Sunday, December 28, 2008

Stephen Harper: Stock Market Tipster Par Excellence

A few days before the October 14 federal election, in an interview with the CBC’s Peter Mansbridge, Stephen Harper gave Canadians advice on how to play the stock market.

“We always know when stock markets go up, people end up buying a lot of things that are overpriced,” he opined “and when stock markets go down, people end up passing on a lot of things that are underpriced.”

“I think there are probably some gains to be made in the stock market,” he said. “That’s my own view.”

October 8, the day after the ever-perceptive leader of the Conservative Party was suggesting that Canadians buy stocks, the TSX closed at 10,056, down from the all time high of 15,073 reached on June 18. The trouble with Harper’s advice is that since he gave it, the TSX has continued its downward trend. On December 24, it closed at 8,311, down 17 per cent from the day he provided his stock tip.

At the time, Harper was thought by many, including his political opponents, to have been callous in giving stock market advice to Canadians when so many people were feeling the pain of the economic downturn, fearing the loss of their jobs or the shutdown of plants and mills in their communities.

Seen over the longer term, though, what stands out is the incompetence of the man. Stephen Harper does not understand that the economic downturn through which we have been passing is not the product of the conventional economic cycle we have experienced since the end of the Second World War, with its more or less pronounced booms and busts. Instead, this is an economic crisis that marks the end of one socio-economic age and the beginning of another.

The proximate cause of the global financial meltdown was the bursting of the real estate bubble, in particular, the collapse of the sub-prime lending sector in the United States. Sub prime lending was legitimated by the foolish decision to de-regulate the financial system to allow mortgages to be provided with little or no down payments to those unlikely to be able to meet the payments.

The more basic cause was the unsustainable debts of the United States, debts of all kinds. There is the eleven trillion dollar U.S. government debt, which is sustained by purchases of U.S. Treasury Bills and other government securities by China, Japan and other countries. There is the net debt of Americans as a whole to the rest of the world which now stands at several trillion dollars. There is the personal indebtedness of Americans, which has soared from just over six hundred billion dollars thirty five years ago to about ten trillion dollars today. This latter debt will be at the heart of the credit card crunch which is waiting to hit the economy in the very near future.

The crisis of the global economy and financial system cannot be overcome by the U.S. or by the West acting alone. In the 1930s, recovery from the severe deflation of the Great Depression required an enormous injection of liquidity into the global financial system. The failure of the United States, the only country with the capacity to provide that liquidity, to bail out the global financial system and to open its markets to the exports of the world, caused the Depression to drag on for years. Its definitive end came only with the outbreak of the Second World War. Today the U.S. is not capable of managing the bailout on its own. Without the financial muscle of China and Japan, liquidity on the scale required, is not available. No matter how gigantic Barack Obama’s stimulus package turns out to be, without the collaboration of the Asian giants, there will be no recovery.

On the topic of stock market, the brilliant Canadian-born economist John Kenneth Galbraith wrote a warning in his analysis of the great crash of 1929 that ought to be required reading for market analysts, politicians and investors today:

“The singular feature of the great crash of 1929 was that the worst continued to worsen. What looked one day like the end proved on the next day to have been only the beginning. Nothing could have been more ingeniously designed to maximize the suffering, and also to insure that as few as possible escaped the common misfortune. The fortunate speculator who had funds to answer the first margin call presently got another and equally urgent one, and if he met that there would still be another. In the end all the money he had was extracted from him and lost. The man with the smart money, who was safely out of the market when the first crash came, naturally went back in to pick up bargains….The bargains then suffered a ruinous fall. Even the man who waited out all of October and all of November [1929], who saw the volume of trading return to normal and saw Wall Street become as placid as a produce market, and who then bought common stocks would see their value drop to a third or a fourth of the purchase price in the next twenty-four months. The Coolidge [Calvin Coolidge was president of the U.S. from 1923 to 1929] bull market was a remarkable phenomenon. The ruthlessness of its liquidation was, in its own way, equally remarkable.”

The labels on the financial instruments have changed from 1929 to 2008. But the story of a speculative market spurred on by foolish governments and greedy big-time investors is the same.

It ought to be no surprise that the demise of the paradigm on which he has staked his entire political and economic outlook should leave Stephen Harper bewildered. Surely a very good reason for Canadians to put him out to pasture.

Friday, December 26, 2008

The Strange Case of Stephen Harper and Michael Ignatieff

(this post appears on

One month from now, the fate of Stephen Harper’s government will be determined by a one person electorate consisting of Michael Ignatieff.

There are three possible assumptions Harper can make about how he is doing as he campaigns for this all important vote: he can assume that nothing he can do will win the vote; he can conclude that he has won the vote already and that he is in no danger of losing it; or he can think that the vote is still his to win or lose.

On the assumption that everything Harper does is diabolically clever, there are some out there who think he is scheming to have his government defeated so that the Liberal-NDP coalition can take power, mess up and open the door to a massive Conservative majority in the next election. In my opinion, that idea is right up there with the theory that the Austrian Crown Prince Franz Ferdinand conspired to trigger World War 1 in 1914 by having himself assassinated.

Harper knows that if his government is defeated and the coalition assumes office, a vicious civil war will break out in his own party and that plotters and schemers from Jim Prentice to Peter MacKay will be out for his job.

If we assume that Harper’s is campaigning for the Ignatieff vote, how well is he doing?

Appointing the 18 Senators was dumb, but not likely fatal. It does give Ignatieff another reason to bring the government down if he is so inclined, but it won’t prove decisive.

Keeping the remarkably incompetent Jim Flaherty in his post could prove fatal. One sure sign that Harper is throwing everything into winning the vote of the one-man electorate would be a decision to drop Flaherty from Finance and announce that Jim Prentice will replace him. Presenting Ignatieff with Flaherty’s head on a platter would be seen as a deeply meaningful gesture, much prized in this sort of blood sport. And appointing Prentice as his replacement would be diabolically clever. Not only is Prentice widely regarded as a Conservative who can actually read and write, the Finance portfolio has traditionally been a poisoned chalice, the recipient of which is thwarted in reaching the top job. (Jean Chretien and Paul Martin were exceptions, but nobody took Chretien seriously as Finance Minister and look what happened to Martin.)

If Harper does decide to behead Flaherty, he’ll likely do it in the first week of January, a slow news time in Ottawa. That would allow the Globe and Mail, the At Issue Panel and other worthies to beseech Ignatieff to abandon the coalition with Red Jack and spare Stephen Harper.

The final act in the drama will come with the Conservative budget, replete with the kind of stimulus most sought by the government’s panel of billionaire economic advisors.

If Harper’s fate remains to be determined by the one-man electorate, Ignatieff’s position is equally uncomfortable. Should he cast his vote for the Conservative government, his power will immediately shrink to the vanishing point. (I’ll avoid phallus metaphors here.) Harper will swell to his former glory and Ignatieff’s great moment will have passed.

As Ignatieff contemplates how to cast his vote, he will be pondering whether the time has arrived to bring down Harper, as he suggested he would when he applied his signature to the document listing the MPs who no longer had confidence in the government. He might consider the advice of Niccolo Machiavelli: “The wise man does at once what the fool does finally.”

Wednesday, December 24, 2008

In 2008: Canada has been a Troubled Democracy

(this post appears on

Among the G 7 countries, Canada can make a good claim to being the longest continuous democracy. Germany, Italy, Japan and France are all knocked out of the running as a result of having been fascist or militarist dictatorships or as a result of being occupied by the Nazis during the Second World War. The United States lapsed into a vicious Civil War during the 1860s, only eliminating slavery at its close. And the power of the largely hereditary House of Lords reduced the United Kingdom to the position of a quasi democracy until the eve of the First World War. That leaves the British North American colonies, later to become Canada, as functioning democracies since they achieved Responsible Government in the late 1840s. They too had their limitations: no control over foreign and defence policy until well into the 20th century and, along with all the others, no votes for women, also until well into the 20th century.

While I have no doubt that Canada will survive as democracy, it is at present, a troubled one.

The proud achievement of Responsible Government---meaning that ministries had to win the confidence of the majority of members of the elected legislature or parliament to remain in office---was traduced in unprecedented fashion when Stephen Harper asked for parliament to be prorogued solely to avoid the defeat of his government in the House of Commons. No former prime minister and his party have ever set out deliberately to mislead Canadians about the very nature of the Westminster system of parliamentary government which is our heritage. To provide a flimsy cover for his betrayal of the system, Stephen Harper resorted to calling into question the legitimacy of the majority of members of parliament from Quebec. He challenged their right to fully participate in providing or withholding confidence from a ministry. That shameful and divisive act has made his record a double betrayal.

While a letter from a majority of MPs expressing a lack of confidence in the government sits on the desk of the Governor General, Harper’s appointment of 18 Senators during the hiatus of prorogation further compromises democratic rule in Canada. One can only wonder at the ethical standards of those who would accept an appointment to the Upper Chamber under such circumstances.

Although Stephen Harper and the Conservatives are overwhelmingly responsible for the departure from the norms of Canadian democracy, the Liberals have also contributed to the malaise in which we find ourselves. Whether or not Michael Ignatieff has the diamond stuff of leadership the country needs in these perilous times, the way he was chosen as Liberal leader bestowed no honour on the party. It would have been so much better had the Liberals opted to have all party members vote by phone or on-line to choose a leader just before the House sits in late January. That would have allowed four or five debates between Ignatieff and Bob Rae in the major regions of the country. Instead Ignatieff has popped up like Zeus, his ideas for how to cope with the economic crisis as mysterious as his sardonic smile (grimace?).

The cynicism about politics in Canada was displayed for all to see when only 59 per cent of Canadians chose to vote in the recent federal election. That suits Stephen Harper and his party just fine. Low voter turnout favours the political right. The Conservatives can win a majority seats if they manage to get slightly under a quarter of a Canadians to vote for them. That way their “coalition” of the rich, most of business, the Christian right, dyed-in-the-wool reactionaries, haters of a diverse society and suspender-wearing young clones of David Frum can rule the country.

Cynicism is eating into the very marrow of Canadian democracy and that is a dangerous thing. The fact that the party that is now in power, without the confidence of parliament, clings to an ideology that has been spectacularly discredited as responsible for the global economic crisis deepens the feeling that politics is hopeless and that all politicians are concerned with power for themselves and little else.

Our mainstream media contributes to this state of affairs. Owned and controlled by a few corporate interests, Canadian newspapers and television have never been as dismal as they are today. Our columnists and on-air analysts are infected with the cynicism that is projected by the Harper government. To them, everything is tactics to gain or to hold onto power. With very few exceptions, they don’t even have the decency to be honest about how our system of government actually works. They have become a part of the system and they shine no independent light on it. The publicly owned CBC, for years terrified of its own shadow, is as bad as the rest. I’ve mentioned the At Issue Panel previously. I do so again because it so typifies what has happened. There is no way that CNN would have such a one-sided group as its flag-ship political panel.

Where our media is concerned, let’s call this the Age of Mike Duffy.

Canadians don’t need to put up with any of this. It’s up to us to take back our political parties from the professional hacks who now run them. And we can take dead aim at the ludicrous media that so badly serves us. Let’s roast them, satirize them, and above all, let’s replace them.

A little outrage on the part of the citizenry in the world’s longest functioning democracy would not be amiss. After the holidays, let’s get on with it.

Monday, December 22, 2008

Bailouts, Bonuses and Fat-Cat Economic Advisors

(this post appears on

In 2006, which was a very good year at Merrill Lynch, Dow Kim, at the time Executive Vice President and President of Global Markets and Investment Banking, took home a modest salary, $350,000. But then he received a bonus that made things more comfortable for him---$35 million.

That year Merrill’s profits came in at a record $7.5 billion. To express its appreciation not only to the top guns at the company like Kim, but also to the company analysts who had helped make it all happen, the company paid out between $5 billion and $6 billion in bonuses that year. Analysts in their twenties with salaries of around $130,000 received bonuses of $250,000. Company traders in their thirties, a little higher up the pecking order, with salaries of $180,000 were treated to bonuses of $5 million.

There was a problem at Merrill though. The record profits were illusory. Because the company was so heavily invested in mortgages that have since crashed in value, Merrill has lost three times as much as the fat profit realized in 2006.

The geniuses at Merrill Lynch played a role in driving the economy over the cliff. But they haven’t returned the bonuses they received, bonuses that allowed them to live like modern day Roman aristocrats.

Even since the crash and the multi billion dollar bailouts, the bonuses haven’t stopped flowing. Things aren’t as lavish as they were a couple of years ago, but bankers in New York are still in line for bonuses worth millions of dollars a year.

In the media, both south and north of the border, however, the target of choice these days is the unionized auto worker, whose annual salary wouldn’t pay for one fat-cat dinner in New York to celebrate bonus day. During the smash-up of the economy over the last three months, it was unclear what direction the political right would take to cope with their new surroundings. Now it’s become all too clear. The American right and its Canadian subsidiary will devote their energies to attacking auto workers and other unionized wage and salary earners.

Meanwhile, the Harper government has assembled an eleven member economic council to advise it on the upcoming federal budget. No workers or trade unionists were asked to participate. Instead the council is replete with millionaires and billionaires---Jim Pattison, Paul Desmarais Jr., and James D. Irving among them. I wonder if they’ll recommend corporate taxes as a way to stimulate the economy!

The Harperites are operating on the theory that people who know how to make money for themselves are experts on how to manage an economy for everyone. Anyone who believes this should read John Kenneth Galbraith’s classic, The Great Crash: 1929. He tells the story of how the big New York bankers thought all they had to do was to ride to the rescue of the stock market and reinvigorate it with a spirit of confidence. They tried it, were cheered for a couple of hours, and then the Depression took hold.

The truth is that tycoons know very little about the economy. They tend to assume that because they made it so big they have some special insight into how things work in the economy and society. Usually their assumptions amount to little more than a grab bag of Social Darwinist ravings about how the true giants rise to the top in the ferocious jungle of the real world and that’s how homo sapiens makes progress. Tycoons often think they conceived of this theory of the world themselves as a consequence of their own life experience. Little do they know that they are reciting tracts from some hack who was writing in the late 19th century.

The dirty little secret of capitalists is that they all know that it benefits them in their own enterprises to keep wages as low as possible. Paradoxically though, they also know that to sell their goods and services somebody out there has to have money to spend. In their economic theorizing, the fat cats can never get around this elementary conundrum. And that takes them back to their fantasies about themselves as Big Cats in the jungle.

Two final notes:

I’m so glad that the CBC has decided to balance its left-leaning At Issue Panel by adding Rex Murphy to it.

And congratulations to Harper’s 18 new senators. Now that Mike Duffy is in the Senate, he can interview himself about the ethics of a Prime Minister who prorogued parliament to prevent his government from being defeated on a vote a confidence but feels free to anoint Senators before parliament resumes and he receives that vote of confidence.

Saturday, December 20, 2008

Harper’s Economic Plan: Attack Workers’ Wages

(this post appears on

George W. Bush and Stephen Harper are once again (perhaps for the last time) partners in making economic policy. Now that the U.S. is providing a multi-billion dollar loan to General Motors and Chrysler, Canada is going to do the same. Priority one for Bush and Harper---make the workers take a hefty pay cut.

Read the front pages of the Globe and the Star today and you’ll see it in black and white. The first instinct of those who run corporations and the politicians who do their bidding is to attack unions and the benefits they have won. Take a look at the comments on the Globe story. Dozens of them are replete with vicious insults directed at auto workers and the CAW. A whole sewer full of them.

We should be ready for much more of this. The first and most dependable response of capitalists to a recession---much more so to a depression---is heightened class hatred. Workers are attacked as lazy, ill-educated, slothful, rapacious, unproductive sons of bitches who want more than they deserve. As though the workers in the plants decided on the product mix at Gigantic Motors.

The tactic goes back centuries. Corporate moguls (in the earlier days master tradesmen and merchants) and their scribes launch an assault on well paid workers and do their best to make lower paid workers resentful and envious of those who’ve done better.

Strike down the highest paid workers. That’s what Bush and Harper are determined to do with their loans to the auto makers.

It works like this. If the best paid workers are forced to take cuts, then the pressure will be on for all other wage and salary workers to do the same. Get realistic, the argument goes. “Even the fat cuts on the assembly line took a cut, so now it’s your turn.” The people who found themselves cheering against the auto assemblers will soon find that their ox is the next to get gored. And who will be there to defend them when their turn comes---the unions they so cheerful denigrated.

The first response of business in a recession is to try to force a general pay cut on ALL wage and salary earners. We have entered that phase. This is class war and this one was not declared by the workers.

In the case of the auto workers, the shrieking stories on the front pages seldom point out that in terms of the costs of the Detroit 3 automakers, their labour costs in Canada have declined by about twenty per cent as a consequence of the rapid decline of the Canadian dollar against the U.S. dollar. And the stories seldom mention that the health care costs of the companies in the U.S. are largely covered by medicare in Canada. It’s not for nothing that the Big Three have regularly made about twice as much per vehicle produced in Canada as they have in the U.S.

Then there’s the economics of all this. While talk of economic stimulus has been in the air, the old instinct of Bush and Harper to do exactly the opposite comes to the fore.

Slash the pay of auto workers and then after them of wage and salary earners in general and the consequence is to push us more rapidly into deflation, the exact opposite of stimulus. Lower wages mean lower purchasing power. With that comes the further deterioration of retail operations and services in general. Cutting wages and salaries speeds up the downward spiral of the economy from recession to depression.

During the Great Depression of the 1930s, corporate managers and their media flunkies made the same case for wage cuts. And their brilliant logic kept the economy in the doldrums for a decade, ending only with the Second World. War.

Harper’s economic plan will be all about class. He’ll want two kinds of cuts: cuts to the taxes corporations and corporate executives pay; and cuts to the wage and salaries employees earn.

Wednesday, December 17, 2008

Why Doesn’t Harper Fire Flaherty?

(this post appears on

Today, Finance Minister Jim Flaherty is meeting with provincial ministers of finance in Saskatoon.

Why is this man still at the helm of financial policy making in Ottawa?

This is the finance minister who earlier this year said publicly that he could see little reason why companies would choose to invest in Ontario. His cure for everything, including the massive problems of the auto industry, has been corporate tax cuts. His beef with Queen’s Park was that the Ontario government wasn’t slashing corporate taxes the way Flaherty thought they should.

Just under two months ago, on October 23, here is Jim Flaherty speaking in Calgary:
“Our economic fundamentals are the strongest in the G7. I'm proud to serve as the Finance Minister and travel abroad and meet with my G7 colleagues. I was speaking with one of them this morning on the phone in Europe. Our economic fundamentals are the envy of the G7. We run balanced budgets here…..As I say, other nations are envious of our situation.”

Here is how Flaherty concluded his speech:

“Let me conclude by repeating that our economy has solid economic fundamentals, and Canadians can take some pride in that. I can assure you that our budget will remain balanced. We do have the strongest economic fundamentals in the G7. I can also assure you that our spending will be controlled.”

“Let me end with three good reasons to be optimistic about Canada and our economy. Our economy is strong. Our government is focused with strong leadership by Prime Minister Stephen Harper. And our country is united. My friends, we have a brilliant future together and I thank you for the invitation to be with you today.”

Remember, this speech was delivered after the election---Flaherty was not trolling for votes. This self-centred, smug, bone-headed view of things is what the man actually thought a few weeks ago. He likely still thinks this heap of bromides makes sense.

Even John McCain and Sarah Palin weren’t saying things as dumb as this about the economy in late October.

Then came Flaherty’s Economic Statement on November 27, a document that has been amply analysed for its economics and its politics as dumber than a bag full of hammers (an expression beloved in the Maritimes).

Any competent government on earth by now would have fired a finance minister with a record as dismal as that of Jim Flaherty. No one trusts him. When he tells the media, as he did today, that he wants to work “collaboratively” with provincial finance ministers, it doesn’t pass the giggle test.

Nothing more clearly reveals the ingrained stubborness of the Harper government than the fact that it has not turfed out this incompetent minister.

Liberal leader Michael Ignatieff ought to pay careful attention to this. He has to decide by late January whether to vote confidence in the Harper government. That vote may come on the new Speech from the Throne or on the Budget. Before choosing to throw in his lot with the “Harper Team”, he ought to ponder what it means that next to the prime minister, Jim Flaherty has been kept on as the number two man on that team.

Tuesday, December 16, 2008

Stephen Harper’s Job Creation Plan: Appoint 18 Senators

In 40 AD, the Roman Emperor Caligula appointed his horse Incitatus to the Senate. On reflection, the emperor may have been an early Keynesian, who suddenly realized that Rome required economic stimulus to aid in the creation of jobs. Whether the appointment of Incitatus to high office improved the empire’s approach to economic policy-making is not known. What is known is that the horse’s high status did lead to the creation of a number of jobs. Praetorian guards were posted around his stables to ensure that he was allowed peace and quiet before competitions. Eighteen servants attended the horse full-time, drawing salaries and this helped generate greater demand for goods and services in the imperial capital.

In Ottawa, Finance Minister Jim Flaherty, the Caligula’s horse of the Harper government, delivered an Economic Statement only nineteen days ago that already is so outdated that it feels as if it could have been written in ancient Rome.

How’s this passage from the Economic Statement as an indicator of the government’s sheer inability to assess what is going on in the Canadian economy:
“Our sensible Canadian approach is paying off.
Our country will come out of this economic crisis in a strong position, because we are going into it in a strong position.”
During the recent election campaign, the Harperites assured Canadians that there would be no recession and no government deficit. Now, less than three weeks after the self-satisfied Economic Statement, Stephen Harper himself is speculating that we could even face a depression.
With warnings on the front pages about the severe danger that a collapse of the auto industry would pose to our economy, including the loss of hundreds of thousands of jobs and an economic depression in Ontario, the Harper government is still waiting on Washington before it takes action to address the crisis in our key manufacturing sector.
All is not lost where jobs are concerned, however. Between now and Christmas Day, Stephen Harper will be appointing eighteen Senators, an entire cavalry squadron of Caligula’s Horses. Ottawa is agog with speculation about who might get the nod from a prime minister who, as a matter of principle, was opposed to making any Senate appointments, at least before the Liberal-NDP coalition reared its ugly mane. Now, Reform and Canadian Alliance warhorses are polishing their resumees and indundating the PMO with entreaties.
The pay is good, $130,400 a year, and the job is not onerous. Check into the Red Chamber several times a year and this pay cheque will keep coming until you turn 75.
P.S. For those determined to get their facts right, I’ll concede that some historians believe that Caligula appointed Incitatus a Consul not a Senator.

Monday, December 15, 2008

Much Needed Stimulus: A Transportation Revolution for Canada

As the Liberals meet with the Conservatives to talk about the kind of stimulus package that needs to be included in the upcoming budget, there is a serious danger that what will be involved is low-level political maneuvering. The Conservatives will be aiming at a budget that contains enough stimulus to coax the Ignatieff Liberals into voting to support it and dump the idea of a Liberal-NDP coalition government. The Liberals will want to make it appear that they have won sufficient concessions to allow them to vote for the budget and survive the political onslaught from the centre and left for keeping Stephen Harper in power.

Over the next few weeks, it is essential to shift the debate to what Canada needs not only to safeguard Canadian wage and salary earners, pensioners, students, farmers and small businesses from the immediate crisis, but also to look to how we should restructure our economy for the 21st century.

There need be no contradiction between these two agendas. Indeed, the best way to protect Canadians today is for the government to invest for the future.

The Conservatives will want tax cuts and immediate bailouts to companies with few strings attached. The Liberals will want to point to a high dollar figure in the overall package that they can claim to have won.

What the nation needs is well thought out stimulus that will keep the public investments as much as possible inside Canada generating wages and salaries here. That way, the stimulus will not leak out in the form of additional demand for imports. Tax cuts risk generating higher imports and are the least effective form of stimulus.

One area (certainly not the only area) that requires imaginative thinking is the transportation sector. What follows is an introductory discussion of what needs to be done in that sector.

* * * * *

With an inefficient fleet of automobiles, poor public transit, an ailing rail system, and airlines plagued with a host of problems, Canada is woefully ill prepared for the 21st century transportation revolution. For a country whose vast size and low population have always made transportation a vital matter, the lack of planning by governments and industry to prepare for change has been flagrant, not to say negligent.

No country will be more affected than Canada by the global revolution in transportation.

Sailing vessels and canoes drove the first Canadian economies, those of the fishery and the fur trade. In these vessels, Europeans journeyed to the Grand Banks of Newfoundland and along the great waterways of the northern half of the continent in the quest for profitable commerce. In the early decades of the 19th century, canals cheapened the passage of goods on the Great Lakes and the St. Lawrence and made Montreal the leading centre of Canadian commerce. In the middle of the century, railways revolutionized life and played an enormous role in the creation of a fledgling Canadian nation that spanned the continent. Railways underpinned the new Canadian state, an east-west economy and the export of wheat from the prairies to Europe, making Canada an economic success with a rapidly rising population by the first decade of the 20th century.

The first mass age of the automobile in Canada came in the 1920s, as provincial governments built the nation's initial highways. It was not until the 1950s, following decades of depression and war that the automobile became a means of transportation for most Canadian families. Over the space of a few decades, governments built superhighways and the Trans Canada highway. Suburbs exploded outwards from the cities, suburbs that relied on the automobile as the crucial form of transportation. Urban density fell as city dwellers shifted from public transit to their cars. Expressways, such as the notorious Gardiner Expressway in Toronto, which cuts the city off from its lake front were seen by the public as symbols of progress. It was not until the 1970s, not coincidentally a decade when the price of petroleum exploded, that city dwellers perceived the downside of expressways that tore up neighbourhoods and in Toronto public pressure stopped the Spadina Expressway.

This first era of skyrocketing petroleum prices lasted from 1973 to 1982. From that date when prices plunged until the early years of the 21st century, petroleum was once again cheap, and Canadians, in company with Americans, purchased vast numbers of SUVs, vans, pickup trucks, and recreation vehicles, all vehicles with poor gas mileage. The rising price of petroleum during this decade, coupled with the bursting of the global property price bubble beginning in the United States and the onset of a global economic crisis, have plunged Canadians into a new world where transportation is concerned.

Over the past four centuries, as the modes of transportation have evolved so too the role of Canadians in designing, manufacturing and deriving their employment from the building of ships, canoes, trains, airplanes and motor vehicles has been subjected to enormous changes with vast implications for the economy and jobs. Disruption, dislocation, and, hopefully, successful adaptation will be elements of the 21st century Canadian story.

Of necessity, Canada’s transportation revolution will unfold as a part of the global transformation in the ways people and goods move.

In 2007, the skyrocketing price of fuel, in conjunction with other factors, such as the shift to large scale production of ethanol and prolonged drought in Australia, provoked a severe increase in the price of food worldwide. In rich countries, the consequence was an annoying increase in the cost of living, in poorer countries, it meant real hardship and in the poorest regions of the world, populations faced starvation. At hand, was a multifaceted global crisis whose epicenter was transportation.

Then in late 2008, as the financial crisis dragged down the global economy, the price of petroleum plunged. The oil price decline, while affording consumers relief at the gas pumps and for home heating bills, did not signal a long-term downward trend. As in the 1970s, oil price increases slowed economic growth and this triggered declines in petroleum prices. The long-term trend in petroleum prices, as will be seen in lock step with eventual economic recovery will be upward.

The long-term trend toward higher fuel prices means that the movement of goods to markets will be much more costly and that the movement of people in their daily commutes or on their longer journeys will carry a higher price tag. The transportation crisis takes different forms in different countries. In the United States and Canada, the sale of pick up trucks and SUVs has plummeted in favour of a rising market for cars and crossover vehicles, along with heightened demand for hybrid vehicles. Tens of thousands of auto workers face the closing of the plants where they work and the loss of their jobs. Airlines in both countries have laid off thousands of employees and cut back the number of flights they offer. In the U.S., major airlines confront the prospect of financial failure.

In Spain, France, and the United Kingdom, higher fuel prices have provoked work stoppages, blockades and demonstrations by truckers who insist the new situation threatens them with bankruptcy. In France and Spain, fishermen went on strike to protest higher fuel costs for the operation of their vessels. In Europe, where the price of gasoline has been about double that in North America, the gas mileage of the European auto fleet is approximately twice that of its North American counterpart. The price of fuel, to which is added the high price of toll roads in many countries, has already dramatically altered the driving habits of Europeans.

In Asia, as markets for automobiles have expanded rapidly, an Indian manufacturer has launched the world's lowest priced automobile. To fuel its vehicles and to keep its industries humming, China has entered into deals with petroleum producing countries in Latin America, Africa and the Middle East, heightening its growing global rivalry with the United States.

In Brazil and the United States, in addition to other countries, the production of bio-fuels has added appreciably to the rising price of food.

Inextricably linked were the global petroleum and food crises and these drove the necessity to transform systems of transportation in virtually all regions of the world.

In Canada, what is needed is not a piecemeal approach to the transportation revolution, but an overall plan. The risk is that Ottawa will simply hand out money to the Big Three auto makers once the Americans have decided on the scale and terms of their bailout plan. All that does, at best, is to buy us a share of North American auto production and jobs.

Canada needs to be involved in designing and building the vehicles we need for the new age in which we live. Auto manufacturers, auto parts producers, other manufacturers, the Canadian Auto Workers, transportation specialists, municipalities, provinces and the federal government need to go to work on the new transportation plan. Of necessity, the transportation plan will have to be dovetailed with new plans for the design of our cities and urban transit systems.

The future of airlines in Canada, and of airports, needs to be dovetailed with the development of passenger rail service for the 21st century. One obvious idea, long-discussed and long-overdue, is to construct an intercity high speed rail system with dedicated lines to service the Quebec City to Windsor corridor to include services to Ottawa. A high speed line between Edmonton and Calgary ought to be in the works as well. Increasing the emphasis on rail and decreasing the number of short-haul flights is essential to save energy and move toward a green transportation system.

We have the design and manufacturing capability in Canada. Such a project will create thousands of jobs. This is both a stimulus project to create employment in the near future and an investment in reconstructing our transportation system to make it more cost effective and less polluting.

Let’s think big as we plan how to spending tax dollars. There is much more at stake than a struggle over which party or parties will hold office in the next couple of years.

Friday, December 12, 2008

The Paranoid Style of Stephen Harper

(With a tip of the hat in gratitude to American historian Richard Hofstadter.)

For the past couple of weeks, the nation's chattering heads have been puzzling over a conundrum: how could a master-strategist as gifted as Stephen Harper blunder as badly as he did with his government's lame-brained Economic Statement?

The answer is not so complicated.  Stephen Harper is not, and never has been, a gifted political strategist.  That cock-eyed idea has been a fabrication of our incestuous media which is dominated by right-wing pundits on the CBC who will cheer him on should he  ever have the chance to privatize the network and private media journalists who fear they will be shown the door if they tell the truth about Harper.

 There is though an oddly unnerving quality about Harper that is even a little spooky.  That oddness, I believe, derives from the fact that Harper exhibits a paranoid political style.

 By paranoid style, I mean, that Harper belongs to the resentful right, whose adherents understand the world in simplistic, binary terms, and depict those who disagree with them as the agents of endless conspiracies against the forces of righteousness.  (A telling example of the paranoid style is the way Conservatives have taken to labeling the Liberal-NDP coalition as “un-Canadian”.  This ludicrous term is lifted from “un-American”, an unsavory epithet that was much employed by McCarthyites during the 1950s who believed they had a corner on what it was to be American.  Until the Harperites appeared, no politicians in Canada were so certain of their monopoly of virtue as to label their foes “un-Canadian.)

Stephen Harper's response to the decision of the three opposition parties to vote down his government and replace has provoked one display after another of Harper's paranoid style. 

Harper's vitriolic assault on the opposition parties has been fueled by two conspiracy theories.  The first is that the determination of the opposition parties to vote non-confidence in his government had nothing to do with his Economic Statement but was evidence of a cabal that had been scheming against him long before the Statement saw the light of day.  The second was that working with the Bloc Quebecois to bring down his government  was no less than a diabolical plot against Canada.

In fact, the economic disagreement between the Harper government and the opposition is fundamental.  The Harperites, true disciples of Milton Friedman and his acolytes in quarters such as the C.D. Howe Institute---the Institute Harper consulted on the eve of the G 20 summit---are wedded to the idea that interest rate cuts by the Bank of Canada should suffice to restore the health of the Canadian economy.  They are determined to keep fiscal stimulus---the spending of large sums of public money on infrastructure or to salvage the auto and forest products sectors---to an absolute minimum.  This goes to the very heart of neo-con ideology.  Stephen Harper and Jim Flaherty are determined not to preside over the return of the mixed economy, in which the public sector plays a major role and government steers the economy.  Their strategy is to make Canada a free-rider whose economy will revive thanks to Barack Obama's stimulus program.  That way their Canada will be a lean, mean provider of resources to the U.S., above-all of oil sands synthetic crude, when the Obama recovery generates an increase in petroleum demand and a return to high oil prices.  So what if our cities, infrastructure, auto industry and educational systems are casualties o0f the economic crisis?

These are the real questions that ought to be debated as we face the turmoil of the financial crisis.  Instead, Stephen Harper reduces it all to an opposition conspiracy.

The second conspiracy to which Harper responded in full paranoid fury was the idea of a Liberal-NDP coalition that would depend on the backing of the Bloc to sustain it on confidence votes.  Harper's dismissal of Quebec's MPs as “the other” takes us back to the days when Preston Manning used to maunder darkly about the coming collision with Quebec which he compared to the state of affairs in the United States on the eve of the Civil War.

The paranoid strain in right-wing politics is quintessentially American.  But, in his essence, Harper is an American right-winger, with not a Tory bone in his body.

Tuesday, December 09, 2008

The Coronation of Michael Ignatieff: And Then There Was One

With Bob Rae’s departure from the race, Michael Ignatieff’s has realized the second of the goals he set for himself when he returned to Canada in the autumn of 2005. First came his election to Parliament and next he embarks on his quest for the office of prime minister.

On his return, two major negatives blocked Iganatieff’s advance. The first was the bad optics of a man coming home to become prime minister after decades out of the country. The idea of a jump from Harvard to 24 Sussex Drive without a period reacquainting himself with Canadians screamed arrogance. That negative has receded with the passage of time.

His second negative was that he enthusiastically endorsed the U.S. invasion of Iraq in 2003. No decision of the federal government during this decade has been as popular with Canadians as the refusal to make Canada a partner in George W. Bush’s “coalition of the willing.” In a mea culpa in the New York Times Magazine in the summer of 2007, Michael Ignatieff acknowledged that he had been wrong about Iraq.

His change of position left unclear his view of the role of the American Empire in the world. It was that positive take on the American Empire---elaborated in his book Empire Lite and in numerous articles---that lay behind Ignatieff’s initial support for the invasion of Iraq. What we don’t know as yet is whether Ignatieff changed his mind on Iraq only because he concluded that the Bush administration had so badly bungled the occupation, or because he has developed a more critical view of the role of the American Empire in the world. That matters. As was the case for his predecessors, should Ignatieff become prime minister, he will have to formulate a position on Canadian-American relations. Will he support a competently run American Empire---say, under the leadership of Barack Obama----or will he want to fashion a much more independent Canadian role in the world? Could he evolve a view that is more critical of the very idea of empire?

In the immediate future, the new Liberal leader, having acquired his position without the seasoning that goes with having fought for it (unless you count his less than stellar run for the job the last time), will need to cope with three immediate challenges.

First, he has to deal with the fact that he is one of the MPs who signed the letter to the Governor General saying that he no longer has confidence in the Harper government. If he chooses to try to influence the Harper Budget and later decides to support it, thereby voting confidence in the Conservative government, he will have lost any chance to assume office on the basis of a later non-confidence motion. Then the only way ahead would be through a federal election. And if he walks away from the coalition with the NDP and the deal with the Bloc, he will have to assume responsibility for the economic record of the Harper government. The way Ignatieff copes with this set of questions will tells us whether he is an adroit politician in addition to being an accomplished intellectual.

Second, he needs to work to repair the rupture between English Canada and Quebec that has been provoked by Stephen Harper’s totally irresponsible tactic of castigating the legitimacy of Quebec’s MPs in the House of Commons as a way to undermine the coalition. The effects of Harper’s attack on the “separatists” is already clear in the re-energized Parti Quebecois which has formed a much larger opposition to the Liberals as a result of the Quebec election than was thought likely a few days ago. And the PQ is no longer hiding the goal of sovereignty from public view.

Third, Ignatieff needs to alert the country to the tremendous danger of letting the United States to move ahead with a deal with the Big Three auto companies without Canada having worked out a position of it own to ensure the long-term future of the industry on this side of the border. If the U.S. proceeds with an All-American plan for the auto industry without an offsetting Canadian plan to go into effect at the same time, our auto industry will face greater risks than at any time since the Canada-U.S. Auto Pact was launched in 1965.

Monday, December 08, 2008

No Time for Ignatieff to Play Mackenzie King

One current of Liberal thought has it that the best way for the party to prepare for the future is to let Stephen Harper rule during the worst days of the economic crisis. Then the Liberal Party can ride to victory in the next election.

Michael Ignatieff seems to be contemplating playing Mackenzie King to Stephen Harper’s R.B. Bennett. His “coalition if necessary, but not necessarily coalition” remark on the weekend certainly points in that direction.

The luckiest thing ever to happen to the Liberal Party was for it to be out of office for the half decade from 1930 to 1935. If Liberal Prime Minister Mackenzie King had not listened to the advice of a soothsayer, he might well have called the federal election earlier than the summer of 1930 and won. But he lost. That left R.B. Bennett and the Conservatives to govern during the most terrible time in the history of Canada. The Conservative Prime Minister earned the moniker “Iron Heel” Bennett due to his savage repression of those out of work, and his indifference to the farmers of the prairies who burned the wheat they grew to heat their homes because they couldn’t sell it, and the farmers who were victims of the catastrophe of the “dust bowl”.

By the time of the next federal election in 1935, two new political parties, destined to remain on the scene for decades had been created, the social democratic CCF and the right-wing Social Credit (the grand-daddy of today’s Conservative Party). But another party, the Reconstruction Party, not destined to endure, was created as a breakaway from the Conservatives. Under the leadership of former Bennett cabinet minister, H.H. Stevens, the Reconstruction Party captured eight per cent of the national vote but won only one seat.

With 45 per cent of the vote, Mackenzie King’s Liberals took 173 seats out of a total of 245, reducing the Conservative to 40 seats and 30 per cent of the vote. In the multi-party field WLMK won a sweeping victory, and the Liberals went on from there to hold power, with majority governments for the next twenty-two years. Had the Liberals been in power from 1930 to 1935, considering that their economic ideas were as boneheaded as those of the Tories, the slogan out of the Depression would likely have been---“Liberal times are bad times.” And during their half decade on the opposition benches, WLMK and his friends learned next to nothing about how to manage the economy more intelligently. They were only saved from going down in history as a dinosaur government by the outbreak of the Second World War, which bestowed on them the reputation of being sound economic managers.

If Michael Ignatieff plans to follow in the footsteps of Mackenzie King if he is anointed Liberal leader (permanent or interim) on Wednesday, he’d be wise to reconsider. The only way the Liberals can sit out the recession on the opposition benches is to vote for Stephen Harper’s budget when parliament resumes. The NDP and the Bloc are sure as hell not going to do that. If Ignatieff’s idea of leadership is to provide confidence for the Harper government as his first act, he could be dooming himself to a short and unhappy career at the helm.

The Liberals would then wear the Harper record on the economy as their record. And while the Conservatives are bound to include some stimulus measures in the budget, there is no way that Harper and Flaherty are going to propose the overhaul of the Canadian economy based on very extensive public investments. And that is what the country needs.

Much though Ignatieff may wish to avoid it, he faces a clear choice. If he keeps Harper in power, it will be Harper who will hold the strong hand. He will determine the date of the next election, and he could well go on to win it. Meanwhile, the NDP, the Bloc and the Greens will feel deeply betrayed if Ignatieff dumps the coalition and allows Harper to remain in power.

At a date, not of his choosing, Ignatieff would go on to face the electorate, squeezed between the Conservative base vote on the one hand and the one third of the electorate already inclined to support parties other than the Liberals and the Conservatives on the other.

For Ignatieff, the WLMK option is a chimera. “A friend to all is a friend to none,” Ignatieff could say if he comes to his senses, that is if Aristotle hadn’t already said it.

To date, Bob Rae is showing a much clearer understanding of the lay of the political land than is his former roommate.

Sunday, December 07, 2008

Michael Ignatieff: “Coalition if Necessary, But Not Necessarily Coalition”

It is highly likely that New Brunswick MP Dominic LeBlanc will pull out of the race for the Liberal leadership tomorrow and will throw his support behind Michael Ignatieff. That will leave only Ignatieff and Bob Rae as contenders.

Pressure is building within the party to force Stephane Dion to resign as Liberal leader as early as Wednesday when the party caucus meets.

Both the Ignatieff and Rae camps want Dion to exit the leadership quickly. But they have very different ideas about how the new leader should be picked. The Ignatieff forces are pushing to have the National Executive and the Parliamentary caucus (MPs and Senators) choose an interim leader as soon as Dion is out the door. Then the final decision would be made at the Liberal convention next May. The Rae supporters are well aware that Ignatieff would be sure to win a quick vote by the National Executive and the Parliamentary Caucus, and that the convention choice would then be reduced to a formality. What they want is a speeded up process whereby every member of the Liberal Party could cast a vote online or by phone sometime in the next few weeks. That way, it is believed, Rae would stand a chance.

Supporters of the Liberal-NDP coalition as a government-in-waiting, have a very real interest in the outcome of the power struggle in the Liberal Party.

Bob Rae is now on a cross country tour promoting the coalition. In interviews this weekend, he has made it clear that he is not prepared to make any sort of deal with Stephen Harper. The Conservative leader has lost his confidence as a member of parliament, Rae declared, and that’s not going to change. Liberals who want to continue the head-on fight against the Harper government have a champion in Bob Rae.

Michael Ignatieff’s view of things is very different. On Sunday, he described his position as “coalition if necessary, but not necessarily coalition.” (The formulation is a paraphrase of Liberal Prime Minister William Lyon Mackenzie King’s declaration during the Second World War that his position on how to meet the nation’s military manpower needs was “conscription if necessary, but not necessarily conscription.”)

Ignatieff is lukewarm about the coalition. He would like to be able to point to its existence as a way to pressure Harper into proposing a Budget he could support. Then, if he chose, he could dump the coalition. Ignatieff would like to be able to turn the NDP and the Bloc on or off like a tap, as it suits him tactically.

If Ignatieff wins, the character of the coalition will alter dramatically, with the NDP and the Bloc reduced to waiting for a call that may never come.

There is a very real danger that Ignatieff is being too clever by half---a failing of his at many points over the course of his career both before and since entering politics. His tactic will invite Jack Layton and especially Gilles Duceppe to reconsider their positions. They may not appreciate being told that by Ignatieff that “they also serve who only stand and wait.”

Ignatieff’s slippery view of the coalition could end by reminding people of what they like least about the Liberal Party---its tendency toward opportunism at the expense of principle.

Saturday, December 06, 2008

The Liberals Must Now Endure the Twelve Temptations

According to the ancient myth (I just made this one up), when men and women set out on a righteous course, they must endure twelve temptations calculated to lure them from their path.

So it now is for the Liberal Party, which is being sorely enticed to abandon the coalition with the NDP and seek an accommodation with Stephen Harper.

The first temptation came today in the form of an op ed piece in the Globe and Mail by John Manley, former deputy prime minister and minister of finance.

Technically still a Liberal, Manley has long served the cause of neo-conservatism and even that of the Harper government. He was the Canadian co-Chair of a commission whose goal was to promote the much deeper integration of the Canadian economy with that of the United States. A year ago, he offered succor to the Conservatives when he served as the head of their panel on Afghanistan, helping them to stave off criticism of Canada’s military role in a conflict which most Canadians do not support.

Manley’s advice to the Liberals is that the party’s national executive and parliamentary caucus should pick a new leader to replace Stephane Dion before Christmas. The first job of that leader should be to “rebuild the Liberal Party, rather than leading a coalition with the NDP.”

When the House resumes in late January---here Manley is at his most beguiling as the tempter---the Liberals should work “collaboratively with all other parties to restore the confidence of Canadians in their Parliament.”

Go back to work, under the Harper government, he is saying. Forget about the coalition and the plan to turn the Conservatives out of office.

The upshot of his advice, of course, is that the neo-Cons would remain at the helm. And then when Harper wants an election sometime down the road, he’ll get to choose the circumstances and the timing.

There is only one chance for the coalition to replace the Harper government and that is at the end of January before the Speech from the Throne or the Budget are passed. That course is precisely what Manley wants to prevent.

In the coming days, the other tempters will appear, some in more diaphanous apparel than Manley’s garb. According to the myth, each temper will be more beseeching than the ones who came before.

Liberals should remember though, that if they give in to temptation, awaiting them will be Stephen Harper and that he will visit upon them a terrible pestilence that will afflict them and their heirs to the end of days.

Friday, December 05, 2008

Canada’s Choice: the Liberal-NDP Coalition or One Man Rule

As the debate continues about who should hold the reins of power in Ottawa, the urgency of the economic situation, the underlying cause of the debate, has become unmistakably evident.

Stephen Harper and his Finance Minister, Jim Flaherty, have been portraying Canada as an island of economic stability in a turbulent world. Everyone with any sense, however, knew that the global storm was about to break on the shores of this country, as it now has with resounding fury.

In November, Canadians lost 71,000 jobs, with Ontario bearing the brunt with a loss of 66,000 jobs. Right at the centre of it was the shedding of 42,000 manufacturing jobs in the province.

Canada’s loss of jobs, the worst in a single month since the recession of 1982, was three times as high as economic forecasters had expected.

The Conference Board of Canada anticipates that in the crisis-ridden auto sector, another 15,000 jobs will be lost before the New Year.

Worse still, while Harper fiddles, Canada’s share of North American auto jobs could be dramatically reduced as a result of talks and potential bankruptcies south of the border. The federal government, the provinces, the auto makers and the CAW should be agreeing right now on a plan to save our auto industry.

In the forestry sector, tens of thousands of jobs have been shed in recent months. Two hundred mills have shut down over the past five years, over half of these shutdowns seen as permanent. In one-industry towns in the B.C. interior, what for others is a recession, has become a full-blown depression.

In Grand Falls-Windsor, Newfoundland, the AbitibiBowater paper mill is about to close. Four hundred and fifty workers will be out of a job. The economic future of the entire community is at stake.

Even the formerly high-flying petroleum sector is seeing plans for expansion being put on hold by Petro-Canada and Suncor.

Job loss, belt-tightening, severe dislocation in many communities is now the order of the day. The economic crisis the Harper government failed to anticipate is here.

Stephen Harper’s response to the economic crisis was an almost incomprehensible failure to act, and when this cost him the loss of the confidence of the majority of MPs, he turned to scapegoating the Quebecois, and he has now hijacked the federal government.

The response of all shades of Quebec opinion to Harper’s onslaught against the legitimacy of the province’s MPs makes clear that the Conservative leader is in the process of provoking a national unity crisis for which he alone will be responsible.

There is only one possible road ahead to restore political sanity and parliamentary rule to the country so that Ottawa can deal effectively with the economic malaise---the formation of a Liberal-NDP coalition government. The alternative is the one-man rule of Stephen Harper. In the absence of a move by moderate Conservatives to force Harper to resign as their party leader, there will be no middle ground.

Despite the bad video of the ever hapless Stephane Dion and the ranting of the ever witless Jim Karygiannis, the supporters of the coalition need to stay the course. Many temptations will be put in their path. The Globe and Mail, to take one example, will plead that even if Harper will not resign, he could be purged of his sins by walking barefoot to Canossa. I don’t buy it. This Holy Roman Emperor is not redeemable.

To emerge into the land of the sane, we will all have to do our part. That includes those who will attend rallies across the country tomorrow in support of the coalition. It needs, as well, to include the full-time support of Michael Ignatieff, who is very effective when he shows up.

Meanwhile in the spirit of the Season, I wish to bestow kudos on three individuals I’ve often criticized in the past.

First, Jack Layton. This week has been his finest. He has explained more clearly than anyone else why we need the coalition. In the midst of the taunts of Stephen Harper, Layton has kept the country on track by pointing out the ways Canadians are suffering as a result of the economic crisis.

Second, Bob Rae. He got it right yesterday when he said that there is no turning back from the course the coalition has set. The reasons Harper has to go cut to the very centre of the way we run our government. Rae’s cross-country tour to make the case for the coalition provides leadership we sorely need.

Third, CBC Television’s Don Newman. His interview with Transport Minister John Baird was an exercise in skillful surgery. With grace and wit, Newman (who knows more facts about Canadian politics than any other mortal) didn’t allow Baird to get away with the lies and half-truths on which the Conservatives have rested their case.

Thursday, December 04, 2008

With Parliament in Limbo: Stephen Harper has become Canada’s Lord Protector

On the advice of Stephen Harper, the Governor General has prorogued Parliament until late January.

Prorogation is the latest move in the desperate campaign of the Conservative government to avoid defeat in the House of Commons at the hands of the majority of its members. We now enter an unprecedented period in Canadian history. A prime minister who has lost the confidence of the House, the sine qua non for governing in our system, is continuing in office.

Unwilling to govern as prime ministers have in the past, Stephen Harper has transformed himself into the country’s self-anointed Lord Protector. The original Lord Protector was Oliver Cromwell who did away with a Parliament he feared in 1653 and then ruled on his own.

Stephen Harper, for the next seven weeks, will be governing without the parliament that has been elected by the people.

In the coming weeks, as Conservative Transport Minister John Baird told the CBC, the plan of the government is to go above the heads of parliamentarians and the governor general to appeal to the people. The famous Harper communications team will go into overdrive to change the subject from that of a government that has lost the confidence of the House to a crisis of national unity because the separatist Bloc Quebecois is supposedly about to be propelled to the very centre of power.

The Lord Protector is seeking to make a fundamental change in our governing arrangements. His goal is to nullify the historic right of members of parliament to decide in timely fashion who has the confidence of the House Commons. Instead, he has bet his future on his ability to subvert the will of parliament by unleashing a storm of popular fury across the country. Not quite across the country. The popular fury will be directed not only at the Liberals and the NDP, but above all at the right of Bloc Quebecois members of parliament to function in the decision making of the federal government.

The Lord Protector has his scapegoat. That scapegoat is Quebec.

Those who would restore our system of government, the tranquility of the relations between the Quebecois and the rest of the country, and who would install a government to lead the country through the economic crisis need to act publicly and insistently.

The battle has been joined.

Wednesday, December 03, 2008

Quebec Bashing: Harper Reverts to his Reform Party Roots

When biographers write the story of the rise and fall of Stephen Harper, they will surely show how he evolved from the man who wanted to erect a firewall around Alberta to the leader who was prepared to recognize Quebec as a nation within Canada. And then addressing his fall from power, they will reflect on how Harper turned against Quebec and returned to his Reform Party roots.

At the height of his career, Stephen Harper dreamed of a decentralized Canadian federation in which government played a smaller role, with the market making the basic decisions in society. Such a Canada would fold naturally into an ever closer socio-economic, maybe even political, union with the United States. Recognizing Quebec as a nation made sense within that weltanschauung.

On his way up, Stephen Harper was happy to meet with, and compose letters to the Governor General, with Gilles Duceppe, as well as with Jack Layton. On September 9, 2004, with the leaders of the Bloc and the NDP he co-signed a letter to Her Excellency, the Right Honourable Adrienne Clarkson that said: “We respectfully point out that the opposition parties, who together constitute a majority in the House, have been in close consultation. We believe that, should a request for dissolution arise this should give you cause, as constitutional practice has determined, to consult the opposition leaders and consider all of your options before exercising your constitutional authority.”

As long as the Bloc hated the Liberals, Harper was prepared to regard its MPs as people who wanted to de-centralize Canada just a little more than he did.

Lately though, as Stephen Harper sees it, the ungrateful Quebecois have bitten the Conservative hand that has been feeding them. In the recent election, the Conservatives hoped to seal the deal for a majority by gaining a swath of new seats in Quebec. Instead, Harper’s assault on cultural spending and his proposal that young offenders convicted of serious crimes do time in penitentiaries, provoked a backlash in Quebec. The Conservatives won only ten seats there.

Now that the Bloc has decided to support the proposed Liberal-NDP coalition government, Harper has put away the velvet glove and unveiled the mailed fist.

Yesterday, Stephen Harper’s performance during Question Period in the House of Commons was a disgrace. To hold onto office, and to deny the House the opportunity to vote on a motion of non-confidence, Harper said he will never relinquish the keys of power to a coalition that relies on the support of the Bloc. So what if a few years ago, he was prepared to do precisely the same thing.

He’s now moved to new and very dangerous ground. Yesterday, he virtually denied that Bloc MPs were entitled to perform their parliamentary functions and to have a say in the governing of the country. Since 1993, the Bloc Quebecois has been a major party in federal politics. In every general election since then, the Bloc has won more seats than any other party in Quebec.

At present, support for sovereignty in Quebec has fallen to a ten year low. By agreeing to support the coalition, the Bloc has undertaken to put sovereignty on the back- burner for the next eighteen months so that the government of Canada can grapple with the economic crisis. Surely, pragmatic arrangements of this kind are precisely the way ahead for a Canada that will always include Quebec.

In questioning the legitimacy of Quebec’s MPs, it is Stephen Harper who is endangering the unity of the country.

Fortunately, though, this desperate gambit will not save Harper’s hold on office. (He’s reminding me increasingly of Humphrey Bogart in The Caine Mutiny. Someone should give Harper some steel balls to roll around in his hand during his next appearance in Question Period.)

At the end of his time at the helm of government, as future biographers will note, Stephen Harper has gone back to the ideology of the old Reform Party. The Reformers thought the Quebecois had too much power in Canada and they didn’t even present candidates in the province during federal elections.

How can Conservatives concerned with the long-term future of their party even contemplate allowing this man to remain their leader?

Tuesday, December 02, 2008

The Harperites Are Misrepresenting Our System of Government

In a bid to save their government from defeat and prevent its replacement by a Liberal-NDP coalition with the support of the Bloc, Stephen Harper and his operatives are trying to sell the public a false view of how our system of government works.

It begins with the bogus proposition that Stephen Harper and the Conservatives “won” the recent election and have a mandate to govern.

In fact, in the recent election, the Conservatives won a minority of seats in the House of Commons, 143 out of 308.

Our system of government, known as “responsible government”, holds that for a ministry to hold office it must enjoy the confidence of the House of Commons, i.e. the support of the majority of the members of the House.

In Canada, we do not directly elect our prime minister. The prime minister is an elected member of the House of Commons (in theory, he or she could be a Senator, but this has happened only twice, the last time under Mackenzie Bowell from 1894 to 1896.) The Governor General asks the leader of the political party that commands the support of the majority in the House to form a government. In the case of a minority parliament, the critical issue is which party or combination of parties can command the support of the majority in the House.

Yesterday, when the leaders of the Liberals, NDP and the Bloc, whose parties hold the majority of seats in the House announced their intention to defeat the Harper government and replace it with a Liberal-NDP coalition government with the support of the Bloc, they were playing out their roles within the system of responsible government. And since this move comes early in the new parliament and holds out the promise of stable government for at least the next eighteen months, it is almost certain that the Governor General will call on the coalition to form a government once the Conservatives have been defeated. (The Governor General does have some discretion here, under the rubric of royal prerogative, but considering how recent the election was, it is highly unlikely that she would accede to a request by Stephen Harper to dissolve parliament to call another election.)

The Conservatives are appearing on news shows, talk shows and are organizing rallies putting out the word that what is happening in Ottawa is an attempted “coup”. At the centre of this inane claim is the proposition that Canadians just re-elected Stephen Harper as prime minister and that he has a mandate to govern.

It is true that the Americans directly elect their president and therein lies much of the confusion that is being stirred up by furious Conservatives over their punch bowls. The American Constitution (in my view grounded on a poor understanding of Montesquieu and the British Constitution following the Glorious Revolution of 1688) rests on the notion of “separation of powers”. The Executive Branch, the Legislative Branch (Congress) and the Judicial Branch each occupy their own hermetically sealed space and are protected from undue interference with each other much the way Vestal Virgins were protected in Ancient Rome. To their credit, the Americans have managed to make this ungainly system work with only one Civil War marring its record to date.

The Canadian prime minister is not a quasi-king in the manner of the American president. He or she rises or falls depending on the votes of the majority in the House of Commons. That is what is going on here. What is coming to an end is the rule of a prime minister who thought he was a king. What is coming is a government that actually represents the views of the majority of the members of the House, and for that matter the majority of voters in the recent election.

Monday, December 01, 2008

If Harper Prorogues the Short Parliament

As the Liberals and the NDP finalize the details of their proposed coalition government, with the support of the Bloc, the Conservatives are engaged in desperate maneuvers to keep their government alive.

They have delayed the vote on a Liberal motion of non-confidence, in the hope that over the next seven days the nascent coalition will self-destruct. In the background lurks the suggestion that the Conservatives might attempt to prorogue Parliament until late January. This would allow the Harperites to return with a budget as the first order of business.

If Stephen Harper goes to the Governor General to ask her to prorogue the current session, he will be hijacking our democracy. For the next seven or eight weeks we will have an illegitimate government that is clinging to office by refusing to allow the people’s representatives to deliberate and to vote.

Future generations of Canadians could then refer to this as our “Short Parliament”. In April 1640, King Charles 1 called Parliament into session because he needed funds. Three weeks later, not happy with the ideas of the parliamentarians the King dismissed what historians refer to as the Short Parliament.

Charles’ high-handed refusal to let Parliament deliberate and decide launched him en route to his ultimate demise. Stephen Harper’s destination will be a more peaceful one, perhaps a return to operating the Gestetner machine at the office of the National Citizens Coalition.

Conservatives, concerned about the future well-being of their party in a post-Harper era, ought to advise the Prime Minister and Guy Giorno, his attack dog chief of staff, not to go the route of proroguing Parliament. Such a step would add to economic mismanagement, knee-capping the opposition, and bugging the deliberations of political opponents, the misdeed of subverting democracy.

Sunday, November 30, 2008

Bringing Down the Harper Government: Not for the Faint of Heart

"There is a tide in the affairs of men.Which, taken at the flood, leads on to fortune;Omitted, all the voyage of their life Is bound in shallows and in miseries.On such a full sea are we now afloat, And we must take the current when it serves,Or lose our ventures."

The Liberals ought to heed these words as they move forward to topple the Harper government. If, instead, they hesitate and give in to their fears, they will hand Stephen Harper an enormous political victory.
Having committed a grave political blunder last week with its Economic Statement, the Harper government is desperately regrouping to try to regain control of the situation. Apparently they are in full retreat, but no one should be fooled. The concessions being offered---backing away from slashing campaign funding for political parties, dropping the assault on the right of civil servants to strike, and moving forward the date of the budget---are all designed to convince faint hearted Liberals that they should abandon the idea of defeating the government and installing a new ministry in which they will hold the key positions.
If the Conservatives manage to salvage their hold on government, the retribution they will inflict on each of the opposition parties will be a terrible one. Stephen Harper does not deal well with what he interprets as public humiliation. Here’s a guy who can’t even attend the annual Press Gallery dinner in Ottawa because he’d have to lampoon himself and people might laugh at him. Lacking a sense of humour, which means a sense of proportion, he is not well-suited to political life in a democracy where give and take is of the essence.
The only thing this man understands is conquest, which is why even the members of his own party don’t really like him.
If the Liberals decide to let Harper wriggle out of this one, they will have exchanged the substance of victory for a Pyrrhic victory.
Making a coalition work will not be easy for either the Liberals or the NDP. What will unite them though is that they are on the same side of the fence when it comes to the need for a serious stimulus package to cope with the economic crisis. Oddly enough, keeping the Bloc onboard may prove to be not so challenging. The Bloc will claim credit for the portion of the stimulus package that goes to Quebec, and they will be rid of Harper’s noxious agenda on culture, crime, and gun control, an agenda that Quebeckers hate with a passion.
The Liberals, NDP and the Bloc can either hang together or they will hang separately.
They cannot play this game again. If they were to unite to topple the Conservatives further into the mandate of this parliament, Harper would have a much better chance of talking the Governor General into granting him a dissolution and a new election. This is it guys.
If the opposition fails to defeat the government and install a new one, Harper will exercise complete control for the next couple of years. The opposition parties will be stuck with Flaherty’s budget at the end of January, which is virtually certain to fall short of what the country needs in terms of economic stimulus. Do they really want to place the fate of Canadians in the hands of a man whose first plan for coping with the economic crisis included selling the CN Tower?
This may not have been the way the Liberals wanted to return to government. But it’s a good way. If they perform effectively in office for the next two years, the Liberals, the NDP and the Bloc will be well positioned for the next election. And, it will be the Conservatives who will fall prey to infighting. If the Conservative government falls, the campaigns to replace Harper as leader will be well underway by Christmas.
The united power of the opposition parties has been demonstrated to great effect over the past few days. They occupy the high ground and the only thing that stands in their way is their own self-doubt.

P.S. I know the speech at the top of this post was delivered by Brutus, who came to a bad end. Shakespeare had a way of having even his doomed characters give voice to enduring truths.

Saturday, November 29, 2008

Harper’s Economic Mismanagement: The Essential Reason to Defeat His Government

Stephen Harper is making the case that while his government has been dealing with the economic crisis, the opposition parties have been scheming to seize power.

Quite the reverse is the case: while the Harper government should have been mapping out a plan to cope with the onset of recession, its members have been busy sticking pins in the opposition parties as well as in that perennial object of right-wing fury, the civil service.

In truth, the members of the Harper government are economic incompetents.

During their first term in office, they put all their eggs in the basket of making Canada an energy superpower. As the price of oil soared, the Conservative policy was full speed ahead with the development of oil sands projects. The consequences were that under Harper, Canada was fast becoming the leading per capita polluter in the world. The Conservatives paid no attention to the flagrant use of natural gas and water to produce dirty fuel. And in their rush to dedicate oil sands synthetic crude to the U.S. market, they gave not a thought to the long-term energy security needs of Canadians.

The overemphasis on the oil sands drove up the value of the Canadian dollar at such a pace that the consequences were ruinous for the manufacturing sector, which was given no chance to adapt to a changed environment in which Canadian labour costs were suddenly much higher. Retailers and book publishers also suffered for the same reasons.

The Harperites failed to learn the lessons of the rapid run up of global petroleum prices in the 1970s. The price soared and ultimately became one of the main causes of the sharp economic recession of the early 1980s. Then the price of oil fell, Alberta’s oil patch suffered hard times, and Canada had little to show for the excesses of the earlier oil boom.

The global financial crisis that has now burst on the world had a number of causes, one of which was the rapid rise of petroleum prices. When the financial crisis struck and the global economy lurched into recession, demand for petroleum fell and so did the price. Down came the value of the Canadian dollar, something that would have been very helpful to manufacturers earlier, but in the present environment is not of much use.

The Harperites are now claiming that their GST cuts provided stimulus to the economy a year before the British decided to do the same thing. The GST cuts were one part of the Conservative assault on taxes, genuflection to pay homage to their anti-government ideology. As for stimulus, the main effect of the GST cuts was to generate increased imports of consumer products manufactured elsewhere in the world. It did almost nothing to shore up the Canadian domestic economy.

What is really needed now is a massive infrastructure program in Canada, a program that will improve productivity and allow us to move toward greater energy efficiency. This requires direct government spending on a very large scale, something the Harperites are loath to do because it contradicts their most sacred ideological doctrine, that government is the problem never the solution.

Barack Obama will make infrastructure spending a centerpiece of his first hundred days. The Europeans are launching similar stimulus programs.

While Harper and Flaherty dither, the Canadian economy is shedding jobs at a rapid rate. That’s why they should be turned out of office.

A new Liberal-NDP coalition government is needed precisely to cope with the economic crisis.

Unlike the Conservative government which does not enjoy the confidence of the House of Commons, the new government will. Our system is called Responsible Government. The Conservatives should learn about it.

Friday, November 28, 2008

Opposition Parties: Too Late to Turn Back Now

The Liberals, NDP and the Bloc have seized on the capital error committed by the Conservatives in their Economic Statement. Now, the three opposition parties have no real option but to see it through and install a new government.

In their Economic Statement, Finance Minister Jim Flaherty and his boss, Stephen Harper, exposed themselves as unreconstructed followers of the Herbert Hoover school of economic policy making. Their approach to the economic crisis, unlike that of any other government in the West, is to hunker down, slash government spending, sell crown assets (at what would be fire sale prices) and try to squeak through with little or no deficit.

They don’t get it.

Along with the rest of the world, Canada needs a massive program to stimulate the economy, not in the form of further tax cuts, but in the form of infrastructure spending. For the past thirty years, during the neo-liberal age (call it the neo-conservative age if you prefer), the emphasis has been on holding down government spending, deregulation and letting the private sector enjoy the fruits of the cheap labour of the third world. Infrastructure has been allowed to deteriorate in many countries, not least Canada. In this country, where bridges fall down, many highways are a shambles, city streets are more noteworthy for potholes than pavement, hospitals and schools are in disrepair, and public transit falls ever further behind, tens of billions of dollars need to be invested.

As it turns out, Canadian governments will get the biggest bang for their stimulus dollars through infrastructure spending. The labour that is hired is local and most of the materials are purchased from inside Canada so there is much less leakage outside the country in the form of increased demand for imports as a result of the stimulus than would be the case with tax cuts.

Economic stimulus will preserve and establish jobs. Intelligent infrastructure programs are an investment in a more productive and greener future.

The Conservatives have over-played their hand. By putting themselves so much on the wrong side of history, they have forced the three opposition parties together. The government, having discovered the extent of their miscalculation, may now try to buy off the Liberals, NDP and the Bloc with compromise wording in the economic statement and the removal of the measures on campaign finance from the package.

It’s too late for that.

If the opposition parties were to settle for a few new phrases in the Economic Statement, they would be opting to allow Harper to push them and more importantly the Canadian people around during several years of government austerity that would deepen the economic crisis.

As it now appears, we could be heading for a Liberal-NDP coalition government with the Bloc providing support in Parliament. These three parties hold the majority of seats in the House and they won the majority of votes in the recent election. In forming a new government, they will be acting in the best interest of Canadians and will be taking a crucial step in the revitalization of democracy in this country.

Thursday, November 27, 2008

Opposition Parties: Out of the Sandbox and Into Real Politics

Since the global financial crisis burst onto the world stage so that even obtuse people like the members of the Bush administration had to notice it, Canadian politicians and the Canadian media have been noteworthy for their head-in-the sand responses to what is happening.

While a large majority of Canadians voted against the Conservatives, the outcome of the election confirmed the surface impression that Canadians had opted for the status quo. Since election day, the mealy-mouthed Canadian media has continued its business-as-usual approach to politics and the economy. On the CBC, Don Newman’s Politics, where the spin never stops, groans on just as before the financial crisis. The At Issue Panel, made up of people who subscribe to the economic and political paradigm that has gone down in flames, continues as in a time warp.

Just beneath the surface of federal politics and the maundering media, however, everything is as different in Canada as elsewhere. The economic crisis is spreading apace and an increasing number of people are its victims. More will be with every passing week.

That the Conservatives are back to their old game of turning secondary issues into confidence matters has become apparent with the government’s decision to slash outlays to political parties. Instead of planning a massive program to rebuild our infrastructure, which ought to be the order of the day, the Harper government is demonstrating that it is utterly bankrupt.

The time has come for the three opposition parties to get out of the political sandbox in which they have been living and to offer the citizenry a real alternative.

During the election campaign, the three opposition parties took plenty of pot shots at each other on a host of issues. By the end of the campaign, the reality of the financial crisis had made the platforms of all three parties look dated and rather ridiculous. The Liberals and the NDP each asserted, for instance, that the government would not run a deficit with them at the helm, a proposition that was perfectly idiotic by election day.

To keep its programs intact, and to mount an infrastructure program to repair the damage of years of neglect, and to create and protect jobs, the federal government needs to run a deficit.

The essential difference between the Conservatives on the one hand and the Liberals, NDP and the Bloc on the other, is not their positions on particular issues. It is that the opposition parties are open to the need for a fundamental shift to face up to what is happening. Unlike the Conservatives, who are waiting for an Obama bailout to reignite the Canadian economy, the opposition parties are alive to the need to take sweeping action.

The moment has come for the leaders of the three parties, along with their advisors, to spend serious time together to work out the program for an alternative government, committed to protecting jobs and investing in the future.

Having agreed, they should make their case to the Canadian people, defeat the Harper government in the House, go to the Governor General and present themselves as able to form a government that can command majority support in the House. That government can be a coalition, with all three parties formally a part of it, with two of them in it, or with only the Liberals forming the new ministry. What matters is the commitment of all three parties to support the program they have drawn up. Let’s get on with it.

Tuesday, November 25, 2008

Ending Harper's Parliamentary Dictatorship

Having won 38 per cent of the popular vote and 142 seats in the House of Commons in the recent federal election, Stephen Harper is acting as though he has a mandate to lead Canadians through the financial crisis that is at hand.

His tactic, which he deployed repeatedly during the year prior to the calling of the election, was to declare not merely the budget, but a long list of other items, matters of confidence for his government. If the Liberals, New Democrats and the Bloc who held, and still hold, the majority of seats refused to bow to his will on virtually everything, that would precipitate an election. Then when he saw his chance, the prime minister violated his own legislation that had fixed the date of the next election and plunged the country into a trip to the polls most citizens did not want.

On election day, Canadians refrained from giving Harper an exclusive mandate. The essence of minority government is that the Conservatives share a mandate with the three opposition parties, the parties that won the majority of seats, as well as the majority of votes cast. Those three parties now have the power to force the prime minister to adopt a cooperative approach to governing or they can defeat him and form a government with a program they all agree in advance to support.

There are compelling reasons for the three opposition parties to forge a common strategy. These parties have positions on social programs, the environment, gun control and crime that are much closer to those of one another than to those of the Conservatives. More important still, they share views on how to deal with the economic and financial crisis that are fundamentally at odds with those of the Harper government.

The global financial meltdown involves much more than a typical economic slowdown. The collapse signals the demise of the paradigm that underlay government economic policy making in the West for the past thirty years----unbridled free enterprise, with a minimum of regulation.

It is that discredited ideology that has been and remains the raison d'etre of the Harper Conservatives. As head of the National Citizens Coalition, leader of the Conservative Party and the Canadian Alliance before that, Stephen Harper has devoted his entire career to the cause of reducing government and shredding regulation.

Recently he has taken to proclaiming that what has made Canadian banks the envy of the world has been the solid regulatory system in which they are embedded. In truth, if the Conservatives had had a majority in the last parliament, they would certainly have deregulated Canada's financial institutions so that taxpayers would now be bailing them out on the same scale as is occurring south of the border.

At the meeting of G 20 countries in Washington last week, Stephen Harper sided with George W. Bush, the Herbert Hoover of our time, in advocating a minimum of regulation in the global financial system. This leopard has not changed his spots.

The Harper government's idea of how to get close to the incoming Obama administration is to negotiate an energy deal that would be bad for the environment and that would virtually cede sovereignty over the Alberta oil sands to the United States. Here's how it would work: in return for a Canada-U.S. pollution reduction deal that falls far short of the targets set under the Kyoto Accord, Canada would guarantee to the United States long-term secure access to the synthetic crude of the oil sands.

On the central matter of reviving the economy, saving the manufacturing sector and promoting a bold new agenda for rebuilding our cities and infrastructure, the Harper government has no appetite for the scale of action that is needed. Harper sometimes sounds like a Keynesian who might come up with a bold plan to stimulate the economy. And then, his finance minister, Jim Flaherty---the man who mused about selling the CN Tower---says that any stimulus plan will have to wait months for his next budget.

In the leaders' debates during the recent election campaign, Stephane Dion, Jack Layton and Gilles Duceppe showed that they shared a good deal in common in their approaches to economic management, or at least to the idea that there ought to be government intervention in the economy.

Could the three parties work out a platform to govern for the next two or three years?

If so, they could defeat the Conservatives in the House and form a coalition government. Alternatively, the NDP and the Bloc could commit to support a Liberal government in enacting the agenda on which all three parties were agreed.

The opposition parties ought to do this for the good of the citizenry, but there are a number of self-interested reasons that could also impel them in this direction.

Following two successive electoral defeats, and having embarked on a leadership race in which the two front runners are re-treads from the last race, the Liberal brand would benefit immensely from a demonstration of leadership during a time of deep crisis. To make this work, Stephane Dion would have to step aside in favour of an interim leader until the new party leader is chosen next May.

Despite Jack Layton's best efforts during the election campaign to present himself as ready to be prime minister, the NDP remains mired in fourth place in parliament, its long-term strategy to surpass the Liberals in tatters. Participation in governing the country could give the party the traction it needs to end its days as a perennial bridesmaid.

The long shot is the Bloc, a party whose reason for existence is to make Quebec a sovereign country. Or is it? In the current financial climate, the Parti Quebecois is doing little to promote the cause of Quebec sovereignty during the provincial election campaign that is now underway. While the party has not backed away from the ultimate goal of sovereignty, its platform insists that the PQ would not be obligated to hold another referendum on the issue should it win the election. The PQ and the BQ are both well aware that the last thing Quebecers want to hear about right now is another referendum.

That leaves Duceppe's party as the permanent odd man out in Ottawa, a party that holds a majority of Quebec's seats but cannot participate in governing.

The Bloc would not have to join a new governing coalition in Ottawa, but it could agree to support it on the basis of a much more interventionist approach to managing the economy than it will ever get from the Harper Conservatives. Bringing the Bloc into responsibility for governing can open the door to a political era in Quebec in which the choices are no longer restricted to sovereignists versus federalists.

The place to start is with a dialog among the three opposition parties to map out areas of mutual agreement. Next, they need to put the Harper government on notice that unless its members are willing to cooperate in mapping out the new agenda that is needed, they will defeat it and establish a new government in its place. Either way, the days of Harper's parliamentary dictatorship would be ended.