Global nationalism: Part 2 – Econlib

A few months ago, I penned a piece exploring the inherent contradictions of global nationalism. The recent Canadian election provides a striking illustration of this dilemma:

“Poilievre had been running a disciplined and effective campaign, boasting a 25-point lead in our last poll for 2024,” noted Graves. The essence of Poilievre’s platform was straightforward: “Canada is broken, Trudeau is bad, and let’s get rid of the [carbon] tax.” However, his campaign was suddenly “radically disrupted” by several factors, Graves pointed out, most notably Trudeau’s earlier-than-expected exit from the race in January.

The “most significant” disruption for Poilievre was the “visceral recoil” Canadians experienced upon hearing Trump discuss annexation.

Beginning in February, Trump initiated a fluctuating trade war against Canada, imposing tariffs that left the Canadian populace in disarray. A wave of nationalism swept through the nation, with hockey fans booing the American national anthem, boycotting U.S. products, and largely shunning cross-border travel.

This predicament placed Poilievre in an almost untenable position. Many within his base—including a significant number of his MPs—hold Trump in high regard. Yet, with Trump openly attacking Canada, Poilievre found himself caught in a bind. Distancing himself from Trump risked alienating loyal supporters, while embracing the American president could alienate the broader electorate.

Mark Carney is poised to lead what is expected to be a new Liberal government in Canada, likely in coalition with a smaller party. Carney, who previously held leadership roles at both the Bank of Canada and the Bank of England, has notably not received formal endorsement from any central bank for NGDP targeting. However, he may have come closer than anyone else to advocating for it. His remarks from December 2012 are particularly insightful:

“If further stimulus is necessary, the policy framework itself would likely need revision. For instance, adopting a nominal GDP (NGDP) level target could be significantly more effective than maintaining thresholds under flexible inflation targeting. This approach would introduce ‘history dependence’ into monetary policy. Under NGDP targeting, past misses cannot simply be forgotten, compelling the central bank to compensate for prior deviations in nominal GDP…

However, when policy rates are constrained at the zero lower bound, NGDP targeting may present a more compelling case. The exceptional circumstances and the magnitude of the gaps involved could render such a policy more credible and comprehensible.

Nevertheless, the benefits of such a regime shift would need careful consideration against the effectiveness of alternative unconventional monetary policy strategies under the established flexible inflation-targeting framework.”

In a postscript, I would argue that one of the most consequential actions of President Trump during his first 100 days (for better or worse) was his trade war with Canada, which evidently thwarted the Conservative administration’s election chances. Prior to this trade conflict, the Conservatives were on track for a historic landslide victory.

Next, we turn to Australia:

SYDNEY, April 29 (Reuters) – Australian university student Jessica Louise Smith plans to cast her vote in Saturday’s general election with a singular aim: to avert the “worst possible” outcome of a right-wing government.

The 19-year-old expressed her fears about the potential election of conservative opposition leader Peter Dutton, citing the disruption witnessed in the United States under Trump as a cautionary tale.

It promises to be another closely contested election.