Sovereignty in the Global World

The Parti Quebecois’ narrow victory in the recent Quebec election was greeted with relief by federalists inside and outside the province.  The victory was so narrow—the PQ garnered less than one third of the popular vote and only four seats more than the second-place Liberals—that it manifestly failed to create the “winning conditions” that the PQ has set as a precondition for another referendum on Quebec’s secession from Canada.  At any rate, legislation to conduct a referendum would surely be blocked by the Liberals and the CAQ, both of which are expressly opposed to holding a referendum any time soon.  At least for now, therefore, Quebec will be spared the disruption of a divisive campaign over Quebec’s future in Canada. However, the narrowness of its victory has not dissuaded the PQ from its populist fiscal agenda, which threatens to push Quebec further down the road of growing indebtedness.   Greece’s recent plight shows where that road leads. Quebec holds the highest debt of all Canadian provinces—$183 billion (gross debt), representing 55.3% of its GDP for the current fiscal year, according to the Quebec Ministry of Finance—and is one of the most indebted jurisdictions in the industrialized world, on the basis of OECD data.  The province also has some of the highest tax rates in Canada.  The outgoing premier attempted to introduce measures to lessen the debt problem by raising tuition fees—among the lowest in the country.  Charest’s plan would raise fees by 254 dollars per year over a seven year period, but it would still be subsidized by tax payers at 83% of its full cost.  The PQ will cancel these tuition hikes. Quebec secession would be harmful economically.  Quebec displays modest growth compared to other provinces, has a large public sector, and has not taken many steps to developing its natural resources.  Its education and healthcare systems are underfunded, and the costs of pensions and healthcare will only increase over time.  Dependent on equalization payments from the federal government, it is set to receive about $7 billion this fiscal year (Ontario will receive the second-highest, about $3 billion). The PQ’s nationalist policies will increase government spending and reduce growth.  Their language policies would prevent Francophones and allophones from attending English language schools and force businesses with 50 or more employees to operate in French. These policies will likely alienate businesses, who will have difficulty competing globally if they are forced to conduct business only in French. In his new book, Lettres à un jeune politicien, former PQ leader Lucien Bouchard also advises Quebecers to move on from sovereignty. In the wake of globalization and an increasingly interconnected world, with the liberalization of trade and the integration of capital markets, is separation a viable option in today’s world?  Economic independence may be Quebec’s best bet for sovereignty.  It is certainly a necessary pillar to autonomy—the weaker Eurozone countries have learned this hard lesson.  Excessive regulation stifles growth.  Far from maître chez nous, Quebec will become a slave to its creditors.  Integrate in the global world—exercise fiscal discipline, or it will be imposed upon you. -Stami Zafiriou

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