By Tom Flanagan

“Reconciliation” has been the watchword for Canada’s relationship with its Indigenous peoples for the last 10 years. So, how’s that going? Not so well, in my opinion. Canada has apologized profusely for Indian Residential Schools, including imaginary unmarked graves and missing children. As prime minister, Justin Trudeau tripled the Indigenous budgetary envelope, his government committing to pay tens of billions of dollars in reparations for alleged deficiencies not just of residential schools but day schools, Indian hospitals, adoption and child welfare services and other policy failings.

Yet when Prime Minister Mark Carney recently brought in legislation to facilitate construction of desperately needed major projects, prominent First Nations leaders focused on the perceived affront to their powers and privileges, with some threatening to block Carney’s entire initiative by reviving the Idle No More protests and blockades of the 2010s.

Our current impasse arises from 250 years of decisions that are now almost impossible to change because they have been made part of Canada’s Constitution, either by elected politicians or by appointed judges. “Big new ideas” are thus virtually impossible to implement. But there is still room for incremental innovations in public policy that focus primarily on economic opportunities benefiting Indigenous Canadians, i.e., on pursuing prosperity and the good things that come with that.

In my opinion, Canada’s First Nations have two major ways to achieve prosperity. Those bands located near cities and large towns can pursue commercial and residential real estate development, as a number are doing – witness, for example, the large Taza development led by the Tsuut’ina (Sarcee) nation along Calgary’s southwest section of its Ring Road.

Those in more remote locations, meanwhile, can pursue natural resource-based development such as oil and natural gas, hard rock mining,  hydroelectricity, fisheries and tourism. Unfortunately, much resource development has been blocked by environmental purists in coalition with the minority of First Nations people opposed in principle to modernization.

Emblematic of this dynamic was the bitter opposition by a small number of First Nations members to the Coastal GasLink natural gas pipeline in northern B.C. that was to feed the new LNG Canada liquefied natural gas terminal at the West Coast port of Kitimat – a project heavily favoured by the Haisla Nation, which has basically staked its economic future on LNG. Despite the opponents’ vandalism and violence, fortunately the pipeline was built and Canada’s first cargo of LNG recently departed Kitimat for markets in East Asia.

So this is clearly an avenue of progress. Indigenous equity ownership of resource projects does not require constitutional changes, and it will help to solidify First Nations’ support for such projects as well as increase the standard of living of participants. With judicious investment, there can more First Nation success stories to rival real estate development at Westbank, B.C. and oil sands service industries at Fort McKay.

Loans and loan guarantees are not without risk, however, and sometimes the risks are great. When offering equity ownership to First Nations, it would be best to concentrate on smaller and medium-sized projects where due diligence is possible and political interference can be minimized.

It also would make sense to diminish First Nations’ current obsession with grievances and reparations. Much of this is derived from Jodi Wilson-Raybould’s “practice directive” issued when she was Trudeau’s Minister of Justice, instructing federal lawyers to prefer negotiation over litigation, i.e., no longer to vigorously defend the Government of Canada’s legal position in court, but essentially to surrender. This document has no constitutional status and can be repealed by a government that realizes how much damage it is doing.

Then there is the reserve system, the bête noire of so many critics. Even as there is no constitutional prospect of abolishing Canada’s system of some 600 mostly small and often economically unviable reserves, there is no good reason for making them artificially attractive places to live, either – as has been done by making them havens from income and sales taxes. This came about through a wrong-headed 1983 Supreme Court decision, Nowegijick v. The Queen, expanding the immunity from property tax conferred by the Indian Act to cover income taxes as well.

But this exemption is based on legislation, not the Constitution; thus, Parliament could change it through ordinary legislation. Ending or reducing the tax haven status could be part of a larger deal to help First Nations participate more fully in the economy through a program of loans and loan guarantees.

These changes are modest, but now is the right time to consider them. It is widely agreed that, even apart from Trumpian threats, Canada needs policy renovation after a decade of Justinian progressivism. The federal debt has doubled, the annual deficit is spiralling out of control, our defence effort is underfunded, and declining labour productivity has affected our ability to pay for basic public services.

Endless moralizing plus grotesque overspending in the name of reconciliation symbolizes the progressive concern with what Friedrich Hayek called “the mirage of social justice” to the detriment of other affairs of state. It’s high time for a course correction in many areas, including Indigenous policy.

The original, full-length version of this article was recently published in C2C Journal.

Tom Flanagan is professor emeritus of political science at the University of Calgary.

By Peter Shawn Taylor

There was free trade between Canada and the U.S. before there was a country called Canada. In 1854, 13 years before Confederation, the colonies of British North America signed a reciprocity agreement with the Americans that allowed for free trade in lumber, meat, grains, coal, pitch and tar and other basic goods. This quickly led to an economic boom throughout Canada that lasted until the Americans revoked the deal in 1866.

Since then, trade relations between Canada and the U.S. have been on a merry-go-round alternating between protectionism and openness depending on the political mood in each country. It is an historical legacy that holds many valuable lessons for how Canada should respond to the current Trump tariffs. And perhaps the best source of advice can be found in what historians today call the “Nixon Shocks”.

In the early 1970s, U.S. president Richard Nixon was dogged by a new economic malaise termed “stagflation”. In response to this erosion in America’s financial might, Nixon upended global economic relations with his New Economic Policy, taking the U.S. off the gold standard, instituting wage and price controls and imposing a 10 per cent tariff on all imports. To Canada’s shock and horror, it too was subjected to Nixon’s tariffs.

During the postwar period Canada and the U.S. had slowly been embracing freer trade and so the tariffs were seen as a serious break in Canada’s access to the U.S. market. Prime Minister Pierre Trudeau argued vigorously for an exemption, but was unsuccessful. (Sound familiar?)

In response to being rebuffed by Nixon, the Trudeau government released a white paper outlining three possible reactions. The first was to maintain the status quo. Second, seek even stronger economic relations with the U.S. Third, look elsewhere. The Trudeau government found the final choice, what became known as the Third Option, to be the most attractive and pursued it aggressively.

In addition to seeking out trade with other countries, the Trudeau government also tried to expand Canada’s political and cultural relations with other countries, especially Communist countries such as the Soviet Union, China and Cuba. At home, the Third Option gave birth to many deliberately protectionism policies meant to keep the Americans at bay, including the Foreign Investment Review Agency and the National Energy Program.

The Third Option’s overarching objective was to sever Canada’s deep economic and cultural ties with the U.S. It didn’t work. There was no real diversification of Canada’s export trade away from the Americans, despite all the self-harm caused by the NEP and other policies. Today, the Third
Option is widely acknowledged to have been a complete failure.

In recognition of this failure, in 1982 Trudeau set up the Royal Commission on the Economic Union and Development Prospects for Canada headed by
Donald S. Macdonald to investigate all aspects of the Canadian economy and deliver advice on how to “respond to the challenges of rapid national
and international change in order to realize Canada’s potential.”

The Macdonald Commission’s final report, delivered in 1985 to Progressive Conservative Prime Minister Brian Mulroney was a conclusive repudiation
of the Third Option and instead called for a free trade deal with the U.S.

To his credit, Mulroney set aside his party’s old animus towards free trade and entered into negotiations with U.S. President Ronald Reagan. The
result was the 1989 Canada-U.S. Free Trade Agreement, which was later followed by 1993’s NAFTA. And while these deals caused some dislocation
to Canada’s economy, the net result has been overwhelmingly positive – the same as was the case in 1854. The very fact Canadians today consider
Trump’s tariffs to be an economic crisis reveal how important free trade with the Americans has become to Canada.

Given these lessons of history, how should Canadians respond to the Trump Shocks today?

First, there’s no getting around the fact that Canada’s prosperity will always depend on trade with the U.S. Today, as was the case in the 1970s, more
than two-thirds of Canada’s exports go south of the border. Economic nationalism is not a winning strategy, as our experience in the 1970s with the Third Option demonstrates.

Second, history also tells us that the U.S. will eventually come around to recognizing the benefits of free trade. Higher tariffs mean higher prices and
less choice for American consumers, after all. Canada’s best chance for long-term success lies in making common cause with American interests
equally hard hit by tariffs, particularly in border states.

Third, while Canada waits for the U.S. to come back to its senses, we can’t ignore our own home-grown problems. In particular, Canada needs to
address its productivity crisis. Where we were once a top tier country in terms of productivity, today we are ranked 22 nd out of 32 OECD countries.
Fixing this issue will require tough choices, including reforming the tax code, investing in basic infrastructure, promoting competition, curtailing
social programs and pushing back against Indigenous veto-seeking.

It won’t be easy, but the current bout of patriotism and a ready-made villain in Trump means Canadians may be more accept such hardships in the
short-term. We should take advantage of the opportunity.

The best response to Trump’s tariffs is not to invent new ways to hate our neighbours, but to fix our own flaws. Only when our house is back in order
will we be ready to take full advantage of the American market when freer trade returns. And based on 171 years of experience, we can be sure it will.

Peter Shawn Taylor is senior features editor at C2CJournal.ca, where the original, longer version of this article first appeared.