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.

4 comments:

Richard Sharp said...

This is almost as exciting as the election campaign and, so far, not as disappointing. I've held the position that the left needs to get its act together for years.

Given Harper's failed, neocon policies, the left includes the centre as well.

Anonymous said...

I fully agree that (1) the Cons are wretched economic managers, and (2) they only looked to the oil sector for economic growth.

But blaming oil prices for worldwide recession is highly reductionist.

You need to look at issues like over-capacity, financial meltdown, growing inequality, profit rates, productivity, and so on.

Anonymous said...

James:
Even more troubling than their neocon dithering is the Conservatives' use of wedge issues, snooping and the like. Back down and there will be more of the same. They are bullyboys.

Anonymous said...

Another sharp comment Jim that offers historical reference, the kind of which, most of our Ottawa MPs forget to consider. I always remember your excellent series for the NFB years ago that looked at Canada from a socio-economic perspective that reached beyond the borders and looked at the big picture.

Clearly, the Conservatives have failed to recognize their place in history and the idiotic notions of "bad government" blocking their first responsibility to govern the people with fairness for all and not just the few. My hope is that at least someone in a powerful position pays heed to your comments and ideas in the near future.

LeonT