meaning that the arena itself will generate the Katz portion of its cost. In sum, the city and province will build the arena, and then forego the operating profits, giving them to Katz to pay for his share. The various loans and levies are simply a distraction from the fact that the city is giving the Oilers a half-billion dollar arena for the next three decades plus.

That’s where it stands today, on paper. Edmonton might cast a wary eye southward to Minnesota. Last spring an agreement was reached to build a new football stadium at a cost of nearly $1-billion. The state of Minnesota would pay $348-million and the city of Minneapolis, $150-million. The Minnesota Vikings will pay $477-million, so it is a roughly 50-50 split.

Public officials in Minnesota were reluctant, as they were in Edmonton, to nakedly commit tax dollars to build a playground for billionaire owners, millionaire players, and the well-to-do fans who can afford the tickets. In Minnesota they sought to camouflage this by expanding video gambling in bars and restaurants. In the first year, though, state-sponsored gambling brought in $30-million less than expected, so now Minnesota is exploring new taxes to make up the shortfall, or perhaps expanding video gambling to racetracks. And all this before the drawings for the new stadium are even unveiled next month.

What is going on here and in Edmonton is more or less business as usual for professional sports, but that does not make it any less offensive on equity grounds. It is true that professional sports teams do contribute to the pride and well-being of a city in way that, say, a tool-and-die plant does not. It is true that lavishing public money on sports teams is popular. It is true that should a city balk at being extorted to fund an arena, there is another city all too willing to hand over sufficient cash to induce the team to move.

Yet it is also true that transferring huge sums from the poor to the rich for recreation and entertainment — compounded by raiding the infrastructure fund or pushing further regressive measures like gambling to disguise the impact on the budget — is deeply decadent. The ancient emperors were accused of distracting the people by giving them bread and circuses. It is not progress to tax the bread to fund the circuses.

Mrs. Thatcher carried on the next day, delivering her closing party conference speech largely as planned, but beginning with a simple statement: “All attempts to destroy democracy by terrorism will fail.”

Reading her Brighton speech now makes it clear that 30 years ago, Britain and the world were different places. Mrs. Thatcher addressed the deployment of nuclear missiles, unemployment reaching three million, privatization of nationalized enterprises, the EU budget and the national miners’ strike. The common theme that united all of her topics was democracy, and how the institutions of democracy were essential to protecting freedom at home and expanding it abroad. The speech made a broader survey of the threats to democracy than just the terrorists who had tried to kill her. And she ended with both a prophecy and a summons: “Democracy will prevail.”

Twenty-eight years after Brighton, and 22 years after she was forced to relinquish her premiership, Mrs. Thatcher is best understood as one who sought to defend democracy in the service of freedom.

There were harsh elements of both Mrs. Thatcher’s style and of Thatcherism. Reviving the “sick man of Europe” was her mission for Britain, but both the aggressiveness of the therapy and her bedside manner could be hard on the suffering.

After Brighton she shared with pope John Paul II and Ronald Reagan the status of having survived assassination attempts. The three were key players in returning genuine freedom to the “democratic republics” under Soviet domination. The name “Iron Lady” was initially intended as an insult from the communists. She wore it proudly, and though she was not the principal force behind the liberation of enslaved Europe — the protagonists of liberty were the peoples of Poland and Eastern Europe themselves — the Iron Lady contributed mightily to the drawing back of the Iron Curtain. She shared with her fellow assassination survivors a conviction that the promise of democracy and liberty was not to be permanently denied to half of Europe.

A lesser threat to democracy that Mrs. Thatcher battled against was that of European centralization and bureaucratization. That threat she would not undo, and in time, her opposition would become her own undoing. Today her fears about European profligacy and the erosion of democracy not only reflect a majority view in Britain, but resonate across the European Union.

Across southern Europe, democracy has been seriously eroded. Italy suspended democratic government for more than a year. In Greece and Cyprus the national government is no longer in control of basic budgeting, being forced by external forces into austerity programs that have little public support. One consequence has been the rise of ominous right-wing parties whose commitment to liberal democracy is suspect. Europe’s democratic future is imperilled, as fundamental decisions about national priorities and the national budget are taken out of the hands of national, democratically elected governments. Mrs. Thatcher may be an unexpected friend to those who are now protesting forced austerity in the south, but she saw those forces emerging earlier than most.

The Falklands were her final contribution to democracy and liberty. She went to war to defend British sovereignty, not liberty in the Argentine. But a happy consequence of her victory was the discrediting of the generals who held power in Argentina, and the return of democracy there had knock-on effects across Latin America. The democratization of Latin America is not yet fully secure, but it was advanced as an unintended consequence of the Falklands.

Mrs. Thatcher’s fiercest critics often spoke of her as somehow having usurped democracy, like some kind of tyrant. Yet she was returned repeatedly by the people, and whatever force she possessed was that of ideas and determination, which is how a democracy is supposed to work. In the end, she was no tyrant, as she was dismissed by popular opposition to her poll tax, and a lack of confidence from her democratically elected MPs.

She was proudly a conviction politician, not a consensus one. A core conviction was that democracy best protected freedom, and freedom was the best friend of ordinary people against those who had power. Mrs. Thatcher was a friend of freedom — in Britain, in Europe, and abroad.