On the Rise or in Decline? Evaluating Canadian and U.S. Power in the 21st Century

Earl Fry, political science professor at Brigham Young University

Brian Lee Crowley, managing director at the Macdonald-Laurier Institute

The United States' increasing government debt is a significant cause of its current decline, noted Earl Fry of Brigham Young University at a program hosted by the Canada Institute. Fry discussed the themes and issues raised in his new book Lament for America: Decline of the Superpower, Plan for Renewal. He was joined by Brian Lee Crowley of the Macdonald-Laurier Institute who discussed his recent book, The Canadian Century: Moving Out of America's Shadow.

In Lament for America, Fry cites three key factors which are contributing to the decline of the United States as the world's leading economy. First, the rise of competitors, such as the BRIC countries and the European Union, has led to a declining U.S. share of global GDP, exports, direct investment abroad, and overall international standing. Second, technological change resulting from globalization has restructured and eliminated many jobs in the United States, and subsequently has had a negative effect on communities across the country. In 2009, the American job market saw a significant amount of "churning," said Fry, noting that while 25 million new jobs were created, some 30 million others were lost. The third factor relates to domestic internal factors that Fry described as "fifteen major domestic fault lines" in the United States that are contributing to its decline. Among them are significant government debt and political partisanship, which will continue to hamper effective policymaking and foster a general apathy and paucity of civic engagement.

Looking forward, Fry predicted that the population of the United States will grow to almost 440 million by mid-century, with immigration contributing to more than 80 percent of that growth. While it will continue to maintain its role as a military superpower, the United States will see a decline in its status as the world's dominant economic power. Answers to questions about the quality of life for the average American, as well as the potential steepness of this relative economic decline, remain to be seen. Despite all of this, Fry is optimistic that a plan for renewal can be successful, but he emphasized that the country's fate is in the hands of the American people and will require a large dose of short-term economic pain.

Conversely, Brian Lee Crowley's new book, The Canadian Century: Moving Out of America's Shadow, argues that sound economic policies have provided Canada with a secure foundation from which to grow. Crowley underscored that the book is not a story of how Canada will increase its power relative to the United States, but rather illustrates how Canada overcame many of the economic problems currently facing its southern neighbor.

Crowley noted that Prime Minister Laurier once proclaimed that the 20th century would be the "Canadian Century." Laurier premised his national economic strategy for Canada on four key principles: liberty, free trade, strength vis-à-vis the United States, and limited government. According to Crowley, Laurier's efforts to implement this economic vision during his tenure as prime minister led to Canada's greatest period of prosperity.

However, throughout the 1970s and 1980s, Crowley argued, Canadian officials lost sight of this plan as government spending ballooned during the Trudeau years and became entangled in protectionist policies, such as the National Energy Program. This trajectory ultimately culminated in a reference to Canada in the Wall Street Journal as an "honorary third-world country."

Crowley maintained that the 1990s was a redemptive decade for Canada, beginning with the Canada-United States Free Trade Agreement in 1989, tax reform, the creation of the Goods and Services Tax, and efforts to repair its relationship with the United States. Stringent program reviews scrutinized every piece of public spending and led to balanced budgets and paying down the deficit by 1995. The center-left Chrétien government, in conjunction with the center-right conservative Reform party, led a united charge towards fiscal responsibility despite party differences, noted Crowley. In 2005, Canada was ahead of the United States and G7 averages for job growth, inward investment, and economic growth.

Drafted by Tina Wong, Program Intern
David Biette, Director, Canada Institute