Stephen Harper’s concept of “enlightened sovereignty,” presented in his speech on Thursday to the World Economic Forum at Davos in Switzerland, is a useful one for international economic policy, and offers a middle way between nationalistic self-interest and supranational regulation.
The phrase is built on the idea of enlightened self-interest, drawn from Alexis de Tocqueville’s discussion of “enlightened egoism” in his book Democracy in America, which he also called “the doctrine of interest well understood.”
On the one hand, Mr. Harper advocated the adoption around the world of “similar regulatory practices” for financial institutions, with what he called international peer review. And he spoke approvingly of the G20′s agreement to “chart the same course toward calmer waters.”
On the other, this would not mean identical financial-sector regulation in all countries, though Mr. Harper did offer the successful Canadian model as a guide for the future (while tossing in a good word in favour of the not yet existing national Canadian securities commission). And he opposed excessive, micromanaging, arbitrary or punitive regulation, while not trying to minimize state supervision either. On the contrary, he argued that if financial regulation remains inadequate, the next crisis will be worse than the one in 2008 and 2009; inaction would be a clear message that banks and other financial institutions would again be rescued from their own recklessness; the moral hazard would be greater than ever.
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