Canada’s “C.D. Howe Moment”: Lessons for Navigating a New Era of Economic Nationalism

Canada’s Finance Minister, François-Philippe Champagne, has repeatedly referenced a “C.D. Howe moment” as the country grapples with the potential disruptions of a shifting global trade landscape. Clarence Decatur Howe, often dubbed “the minister of everything,” spearheaded Canada’s modernization after World War II. But what can his legacy teach us about navigating today’s challenges, particularly the rise of economic nationalism and protectionist policies?

Who Was C.D. Howe? A Profile in Pragmatism

Born in Massachusetts, C.D. Howe wasn’t a born Canadian – he chose to become one. This perspective, as historian Robert Bothwell notes, gave him a unique boldness in dealing with the United States. He arrived in Canada in 1908, becoming a professor at Dalhousie University before venturing into business, initially with grain elevators in Western Canada. His political career began in 1935, and he quickly rose through the ranks, holding portfolios including Railways, Canals, Marine, Transport, Munitions and Supply, Reconstruction and Supply, and finally, Trade.

Building a Modern Canada: Howe’s Key Achievements

Howe’s impact on Canada is undeniable. He played a pivotal role in establishing Air Canada (originally Trans-Canada Airlines) and the Trans-Canada Pipeline. More crucially, during World War II, he transformed Canada into a major industrial power. Facing critical shortages, he oversaw massive government investment to build a robust manufacturing base, centered around Quebec’s hydroelectric resources. This wasn’t just about wartime production; it laid the foundation for decades of economic growth.

Post-war, Howe focused on converting war industries to civilian production, strategically investing in sectors like aviation – believing it was “the transport of the future.” He championed Canadian exports and worked to strengthen the nation’s economic independence. His approach was characterized by pragmatism and a willingness to make difficult decisions, even if they were politically unpopular, like using closure to pass the Trans-Canada Pipeline legislation.

The Echoes of Howe: Economic Nationalism Today

Champagne’s invocation of Howe isn’t accidental. Like the post-war period and the Trump era, Canada is facing a moment where global trade rules are being questioned and economic self-reliance is gaining prominence. The US Inflation Reduction Act, with its “Buy American” provisions, is a prime example. This echoes the concerns Howe had about over-reliance on the United States.

Pro Tip: Understanding the historical context of economic nationalism is crucial. It’s not a new phenomenon; it’s a recurring pattern in global economics, often triggered by periods of instability or perceived unfairness.

The Rise of Industrial Policy

Howe’s actions were, in essence, a form of industrial policy – government intervention to support specific industries. Today, we’re seeing a resurgence of industrial policy globally. The US, Europe, and China are all actively using subsidies, tax breaks, and regulations to promote domestic manufacturing, particularly in strategic sectors like semiconductors, electric vehicles, and renewable energy. Canada is responding with its own initiatives, but faces challenges in competing with the scale of investment in other countries.

For example, the US CHIPS and Science Act offers significant incentives for semiconductor manufacturing within the US. Canada is working to attract investment in this sector, but needs to offer a compelling value proposition to compete. According to a recent report by the Council on Foreign Relations, the US is investing over $52 billion in domestic semiconductor production.

Supply Chain Resilience and Diversification

The COVID-19 pandemic exposed vulnerabilities in global supply chains. Howe’s focus on building domestic capacity resonates strongly with the current emphasis on supply chain resilience. Companies are now actively diversifying their sourcing, reducing their dependence on single suppliers, and “nearshoring” or “friend-shoring” production closer to home. This trend benefits countries like Canada, which are seen as stable and reliable partners.

The Energy Transition and Infrastructure Investment

Howe’s vision for the Trans-Canada Pipeline demonstrates a long-term perspective on infrastructure investment. Today, Canada faces a similar challenge with the energy transition. Building the infrastructure needed to support renewable energy sources, carbon capture and storage, and a hydrogen economy will require significant investment and strategic planning. This includes upgrading the electricity grid, developing new transportation networks, and supporting research and development.

Lessons from Howe: What Canada Needs to Do

While directly replicating Howe’s approach isn’t feasible in today’s world, his legacy offers valuable lessons. Canada needs to:

• Embrace Strategic Investment: Targeted government investment in key sectors is essential to build a competitive advantage.
• Foster Innovation: Support research and development to drive technological advancements.
• Strengthen Trade Relationships: Diversify trade partners and negotiate favorable trade agreements.
• Prioritize Infrastructure: Invest in modern infrastructure to support economic growth and resilience.
• Be Bold and Pragmatic: Make difficult decisions and prioritize long-term national interests.

Did you know? C.D. Howe reportedly advised Jean Lesage, a key figure in Quebec’s Quiet Revolution, offering guidance on economic development and modernization.

FAQ: C.D. Howe and Canada’s Future

• Who was C.D. Howe? A Canadian politician and businessman who served as a key minister in the governments of William Lyon Mackenzie King and Louis St-Laurent, instrumental in modernizing Canada’s economy.
• Why is C.D. Howe relevant today? His approach to economic nationalism and industrial policy offers lessons for navigating the current era of trade tensions and geopolitical uncertainty.
• What is industrial policy? Government intervention in the economy to support specific industries or sectors.
• What is supply chain resilience? The ability of a supply chain to withstand disruptions and continue functioning effectively.

Further Reading: Explore the Bank of Canada’s research on supply chain disruptions: https://www.bankofcanada.net/research/

What do you think? Is Canada prepared for a new era of economic nationalism? Share your thoughts in the comments below!