Congratulations go out to the United States for just holding the most exciting Presidential and Vice-presidential election in memory. Four candidates with no prior incumbency vis-à-vis previous administrations at 1600 Pennsylvania Avenue duked it out over several months and the most important issues received a thorough airing.

The Democrats now hold power in the White House, the Senate and the House of Representatives. This surfeit of control presents its own challenges. Plus President-elect Obama’s effectiveness will also depend on whether or not he is able to maintain a centrist position, versus a hi-jacking to the left by the more radical elements of his own party.

The first order of business is likely to be tax cuts for the middle class. This will help to provide the fiscal stimulus that is needed to break the downward spiral of consumer spending that is underway. Combined with the financial bailout packages, there will be a restoration of better prospects for the U.S. economy. In turn, this is crucial for Canada’s prosperity and global growth overall.

Universal health care as proposed by Mr. Obama will change the American social landscape. The new ease-of-mind that this will provide to many U.S. citizens will come as a surprise and a delight. Reduced worries about potential health care liabilities will make it easier to commit to spending in other areas. This is a partial answer to the problems that have arisen from the financial sector credit squeeze.

It will also make U.S. industry more competitive. Canada’s government-backed health-care system has long been a selling point for firms considering investing in this country. Business operating costs are lowered and, in the future, the Americans will be able to tout this advantage as well.

The Democrats will be pushing for more U.S. energy self-sufficiency. Party officials say that they will consider offshore drilling and nuclear power as means to achieve this goal. Canada can certainly provide more electricity and fossil fuels to the North American market – which will reduce dependence on energy from unstable foreign regimes – but there has to be some worry about whether or not Alberta’s Tar Sands oil will be judged clean enough.

A particular focus for the Democratic Party will be on “green” jobs. Promotion of all things environmentally friendly – wind and solar power; hybrid and electric cars – and potential jobs providing such initiatives for domestic and export sales are a big part of the Democratic platform.

Canada must watch these developments closely and try to establish alliances and supply-chain positions whenever possible. This is the wave of the future for production jobs in both the U.S. and Canada. High-tech “green” jobs will provide the counter-weight to low-cost labor and assembly-line jobs in newly industrializing and emerging nations.

Another emphasis for the Democrats will be on keeping and creating U.S. jobs. Hopefully, this will not lead to excessive protectionism. “Beggar thy neighbour” policies are not constructive at any time, let alone during a worldwide recession. Some aspects of the North American Free Trade Agreement (NAFTA) might be open to re-assessment in the areas of labor and environmental standards. But wholesale revamping or withdrawal from the pact would be a mistake.

NAFTA has raised the trade volumes between Mexico, the U.S. and Canada to a significant degree and thereby also increased the living standards of the citizens of all three nations. One can only speculate on how much greater the inflow of illegal immigrants into the U.S. would have been over the past many years without NAFTA in place.

Furthermore, companies have been undertaking country-specific investments throughout North America based on an expectation that the advantages of NAFTA would be there to backstop their decisions. Calling NAFTA into doubt causes the kind of uncertainty that is anathema to capital spending plans.

With some small sense of wonder, the media is reporting that Americans are currently buying guns in record volumes on the expectation that there will be a clampdown on firearm sales under the Democrats. Most Canadians do not understand this aspect of American society. We’ve heard the arguments: the only free man is one who can defend himself with extreme force. Our scepticism is anchored in alarm over what the perceived need to be armed – in terms of heightened anxiety and the potential for tragedy around the home – must do to the psyche. This is an issue that will remain divisive for the citizens of both nations.

Internationally, the War on Terror is likely to shift from Iraq to Afghanistan. This may free up some money for spending at home, to cover social initiatives and infrastructure capital projects. But for Canada, the main benefit will be to offer support and a measure of relief for our troops fighting the Taliban. To this point in time, a successful resolution of that conflict has appeared near impossible.

In summary, on November 4th there was almost universal joy in the fact that the U.S. resumed its moral leadership among the community of nations. A new era of international cooperation and consultation has been promised or, at least, implied. To the world at large, one week ago Tuesday seemed to represent several welcome ascendancies: of the fresh over the stale; of opportunity over entitlement; and of goal-seeking over negativity.

Perhaps most important, however, for a world facing crises across a broad spectrum of issues – from feeding the world’s poor to financial sector reform and from dealing with rogue states to preserving the environment – hope has been lifted that substance will triumph over attitude.

Alex Carrick

Find Canadian construction-related economic articles in Canadian Construction Market News and in the Economic Outlook section of Daily Commercial News.

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