BERNIER’S BIG VICTORY. WILLIAM WATSON,

OPPOSING SUPPLY MANAGEMENT AND HANDOUTS GOT HIM SURPRISINGLY CLOSE.

I completely missed the Conservative leadership excitement Saturday. I spent all day in a hotel meeting room in Vancouver talking to 25 Canadian journalists about economics. It’s a Fraser Institute initiative built on the belief that if Canadian journalists better understand economics then so, eventually, will their readers, listeners and viewers, and in the long run that will produce better public policy.

It’s a leap of faith, admittedly. The Fraser Institute normally sets great store by measuring outcomes: “If it matters, measure it,” is its motto. Confirming whether educating journalists in economics has worked will be hard, but private institutions and the individuals and entities that fund them are free to spend their resources as they see fit, so more power to them.

Economics for journalists is clearly a long game. In a leadership campaign, by contrast, the short term rules. But maybe the long view is the best way to read the Conservative leadership results. I don’t know if Maxime Bernier is really a libertarian, as the press characterized him. But he was the most libertarian candidate for the leadership of a major Canadian political party in a long time. Not the most libertarian ever. If you read the speeches of Wilfred Laurier and even Mackenzie King, they’re pretty libertarian. People forget that this country used to have a smaller public sector than the U.S. In the 1940s, our leading political journalist, Bruce Hutchison, called us “the last surviving rugged individualists.” Not long afterward, however, we too adopted the welfare state. Rugged individualism went out of style.

For supporters of free markets, Bernier’s narrowest possible of losses Saturday night (just 51 to 49 per cent) must be bitterly disappointing, especially since, after unreality candidate Kevin O’Leary dropped out, it seemed he had the thing won. But step back to Bernier’s announcement of his candidacy almost exactly a year ago. What were the chances a candidate opposed to supply management, equalization and fiscal handouts aimed at “creating jobs” could win? Slim and none was most observers’ bet. In the end, they were right: Bernier didn’t win. But it was a wonderfully and surprisingly close-run thing.

Part of the economics my co-teachers and I give the journalists the Fraser Institute assembles is a brief introduction to “public choice” theory, which is how economists analyze political decision-making. An axiom in the publicchoice literature is that policies with highly concentrated benefits and widely diffused costs can pass even when their total costs are greater than their total benefits.

Supply management is a classic example. It’s a lot easier to organize 10,000 dairy farmers in support of supply management than it is to organize 35 million Canadians to oppose it. The cost of higher prices for milk, eggs, chicken, cheese, ice cream and so on is not negligible, but to individual consumers it’s not big enough to get them into the streets in protest. By contrast, the prospect of losing several hundred thousand dollars worth of dairy or poultry quota is more than enough to concentrate dairy and chicken farmers’ organizational impulses. So it’s no surprise that the last time Parliament delivered itself of an opinion on the subject it was unanimously — repeat: unanimously — of the view that no new trade deals should touch supply management. The last prominent Canadian politician to come out against supply management — former Liberal MP and leadership candidate Martha Hall Findlay — did so from outside the House of Commons and she is no longer in politics.

Maybe the short-term lesson of Bernier’s loss is that if you support pro-market policies that traditionally have been political poison, you lose. On the other hand, maybe the lesson is that Bernier got very close to winning, even with strong market policies. Did he lose the fatal one per cent because of his policies or because of his and his campaign’s other faults? Hard to say.

But then there’s the long run. John Crosbie’s loss to Brian Mulroney in the 1983 Progressive Conservative leadership candidate was a heavy blow to supporters of Canada-U.S. free trade, which Crosbie had supported and Mulroney had not. Yet only five years later Canada-U.S. free trade was the law of the land. Crosbie never got to be prime minister. But he has the satisfaction of knowing he was right for the long run.

It’s true, as John Maynard Keynes noted, that in the long run we’re all dead. But before that ultimate unavoidability, a lot can happen. In the 1970s, I never thought I’d live to see Canada-U.S. free trade. Not so long ago I never thought I’d see a quasi-libertarian come within an ace of being Canada’s opposition leader. For friends of the market, the glass is not 51 per cent empty after Saturday’s vote. It’s 49 per cent full.