Thank you very much, Chairman Levitt. It's an unexpected honour to be asked to testify before this important committee.
Your staff very usefully provided me with five questions to address. Two of them concern Canada's transatlantic alliances and policies for bolstering the liberal international order. Coming from a country that has made a total hash of these issues recently, I'm a little reluctant to offer my advice, but if you press me during the question period, I will do so.
Of the remaining three questions, the responses to which will form the bulk of my opening testimony, the first concerns the factors driving the popular and populist resentment, the upsurge in this resentment in most of Europe's liberal democracies. Happily, after a period of confusion, something of a scholarly consensus is emerging as to the major causes of this upsurge.
A familiar place to begin is with the impact of technology and globalization on the economies of advanced western democracies. This has triggered, among many other pathologies, the end of the 40 years of postwar convergence between more prosperous and less prosperous regions, and instead the rise of massive and steadily increasing regional inequalities. One economic geographer has recently labelled the upsurge of populism “the revenge of 'left-behind' places”, and I think there's a lot to that.
Second and relatedly is the collapse of traditional manufacturing in many areas, including many former urban manufacturing centres, particularly in France and the U.K. This hit the industrial working class very hard. At the same time, centre-left parties updated or modernized their programs away from working-class concerns toward the concerns more characteristic of upscale professionals. This left the working class in many countries feeling resentful and politically homeless. They decoupled from their traditional alliances with centre-left parties and became the most unstable force in European politics and, I would add, in American politics as well.
Third is the impact of immigration, which has triggered a host of identity concerns and issues. If I had a lot of time, I could go through a series of decisions by European leaders, such as Tony Blair and Angela Merkel, which contributed to the impact of immigration on the population of European countries. Suffice it to say that we have the AfD in Germany, the League in Italy and Brexit in the U.K. in no small measure as a direct response to public concerns about immigration policy.
I should add parenthetically that one of Canada's distinctive features against this backdrop is its immigration policy, which not only serves your national interests pretty well, but also enjoys broad-based public support, the last time I checked. This is very unusual and accounts, I think, for the decidedly more positive and healthy tone of Canada's democracy, relative to most of the rest of the west.
The fourth cause for popular and populist discontent was the mismanagement of the financial crisis and its aftermath. European elites did not distinguish themselves in their handling of the post-crisis recovery. Failed austerity policies raised questions about the elites' competence and their concern for ordinary people.
Fifth and finally, there are growing conflicts between elites, most of whom are urban-based, and those in small town and rural areas about cultural change and the rapid evolution of social norms. In this respect, I would note the increasing importance of educational differences. One of the great dividing lines that have emerged in western democratic politics is between people who have gotten a college education and people who haven't. This is more than a question of economic opportunity. It also shapes fundamental outlooks on a host of cultural issues.
So much for question one.
Next is question two: What are the main threats facing liberal democracies in Europe today? Here I can be briefer. I think we have to distinguish first between established democracies and new democracies, especially the post-communist democracies. The main problem is with the latter, not the former. I am not saying that large established democracies in Germany and France are going to get off scot-free, but I do not expect them to morph into something illiberal, let alone undemocratic. I am much less sure about the new post-communist democracies.
In this respect, I would cite the growing cross-national appeal of what I will call “Orbánism”. Viktor Orbán of Hungary, of course, has originated what he calls illiberal democracy, which gives you the trappings of democratic elections without liberal restraints such as a free press, an independent judiciary, robust civil society and protections for individuals and minority groups.
The problem with Orbánism and this whole idea of illiberal democracy is that it is not a stable political position, for two reasons. First of all, the centralization of power tempts leaders to put their fingers on the electoral scales. We have seen this happening in Hungary and in many of the countries influenced by Orbán's ideology. Second—and this is even graver—is that the reliance on the people, the idea of pure majoritarianism, in practice gives way to exclusionary definitions of the people, based on differences of religion, ethnicity, language, etc.
The third and final question I will address is: What can and should be done? Here, very briefly, let me just tick off a few points. First of all, whatever neoclassical or neo-liberal economics may say, it is increasingly important to take place seriously as the basis for economic policy. The exacerbation of regional differences has created serious strains within European countries and between them, and there are active discussions going on in the United States, the U.K. and the EU as to what can be done to put in place more effective, place-sensitive economic policies.
Second, the kinds of immigration policies that leaders such as Tony Blair and Angela Merkel put in place are not politically sustainable. Immigration policy must be rethought to meet public qualms halfway and to establish a basis for a sustainable immigration policy that enjoys a broad measure of public support.
Third, the EU should be very careful and restrained in imposing elite cultural preferences on populations that may have a more traditional set of views. Take Poland, for example, where the influence of the Catholic church is particularly profound. The conflict between EU cultural norms and what most people in Poland believe is correct is an increasingly troubling issue.
Finally, I think it's important to acknowledge the power of the desire to retain a measure of control over one's national destiny. It turns out that nationalism is not dead, and because it's alive—but not only because it's alive—it shouldn't be treated as a dirty word. I think it's going to be important to work for a new balance between the imperatives of nationalism on the one hand and of European integration on the other.
In conclusion, I will say that, as an overarching goal, an ever-closer union may be past it's sell-by date.
Thank you, Mr. Chairman and members of the committee. I'll be happy to answer your questions.