Terence Corcoran: Market freedom should be our ‘national interest’

In the Carney government’s Bill C-39 now making its way through Parliament, the chief justification for major transformations to Canada’s economic system is reduced to a simple concept. The dramatic economic interventions are said to be in “the national interest.” In C-39, the words “national interest” appear dozens of times, each serving as a justification for a form of government Canada has not seen since wartimes.

For decades and even centuries, economic theorists, political philosophers and courts have criticized and even condemned the adoption of two meaningless political concepts as justifications for the expansion of government: “the national interest” and “the public interest” — which appears 53 times in C-39.

Criticisms of the application of the national interest come from across the ideological spectrum and within all nations.

On the left, we have such intellectual legends as Noam Chomsky, who 50 years ago wrote: “To those in power, it seems obvious that the population must be cajoled and manipulated, frightened and kept in ignorance, so that ruling elites can operate without hindrance to the ‘national interest’ as they choose to define it.”

Market conservatives and libertarians also line up against the national interest concept, including Milton Friedman, Friedrich Hayek and Nobel economist James Buchanan. Canadian economist Pierre Lemieux refers to the national interest as a “dangerous” concept. In The Tyranny of the National Interest,” Lemieux described both national and public interest as definitionally meaningless.

The general agreement has been that throughout history the words “national interest” have served no purpose beyond giving governments justification for whatever actions they wanted to pursue, whether in war or peace. That perspective has disappeared. The current rise of national interest to drive policy in many nations has been attributed by some to President Donald Trump’s national populism and the associated rejection of globalization and abandonment of confidence in open economies driven by free trade and relatively open markets.

But never mind the past. In Canada today, the Liberal government of Prime Minister Mark Carney is pushing through Bill C-39, an agglomeration of major economic and political initiatives that are said to be in the “national interest” and the “public interest.” Definitions of these concepts vary slightly through more than 80,000 words of legislative processing, all of which open the gates for cabinet approval of projects, from pipelines to rail corridors, environmental rules and labour law changes. One section of C-39 calls for amendments to Canadian labour law that would allow the government to undermine the right to strike by forcing unions to bend in support of national interest objectives.

One definition floating through legislation actually leaves the gate open for the Governor in Council — i.e. Carney’s Liberal cabinet — to make up definitions as they go:

“In deciding whether to make an order under any of subsections (1), (3) and (4) in respect of a region, the Governor in Council may consider any factor that the Governor in Council considers relevant, including the extent to which projects of an eligible type within that region can:

(a) strengthen Canada’s autonomy, resilience and security;

(b) provide economic or other benefits to Canada;

(c) have a high likelihood of successful execution;

(d) advance the interests of Indigenous peoples; and

(e) contribute to clean growth and to meeting Canada’s objectives with respect to climate change.”

The objective, Carney has said, is to “remove red tape” and open the gates to “building at home, building Canada strong, building in a way that builds for all” — slogans now all too familiar to Canadians.

The national interest program does not really remove red tape. Obstructive tape remains in place across the economy. The difference is that the government will now assume arbitrary power to ignore the red tape — often designed to block private-sector economic activity and deprive private actors of their rights — by overriding existing legal and bureaucratic obstacles and imposing direct government control over economic activity.

Instead of allowing economic activity to evolve in a market setting, the government is setting up a new regulatory regime. As C.D. Howe Institute economist Kate Koplovich noted in FP Comment, the C-39 package “puts projects at the mercy of politics.” Impact assessments and energy projects will become subject to policy and ideological objectives “that don’t belong in such reviews (like climate change, sustainability and the intersection of sex and gender with other identify factors”).

Projects covered by C-39 include the multibillion-dollar Pacific Link oil pipeline to the West Coast, described by Carney as “a project of national interest.” The economic viability of the pipeline is apparently irrelevant because it will be owned by Ottawa and Alberta.

Hundreds of lesser economic developments are now under government control. Carney and Ontario Premier Doug Ford this week announced $9 billion in new federal funding for projects in the province.

There is much more to come, as promised this week by Intergovernmental Affairs Minister Dominic LeBlanc, who introduced a new list — of highways, new ports and terminals, and nuclear waste facilities. “I understand (the Conservatives) share our enthusiasm for designation, the listing of projects of national interest,” he said. “Good news is coming again soon.”

When it comes to the national interest, however, good political news is often bad economic policy news.