Jacques Parizeau: The economist as saviour

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The history of Canada would be considerably different if the Bank of Canada had hired Jacques Parizeau as Deputy Governor when he applied for the job in the 1960s.

With a PhD from the London School of Economics, a prominent career in teaching and research, and on his CV a string of public policy successes working in the highest reaches of the Quebec government, Parizeau, if anything, was over-qualified for the job.

The Bank of Canada was a no-go zone for French Canadians, and the barriers that prevented qualified francophone candidates from being accepted into the top Ottawa financial jobs did not fall for him. It took over a decade more before Bernard Bonin, Parizeau's colleague from the University of Montreal business school (HEC), was named the Bank Deputy Governor.

To this day, no francophone has been named either Governor of the Bank of Canada or Deputy Minister of Finance -- and no woman either.

Parizeau was far from being a conventional economist. When in 1970 Kari Polanyi Levitt published Silent Surrender, her groundbreaking study of the impact of American foreign direct investment, Parizeau wrote the introduction for the French edition (Mel Watkins did the English introduction).

An academic in every respect, Parizeau had two other careers. The first as a public servant and economic adviser in the 1960s would make him celebrated for his vision and competence. The second in politics as finance minister, opposition leader, and then premier, would be surrounded in controversy. 

After the ousting of the Union Nationale government by the Quebec Liberals in 1960, Roland Parenteau assembled the economic advisory team to Jean Lesage that would build the state institutions of the Quiet Revolution.

Parenteau devised a winning formula. He recruited an inner circle of top policy operatives: Parizeau, Claude Morin and Michel Bélanger.

Morin would go on to dominate federal-provincial relations as first Quebec deputy minister, and then minister of intergovernmental affairs (before being disgraced when revealed to have been an RCMP informant).

Bélanger came from the federal finance department, his career culminated as head of the Banque Nationale, and a sharp critique of Parti Québécois (PQ) policies.

Drawing on the resources of Premier Lesage, the economic team developed an offshore borrowing capacity for the provincial government, and boosted Hydro-Québec to prominence with the nationalization of electricity.

The Lesage team, with Parizeau playing a starring role, helped give Quebec a regional development capacity; it incubated the state infrastructure that would build the economic dynamic known as Quebec Inc.

The Quebec Quiet Revolution was about education, health care and economic strength, and the economic advisers were the prominent revolutionaries.  

In particular, Parizeau is associated with the creation of the Caisse de dépôt et placement du Québec, a breakthrough achievement.

In 1963-64 when the Canada Pension Plan (CPP) was devised, the federal Liberal government of Lester Pearson agreed in response to pressure from Lesage that Quebec should have its own pension plan (QPP).

The CPP/QPP concept was concrete recognition that when Lesage called for Quebecers to be masters of their own house (Maîtres chez nous) Ottawa could respond in the name of asymmetrical federalism, or special status for Quebec (or even associated sovereignty), and recognize Quebec autonomy within Canada.

With a flow of pension premiums into the Caisse, Quebec was able to build an entrepreneurial instrument for industrial development.

Later Parizeau was to see the Caisse and the fiscal capacity of Quebec as the basis for creating more than a "distinct society."

In the later 1960s, Parizeau took a train trip to Banff where he was invited to address the Institute of Advanced Management. "When I left Montreal I was a federalist, by the time I got to Banff I was for Quebec independence."

When Parizeau joined René Lévesque and the Parti Québécois in 1969, he gave the party the one thing it most needed: economic credibility. It was not just his credentials that made Parizeau such an important catch, it was everything about him.

The insurance business has made the Parizeau family one of the richest in Quebec. Wealth conferred power and assurance -- Parizeau projected both.

The young Jacques Parizeau had attended the exclusive Outremont French Lycée; in his later years he acquired a vineyard and winery in France.

In a Quebec where people routinely addressed each other using the familiar tu rather than the standard vous, Parizeau enjoyed being addressed as Monsieur (sir).

René Lévesque and other PQ heroic figures entered politics with a conviction reminiscent of young men taking the vows for the priesthood. The Young Catholics organization (Jeunesse étudiante catholique or JEC) had provided many of their generation with their first experience of leadership, and a belief in the pursuit of the common good. The JEC marked future Liberals such as Pierre Trudeau and Claude Ryan, as well as PQ members elected with René Lévesque.

Parizeau was different, more worldly, than the other PQ members. His British-accented English, his formal attire, and his brilliant intelligence set him apart. Montreal financier Eric Kierans, a Lesage Liberal cabinet minister, and later an Ottawa minister with Pierre Trudeau, used to say that Parizeau was always the smartest man in the room.

On October 15, 1976, Parizeau was elected to the Quebec National Assembly, on his third try.

When the PQ took power after that election, Jacques Parizeau joined a cabinet that was arguably better educated and more talented than any ever put together in Canada, then or later.

Minister Parizeau took three portfolios: Finance, Treasury Board, and Revenue; and was deputy premier in everything but title. Lévesque and Parizeau were close collaborators, but there were differences. Parizeau was unhappy with the 1980 referendum question, and wanted to cancel the nationalization of asbestos.

The Gordian knot for the PQ project of "sovereignty-association" was the currency question. Parizeau knew that Quebec could never aspire to the independence he wanted for it, without having its own separate currency; but he would never get his way on the issue.

The idea of giving up the Canadian dollar was not going to be an easy sell. In the event, the PQ decided the currency would be part of the new equal partnership with Canada they envisaged would emerge following a successful referendum. A sovereign Quebec would adopt the Canadian dollar and share ownership of the Bank of Canada

Parizeau played along as a good soldier and defended the PQ policy on the dollar in the 1980 referendum, and again in the referendum process he set off after becoming premier in 1994.

No Canadian ever launched a career as premier with more experience in government than Parizeau, but simply governing Quebec never really interested him once he entered the premier's office. He wanted to preside over an independent Quebec, and he had a strategy ready.

Parizeau recruited the charismatic trade union leader Monique Simard to lead civil society forces for the Yes vote, and she did an outstanding job. Her success in mobilizing Quebecers against policies of the Chrétien government, especially the 1995 round of severe unemployment insurance cuts, brought the Yes side from 10 points down to a lead, as referendum day approached.

An independent Quebec would create jobs and never abandon the unemployed, said the Yes side. In 1995, the Bloc Québécois controlled 54 of 75 seats in the House of Commons (compared to 74 of 75 seats for the Trudeau Liberals in the 1980 referendum). The BQ helped carry the bad news: not only does Ottawa not create jobs for Quebecers, the Quebec jobless were going to lose access to unemployment insurance.

Parizeau planned to secure recognition for an independent Quebec from France, protect the value of Quebec government bonds by using the resources of the Caisse, and sit down to negotiate with Ottawa only once independence was a fait accompli.

He came within one per cent of getting a chance to implement his plan.

Following the failure of the 1995 referendum, Parizeau resigned as premier. Initially the sovereignty movement was buoyed by the close loss, even if bitter about the result, saying the No campaign had broken the rules governing spending.

The Bloc Québécois under Gilles Duceppe continued to promote sovereignty in the House of Commons until the 2011 federal election brought Jack Layton and the Orange Wave its unexpected success.

Duceppe suggested that a sovereign Quebec would adopt the U.S. dollar. This was not an improvement over adopting the Canadian dollar, nor was it a position designed to satisfy proponents of an independent Quebec.

As Parizeau could have explained, a Quebec currency issued by a Quebec central bank was preferable, because it created room for Quebec to borrow on the credit of the Quebec economy. A central bank was needed as a lender of last resort to domestic financial institutions.

Adopting the U.S. dollar would have forced Quebec to borrow U.S. dollars when it needed to stabilize the financial system, and hamstrung efforts to build government investment capacity. It was hard to take the Bloc proposal seriously whether for or against sovereignty.

Parizeau did not age gracefully. His role became to act as one of the "mothers-in-law" critical of his former party. He fell out with Pauline Marois, his former assistant, when she became party leader, and was a public critic of her premiership. In the last Quebec election Parizeau announced he was voting for Option Nationale, a fringe party, not for the PQ.

A giant in the history of post-war Quebec, the Parizeau state funeral was set for June 9 in Outremont, where he grew up. Fittingly, he lay in state at Caisse headquarters in Montreal June 6, before being exposed in the Salon Rouge of the Quebec National Assembly June 7.

In addition to those who mourn him, Parizeau leaves unfinished business at his passing.

Duncan Cameron is the president of rabble.ca and writes a weekly column on politics and current affairs.

Photo: Webmasterfonds/Wikimedia Commons

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