ANNAPOLIS ROYAL - “March to the sound of the guns” is a Battle of Waterloo quote Peter Nicholson uses from time to time and it defines much of his life. He’s found himself in the thick of national and international problems, has gone to the core of the issues, and managed to come up with solutions that often in hindsight should have been obvious.
He’s Canada’s one-man think tank and has been called upon by prime ministers and premiers to come up with solutions to problems. He claims an outsider’s perspective, a bit of a contrarian disposition, and a logical mind.
Nov. 7 he was presented with the Order of Nova Scotia at a ceremony in Halifax.
From his home in Annapolis Royal the next day he talked about some of the highlights of a life that took him from studying physics at university, helping chart new fisheries policy, coming up with a solution to the Latin American debt crisis, to helping draft the 1995 federal budget that turned around Canada’s dire fiscal position.
Nicholson comes from Nova Scotia’s smallest town and graduated from a small class at Annapolis Royal Regional Academy -- an almost legendary group of achievers.
“Certainly ARRA as an educational platform to equip you to take on the world I think was pretty darned good. I didn’t go to a bunch of other schools so I don’t know,” said Nicholson as he sat in the living room of his house across St. George Street from the school. “We had a terrific group of teachers, and we had a terrific class. My Grade 12 class, which was basically people I was with all the way through, ended up with three people getting the Order of Canada – it was a class of 24 or 25 people.”
Nicholson was one of those recipients along with classmates Judith Maxwell and Daurene Lewis.
From ARRA, Nicholson went on to Dalhousie University where he studied physics and earned bachelor and master degrees in science, and earned a Doctor of Philosophy degree at Stanford University in California.
Since then he’s been busy.
“Peter Nicholson has been a central force for policy changes in fisheries, third-world debt, national economic policy, and science and technology,” said a citation with the Order of Nova Scotia award. “He is deeply committed to finding new and better ways of doing valued things.”
It said Nicholson was the principal author of the 1980s Kirby Task Force that set out principles that still govern the Canadian fishery and as senior VP of the Bank of Nova Scotia proposed a resolution to the Latin American debt crisis of the late 1980s.
“As deputy chief of staff in the prime minister’s office in the 1990s, he helped turn around Canada’s fiscal position,” it said. “Internationally, he has been special advisor to the secretary-general of the Organization for Economic Co-operation and Development in Paris. Nationally, he helped to develop a strategy on science and technology and the Canada First report. Provincially, he contributed to the One Nova Scotia report and The Field Guide for Nova Scotia’s Innovation Ecosystem.”
Initially, the Latin American debt problem wasn’t even Nicholson’s concern. He knew some of the Scotiabank group that was trying to sort it out and listened to what they were saying, thought about it, and said there had to be a better way.
Banks across North America had loaned money to Latin American countries with floating interest rates and when the interest rates jumped to as high as 20 per cent, the crisis became obvious. The solution less so.
“The losses that the banks were looking at were enough to bring them down,” Nicholson said as he described the economic chaos of the 1980s brought on by skyrocketing interest rates in the early part of the decade.
“So you had a really, really serious … problem that the banks did not have enough equity to absorb the losses that they were staring at. And that was one of the reasons that the only solution at the time was keep lending these countries more money because as long as they were formally paying you interest the bank regulators would not cause you write down the value of the loans and take those losses on your balance sheet.”
Nicholson’s idea was backed by then Bank of Nova Scotia CEO Cedric Ritchie.
“The approach was pretty simple – it was take these loans that were at floating interest rates, give them a fixed interest rate – five per cent it turned out – but extend the term up to 30 years and have the IMF guarantee that the principal would be paid in 30 years time,” said Nicholson. “But a dollar being paid 30 years out doesn’t have that much value in the here and now. So it was a deal that looked okay from the public authority’s point of view. Their liability was out 30 years. It gave the countries certainty because they were looking at a fixed interest rate.”
Nicholson worked on the problem for two years.
“I didn’t do anything else,” he recalled.
Finally, when the first George Bush became President, within two weeks his new Treasury Secretary James Brady endorsed a plan that was exactly like the one Nicholson had been putting forward for two years.
“By that time there were others who had come to the realization that something similar to this was going to have to happen, so I wouldn’t ever say this was an idea that wouldn’t have been eventually landed on,” said Nicholson. “But there is no question we had tilled the soil. We had a good relationship with a very significant law firm in Washington. We were sort of aligned with American Express at the time that didn’t have much exposure but had a real interest in currying favour with some Latin American countries. And American Express had terrific connections in Washington. All that meant that we were able to get these thoughts into the system. And when the administration changed and the former Treasury Secretary, a guy named Baker – Jim Baker – was replaced, it was easy for the new guy coming in to finally say we need this new approach.”
These instruments used to solve the crisis became known as Brady Bonds.
“They still exist,” Nicholson said. “A secondary market developed for them quite quickly and it solved the problem.”
Nicholson likes the analogy of life as a river.
“I floated down the river, with a little bit of a paddle, not so much that I tried to look too far ahead, but I did look for opportunities where things were happening,” he said. “I used to say that like Napoleon I tried to march toward the sound of gunfire. When I look back at all of the things that I’ve done, virtually all of them involved getting tangled up in some big problem that didn’t have any very obvious answer at the time. I guess overlaying it all was an interest in the public sector, but I think that provided a general direction. I was more drawn by problems -- where confusion reigned I like to try to think through the situation.”
And it may be that he looks at things from a different perspective.
“I often tried to escape from the conventional wisdom because someone once said if you keep doing the same thing you can’t expect a different result,” he said. “So certainly I brought almost always a bit of an outsider’s perspective. That sometimes doesn’t work. I mean often there are a lot of things that only the insiders know. If you’re an outsider who listens to the insiders sometimes you get the best of both worlds. I think that was definitely the case in the Latin America debt issue.”
Asked what advice he might offer to young people, Nicholson said that’s difficult.
“It’s hard to give advice for two reasons. The world has changed. The particular skill set that I have I can see is facing declining demand. I’m somebody who is deeply involved in the detail of things, reading huge documents, and not watching videos – it’s a very different kind of relationship to information. And the second reason of course is that people are different in terms of what motivates them. What works for me might not work for someone else.”
But he had a few thoughts akin to advice.
“I think what you could say pretty universally is look for ways in which … you can add value. Don’t always wait to be told. Keep your eyes open. Listen carefully to the people who have been there. Don’t be arrogant. This is a problem I’ve seen over and over again with people coming into organizations – they feel the lifers don’t have anything to teach them. Well, that’s a huge mistake.”
He said all of that is basically saying maintain a level of humility married with curiosity.
“I’ve always just wanted to understand the way things work. That’s what’s motivated me. I’ve got a very curious nature,” he said. “It doesn’t matter what it is, I’m interested in trying to understand it. That’s important for certain kinds of work, in other cases of course you don’t particularly want to be creative. You want to fit in and just do the job that’s in front of you competently.”
He thinks there is going to be less and less opportunity for that going forward.
“People are going to have to be more imaginative, innovative, to stay ahead of the machines,” he said. “Anything that’s routine you know there’s a robot waiting to take it over. So I think that maintaining a level of curiosity and some commitment in creativity which usually means identifying the better ways of doing things, the problems that need solving, and that’s the frame of mind you have to take in order to be successful – more so in the future even than it’s been in the past.”
Nicholson, at 75, is part of that future he talks about. He’s still curious, still thinking, still working, and still in great demand. And when he’s not working, he and partner Jane go dancing.