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The 1960s

John Fitzgerald Kennedy was an inspirational figure. My parents loved Canada, grateful for the opportunity it had provided them, yet they still had a small bust of JFK that sat on a living room table. If there was one person who symbolized the 1960s, it would be Kennedy, and there is one single quote that defined him above all else: “My fellow Americans, ask not what your country can do for you, ask what you can do for your country.”1

The words inspired a continent, at least temporarily. The irony is that before the decade was out, this quote had been turned on its head: North Americans were increasingly asking what their country could do for them, and expecting more and more.

JFK had a wonderful ability to turn a phrase. If the “ask not” quote is his most famous, perhaps number two was “Those who make peaceful revolution impossible will make violent revolution inevitable.”2 The years after JFK’s death were turbulent, but there was a peaceful revolution that had been going on since the middle of the Second World War, and the ripple effects were felt in both the developed and developing worlds.

It was the so-called “Green Revolution,” referring to improved agricultural practices that started in Mexico in the 1940s, and spread across the globe over the next two decades. This revolution’s George Washington was an American scientist, Norman Borlaug. He developed new, disease-resistance strains of wheat. These products, combined with mechanized farming, made the United States, a country that had previously had to import half of its wheat, a net exporter by the decade’s end.

The Green Revolution involved more than developing new and more robust strains of plants. It also crossed into fields as diverse as agronomy, soil science, and genetic engineering.3

Almost unbelievably — because of the latter in particular — there is some “controversy” around the Green Revolution. There have been criticisms levelled against it, including that increasing food production has led to overpopulation (suggesting it would be better if more people starved to death?) and that some places — specifically Africa — have not benefitted to the same extent as others because of a lack of infrastructure and corrupt governments (clearly Borlaug’s fault!).

QUESTION 17

Which do you think a critic of the Green Revolution is more likely to have?

☐ A full stomach.

☐ An empty stomach.

The Green Revolution was — and is — an unmitigated good and if there ever was someone who deserved a Nobel Peace Prize, it was Norman Borlaug, who received the award in 1970.4

Canada benefitted from the Green Revolution. One of the consequences was that fewer people actually produced more food. In 1951, 2.9 million Canadians lived and worked on farms. That number was cut in half by 1971.5 This change freed them to do other things; that is, to provide other goods and services, enabling the economy to grow even faster.

A transition was continuing. Canada, which had had an economy based on agriculture in the nineteenth century, was becoming increasingly more reliant on manufacturing, and its single most important sector was automobiles.

General Motors, Ford, and Chrysler were a tight oligopoly that controlled the North American automotive market. They manufactured on both sides of the border and all faced the same problem: there were stiff duties on both imports and exports. This meant that in order to sell Thunderbirds in Canada, Ford had to produce Thunderbirds in Canada. Otherwise, the tariffs made the cars prohibitively expensive. This hindered the economies of scale that are required to manufacture efficiently.

A compromise solution was eventually reached — the Auto Pact of 1965.

Its key points were:

 for tariff-free entry of Canadian automobiles or original equipment parts into the U.S., automobiles must contain at least 50 percent North American (U.S. or Canadian) content;

 for tariff-free entry of U.S. finished vehicles or original equipment parts into Canada, manufacturers in Canada must satisfy the following criteria:

 manufacturers must maintain a certain ratio between the net sales value of vehicles made in Canada and the net sales value of vehicles sold in Canada;

 the amount of Canadian value added for all classes of vehicles made in Canada must be at least as great as the amount achieved in the base year.6

The Auto Pact created a unified North American market that discriminated against manufacturers located off this continent. It meant, practically speaking, that if Canada accounted for 10 percent of the North American auto market revenues, 10 percent of the total value of all cars sold in a calendar year had to be built here. This allowed a company like Ford to do all of its production of one model in Detroit, and sell them across North America, as long as it did all of its production of another car in Windsor, Ontario.

This was good for both countries, but the impact was more pronounced in Canada: the productivity gap between Canadian auto plants and U.S. plants narrowed markedly in the wake of the Auto Pact.7

Geography — as well as culture — made it inevitable that the United States would be our most important trading partner (and vice versa, though many Americans are unaware of this fact).

A trade relationship can be impacted significantly by exchange rates.

A quick step back in history. Coming out of the Second World War, there was a desire for the developed countries of the world to maintain the value of their currencies. I still remember a picture from my high-school history textbook of a German man in the 1930s pushing a wheelbarrow full of bills in order to purchase a single loaf of bread. The painful lesson was that runaway inflation could lead to economic and social chaos that in turn could lead to horrendous political solutions. Therefore, exchange-rate stability was a paramount goal of international policy in the 1940s and 1950s. This led to the Bretton Woods agreement.

The U.S. dollar (USD) was established as the global reserve currency, the benchmark against which other currencies were valued. Exchange rates were fixed for the world’s currencies, with one important exception — the Canadian dollar.8 From 1950 to 1959, the Canadian dollar (CAD) was allowed to float, and for much of that time it traded at a slight premium to the USD. However, in 1960 it started to fall sharply. Canada returned to a fixed exchange-rate system from 1962 to 1970, with a new rate of 0.925USD to buy 1CAD.9

The combination of a fixed dollar and managed trade wasn’t optimal. If Canadian productivity was lower (it was), a depreciating CAD would have levelled the playing field.

Here’s how. There’s an American who makes twenty-four car parts in a week. There is a Canadian who makes twenty car parts in a week. The American is 20 percent more productive than the Canadian.

To keep the arithmetic simple, let’s start off with the two currencies trading at par: 1CAD = 1USD. If each worker made $200 per week, the cost contribution from labour on the U.S. side is $8.33 per widget ($200/24). On the Canadian side, it’s $10 per widget. However, if the U.S. dollar appreciated by 20 percent, the labour cost per widget would be equal.

This is the benefit of freely floating exchange rates and why (sensibly) most developed countries embrace this as public policy. It helps correct imbalances.

Yet here’s the overriding point: In spite of the fact that our currency was fixed against the U.S. dollar for most of the decade, manufacturing still took off. That shouldn’t surprise anyone who’s stuck with the thesis of Stalled so far.

There are four factors that drive economic growth: labour, capital, total factor productivity, and motivation. It’s difficult to draw too direct a line between exchange rates and any one of them.

You can make the argument that the 1960s really started with the election of JFK on November 8, 1960. Richard Nixon was Eisenhower’s vice-president and even then seemed much more a product of the 1950s and the Cold War. JKF represented the future … hope. Then he was assassinated on November 22, 1963.

I have no recollection of that day. But one of my most distinct early memories is of watching JFK’s funeral with my mother. I was in kindergarten at the time, which meant I spent mornings in school and afternoons at home with her. My sister was in Grade 2, so my mother and I were alone in the basement of our house. I was playing with my toys on the hardwood floor and she was ironing my father’s shirts. Tears were streaming down her face. I asked her why she was crying. She said that what was on TV was upsetting her. I asked her why she didn’t change the channel. She just shook her head and cried even harder.

It was the first time I had seen my mother cry.

JFK’s assassination traumatized our southern friends and neighbours. There were two major consequences of his assassination: a significant change in the manner in which the Vietnam War was conducted and the launch of the Great Society program. At the same time, the United States wrestled with a terrible historical injustice — slavery.

We hold these truths self-evident, that all men are created equal; that they are endowed by their Creator with certain unalienable rights; that among these are Life, Liberty, and the Pursuit of Happiness.10

These stirring words were written by Thomas Jefferson, who throughout his lifetime owned six hundred slaves.11 Not for the first time — or last — would a politician talk the talk, yet fail to walk the walk. Perhaps we shouldn’t judge Jefferson too sharply. It was the world he was born into.

QUESTION 18

In a world of slaves and masters, which would you choose to be?

☐ A slave.

☐ A master.

A bloody civil war was fought, in part at least, to end the abomination of slavery, although a more sober reading of history might suggest that the real motive was to preserve the Union. After the Civil War ended, the United States struggled with race relations, and it came up with the doctrine of “separate but equal.”

The politicians passed the laws. Then the Supreme Court put its stamp of approval on the policy with the 1896 decision Plessy v. Ferguson. Not only was it legal to provide separate facilities for blacks and whites, if you defied the law you were considered a criminal. That was the law of the land until the 1954 decision Brown v. the Board of Education. Following that decision, the policy of “separate but equal” was against the law.

Prior to Lyndon Johnson’s assumption of the presidency following Kennedy’s assassination, both Eisenhower and Kennedy had used the federal government’s power to trump the states when the rights of blacks weren’t being adequately protected. Little Rock, Arkansas, 1957. James Meredith, University of Mississippi, 1962. These actions were necessary to reverse obvious wrongs. Wrongs, by the way, that would never have occurred had America defined itself as a collection of individuals rather than groups. But I digress. The result was that fair-minded people, seeing what good the federal government had done with respect to this issue, started reflexively siding with the federal government. Power was increasingly being concentrated in Washington D.C., at the expense of the states and, ultimately, individuals.

On May 22, 1964, Lyndon Johnson delivered his famous Great Society speech at the University of Michigan’s commencement ceremony. It’s a wonderful piece of oratory and established the foundation for public policy for decades to come — I would argue — on both sides of the forty-ninth parallel. I’ll summarize it, using LBJ’s words as much as possible.

For half a century, we called upon unbounded invention and untiring industry to create an order of plenty for all of our people. The challenge of the next half century is whether we have the wisdom to use that wealth to enrich and elevate our national life.

LBJ was right that in the early half of the twentieth century plenty had been created for most of the American people. Yet even as late as the early 1950s, hunger had been widespread in parts of the United States. That was no longer true by 1964.

LBJ then proceeded to explain how he planned to “elevate” national life:

The Great Society rests on abundance and liberty for all. It demands an end to poverty and racial injustice, to which we are totally committed in our time. But that is just the beginning.

The three pillars of the Great Society, according to LBJ, were taking care of the cities, nurturing the countryside, and improving the classrooms of America. He ended the speech with a series of rhetorical questions:

So, will you join in the battle to give every citizen the full equality which God enjoins and the law requires, whatever his belief, or race, or the colour of his skin?

Will you join in the battle to give every citizen an escape from the crushing weight of poverty?

Will you join in the battle to make it possible for all nations go live in enduring peace — as neighbours and not as mortal enemies?

Will you join in the battle to build the Great Society, to prove that our material progress is only the foundation on which we will build a richer life of mind and spirit?12

I don’t know what you were doing as you were reading those words, but I was standing on top of my desk and shouting: “YES! … YES! … YES! … YES!!!”

Only one problem: the legislation that came out of the Great Society program accomplished exactly the opposite.

LBJ wanted the Great Society to be his legacy; I would argue that what actually came to define his presidency was the Vietnam War. The United States got sucked into a quagmire, and just as in previous wars, there was a shortage of volunteers, so it had to rely on the draft to fill the military’s ranks. The country was torn apart, divided along class lines. Working class/blue-collar America generally supported it. The intelligentsia and the privileged were against it.

I’ll be the first to admit that this is a crude characterization. But I’m guessing that Oliver Stone’s Platoon was accurate: those who were sent to die in Southeast Asia, were, for the most part, those who benefitted least from the system.

The decision to go to war is the most profound one that any country faces, but it’s a particularly significant one for States that consider themselves democracies. The ultimate sacrifice that anyone can make for his or her country is to die for it. There are some people who willingly put themselves in harm’s way. I would characterize them as extraordinarily brave, but I suppose there are other ways to describe them. However, there aren’t enough people like that. So there has to be some kind of system to fill the ranks. The consensus in America at the time of the Vietnam War was that the fairest method was a lottery system, which was what the draft represented. But during Vietnam, the elite turned their backs on fairness, and gamed the system with deferments or draft-dodging or desertion … and, most importantly, they got away with it.

QUESTION 19

How would you describe the soldiers who served in Vietnam?

☐ Noble.

☐ Complete suckers.

It was clear how the American elite of the late 1960s and early 1970s would have answered that question. In fact, the poster-child of that group, Vassar-educated Jane Fonda, travelled to Hanoi in 1972, sat on anti-aircraft guns, and posed for pictures. She called POWs who spoke of torture “hypocrites and liars” and was cheered by many Americans.13

An important line had been crossed.

Every society has its elites. The important questions are:

 Who are they?

 Where does their self-interest lie?

 In pursuing that self-interest, at whose expense will it be?

The New Elite that was emerging in North America was university-educated, concentrated in urban centres, disproportionately made up of those trained as lawyers, and tended to work in the public rather than the private sector. And it understood that its economic interests were tied far more closely to the political process and the redistribution of income than to wealth generation.

I’ve spent a great deal of time speaking about the United States when this book is supposed to be about Canada. There’s a reason: we tend to mimic the United States.

Canada has a complicated love-hate relationship with its southern neighbour. I think of it like this: the United States is the cool, older teenaged brother (let’s call him Lance): captain of the football team; dates the head cheerleader; drives a souped-up Camaro; C-student, true, but with a larger-than-life persona — you get the idea. Meanwhile, Canada is the nerdy younger brother (given name, Les): not very athletic; wears braces; straight A student, but who cares about that except Mom and Dad? We envy and resent the success of Lance, and even while we’d like to be him, we know we can’t, because after all, we are Les. There’s more than a little bit of an inferiority complex at work here.

Meanwhile, Lance doesn’t think too deeply about the relationship. But then again, Lance doesn’t think deeply about very much! He just goes on his merry way, gets away with what he wants because he is captain of the football team … and often leaves a mess in his wake that other people have to clean up.

So, what was happening in Canada during this decade? Along with the increases in efficiency in agriculture and the further development of the industrial sector, cemented by the Auto Pact, there were two State-sponsored initiatives in the 1960s that contributed to Canada’s strong economic performance. “Socialized” medicine was brought to Saskatchewan in 196214 (by 1966 it had spread across the land) and the Canada Pension Plan (CPP) was established in 1965.15

There is a solid economic rationale for why the State should operate the health care system. There are certain industries where “natural” monopolies exist. It wouldn’t make sense to have several different private companies provide water to a city, for example — it would mean multiple sets of pipes. That’s wasteful. A similar argument can be made for health care. The single-payer system has administrative efficiencies. The single-payer system results in greater buying power and the ability to negotiate lower prices with suppliers. And the proof is that in 2012 total per-capita spending on health care was half as much in Canada as it was in the United States.16

The logic underlying the CPP is impeccable. Everyone needs to save for retirement, yet most people don’t have the expertise or the sophistication to do it for themselves — not to mention that many don’t have the discipline either. The CPP is designed so that citizens benefit to the extent that they contribute to it. Its size (particularly as it stands today, with assets well in excess of $125 billion) means that there are economies of scale. It costs about 0.3 percent of assets under management to operate,17 which means that if it returns 7 percent before fees, 6.7 percent of that goes to the Canadian people. Most actively managed mutual funds charge around 2 percent, which means that if the assets return 7 percent, the investor sees only 5 percent. And from the beginning the CPP was a defined-benefit plan, eliminating longevity risk — the possibility that your money will run out before you die.

When they were introduced, both State-run medicine and the Canada Pension Plan were almost perfect. However, each has failed to adequately change over the years. In 1962, no one could have foreseen how expensive medicine would become. The Canada Pension Plan was established when life expectancy was much lower. In 1965, the fact was that many people who paid into the CPP over the years would never live to receive anything from it.

While the State-run medical insurance and pension plans set up in Canada in the 1960s created great benefits for all Canadians, the same cannot be said for many of the changes made to the education system.

In 1967, the Province of Ontario eliminated Grade 13 departmental examinations. Up to then, every student who graduated from an Ontario high school wrote the exact same examination, and the result was critical in determining who would proceed to post-secondary education.

Those tests hold special significance for the Hlinka family. My grandfather was a man who never set foot in a school, except to ensure that his children received the education he never had. But he was damn sure that his son would go to university. He didn’t believe that there was the same need for his daughters. Fortunately, his children were as stubborn as he was and one of my aunts did an end-run around her old man: she wrote the departmentals, achieved the best mark in the province, and received a full scholarship to the University of Toronto. If there was one thing my grandfather hated more than anything else, it was turning down something free. His youngest daughter received the university education she so desperately wanted.

This scholarship wasn’t means-based. The daughter of a landscape gardener and the son of the moneyed classes were equally eligible. It was decided on sheer merit. This spoke to the values of the time.

In 1968 I was watching the U.S. Track and Field Championships. The winners would compete in that year’s Olympic Games. I remember a discussion that the commentators had after a favourite was upset, which meant he would not be going to Mexico City. One questioned the wisdom of the U.S. system. The Soviet Union did it very differently, he said. A committee got together behind closed doors and decided which athletes would wear their country’s colours. He argued that this method made a lot of sense. It probably meant more medals, and that was the point of the Games, wasn’t it?

His colleague was mortified. No, the Olympics was about providing everyone a fair opportunity to compete. And if that meant fewer medals, so be it.

QUESTION 20

How should Canada’s Olympic team be decided?

☐ Via open and transparent competition.

☐ Via committees meeting behind closed doors.

What the Canadian education system did in 1967, if I may extend this metaphor, was move from an open and transparent, objective-merit, American-style Olympic-selection process to a closed, subjective-merit, Soviet-style one. If your name was Betty Hlinka (“What’s wrong with these people — can’t they even afford enough vowels for their names?”) and you weren’t raised in the right neighbourhood, it would become that much harder to compete.

Then, in 1968, education in this province took a huge step back with the acceptance of the Hall-Dennis Report. Its key conclusion was that education was about things like “self-actualization” and “fulfillment” rather than meeting the needs of the marketplace.18 I personally felt the impact two short years later.

I was in Grade 8. Every Friday afternoon our teacher had us move our desks, which were in traditional rows, and create a rectangle around the perimeter of the classroom — like a large conference table. Then we would — and I kid you not — have to say something “nice” about someone else in the room.

There were a couple of different ways we went about this. Sometimes you could pick whom you wanted to compliment (“Johnny, you have a very nice personality”). Sometimes, we went around the room clockwise (“Susie, I think you’re very nice”) or counterclockwise (“Jimmy, you’re very good at sports”). And sometimes, he would direct us to heap praise on someone specific (“Mary, everyone thinks you’re very smart”).

The exercise was about building “self-esteem,” and to this day I think my teacher was well-meaning. But kids aren’t stupid. Everyone saw how ridiculous it was, and it led to one of the funniest things I’ve ever seen in my life.

There were three short boys in the class. I was one of them. But I was accepted because I was a good athlete and that earned me sufficient cred. The other two short boys were Roger and David. They hated each other with a passion. Roger was a very smart kid, while David was … the polite word back then was “slow.” One day, after we arranged our desks, it happened that the two ended up beside each other, and David was called upon to say something nice about Roger.

There were four stock phrases. I’ve already given them to you. David had to say something nice about Roger. But he couldn’t come up with anything. He started, “Roger is …” He stopped himself. He ran his hands through his hair, then clenched his fists, as if he was trying to force an idea out of his cranium. You could almost see the smoke coming out of his ears as he tried to come up with something — anything — good to say.

Meanwhile, the other kids (we were all between twelve and fourteen) were laughing until tears streamed down our faces. Finally, the teacher said: “David, say something nice about Bobby instead.”

David immediately responded, “Bobby has a very nice personality.”

I left public school aware that:

 I had a very nice personality;

 I was very nice;

 I was very good at sports;

 everyone thought I was very smart.

That’s what I knew. What I didn’t know was the difference between a noun and a verb, or an adverb and an adjective.

The assault on educational excellence had begun.

If real economic growth was strong in the 1950s, it was explosive in the 1960s. The following are U.S. numbers, but they are indicative of the situation in Canada as well. In 1960, there was one passenger car for every three Americans. By 1970, it was one for two.19 Houses were getting bigger and better. The “official” numbers indicate that real per capita income jumped by just over 3 percent compounded annually over those ten years,20 and poverty had been virtually eradicated from both the United States and Canada — Lyndon Johnson noted as much in his 1964 speech at the University of Michigan.

I am very lucky. I don’t know what it is to be hungry. But I’ll never forget a story my grandfather told me, a story from when he went back to Czechoslovakia for the last time to bring his family to their new home in Canada. He had spent the day working in the fields with his brothers and sisters. It was harvest time and everyone had to pitch in. He returned to the shack they called home, and there was a glass of milk on the table. Except it wasn’t really a glass; it was more like three ounces. He was exhausted and hungry and he went to drink it. My grandmother, seeing what he was doing, said, “No. If you have that, there’s nothing for the children tomorrow.” So he put it down and went to bed.

Three lousy ounces of milk. That’s poverty.

There were very few situations that extreme in Canada, even back in the 1930s. There was nothing like that in 1968. The war on poverty had been won, but some people were arming themselves for a new battle.

Welcome to the low income cut-off (LICO) metric.

It was determined that in 1959 the average Canadian family spent 50 percent of its income on basic food, clothing, and shelter. The 1968 low income cut-off said that if a family spent 70 percent of its income on basic food, clothing, and shelter, that it was “low-income.” What happened is that the LICO, for all intents and purposes, became Canada’s “poverty” line. And this framework guarantees that we will always have people living in “poverty” — no matter how wealthy all of us are.21

A bit of basic math.

It is 1968. The average Canadian family brings in $8,000 per year. It spends $4,000 on necessities, which means that $4,000 is left for luxuries. A low-income family brings in $5,333 (67 percent of the average) and must spend $4,000 (75 percent of its income) on necessities. This means that it is below the low income cut-off, even though its needs are covered and there is $1,333 (25 percent) left over for luxuries.

The decades pass. If real economic growth averaged 3 percent (and it did during the 1950s and 1960s), then in thirty years the average Canadian family brings in $20,000 in inflation-adjusted dollars. We’ll assume that it spends $10,000 on necessities and $10,000 on luxuries. The low-income family continues to earn 70 percent of what the average family earned, which means that it earned $14,000. It’s required to spend $10,000 on necessities (71 percent) and $4,000 on luxuries. So even though the low-income family is spending on luxuries what the average family did a generation ago, it is still considered low-income, with the logic being that it is deserving of social assistance.

The LICO framework is a fraud.

QUESTION 21

Before reading these preceding paragraphs, I understood how “poverty” is defined in Canada.

☐ Yes.

☐ No.

And for the sake of novelty if no other reason, can we be honest and agree that very few “activists” ever mention LICO. They use the much more emotionally charged word, “poverty.”

QUESTION 22

Which term are “activists” more likely to use?

☐ LICO.

☐ Poverty.

QUESTION 23

Do you agree that a poverty “activist” will do anything in his/her power to eradicate poverty, short of putting in an honest day’s work?

☐ Yes.

☐ No.

The LICO was designed to redistribute income and perpetuate government bureaucracies that generate nothing of value. And there would be many, many more of those departments created in the decade that was to follow.

The 1960s in sixty words: Immigration continues, but not at the same rate as experienced in the previous decade. Fewer people are needed to work in agriculture, and in the wake of the Auto Pact, manufacturing becomes much more efficient. State-run medicine will benefit the country for years to come. But there are storm clouds gathering as Canadians begin to expect more and more from government.