Neoliberalism Ascendant

Brian Mulroney was Canada’s answer to the fad for archconservative neoliberal politicians across much of the Western world during the 1980s. Similar to the lasting impacts of Ronald Reagan and Margaret Thatcher’s social and economic policies on the United States and United Kingdom, Canada’s current economic, political, and social instability has its roots in Mulroney’s policies from forty years ago.

Mulroney’s economic policy had two main goals: to enhance the competitiveness of the Canadian economy through widespread privatization of state assets, and to establish a free trade arrangement with the United States.

The privatization drive led to Canadians losing direct control over foundational elements of the national economy. By the mid-1980s, these sectors included Petro-Canada, a vertically integrated state oil company; Air Canada, the national airline; aircraft manufacturers Canadair and De Havilland; Canadian National, the national railway; and Connaught Labs, a major producer of pharmaceuticals, among an additional estimated three hundred publicly owned corporations.

About 250,000 Canadian workers were employed by federally owned public corporations, with another quarter million working for corporations owned by Canada’s ten provincial governments. In 1985, just as Mulroney’s privatization drive began, the Washington Post valued the federal government’s public corporations at more than $57 billion, or roughly $163.4 billion today.

While this might not have been the ideal economic model to entice foreign investment, it served as the foundation of Canada’s post–World War II prosperity. Public corporations helped guarantee a stable and prosperous middle class as much as they guaranteed economic — and by extension political — autonomy from the United States. Moreover, public ownership ensured these corporations served the public interest first and foremost.

Privatization was sold to the public as a solution to lower federal debt, reduce government involvement in the economy, and potentially create profitable private corporations where inefficiency and waste had allegedly prevailed. However, the argument that government involvement in the economy was inherently bad was far more ideological than evidence based.

Writing for the Toronto Star in March 1985, University of Victoria political scientist John D. Langford debunked common myths about privatization, warning that Mulroney’s drive was being led by special interests spouting ideology thinly disguised as economics. Langford cautioned that there was no public support for privatization, and no evidence to suggest either that Canada’s public corporations were underperforming or that privatization would increase their productivity or profitability. Langford correctly anticipated that privatization would simply involve the transfer of public corporations and assets to the private sector, citing Brian Mulroney himself, who had said years earlier that takeovers only benefit lawyers and accountants.

The Great Privatization Swindle

Time and again, privatization has proven detrimental for the Canadian public. The privatization of Air Canada led almost immediately to the merger and consolidation of Canada’s other airlines, culminating thirteen years later in Air Canada swallowing its chief competitor to become the country’s sole “full service” international airline.

Just three years after that merger, Air Canada went into bankruptcy protection. It has since required government bailouts during the Great Recession and during the COVID-19 pandemic. After its second bailout, it sought to acquire another competitor. Meanwhile, it cut domestic routes, laid off twenty thousand workers, and continued to promote air travel despite public health risks. Gerard Di Trolio, writing in these pages, argued Air Canada no longer acts in the public interest, and that it would make sense to renationalize the airline.

Privatization significantly damaged Canada’s aviation sector. Mulroney privatized two aircraft manufacturers which had previously built military aircraft for the Canadian Armed Forces and which had invested billions in developing new aircraft types to corner emerging aviation markets. Despite this massive public investment, the private sector, especially Bombardier Aviation — which acquired these manufacturers — benefited the most. Bombardier leveraged this investment to become the world’s third-largest aircraft manufacturer by cornering the regional airliner market, using technology that had been funded by Canadian taxpayers. Bombardier has since sold off its regional airliner business to Mitsubishi, leaving the Canadian aviation industry a hollow shell of its former self.

Privatization in other sectors also fell far short of Mulroney’s promises, and Canadians are still paying the price for what was lost. The privatization of Canadian National Railways (CN), initiated near the end of Mulroney’s tenure, resulted in the complete elimination of its service in two Canadian provinces and the divestment of parts of what had been a cohesive, vertically integrated transportation company. For seventy-six years under public ownership, CN prioritized Canada’s transportation needs and was a profitable venture that provided hundreds of millions in annual dividends to the Canadian government. Today it pays dividends to its majority shareholder, the Bill and Melinda Gates Foundation Trust. Furthermore, despite considerable public interest in the development of a high-speed rail network in Canada, the nation’s publicly funded railway infrastructure is unavailable for the public’s use.

The False Promise of Free Trade

Free trade was Mulroney’s other key economic policy, and this too wound up doing far more harm than good. Bruce Campbell, writing for the Economic Policy Institute, bluntly assessed the impact of free trade on the Canadian economy, calling it a false promise. He pointed out that while trade with the US increased after the implementation of free trade, inter-provincial trade decreased — and remains a problem today.

Canada’s growth performance in the 1990s was the worst since the 1930s, with per capita family income falling throughout much of the decade. Real incomes declined for the bottom 80 percent of the population, while employment insecurity increased, and the social safety net withered.

Campbell also notes that free trade ushered in an era marked by corporate raiding and takeovers along with a drop in public sector spending and public sector streamlining, all of which contributed to job losses across various sectors. The government’s strategic economic interests in energy and transportation were completely shifted to the private sector.

Writing around the same time, the Canadian Centre for Policy Alternatives came to similar conclusions: free trade has made Canadians poorer, depressed wages, led to more job losses than gains, and ultimately undermined the nation’s sovereignty, particularly on foreign policy issues.

Normalizing Corruption

An attempt to fully document the crime and corruption of the Mulroney years is far beyond the scope of this article. It took investigative reporter Stevie Cameron about five hundred pages to document nine years’ worth of kickback schemes, bid rigging, favors to corporate party donors, patronage appointments, and misappropriation of parliamentary budgets.

Cameron concluded that Mulroney enriched himself while in office, building an enormous fortune and fleecing taxpayers in the process. Cameron’s accounting of Mulroney’s corruption was collected in On The Take: Crime, Corruption, and Greed in the Mulroney Years, which may still hold the record for the highest-selling book about Canadian politics ever written.

Cameron’s reputation was unjustly smeared by well-connected Mulroney loyalists who alleged she had been a confidential informant for the Royal Canadian Mounted Police (RCMP). While the RCMP had labeled her as such, Cameron maintained that she only ever provided the RCMP with information she had already published as a reporter.

The corruption Cameron details ranges from the banal to arguably one of the biggest corruption cases in Canadian political history. Mulroney and his wife Mila were well known for their expensive tastes and their uncanny ability to get other people to pay for their lavish lifestyle. Both were alleged to have received cash allowances from the fundraising arm of Mulroney’s Progressive Conservative Party. They were also said to have refurnished and redecorated their official government residences on the taxpayer’s dime, taking it all with them as personal possessions when Mulroney left office in 1993.

The Airbus Affair

When compared to the Airbus Affair, all previous Mulroney blunders seem mild mannered. This political scandal, which began in the late 1980s and dominated headlines in Canada from 1993 through 2010, revolved around the purchase of Airbus passenger aircraft for Air Canada (in the 1980s, when it was still a public corporation) during Mulroney’s tenure. German-Canadian businessman Karlheinz Schreiber was alleged to have bribed Mulroney to purchase Airbus aircraft as part of a scheme to help the European aircraft manufacturer establish a toehold in the North American commercial aviation market.

Though Mulroney claimed he only peripherally knew Schreiber, evidence later showed that they had several meetings in upscale hotels, involving business transactions with envelopes full of cash. It was further revealed that Schreiber represented two other German businesses that had sought or received Canadian government contracts during Mulroney’s time in office.

Mulroney defended himself against the allegations, claiming they were part of a smear campaign, and sued the federal government for $50 million. Ultimately, the RCMP ended its investigation without laying charges. In 1997, the government settled out of court with Mulroney, agreeing to pay his legal fees — an estimated $2.1 million — despite later findings that Mulroney had indeed received at least $225,000 in cash from Schreiber.

In its obituary, the Globe and Mail mentions the Airbus Affair only in passing, and doesn’t mention Karlheinz Schreiber at all. This omission is like writing Richard Nixon’s obituary without mentioning Watergate or the White House Plumbers. Similarly, other legacy media accounts glossed over Mulroney’s involvement in a political scandal that lasted over a decade.

While Mulroney apologized for taking money from Schreiber, he was only ever found to have acted inappropriately (for an elected official) and to have had an inappropriate business relationship with Schreiber. The RCMP’s investigation into the affair concluded in 2003, several months before the Canadian public became aware Mulroney had in fact received hundreds of thousands of dollars from Schreiber. The public later learned that in 1998 Mulroney had met with Schreiber in Zurich to determine if Schreiber possessed any incriminating documents, and that Mulroney had waited until 1999 to declare the payments on his income taxes. Despite these revelations, Mulroney never had to repay the money.

Mulroney’s time in office showcased the failures of neoliberalism, while his death has demonstrated how the Canadian political and media establishment have conspired to rewrite the historical record in real time. Justin Trudeau hailed Mulroney’s role in creating a “modern, dynamic, and prosperous country,” despite Mulroney leaving behind a ruined economy and a nation so divided that Quebec held a sovereignty referendum within two years of his resignation.

Rewriting History

Many assessments of Mulroney’s legacy highlight his opposition to South African apartheid, though the role he played in this opposition seems to have been exaggerated. Some obituaries describe Mulroney as having “led” international efforts against apartheid, but Owen Schalk points out that Mulroney’s opposition emerged only after the Republic of South Africa government began to face serious and consistent internal and external challenges. Although Canada, under Mulroney, was the first nation in the Anglo-American sphere to declare opposition to apartheid, this was after decades of Canadian support for the apartheid regime. Nelson Mandela recognized Yasser Arafat and Fidel Castro as the leaders most consistently supportive of his struggle against apartheid, not Mulroney.

Mulroney’s outspoken personal opposition to apartheid raised questions about his government’s policy towards Canada’s indigenous peoples. On a 1987 trip to southern Africa, Mulroney bristled at the insinuation the Indigenous population of Canada faced conditions similar to apartheid. However, just a month after Nelson Mandela’s visit to Canada in June 1990, Mulroney authorized a military deployment of 4,500 combat troops to counter Kanienʼkehá:ka (Mohawk) resistance to a golf course and condominium development on an ancestral burial ground. The standoff culminated in a military attack on Kanienʼkehá:ka barricades and widespread allegations of misconduct and abuse by military and police forces. The response of military units, vehicles, and militarized police against Indigenous land defenders and water protectors has since become normalized, even as Canada’s government has adopted reconciliation as an official government policy.

Both Mulroney’s tenure and the rituals of remembrance in the wake of his passing share a “pay no attention to the man behind the curtain” quality. When he stepped down, he was genuinely reviled. His legacy largely consists of policies that left Canadians worse off, and he lowered the bar for the Canadian political class as a whole. It is fitting that the Canadian news media has been unwilling to report honestly about Mulroney’s time in office. Mulroney hoodwinked a nation, confident that in the long run Canadians would rather pretend nothing was wrong than admit they had made a terrible mistake. He knew us too well.