Viking Books, 1995, 309 pp., $29.99
The title of Linda McQuaig’s latest book, Shooting the Hippo, is crafty, provocative, and witty; the book, unfortunately, is not. After all the pre-release hype, the joyful praise from socialist reviewers, the mad rumbling from conservative reviewers, and its purported number-one bestseller ranking for several months, one would guess this would be a book to sink one’s teeth into. According to reviewer John Ralston Saul: “McQuaig has laid out sufficient material to throw serious doubt on the economic policies that dominate our society.” Expecting a well thought out critique that will provide some life to the left of centre crowd in Canada, readers instead encounter a sophomoric rant that only occasionally departs from describing the offices of the financial elite and speculating about their lifestyles and spouses. And then it is to inform us—hold your breath—that Canadians are being held captive by the monetary lust of a small group of conspiracy-minded bondholders.
The conspiracy uncloaked
This revelation apparently has been suppressed through the conspiracy of silence that involves bondholders, economists, capitalist media tycoons, the Bank of Canada, etc. McQuaig believes there is an organized attempt to keep debtors in debt by keeping interest rates artificially high. High “real” interest rates ensure the continued prosperity of the rich class which apparently controls pools of capital worldwide, while keeping the debtor class shackled. Since the Bank of Canada sets interest rates, the conspirators make sure the Bank is stocked with zealot economists who believe the myth of zero inflation, and the chief monetary tool to combat inflation is to set high interest rates. As the blind economists gainfully pursue the Holy Grail of zero inflation, they unwittingly play into the hands of the clever masterminds. And suddenly it all becomes clear how bondholders are quietly running Canada for their own selfish gain.
It is difficult to know how to respond to McQuaig’s simplistic retried Marxism. Is she attempting to humour Canadians? McQuaig’s supposed revelatory insights are seriously flawed. First, the Bank of Canada has virtually no control over long-term interest rates and the world’s bond markets, particularly when our governments borrow more each year than we save as individuals. Second, the foreigners that she so clearly dislikes have lost billions by loaning the federal government buckets of money over the last two decades. Why? Because the irresponsible practices McQuaig advocates ensure a falling currency over the long run. Thus when foreign investors buy a bond that yields eight per cent annually, only to watch our currency decline 10 per cent, they lose money, all for the privilege of funding an increasingly spendthrift nation. Many Japanese pension funds have lost hundreds of millions over the last decades on Canadian bonds. For their troubles, McQuaig calls them “grumpy, sour bondholders who revel in the misery of others” (p. 89).
Spendthrift ways ignored
Despite its many faults, Shooting the Hippo does make two useful points. McQuaig is correct in noting that the debt debate in Canada has recently centred almost exclusively on reducing spending, while relatively little has been put forward about other measures to put our nation’s finances on a healthy footing. Presumably this development is what fosters her belief that the media are part of the conspiracy. But while lamenting this imbalance of argument, her book provides nothing in the way of an alternative blueprint for balancing our nation’s fiscal ship.
McQuaig does an excellent job of showing how the years 1989-92 were marked by conflicting fiscal and monetary policies. While large deficits were run federally and provincially, and taxes (such as the GST) were raised, heating up the economy, on the monetary side the Bank of Canada was trying to cool things down through dramatically raising short-term interest rates ahead of the United States. These conflicting policies, not surprisingly, precipitated a recession. McQuaig would have us believe that this error caused the entire debt burden we now live under.
Somewhere in her analysis, she forgets the spendthrift ways of successive governments from 1975-1989! The lack of fiscal and monetary coordination late in Mulroney’s second term aggravated an already disastrous debt situation. But McQuaig gravitates to this brief period because it serves her assumed thesis, namely, that government spending has nothing to do with our current debt malaise.
Shooting the Hippo is a disappointing book. Despite its length, it contains a very weak and incomplete critique of the current economic conventional wisdom. Completely lacking is any prescriptive insight, any discussion about the appropriate size and role of the state in the lives of the citizenry. Instead, it eventually grinds to a halt, determined at all cost to maintain the status quo, even if that means asking Canadians to suspend their intelligence long enough to believe that an elite group of financial insiders are running the country from behind closed doors. Who knows, they could be meeting right now?!