How and why Stephen Harper is a bad economic manager

Prime Minister Stephen Harper likes to tell Canadians that his Conservatives are the only to party to be trusted with the economy. If you’ve watched Question Period, a speech by the PM or his finance Minister, Joe Oliver, or one of the ‘Economic Action Plan’ ads, you’re probably familiar with some of the talking points: ‘a steady hand’ in ‘fragile economic times‘, ‘keeping taxes low’, ‘a low tax plan for jobs and growth’, ‘tax relief for families’, ‘1.1 million net new jobs (since the depth of the recession in 2009)’, to name a few. On April 21, the Conservatives introduced their first balanced budget since the recession – as they had promised. They have accused both the Liberals and NDP of wanting to spend recklessly and raise taxes – recently alluding several times to Pierre Trudeau (Liberal PM from 1968-’79, ’80-’84) as a cautionary tale.

Canadians have largely been buying it. Over the decade they have been in power, polls have consistently shown that Harper’s Conservatives are trusted by more Canadians on the economy than are the other parties (e.g., recently here).

But does the Conservative economic record stand up to scrutiny? I would argue the answer is a clear ‘no’. In this post, I will briefly make my case in three ways: First, I will bust what I think are some of the most prominent myths about Harper’s economic track record and leadership. Second, I will argue why Harper’s policies, ideology and governing style are corrosive to long-term growth prospects in Canada, even putting aside his track record. Lastly, I will discuss the shortcomings of the recently released 2015 budget.

Myth 1: Canada weathered the global recession better than other G7 countries because of Harper’s leadership.

Facts: Canada weathered the global recession better than other G7 countries, yes, but did so in spite of Harper as much or more than because of him. Experts mostly agree that Canada has fared well for two reasons: (i) our banks had regulations preventing them from engaging in many of the risky lending practices that brought down the big U.S. banks (Harper himself has said this); (ii) we, like most other developed countries, used fiscal stimulus to cushion the fall in the immediate aftermath of the banking crisis, and we bailed out some of our big manufacturers (e.g. General Motors and Chrysler).

Canada’s banking regulations pre-dated Harper by decades. In fact, prior to the financial crisis, Harper was a proponent of deregulation. In 2006 for example, he paved the way for the introduction of the risky 40-year, zero-down mortgages that helped bring down the U.S. banking system – insured by Canadian taxpayers. Some have argued that Canada would have suffered much worse in the financial crisis had it happened a few years later. In fact, we may not even be out of the woods yet. Canada’s housing market is considered to be dangerously (~35%) over-valued, and the drop in oil prices is threatening to burst the bubble. In opposition and at the National Citizens Coalition, Harper was similarly a proponent of U.S.-style banking deregulation, and was a critic of Chrétien’s decision to block large bank mergers in the late ’90s – a decision which the IMF recently argued was partly responsible for how well Canada was able to weather the crash.

As for the stimulus, Harper’s government did enact it – for which they deserve some credit – but with two very important caveats. First, their initial planned response to the financial collapse – outlined in their November 2008 fall fiscal updatewas to cut government spending (i.e. austerity), not to add stimulus. For some reason, everyone seems to forget this (maybe it’s the $750 million-worth of ads). They only enacted stimulus (a) after being told by the opposition that their minority government would be defeated if there was no stimulus in their budget (see summary of the dispute here), and (b) under considerable pressure from other G20 countries looking for a unified response. Second, the release of their stimulus was delayed by several months by Harper’s proroguing of Parliament in fall 2008 to avoid an election; and the stimulus itself was only partially rolled out, was much smaller (0.4%) than the 2% of GDP agreed to by the G20, and was heavily skewed towards Conservative ridings rather than economic need (Rick Mercer lampooned this on 22 Minutes). Had the Conservatives enacted austerity in response to the recession (as they quite likely would have had they had a majority) – Canada’s recovery could easily have looked more like the even more anemic recovery of the European Union – for which many economists blame austerity policies enacted by fiscally conservative governments in England and Germany, for example.

History of Canadian budget surpluses and deficits. Source: CBC: http://www.cbc.ca/news/multimedia/canada-s-deficits-and-surpluses-1963-to-2015-1.3042571

History of Canadian budget surpluses and deficits. Source: CBC: http://www.cbc.ca/news/multimedia/canada-s-deficits-and-surpluses-1963-to-2015-1.3042571

Myth 2: Conservatives balance budgets; Liberals run deficits.

Facts: With the exception of the Liberals from 1997-2006 under Jean Chrétien and Paul Martin, basically no one has balanced the federal budget since the early 20th century; but the Tories (Conservatives/Progressive Conservatives) have run some of the largest deficits (see figure at left from CBC).

Myth 3: Conservative governments produce better growth than Liberal governments.

Fact: Historically, it’s been the opposite. In fact, controlling for a number of other factors (including US growth and lagged US growth), a recent study found that growth was on average 2% higher with a Liberal government in power than with a Conservative (or PC) one. Of course, as with the budget numbers, there are a lot of factors beyond the government’s policies that could be at play here. For example, Tories were in power during both major global recessions of the last century (Harper, and R.B. Bennett in the 1930s) (though recall that the study controls for US growth). Another possibility, discussed by the study’s authors, is that perhaps voters prefer Conservative governments during tough economic times and Liberal governments during prosperous times.

A third possibility is that Conservative governments have performed worse economically than Liberal governments because they are generally more ideological, which reduces their ability to strategically pivot their policies to match the times. As a cartoon example, if one is willing to accept the notion that at least some level of government is needed for a strong economy, then it stands to reason that some times will call for larger government; others will call for smaller government. A party that is only willing to consider shrinking (or growing) government will be wrong a substantial fraction of the time. Past Liberal governments, for example, have bended their traditional economic centrism both to the right (e.g., Chrétien’s spending cuts of the late ’90s) and to the left (e.g., Pierre Trudeau’s Canada Health Act and National Energy Program). This focus on adaptability (and evidence) over ideology might explain why a 2008 study found that 40% of Canadian university professors identify as Liberal – more so than any other party and quadruple the number that identify as Conservative. Studies in the U.S. have found similarly low support among scientists for the Republicans (also considered to be the more ideological of the two parties).

Regardless of whether the apparent Liberal economic advantage is causally-linked or spurious, there is very little evidence, if any, to support a Conservative claim to be superior economic managers – at least historically. Canada’s growth and employment numbers under Harper certainly aren’t anything to get excited about.

Why the Harper government is a threat to Canada’s long-term growth

Whether or not you buy my take on Harper’s economic record to-date, here are three reasons Harper’s policies and politics are a threat to long-term economic growth in Canada.

1. He is eroding Canada’s political and informational capital 

Good data and a healthy political system are key to good decision-making, and no PM has done more to erode both in Canada than Stephen Harper. Here are some of the highlights: He scrapped the long-form census – a decision which has already obstructed city planning and other policy-related research across the country. He has systematically dismantled the federal government’s science and science outreach capacity (see referenced chronicle here), especially on the environment file (he also appointed a Science and Technology minister who suggested he might not believe in evolution, and an Environment minister who doubted evidence of climate change). And last, but certainly not least, he and his Conservative government have taken the level of discourse in Parliament to a never-before-seen low (also being the only government ever found in contempt of Parliament).

Some people argue that Harper’s parliamentary antics are nothing new; but if you look back at old clips of Question Period, for example, it is plainly obvious that no previous government even comes close to Harper. Take the decision of deploying Canadian troops in combat for example – a life-and-death decision that you would think should be accompanied by a reasoned, non-partisan debate. Here are clips of Harper and Chrétien explaining decisions to go/to not go to war in Question Period. Here is Harper’s Parliamentary Secretary, Paul Calandra, addressing the same question. The differences are striking.

2. His instincts are often wrong and his ideological learning curve is slow

Here is a short list of ideological ill-fated economic (or economy-related) policies or positions that Harper has taken, and taken longer than most to abandon:

(i) Canada should have joined the war in Iraq (see his speech to this effect here, which he plagiarized from Australia’s John Howard). The U.S.-led campaign in Iraq found no weapons of mass-destruction and did nothing to help stability in the region (in fact, it arguably laid the breeding ground for ISIS), and cost the U.S. taxpayers over $2 trillion.

(ii) Third-party election spending limits should be abandoned. In the U.S., the 2010 Supreme Court’s ‘Citizens United’ decision dismantled third-party campaign spending limits – leading to an unprecedented explosion of money, and arguably corruption, in politics. Citizens United was a lobby group that sued the government over their right to run negative advertisements against Hillary Clinton during the 2008 campaign. Less widely known is that Stephen Harper himself launched a very similar court challenge against the government of Canada in 2000 (as President of the National Citizens coalition), but lost. As PM, Harper has eliminated public campaign financing (but waited to benefit from it first) and raised campaign spending limits, but thankfully has backed away from outright eliminating spending limits (as he once promised to do).

(iii) It is a good idea to ignore China. In his first three years in office, Harper decided to give China the cold-shoulder politically in order to posture for his base, citing the Chinese government’s record on human rights. While I share Harper’s concern for human rights in China, neglecting relations with China (and not many other countries with worse human rights records – including Saudi Arabia, which his government sells arms to) did not accomplish anything on that front, and might have had an economic cost (so the opposition argued). To his credit, Harper did eventually come around and engage with China on trade, though also ended up signing a secret 31-year foreign investor protection agreement (FIPA) that many experts think is a bad deal for Canada that could pose serious risks to sovereignty.

(iv) The economic future of Canada’s is as an ‘energy superpower’ – led by the oilsands. Harper’s Conservative government has made aiding oilsands development (which they call ‘responsible resource development‘) a centerpiece of their economic policy. Their strategies include billions of dollars in subsidiestens of millions of dollars in advertising campaigns in the U.S. promoting the Keystone XL pipeline, dismantling environmental regulations, and muzzling and maligning environmental groups. This aggressive focus on oil has come at a cost to growth in other industries – especially manufacturing in eastern Canada. With oil prices in what seems to be a long-term low, Canada’s already anemic economic growth has stalled, and experts are questioning whether it was wise to stake our economic future on oilsands oil (e.g., here and here). Despite this, Harper’s government has so far shown few signs of changing their approach.

The ultimate cause of the recent fall in world oil prices is that the emergence of new, largely unconventional (e.g., oilsands, shale gas), oil and gas reserves is outstripping the pace of global demand growth. The proximate cause is low-cost producers (e.g., Saudi Arabia) refusing to cut production in order to protect their market share and force higher-cost producers to cut back or leave the market. Canada’s oilsands producers have some of the highest costs – making them most vulnerable to low prices and weak demand. Any global shift away from fossil fuels in order to combat climate change will weaken demand further, and there are signs of this happening – with the U.S. and China recently signing a major climate deal, and the upcoming Paris conference likely to usher in further commitments from the international community. What’s more, what little global demand exists for oil and gas in the coming decades is forecasted to occur mostly in China and other developing countries – not in the OECD. With Canada’s pipeline projects stalling and China recently signing a major liquid natural gas (LNG) deal with Russia, for example, Canada’s prospects as an oil-driven energy-superpower seem to be dwindling (see also here).

(v) Bully-tactics are effective at getting pipelines approved. Pipelines – to get oilsands products out of landlocked Alberta and into global markets – have always been a key piece of Harper’s oilsands development strategy; but nearly a decade into his term in office, none of the major proposed pipelines have been built. Arguably, one of the biggest reasons for this is the Harper government’s bully approach to selling the pipelines. In the U.S. for example, the Obama administration has repeatedly stalled on issuing a decision in response to pressure from environmental groups. Instead of recognizing these domestic pressures and working with the Obama administration to ease some of the environmental concerns (which might have been possible considering the alternative modes of oil transport – chiefly rail), Harper has instead opted for making bellicose public statements (e.g. that he ‘won’t take no for an answer’, a thinly veiled threat of a NAFTA challenge) and spending millions on U.S. ad-blitzes. These actions have made approving Keystone XL harder, not easier, for Obama to justify politically, and so he continues to stall – it now looking increasingly likely that he will ultimately not approve the project. In 2013, Harper did finally (quietly) offer Obama joint emissions regulations on oil and gas in exchange for Keystone XL approval; but so far this has been too little, too late. At this point, some question whether the economic case for Keystone XL still exists, or if the ship has sailed.

(vi) Ignoring climate change is good for our economy. The Harper government’s record on climate change is internationally renowned for how bad it is. Harper and his team often claim that emissions-reduction policies, such as carbon pricing or regulating the oil and gas sector, are bad for the economy. Yet, aside from the damaging effect of Harper’s climate policy on pipeline prospects and the oil industry’s global reputation, evidence continues to mount that combatting climate change – and leading rather than lagging on this file – is good economics. Even Preston Manning – founder of the Reform party – and other prominent conservatives are recognizing this evidence.

The National Roundtable on the Environment and the Economy (which Harper shut down in 2012) estimated that climate change will cost Canada’s economy $5 billion annually by 2020, and up to $43 billion annually by 2050. Since Canada signed Kyoto in 1997, economists have been saying that meeting its emissions targets does not have to hurt the economy if policies are implemented immediately and steadily. Indeed Harper’s own emissions targets for 2020 could have been achieved with no economic ill-effects; they won’t be – even Harper now says so. Meanwhile, British Columbia has had a carbon tax since 2008, and has seen both its emissions reductions and economic growth outperform most other regions of the country. The IMF – hardly a bastion of leftism – has called on all countries, including Canada, to adopt carbon taxes and use the revenue to reduce other taxes. They estimate that a well-designed carbon tax could increase Canada’s GDP by 1.4%, reduce carbon emissions by 15%, and reduce air-pollution-related deaths by 25% – hardly the ‘job killer’ the Conservatives describe.

The bottom line is that the world is headed towards more and more climate action – because it’s good for the economy, the environment, and human health. In the long run, this will mean more and more demand for low carbon technologies, and less and less demand for fossil fuels. That doesn’t mean we should suddenly stop extracting our fossil fuels altogether while there’s still demand, but it does mean that getting out in front of the rest of the world on building a low-carbon economy will create long-term economic opportunity for us, and lagging behind will create long-term economic pain – as our transition will have to start more abruptly, from a position of greater disadvantage, the longer we wait.

3. He has poor character 

As I discuss in a previous post, a politician’s character is important in determining how well they govern – perhaps more important than their platform. A politician governing in their own personal interest, rather than the interest of society, is bound to make bad – but politically opportunistic – choices. Richard Nixon, for example, sabotaged Vietnam peace talks in 1968 – causing the war to drag on for five more years and kill millions – in order to win the U.S. presidency. Harper has yet to make a decision this disastrous, but few – even among Harper’s friends – debate the charge that he is ruthless, vindictive, and hyper-partisan, like Nixon. Tom Flanagan, Harper’s political mentor and former chief of staff, provides the following description of Harper’s politics in his new book:

“He believes in playing politics right up to the edge of the rules, which inevitably means some team members will step across ethical or legal lines in their desire to win for the Boss. He can be suspicious, secretive, and vindictive, prone to sudden eruptions of white-hot rage over meaningless trivia, at other times falling into week-long depressions in which he is incapable of making decisions.”

Harper’s pettiness has already had consequences on economic policy – the delayed and inefficient stimulus (see above) being one; his carbon pricing policy arguably being another (the Conservatives actually supported North America-wide cap-and-trade in their 2008 election platform, but then backed off after their attack ads on Stéphane Dion’s ‘Green Shift’ proved effective). We should not underestimate how far down Harper is willing to drag Canada’s public interest to protect his own. The ‘Fair Elections Act‘ is a prime example of this.

Budget 2015: Inefficiency, inequality, and low-growth policies

Joe Oliver, Harper’s Finance Minister, recently tabled his government’s election-year budget – one that is ostensibly balanced. This budget has received some positive reviews (e.g., here); others negative (e.g., here); others mixed (e.g., here). In his post, Ian highlights what he thinks are some positive measures in the budget. To be clear, I also do not think this is a disastrous budget that will blow up the Canadian economy. However, I do think that most of the new measures introduced in this budget fail the economic sniff-test, including some that Ian defends. Aside from the copious accounting gimmicks, I see three troubling themes in this budget: inefficiency, inequality, and low-growth policies.

Canada’s already weak economic growth has stalled because of the oil price collapse (our economy shrunk in January). We need public investments to stimulate the economy, and the feds are currently in a strong fiscal position (low debt/GDP), while the provinces are not. This, combined with the fact that the costs of borrowing are at historic lows, means that balancing the 2015 federal budget shouldn’t have been a priority to begin with. Thus, if they were still insistent on balancing the budget, it would be imperative for their tax and spending changes to be efficient – producing high returns on each dollar invested (or not collected).

But what we see in this budget – and have seen throughout the Conservatives’ tenure in office – is inefficiency. The big-ticket tax cuts – income splitting and doubling tax-free savings account (TFSA) limits (at least the versions offered)- will cost billions, will benefit few, and won’t create jobs. This high cost and low return are one of the reasons the late Jim Flaherty, Harper’s previous Finance Minister, opposed income splitting. The TFSA limit increases could be far worse. Some experts fear they might be a ticking fiscal time-bomb for future governments – one Oliver flippantly suggested Harper’s granddaughter can worry about. There’s a new small business tax cut, which also may or may not create jobs. Corporate tax cuts – in Canada and elsewhere – have a dismal recent record of job creation – explained here by Forbes. Those same billions, if spent on infrastructure (which is in need of upgrade across the country), education, or research, for example, could create much more of the ‘jobs, growth, and long-term prosperity’ that the Harper Conservatives claim to espouse. They are promising some infrastructure spending in this budget, but much of it is backloaded to future years (e.g., their much-touted transit funding starts in 2017-2018) – no doubt so that it doesn’t count against this year’s bottom line.

Inequality is also a major theme in the 2015 Conservative budget – especially inequality among generations, and inequality among seniors. Much has been made already of the inequality in income splitting and TFSA limit increases. Income splitting benefits fewer than 15% of families – the wealthy disproportionately (this is the main reason Jim Flaherty opposed it). Increasing TFSA limits, too, will benefit primarily the wealthy (who have $10,000/year to save) as well as seniors. Seniors – declared by many pundits to be the budget’s big winners – will also benefit from decreases in the required Registered Retirement Income Fund (RRIF) withdrawal limits. But the budget doesn’t necessarily even benefit all seniors – again favouring the rich – but ignoring the chronically underfunded Canada Pension Plan and Old-Age Security, which lower-income seniors depend on (and also ignoring rising inequality among seniors).  There is almost nothing in the budget for young people – aside from a small increase in student loan eligibility – despite persistently high unemployment and underemployment among Canadian youth and growing intergenerational inequality. But young people don’t vote, and when they do they often don’t vote Conservative.

There are other inequality-magnifying provisions that have received less attention. For example, the budget saves $1.8 billion dollars by keeping Employment Insurance (EI) premiums higher than payouts (EI is supposed to be revenue-neutral). This amounts to a tax hike on labour – being used to pay (among other things) for a tax-break on the savings (capital) of the rich. Capital in the Twenty-First Century indeed.

Trade policy – Harper’s silver lining?

Credit where credit is due: trade policy is one area where I think Harper has done decently for the most part (FIPA with China aside). His government has advanced trade agreements with the E.U., South Korea and India, among others, and appears at this point open to considering the concessions needed to join the Trans-Pacific Partnership (TPP). Free trade deals aren’t always sunshine and rainbows, particularly for the smaller countries (which tend to lose in arbitrations) and smaller businesses (who don’t benefit as much from export opportunities but can be squeezed by new competition); but for the most part, they do grow the pie, and the global economy is headed generally towards more trade, not less.

But even if all of Harper’s major trade deals are ratified (which is far from certain), his economic legacy will still be one of slow growth, high deficits, fiscal inefficiency, rising inequality, ideology over evidence, and harm to long-term growth potential. It’s a record that they should want to run from – and voters should want to chase them out of office for – if someone would only shine a bright enough light on it.

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35 thoughts on “How and why Stephen Harper is a bad economic manager

  1. Well written article Matt. You raise many important concerns, even from a personal level, on how you are dissatisfied with the Harper government and how they have stalled economic growth while in office. However, my only critique of your article is when you mention the ‘dangerous’ policies Harper was willing to implement, but backed down from (e.g. deregulating banks, not making Canada join war in Iraq, ignoring China, abandoning third-party spending limits, using bully tactics). Perhaps his willingness to back down on specific policies, even if it took him longer than expected, actually helped the Canadian economy to stay afloat. Perhaps he isn’t that bad and actually thinks about the consequences of his actions before implementing policies.

    Despite the continual critiques on Harper and anti-Harper bias of this article, I do not see any solutions on what direction the Canadian economy should head towards. Thus, I would like to know of solutions you would implement if you were in Harper’s position (that is Prime Minister). What would you do if you were PM? How would you spend public funds? Let me know what your response is. Such a response might be useful, especially that the federal election is coming soon. And what political parties have similar ideas to your plans? I’d like to know that as well! Especially that I, and many Canadians, are unsure of whom to vote for come October.

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    • Thanks for your comment Mark. The first part of your comment doesn’t make sense. 1) I don’t say Harper’s policies are ‘dangerous’; 2) how could taking longer than most to back down from poor economic positions be good for the economy, or ‘help it stay afloat’? Unless you provide a plausible mechanism, this sounds like a platitude.

      I don’t agree that my article is biased. Bias is misrepresenting the facts to bolster your position; I think I have presented a carefully-researched viewpoint. I try to give Harper his due credit where he has done well (e.g. trade) or where he has reversed his position. Presenting facts in a balanced way and asserting a conclusion whose basis is transparent is not bias. If you think my piece is biased, which facts am I spinning or misrepresenting?

      Your suggestion that I offer alternative policies is fair. I think I offered some implicitly, but I will make them more explicit: 1) we should make the tax code simpler and more progressive (Harper has done the opposite); 2) we should put in a national carbon pricing policy – preferably a carbon tax; 3) we should increase our public investments in infrastructure and education (and start right away, not in 2017); 4) we should expand the CPP and reverse Harper’s TFSA limit increase; 5) we should have a national energy strategy, in collaboration with the provinces; 6) we should have some kind of meaningful child care program – either a much bigger and more progressive payout like Trudeau promised, a national daycare program like Mulclair promised, or a combination. I might do a post closer to the election on what my platform would be if I was running, but there’s an idea of alternatives for now.

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      • Matt, for the first part, what I meant by ‘dangerous’ policies is that the policies Harper was thinking of implementing could potentially hurt the economy. Fortunately he did not implement them, and as a result, saved the Canadian economy from large-scale recession. That’s all.

        For the second point, is there really any proof you could give that Harper taking longer to back down from ‘poor’ policies (e.g. deregulating banks, not making Canada join war in Iraq, ignoring China, abandoning third-party spending limits, using bully tactics) hurt the Canadian economy? I did not see any in your post.

        As for the bias, yes, your article is biased to some extent. To prove this, I noticed one part of the article which demonstrate you are pro-Liberal (a.k.a. Myth 2). I believe Myth 2 is a Myth and not a Fact because you do not give #s that demonstrate that budget surpluses were present when the Liberals were in power, and that budget deficits were present when the Tories were in power. Perhaps adding a table and/or statistical test would help strengthen your position that there is more economic prosperity when the Liberals are around. As well, do you have any #s and/or statistical test to prove that employment numbers were better during years when the Liberals were in power?

        I am happy with the idea that you are planning on writing a post on alternative policies. I believe the information will be useful come election time. I would really like to know, based on $s and #s, if your plans could really help stimulate the Canadian economy. That would make your article very credible and something all Canadians should know come election time.

        Ideas I have for alternative policies that could clear up some public funds include freezing MP salaries, cutting down MP bonuses and public sector bonuses and abolishing the Senate. Have you considered this as well in your analyses?

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  2. “Fortunately he did not implement them, and as a result, saved the Canadian economy from large-scale recession.”

    He actually did implement some of them (e.g., the risky 40 year mortgages). People have argued that we could have fared much worse if the recession had started a few years later as a result (see links in my post). Arguably, he could have implemented others if he didn’t have a minority back then (e.g., austerity instead of stimulus). And none of his policies (except the stimulus, which the opposition forced him into) helped us in the recession. So I don’t think he deserves much credit for saving the economy.

    “For the second point, is there really any proof you could give that Harper taking longer to back down from ‘poor’ policies (e.g. deregulating banks, not making Canada join war in Iraq, ignoring China, abandoning third-party spending limits, using bully tactics) hurt the Canadian economy? I did not see any in your post.”

    On Iraq, thankfully he didn’t get the chance to send us there so of course him saying we should have gone didn’t hurt the economy. My point there was that it would have if we had gone (like it did in the U.S.). On China, the evidence is unclear. The Opposition argued that it had an effect, but it’s one of those hypotheticals that’s hard to measure. It definitely didn’t help. My argument on abandoning third-party spending limits was that it would hurt our economy in the long term by increasing the influence of money in politics, like in the U.S. Some of his rule changes there don’t come fully into effect until after the election (because the per-vote subsidy is currently benefiting his party, so he wants to wait until he’s gotten as much out of it as possible before getting rid of it), but I think there is little question that a) the influence of big money in politics in Canada has increased since Harper came to power (the ad spending numbers since 2006 reflect this), and b) influence of big money in politics hurts economies in the long-run (Daron Acemoglu is an economist who has done a lot of work showing this in case studies throughout history). On bully tactics, there is solid evidence that this has hurt the economy, because a) there have been studies showing Keystone would benefit the Canadian economy, and b) there is evidence that Harper’s bully tactics have made it politically harder for Obama to approve the project.

    “I noticed one part of the article which demonstrate you are pro-Liberal (a.k.a. Myth 2). I believe Myth 2 is a Myth and not a Fact because you do not give #s that demonstrate that budget surpluses were present when the Liberals were in power, and that budget deficits were present when the Tories were in power. Perhaps adding a table and/or statistical test would help strengthen your position that there is more economic prosperity when the Liberals are around. ”

    There already are #s in the post. The graph from CBC in the post shows exactly what you suggest (surpluses with Liberals under Chretien/Martin, deficits otherwise, especially high with Conservatives). In Myth 3, I cite and link a study which does do a statistical test supporting my claim about growth.

    “I am happy with the idea that you are planning on writing a post on alternative policies. I believe the information will be useful come election time. I would really like to know, based on $s and #s, if your plans could really help stimulate the Canadian economy. That would make your article very credible and something all Canadians should know come election time.”

    I have not yet had a chance to crunch the numbers on my proposed policies (running a model of the Canadian economy is not a trivial task:p); but there are studies supporting these types of policies for growth (see this recent article in the NYT for example: http://www.nytimes.com/2015/05/03/opinion/sunday/nicholas-kristof-inequality-is-a-choice.html?_r=0). Another good references is ‘The Price of Inequality’ by Joseph Stiglitz. I will try to dig up some studies on the Canadian context in the next few weeks – I’m sure they exist.

    “Ideas I have for alternative policies that could clear up some public funds include freezing MP salaries, cutting down MP bonuses and public sector bonuses and abolishing the Senate. Have you considered this as well in your analyses?”

    I like your policy suggestions, though the money you save from freezing MP salaries & bonuses would be very small in the big scheme of things because MP salaries are an extremely small fraction of the budget. I’m with you on Senate reform (though I might opt for it to be democratic rather than abolishing it – I’d have to think about this more).

    Thanks again for your input! Great to keep the discussion going:)

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  3. OK, fair enough Matt for the first point. It is true that being stuck in a minority government from 2006 to 2011 prevented Harper from passing ‘poor’ policies. I’ll give that one to you.

    Second point, yes, it is clear now to me that Harper’s insistence on Keystone has hurt the Canadian economy (especially Alberta). It’ll be interesting to see tonight the results of the Alberta election, might have big repercussions on the October federal election.

    Myth 2: do you consider the Progressive Conservatives and Conservatives different political parties? If so, I think it would be good to highlight that the two are different political parties. Then I would believe you in saying that the economy was better when the Liberals are around. If you say they are the same, then your assumption is false. Note, from 1980-1984 the Liberals were in power (under Trudeau), from 1984-1993 PC was in power (under Mulroney). Seems like data is similar throughout those years.

    Myth 3: Any data from 2005 to 2014 available? Note the Conservatives only entered power in 2006. Unless you think the PCs and Conservatives are the same political party. I’ll leave that decision to you.

    Sounds good for the article on alternative policies. Look forward to reading it!

    By the way, despite my critiques, the article is really good! You really know your Canadian politics! Do you plan on posting this as an op-ed in a major Canadian newspaper? Or in Macleans?

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  4. Thanks Mark! The point about whether PC and Cons should be considered the same or different is valid. I think they are towards the same end of the spectrum, but I also think the Cons are way worse (since they are more Reform than they are PC). It’d be interesting to see if any studies come out comparing all three parties. And thanks for your encouragement ok the article! It’s much too long and dense to be a newspaper op-ed and few places would publish something that’s already a blog post. So I think I’ll leave it.

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  5. OK, sounds good. I’d like to know your viewpoint on this (which you mention in your article): do you believe Harper not investing in climate change research has resulted in numerous students wanting to study environmental-related programs abroad (i.e. anywhere but Canada)? And limited university recruitment in environment-related programs across Canada? And environmental jobs across Canada?

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  6. That’s a great question, Mark. I don’t know the answer for sure, but my impression is that the programs in Canada’s universities are probably not affected too much – except insofar as NSERC funding is affected. However, there does seem to be a brain drain from the government science as a lot of good people have been laid off or had their funding cut.

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  7. Interesting premise here: “voters prefer Conservative governments during tough economic times “.

    Is it even barely possible that Harper wants to keep our economic recovery fragile, keep us in tough economic times, to make it more likely that voters will vote conservative? Considering some of Harper’s other tricks, I wouldn’t put this entirely past him.

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    • Very interesting. I too wouldn’t put it past Harper to deliberately kneecap the economy if he saw political gain in it, but I doubt there’s political gain in it (at least in a general sense), all things considered. Hard economic times probably disadvantage incumbents more than they advantage conservatives (if they even do at all – that was only a hypothesis of the paper I linked to, not substantiated by data to my knowledge). Also, the federal Conservatives get so much of their support and money from big business that it’s also hard to imagine him not worrying about pissing them off. Where Harper’s policies do hurt the economy, they often do so in areas where there are residual political gains in other areas from doing so, rather than direct gains from a weaker economy (e.g., prematurely balancing the budget, scrapping the census, and increasing TFSA limits to keep election promises; or his big jails in times of low crime policies to pander to his base).

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  8. Thanks for posting the article Matt! Very well written article. I really liked reading it!

    What I believe is the big problem is finding a solution to the problems created under Harper. I would like to see the current opposition parties (i.e. Liberals, NDP) propose solutions to the problems, rather than complain of poor governance on the part of the Tories. What would these parties do if they were in power? What measures would they implement to improve Canada’s environmental record and economy? What measures would they implement to decrease inequality and corruption? What would they do to improve Canada’s standing globally? If such solutions are not proposed, I strongly believe Harper will be in power till 2019.

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  9. I’m not fully convinced that Canadians will decide to vote Liberal if the NDP is losing ground in Quebec. The Liberals, in my opinion, have not led a solid campaign so far. However, opinions on each political party could change as the election campaign progresses.

    I’m fully convinced, however, that Quebecers will vote NDP again, especially considering the current political climate. It is expected that student associations (http://www.afea.uqam.ca/2015/05/la-greve-est-interrompue/) and public sector labour unions (http://www.ledevoir.com/politique/quebec/437632/fonction-publique-une-greve-generale-sur-la-table-a-l-automne) go on an unlimited strike mandate starting in September to denounce the the austerity measures imposed by the Quebec Liberals in last March’s budget. In my view, such actions might significantly increase the number of NDP votes coming from Quebec.

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  11. Over the course of this debate, you have spoken a lot about Stephen Harper’s bad economic record. This makes it clear to me, and all other participants, that you will NOT vote Conservative in the next election. However, I’d like to you what party you plan on voting for and why. Or are you more the type to vote for an independent candidate? I’d like to know your thoughts!

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  17. Well written with excellent references from a variety of sources. I certainly agree that when policy is stuck to ideology it is unable to respond to what is happening. The policy of low taxes and prosperity for a small few as never worked and is responsible for the collapse of the economy in Greece and the problems the US had under Bush. A recent article indicated that US corporations have 1.2 trillion dollars in off shore havens. Companies are not investing in workers or society. We need evidence and data to drive our policies based around a sound vision for a fair and just society which respects our Charter of Rights and Freedoms. Thanks for taking the time for writing this well-written and much needed article.

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    • Thanks for the kind words, and for reading! I think you’re oversimplifying the Greek and US problems a bit (US’s main problem was lack of banking regulations and the overuse of monetary policy instead of fiscal policy as stimulus; Greece’s problem was corruption and fiscal imprudence and bad banking regulations, which were then compounded by the wrong-headed push toward austerity from the EU; I did a post on Greece a while back if you’re interested), but I definitely agree with you that there’s too much corporate ‘dead money’ that is neither being taxed nor being recycled into the economy. That’s an excellent point!

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      • I suppose my point is more about the hazards of increasing Global Inequality. We can keep Corporate Taxes low as long as it meets the criteria of job growth and investment back into the country. Low Taxation that does not assist in building a better and more equal society is counter productive. I think we need a broader measure to determine health of nation than just GDP. In one of my past blogs I wrote about Finding Happiness (http://jameshoddinott.com/2014/03/08/finding-happiness/) which introduces the concept of the Untied Nations’ Gross Happiness Index as way to look at alternate measures to determine if a society is working or not. The current Canadian Economy is very fragile and slight hikes in interest rates, any movement down in the housing market or inflation could cause many Canadian families to go bankrupt as their household debt is problematic. We need to look at broader investment in a National Energy Plan that includes expansion and production of Alberta Oil (Refineries that turn our dirty oil to clean oil), expansion of Hydro-Electric Power grids from west to east (Manitoba/Northern Ontario and Quebec) as well as investment in research to find green alternatives. We need to look at the problems facing us as challenges that require a different response. It is why we can’t support a current government that doesn’t seem to want to address these local and global issues with informed change but stuck on an ideological ideal that doesn’t currently match with the issues that need to be solved. We need to turn dead money into money into our economy. We can do that by clawing back the money or requiring the dead money to be invested in job creation, expansion of companies as well as job training. We could go back to the early years of Immigration Policies that went along with economic growth where we targeted Immigration to some rural areas or northern areas to stimulate growth in our energy sectors as stated above. We certainly need to change our policies in regards to enabling our Aboriginal population to become active members of our society. Failure to address the poverty amongst our fastest growing population group will have catastrophic consequences.
        We also realize the correlation of poverty, crime, health, mental health, violence in societies where their is a great disparity between those that have and those that do not. Once people come to a greater understanding that the so-called ‘American Dream’ is unattainable it sets the stage for civil unrest.
        We need to change our thinking and thus change our actions.

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