Merger of the Century by Diane Francis: Review

The argument for Canada and the U.S. to unite

Diane Francis’s Merger of the Century, HarperCollins, 403 pages, $32.99.

By: Don Tapscott

If the creation of the European Union is evidence, trade agreements, common markets and economic unions can lead to political unions. So it’s not so preposterous that 20 years after the signing of the North American Free Trade Agreement, someone has finally crafted a serious proposal for the political integration of Canada and the United States.

Best-selling author, writer and pundit (and dual citizen of both countries) Diane Francis argues that the United States and Canada should unite ASAP. She sets out the economic benefits of joining forces, how the deal could be fairly structured, and the political hurdles to overcome.

Once an unrivalled economic superpower, today America is ailing. The International Monetary Fund forecasts that China, India, Japan and the four Asian Tigers — South Korea, Taiwan, Singapore and Hong Kong — will be bigger than the G8 (minus Japan) by 2018.

Francis quotes Andy Stern, a former union leader, who argues that “In an era when countries need to be economic teams, Team U.S.A.’s results — a jobless decade, 30 years of flat median wages, a trade deficit, a shrinking middle class and phenomenal gains in wealth but only for the top one per cent — are pathetic.”

In building the economic case for unification, Francis says Canada’s biggest strength is our “mind-boggling” natural resources. With professional assistance, she estimates that Canada has between $9 trillion to $15 trillion worth of undiscovered metals and minerals. Add in the economic multiplier effect and the total value more than doubles.

To complement our resources, we have a solid banking system, a strong relationship with the U.S., more sophisticated social values and systems and an educated, law-abiding people.

As for the U.S., Francis says its greatest competitive advantage is its culture of risk-taking and entrepreneurship. American attitudes de-stigmatize setbacks and failures by entrepreneurs operating in good faith, while other nations or cultures punish any failure. The United States is the only nation with the capital, scientific prowess and motivation to develop our wilderness in a sustainable and responsible way. Canada’s resources and the Arctic region – destined to be “the world’s future Panama and Suez canals”—would bestow “unbelievable opportunities.”

The U.S. and Canada together would have a larger economy than the European Union or than the economies of Japan, China, Germany and France combined. The US-Canada combo would control more oil, water, arable land and resources than any other country, all protected by America’s military. Citizens of the merged countries would have more options in terms of jobs, climates, studies and lifestyles.

She lays out the economics of several merger scenarios as well as approaches for political integration, such as the Full Monty German reunification embraced by the previous West and East Germanys. Another option is creating a meta-state like the European Union — where Canada and the U.S. would continue as separate political entities.

Francis concedes that merging would be hard but insists it is worth the pain. Without some form of political fusion, the prospects for Canada could be grim. We could become a resource battleground. Russia or China could gain control over our resources and Arctic region, provoking tension with the U.S. Mishandling our First Nations obligations could incite civil disobedience, and Quebec’s separatists could pump up economic and political instability. Canada would soon not qualify as a member of the G20.

Absent a merger, America will face increasing adversity and competition for resources and an inevitable decline.

Francis’ “thought experiment” is a must read — meticulously documented, calmly and rationally argued. Commanding a rich knowledge of world political and economic history, she paints a compelling tapestry that is hard to dismiss.

Francis is typically blunt. She uses economic data to excoriate both the U.S. health care system and Canada’s handling of aboriginal rights. She’s lampoons American phobia of government and Canada’s complacency about defense. She explains merger politics and how there may never be another Republican President again. She doesn’t flinch, nonchalantly presenting an investment-banking style balance sheet that justifies a post-merger $15 trillion payout to Canadians.

Given the antics of a dysfunctional U.S. Congress this week, Francis’ timing south of the border may not be bad, as many worry deeply about their future. This week, Canadians are more likely to say “I’ll have none of that.”

But we all owe it to ourselves to step back and reflect deeply about the volatile period of history we are entering. To me, if it advances prosperity, sustainability and justice, then no proposal is too outrageous to consider.

Don Tapscott’s most recent book is Macrowikinomics: New Solutions for a Connected Planet. As a Fellow of the Martin Prosperity Institute at the Rotman School of Management, University of Toronto, he is conducting a multi million dollar program on new models of global cooperation and problem solving. Twitter @dtapscott

Courtesy: Toronto Star
http://www.thestar.com/entertainment/books/2013/10/17/merger_of_the_century_by_diane_francis_review.html

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