It’s rather a strange coincidence that both Canada and Australia had elections in the last week. It provides a nice excuse to talk about the numerous parallels between the two countries, which apparently led to almost identical election results, with unexpected wins to the left-leaning parties. (The victory to Labor in Australia was not unexpected, although the magnitude of it certainly was).
Canada and Australia appear to be in some kind of competition to see who can blow the most insane real estate bubble. Those bubbles are in turn fuelled by unsustainable immigration, and yet the elites of both countries have zero intention of reducing the intake, with the entire subject of immigration rendered verboten in the public discourse. Both countries have hollowed-out manufacturing sectors and a heavy reliance on commodity exports to fund a decreasing standard of living. In short, both countries are on a road to nowhere and just had an election where neither party offered anything except more of the same.
To understand the current situation that Australia and Canada find themselves in, we need to zoom out. Let’s zoom all the way out to the 16th century, and let’s talk about the country that would eventually give rise to both Canada and Australia: England. At the start of the 16th century, England was a backwater whose economy was predicated on the commodity export of wool, which it traded primarily with the Benelux countries, whose wealth came from turning that wool into clothing.
The ruling class of England wanted a piece of the action and set about a long-term plan to develop their own clothing industry. This is what is known in the business world as vertical integration. Since the English owned the raw materials, they could cut out the middleman by developing the ability to manufacture the final product. That’s exactly what they eventually did. Once their domestic clothing industry was up and running, the English cut exports of wool to the Benelux countries.
This was an early example of using protectionism and other trade and economic measures to grow domestic industry. Since the technological improvements that came with the manufacturing of clothing led directly to the industrial revolution, it’s hard to understate how important this was to the later success of Britain and its evolution into an imperial power. Britain’s initial imperial success came from being an exporting powerhouse predicated on the innovations that came with a vibrant domestic manufacturing industry that had been deliberately nurtured into existence.
Fast forward to the 19th century, and there was a big policy shift in Britain towards what some historians have called the “imperialism of free trade”. Britain threw off its protectionism and ran an imperial policy based on control of trade and financial markets. At the same time that Britain decided to pursue free trade, there were two primary rivals emerging: the USA and Germany. Both of the latter countries had learned from Britain’s example and were using protectionist measures to provide a safe haven in which domestic industry could grow. In some sense, Britain was the beneficiary of that since its consumers received cheaper goods. But the tradeoff was the loss of domestic industry.
If all this is sounding very familiar, well, yes, it’s the same pattern the US has gone through in recent decades. But there’s one more parallel which is directly relevant to our time. Once the deleterious effects of free trade on domestic industry became impossible to ignore, some elites in Britain started to realise that a reversion back to the old paradigm was needed. Thus, by the early 1930s, Britain was once again pursuing protectionist policies alongside its two rivals, Germany and the USA.
However, the key point to understand is that the protectionism was not carried out at the national level but within three primary trading blocs. There was the British Empire. There was the German-dominated trading zone of central Europe. And there was the American zone that included South America and also Japan, the Philippines, etc.
Although Australia and Canada were nominally independent nations at that time, the reality is that we were very much a part of the British Empire, and trade and foreign policy were set in London for the most part. Thus, despite its proximity to the USA, Canada’s main trading partner at the start of WW2 was still Britain.
Heading into the war, the GDP of each of the three trading blocs was almost identical. If we think about it purely in terms of economics, let’s pretend Britain and the US stayed out of the fight. Germany would have united continental Europe into a trading bloc that very closely resembles the current EU. Setting aside the moral and political issues, that might have been a somewhat stable equilibrium, but there was a wild card in the pack.
Russia had made significant advances in industrial production in the 1930s. By the end of the decade it was, at least in terms of raw industrial output, comparable to the other three trading blocs. Germany’s breaking of the Molotov-Ribbentrop Pact was a game changer for a number of reasons, not the least of which is that it opened the possibility that not only would Europe be unified but that it would also incorporate Russia. That would have easily been the largest trading bloc in the world.
In summary, by the start of WW2, there were four primary economic blocs: the British Empire, the German Empire, the USSR, and the USA. Britain and Germany went to war, followed shortly thereafter by the USSR. The USA got to stay out of the fray. That was its first big advantage. Its second big advantage was that the British Empire was not what it used to be. All that free trade and hollowing out of domestic industry had left the British with reduced capacity to compete with the Germans in war production. The Americans agreed to supply the British firstly via the Cash and Carry mechanism and then, when all British gold had been transferred to Washington, via the Lend Lease program.
The result was that the British Empire was bankrupt by the end of the war. The German Empire was also finished. That just left the USSR, which had also accumulated large debts to the USA via Lend Lease but which decided simply to default on those and gobble up land in Eastern Europe, thereby ushering in the Cold War.
The upshot of all this is that both the British and German economic blocs were merged with the US bloc after the war, with the USSR creating its own bloc in eastern Europe while also attempting to expand into Asia. Since Canada and Australia were both members of the British Empire, our allegiance was transferred to the US by default. It’s important to understand that, even though this period was nominally a “decolonising” and “anti-imperial” time, in actual fact the USA had inherited the mechanism of imperialism that Britain had created, which is to say, domination through control of trade, financial networks and military alliances. For Australia and Canada, the transfer of power from Britain to the US was so subtle that few even noticed, although the arrival of Coca-Cola billboards and Hollywood films should have provided a clue.
In the decades immediately after WW2, most nations in the now US-led western trading bloc were allowed to run relatively protectionist economic policies, and these facilitated domestic industrial production during the post-war boom. That was all thrown away, however, with the collapse of the USSR and the neoliberal reforms of the 1980s and 90s, with markets opened up and manufacturing exported to China.
The whole thing looks a hell of a lot like the same blunder that Britain made back in the 19th century with its “imperialism of free trade”. Manufacturing in every western nation has been hollowed out in exchange for a “services-based economy”. The US Empire now runs almost exclusively on control of financial networks rather than on the production of goods and services. For its part, China has pursued exactly the same strategy that Britain, Germany, and the US once followed of nurturing domestic manufacturing through protectionist measures.
From the point of view of Australia and Canada, we’ve been through all this before. In the 1890s, there were enormous asset bubbles caused by British free trade and monetary policy. In the 1980s, the same thing happened under a similar set of policies pursued by the US. Logic says that the same thing should be about to happen, and Australia and Canada are in their familiar position of being pawns in a game over which we have little real control.
And that brings us back to the recent elections. On the surface of it, it’s quite incredible that the general public of Canada and Australia should so eagerly vote for more of the same given how fast our standard of living has slipped in recent years. But the reality is that the governments in our countries are not in control of the levers that could actually change the economic situation. The big decisions are now made in Washington D.C and Beijing.
Despite these similarities, there are several interesting differences between the status of Canada and Australia. Firstly, Canada’s economy is now completely dominated by the US. About 3/4 of Canadian trade is with its southern neighbour. By contrast, Australia trades little with the US, and we are relatively diversified compared to Canada, with China, Japan, and South Korea being large trading partners.
A second big difference is that Canada is being weaponised by China in its trade fight against the US, not to mention being used as a trading post for fentanyl distribution. Canada is kind of like that character who wanders in between the hero and the villain in a movie shoot-out.
Australia certainly benefits from our geographic distance. But we’ve been given much the same role as Canada in the imperial arrangements. Our job is to supply commodities and raw materials. The result is a hollowed-out economy that is apparently now entirely predicated on immigration, for which we simply cannot produce the housing stock, leading to a truly insane housing bubble that, if it were to crash, would make the 1890s look like a picnic.
Against this background, I suppose the recent election results in both countries make some sense. Neither party was promising any change to the status quo because neither country is in a position to make such a change. Both Canada and Australia are pawns in the larger power game going on between the US and China. In that sense, voting for the fluffy-cuddly leftist parties is the best bet since they are the ones who promise to keep you “safe” and “protected”, which in this case is code for protected against the economic machinations of global powers.
Hi Simon
What a great analysis of the situation – I learned alot. Thanks, Sandra
Hi Simon,
Gave a shout out for your blog over at Mr Greer’s. Thanks for the thoughts, insights and perspective.
The results look like a flight to comfort in challenging times, which is what you’ve said (although please correct me if I’m mistaken). Doesn’t make the problems go away though, does it?
What I’ve taken away from the past three or four Federal elections is that people are OK with wealth inequality, particularly in relation to the housing economic bubble. I believe that this may be why the Greens were smashed too. Do you have any thoughts about that lot? I see Mr Brandt is in the very real danger of losing his seat.
Cheers
Chris
Sandra – thanks!
Chris – If you think of the core one or two principles that each party has traditionally stood for. For Labor, it would be fairness and the welfare state. For LNP, it would be fiscal responsibility and border security. Labor neutralised the border security issue years ago and covid destroyed the fiscal responsibility issue. The LNP can no longer run on “balancing the budget” since the budget is not going to be balanced for a very long time. Meanwhile, Albanese can still get up and wave his medicare card around and the Labor can still play to its fairness and welfare state core principles.
As for the Greens, well, what are their core principles? It started off as hugging trees and now it’s chopping down trees to put up solar panels and wind turbines. Their support for some of the protests that most Australians find repugnant hurt them too.
It’s pretty farcical, it’s quite obvious that the Commonwealth is all taking the same orders (Starmer, Carney, Albo), and we are being controlled by the Imperial faction that just lost in the USA. In some ways this faction is in retreat and seem to be reinforcing the EU and the Commonwealth.
Up here the talk of succession is being discussed like after every federal election, it used to be something to laugh about but now people are starting to see it as a viable option. I even heard Gen z types saying Bob Katter is their favourite politician.
It’s actually not that difficult, the process I laid out in the constitution. The last attempt in New England in the 60s only failed because Newcastle was included (suspiciously), whereas all the inland rural areas voted yes.
Three new states (NSW/Vic Riverina, New England, North Queensland) would certainly offer a different balance to the senate at least. If Albo is so keen on Republicanism he should go the whole hog.
Skip – believe it or not, there’s actually a movement to recreate the old British Empire – https://www.canzukinternational.com/2024/04/canadian-think-tank-welcomes-former-australian-prime-minister-as-senior-canzuk-fellow.html
We’re still in a transitional period for the moment and I suppose the old guard is waiting to see what happens in the US and praying that it’s all a bad dream and that the Democrats will get back into power.
Hah! Never knew about the New England secession movement. Sounds like a great idea. That area contains some of my favourite parts of the country.
Well a few financial guys I follow have always made the point the British Empire never really died, it just did away with outer form and kept the financial and intelligence infrastructure. And the British Empire itself was run and financed by what were originally continental banks who moved there at the end of the 17th century from Amsterdam (along with a Dutch King) and set up the Bank of England.
The whole LIBOR/SOFR (basically the Federal reserve destroying the offshore Eurodollar market in Europe) thing is perhaps a big clue that there is some truth to the argument that the battle going on right now is between US oligarchs and old banking money Europe.
Yeah funny how we never learn about that secession referendum considering how close it was. Perhaps they don’t want us getting any ideas.
I would argue that the British Empire was always primarily esoteric (inner) in nature. That’s why it never had an emperor (c.f. Napoleon, Mussolini, Hitler etc).
It’s also why it was possible for the US to take it over after WW2 in a way that almost nobody understood. There was a representative of the Bank of England who said of the Bretton Woods conference that it was the worst thing to happen to Britain except for the war itself. Basically, the US got to rewrite the rules of the game in its favour and probably only a handful of technocrats even knew what it meant.
Hi Simon,
Thanks for your thoughts. The Greens backed a minority concern with those protests, hmm. It’s funny when you think about it, groups which can organise violent protests are generally dealt to, if not at the time, then later – and bizarrely, it’s often long afterwards that concessions are made. In Australia, that goes way back to the military coup of the Rum Rebellion where we lost Governor Bligh (yes, him also of the mutiny of the Bounty fame – the sensitive person might suggest that the bloke had zero concept of people management) and gained Governor Macquarie. More recent examples are the CFMEU – they got dealt to, yet the building trades are pandered too, for obvious reasons. Eureka Stockade is another, high body count, then a grudging acceptance that gold yields per miner had declined. Don’t know whether you recall the shenanigans of the old Painters and Dockers union. Hmm.
The take away I get from all that history is that in Australia, you can’t directly fight city hall, although you may be able to find ways to ignore that lot. That’s the wiggle room left to us mere mortals! 🙂
And I agree with your summation of the traditional stomping ground of the two parties. Interestingly, if you look at the primary vote for the two parties, there is not all that great a distance. I’d have to suggest that the Greens gave their preferences to the ALP unwisely.
However, the bigger issue is that sooner or later, a vision as to what does Australia stand for has to be envisioned, and neither party managed to do that hard work.
My perspective on the Greens is that they are an urban ideological concern, and people in genuinely rural areas are no fans of that doublespeak.
Cheers
Chris
Hi Simon,
Almost forgot to mention. I’m old enough to recall singing ‘God Save the Queen’ at primary school whilst standing in neat military, sorry, I meant to say, neat rows based on grade with a portrait of Queen Elizabeth in the background.
Truthfully, I don’t actually know the words, or what is meant by Advance Australia Fair. Sounds like an ALP jingoism to me! 😉
Cheers
Chris
Hi Simon. Any thoughts on how the Liberals will or should proceed? I wouldn’t want to be in the think tank trying to resolve that matter, although I think the Moira Deeming issue did some damage to (Vic State) Libs so maybe female issues/representation could be a possible path forward. Possibly also a change of guard – I have read that they need to bring back Josh Frydenberg as leader slowly via the Senate. Why bring back the same old people when people aren’t buying it. What do you think?
Chris – I’m always fond of pointing out that, back in the 70s, the Greens were allied with the unions and were more about preserving urban heritage buildings and parks than ‘saving the planet’. They were also about having a sustainable population. Come to think of it, the original Greens would oppose pretty much everything that is going on now, especially mass immigration and liquidating urban spaces for maximum density. As for the anthem, well, I think we only got our own passports in the 50s and our own currency in the 60s. The process of weaning ourselves off Britain took a long time and then we decided to go for multiculturalism. It’s no surprise that nobody knows what Australia stands for.
Sandra – I thought Boris Johnson showed the way in Britain by courting the working class vote. But then the party flipped on that and now the Tory Party might genuinely be dead with Farage’s Reform taking their votes. There’s similar things happening in other European countries. It’s possible the Liberal Party also can’t fix itself. Too many true believers in an economic ideology (neoliberalism) that is finished. The problem in Australia is that it’s very hard to see where a new party could emerge from. Clive Palmer’s attempts have been a total flop, which proves it’s not an issue of money but a lack of ideas and organisation.
Hi Simon,
True, the old Builders Labourers Federation actually used to ‘green bans’ on demolishing heritage buildings – which you’ve written about before. My things have changed since those days. And that lot got shut down too.
You’ve probably noticed that at the core of the word ‘conservatism’ implies the desire to ‘conserve’ something, anything. The political parties aren’t talking about doing that, and so the reality is quite different.
I suspect that something awful has to occur before we as a nation decide what it is that we’re trying to achieve. But that might not happen either, we could keep muddling along for a while yet. Dunno. I can foresee some limits to the neoliberal agenda, and I recall when that switch was flipped on – then things were suddenly different.
Cheers
Chris
Chris – the write Walter Benjamin had a useful for metaphor for modernity. He said it’s like we’re sitting on giant demolition truck facing backwards and we watch as things get shredded coming out of the back of the truck. I think the metaphor is overly pessimistic since it’s also true that new things get created by “the machine”. But the important thing is that we can’t seem to turn around and face forwards. Therefore, we can’t know what’s coming. We just sit back and try to make sense of things after the fact. I don’t see how the neoliberal agenda can continue. But I also have no idea what would come next. I don’t think anybody does, including our political leaders.
“I don’t think anybody does, including our political leaders.”
More of the same, really. Civilisational decline until rates of consumption meet a point where availability of resources makes feeding and fending off others is no longer our primary concern. Of course, that ain’t gonna happen.
The alternative is that transport and communication technologies decline to a point where isolationism is a natural state. Scarcity of resources, together with common religious vision tends people towards cooperation.
Jinasiri – problem is that resources are not evenly distributed. Once the standard of living in US, Australia, and Canada falls below a certain point, it will no longer be in our interests to play along with the larger game. I must admit, the globalists are doing their level best to gaslight us into thinking that is not an option. It’s a propaganda operation the scale of which has never been seen before.
Do people change while their civilisation is sick or do they wait until after it’s dead? The former is precluded by delusions of health and immortality.
Australia has always been short on the resources that matter: water and fertile soil. The water depends on complex infrastructure and the fertility on oil and it’s derivatives. It’s a harsh land to live in without those too aids.
To paraphrase Nietzsche, a nation that has a why can put up with any how. It was not shameful for the LNP to lose the election, but it was shameful for them to lose without offering any meaningful alternative or vision for the country. Similarly, I wouldn’t mind if Australia “lost” if we actually stood for something.
Hah! Separated from vision all men bow before truth and despair.