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The Slandering of Duplessis

Vincent Geloso
October 26, 2010
Why Quebec conservatives need to rediscover their Inner Duplessis
Stories

The Slandering of Duplessis

Vincent Geloso
October 26, 2010
Why Quebec conservatives need to rediscover their Inner Duplessis
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The ascent of the left in Quebec from 1960 onwards was nicknamed the Quiet Revolution (Révolution Tranquille) and the history of this ascent was made at the price of factual accuracy. To create the idea of a golden age after 1960, meaning after the implementation of policies that led to a welfare state, one needed to reject everything that had gone before. Hence, the previous administrations were slandered or ignored. The one to receive the most scorn was the administration of Maurice Duplessis, premier of Quebec from 1936 to 1939 and then from 1944 to his death in 1959. To historians who wrote about that era, it was crucial to denigrate everything Duplessis did and to challenge anyone who proposed that he might not have been as bad as it was claimed. This is why magnificent historians such as Robert Rumilly, who was actually a close friend of Duplessis, and Conrad Black were labelled as “partisan historians” and “lacking in rigor” by René Durocher, one of the main historians praising the Quiet Revolution. The contributions of similar “partisans” in economic history and political science allow us to see that the era of Duplessis was one of intense socio-economic life.

Quebec began its industrialization in 1900 and the growth of its industries was rapid. The neighbouring province of Ontario was also becoming industrialized but at a considerably faster pace. In fact, looking at the average personal disposable income, we see Quebec losing ground to Ontario from 1926 to 1939. The ratio of the size of the economy of Quebec to Ontario declined from 74.48 per cent to 70.30 per cent. Economists and economic historians such as Morris Altman have rejected simple explanations for slower growth in Quebec that are based on qualitative evidence. A more plausible reason is based on the strong opposition toward industrialization amongst French-Canadians. Traditionalists on all sides who wanted to exclude foreign capital from Quebec and even nationalize some industries attacked premiers such as Sir Lomer Gouin and Louis-Alexandre Taschereau. Taschereau even campaigned in 1931 on a classical liberal position against Camillien Houde, mayor of Montreal, who openly labelled himself the Mussolini of Quebec because he embraced fascist economics. Historians and economists like Norman Taylor in his seminal article in the Journal of Political Economy did note the vast opposition of French-Canadians toward foreign capital, big business and risk-taking. Rather, French-Canadians valued small businesses and agricultural settings. In fact, even Duplessis in his first mandate was elected on a streak of anti-industrialism although he had returned to his “conservative moorings by the time of his second mandate” in 1944 as Conrad Black noted. During these periods, however, Quebec remained open to foreign capital, regulated businesses very lightly and intervened very little in labour markets. In addition, the government consumed only a very small share of the economy. Yet, as we noted, French-Canadians were hesitant to join in, making foreign capital necessary and slowing down economic growth. This is why Quebec lagged behind Ontario economically until the Second World War.

If Duplessis seemed hostile to free markets during his first stint in office, he could not have been more in favour of them when he proclaimed during his second mandate that it was necessary to “give free enterprise the important place it should have in our provincial economy, because free enterprise is an excellent guarantee of lasting progress and of necessary and legitimate ambitions; it is the economic system … which is most capable of guaranteeing our youth lasting and profitable careers”. Duplessis invited foreign capital into Quebec to develop natural resources and manufacturers. The results spoke for themselves: value of mining accounting for inflation increased, electrical power spread throughout the province and could be sold on other markets and real manufacturing wages followed great increases in productivity. Furthermore, Duplessis invested massively in road infrastructure, which allowed for an expansion of the road network that had previously been “inadequate to support any economic expansion” as emphasized by Black. Finally, under Duplessis the number of children under 14 who were in school increased from 54 per cent to 64 per cent. Moreover, for every Ontarian who underwent technical training, two Quebecers trained to acquire technical skills. This created a very dynamic economic environment that produced opportunities and Quebec workers took them!

Duplessis never was hostile to French-Canadian entrepreneurs. In fact, in several of his Throne Speeches he said that entrepreneurship and skill acquisition were the best ways to improve people’s standard of living. Using data drawn from the Annual Statistical Records of Quebec, we can see that net business creation (creation minus failures) skyrocketed under Duplessis. This indicated a shift in mentality toward industrialization. The number of farms declined from 155,000 in 1941 to less than 95,000 in 1961, after massive investments were made in tools to increase agricultural productivity. The size of the population in cities went from 63.32 per cent in 1941 to 74.82 per cent in 1961. French-Canadians were embracing markets, business and industry. Capital formation increased considerably and gross fixed capital formation per worker surpassed Ontario after 1955. Economic growth followed at a fast pace: Quebec outdid Ontario; it not only grew faster than Ontario did, but it had the most growth of the five most populous provinces. This was a quite a feat given that the volatile business cycle – there were four recessions during Duplessis’s time – was quite beyond his control. This “renewed expansion of the economy created a wide new range of new occupations, closed out some others, enhanced upward social mobility, and consequently altered the class structure considerably” as was asserted by Michael Behiels. Historian Jorge Niosi pointed out that French Canadians, as they grew more affluent, turned to the new francophone insurance, banking, trusts and investment companies. The massive urbanization favoured the entry of new businesses in greater numbers; French Canadians companies even began to participate more actively in traditionally Anglophones businesses.

This was what Duplessis wanted. In fact, recent reviews of his speeches noted a strong emphasis on progress, development, growth and ensuring “our youth [have] prosperous and profitable careers”. The reason for this shift is best explained by economic theory. A stable policy environment that favours market mechanisms over command and control policies allows for economic growth and the accumulation of human capital. This generates institutional opportunities that change society to a very large extent. True, institutions matter but actual policy matters more, and policy that proposes government restraints is important. This is what happened under Duplessis, who made a credible and firm commitment to growth and free enterprise.

When we extend our data survey to the period of the Quiet Revolution (1960-1976), we do not see any dramatic change in economic growth. True, Quebec did become more interventionist but so did everybody else, and Quebec kept the same rate of economic and social progress (yes … social progress) as under Duplessis. The only change was in terms of government spending, economic interventionism and massive welfare programs that were made possible by the responsible fiscal policy of Duplessis, which reduced the debt and hence the share of the budget allocated to debt service.

Why is it then that Duplessis is constantly lambasted in history books? Why do historians and some economists criticize him so severely? Why is the Quiet Revolution hailed as such a golden age? Likely because the Quiet Revolution did not live up to its promise and its reputation had to be rehabilitated.

Unlike the era of Duplessis, the economic growth of the Quiet Revolution came with a mortgage. How can growth come with a mortgage? Research done by Mancur Olson, a political economist from Harvard University, provides the answer. In his Rise and Fall of Nations one of the most influential economics books and still widely quoted, Olson asserted that social groups that assemble to demand something from governments have interests that make it worth their time. Such demands can take the form of protectionist measures, regulatory measures to prevent access to the market, redistribution of wealth toward particular interest groups. If the population absorbing the costs is large enough, no individual taxpayer or consumer will have an interest in spending time and resources to fight this. However, a group will do everything to make sure it gets and keeps what it wants. Although, the more these groups intertwine themselves with governments, the more they adversely affect economic growth and development.

This has been the case in Quebec. The often ill-praised Quebec Inc. is in fact a good example of this, since it was highly dependent on governmental intervention to boost its performance, notably through organizations such as Société générale de financement (SGF) and the Caisse de dépôts et placements du Québec (CDPQ). However, its dependency on such government help has come at a high cost. The CDPQ, which was instrumental in boosting these businesses, on average has a worse performance than normal mutual funds. The SGF is also a sad story of multiple injections of capital borrowed at market interest prices that fail to produce expected returns. In fact, such interventions have been more efficient at distributing wealth than at creating it. Back in the 1980s, well before the rise of systematic criticism of the Quebec model, a governmental report on privatization concluded that state societies that were intended to promote economic growth had in fact failed miserably.

The same applies to trade unions. No matter which way we look at it, Quebec has the most pro-union labour laws in North America. These laws are made to benefit union members with the intent to raise real wages. The labour code may be good for workers in the short term, but legal dispositions that favour unions have the effect of disproportionately reducing possible returns on investment, hence reducing private investment. This means that in the long term, productivity – the most efficient measure of living standards – grows at a slower rate and that jobs were becoming more scarce. This has reduced growth considerably in Quebec.

At the same time, spending on expensive social programs such as pensions, health care and education increased dramatically at levels beyond what was experienced before. To finance this expansion, deficit spending was the main tool and it soared so that Quebec’s debt stands at more than $222-billion. We have to add unfunded benefit claims such as those for the Régime des rentes de retraite, which were last estimated by Maurice Marchon in 1996 at $125-billion or 68 per cent of the economy at that time. This might not be a problem if the government had been only a small share of the economy. However, this is not the case as Quebec has become the spendthrift province of Canada. Quebec’s revenue accounts for 24 per cent of the economy, not including federal and municipal shares, compared with 16 per cent for Ontario and 12 per cent for Alberta. There is very little room for the government to face its financial obligations. Total spending since 1960, unmatched in the other populous provinces of Canada, has mortgaged economic growth in the future on top of all the policies that it has slowed down and continue to slow it down.

We have to conclude the following from this brief survey of Quebec economic history: The period from 1940-1960 should be vilified as a Great Darkness if one believes that the Quiet Revolution was a better era. Sadly, this is not the case, and rewriting economic history to one’s advantage does not make the truth go away. The rise of the right in Quebec stems from a gradual realization within the general population that – maybe – the Quiet Revolution just was not that great.

The victims of the Quiet Revolution, the Quebec youth, are slowly but surely turning their backs to the Quebec social-democratic model. Without embracing everything that Duplessis did, they seem to understand that some elements of his policies may have to be rediscovered to solve the current problems.

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