Almost a year ago, Stephen Harper travelled to Greece to encourage Greek prime minister George Papandreou to screw his courage to the sticking point and go further down Austerity Road. Papandreou has since departed in disgrace and -- if Michael Den Tandt's reporting is correct -- Harper is about to apply his own version of Grecian formula to the Canadian economy.
Harper is not in the habit of listening to expert opinion. But he should lend an eye to Paul Krugman's column in today's New York Times. Krugman writes that Greece illustrates how profligate spending in good times can get you into trouble. However,
trying to eliminate deficits once you’re already in trouble is a recipe for depression.
These days, austerity-induced depressions are visible all around Europe’s periphery. Greece is the worst case, with unemployment soaring to 20 percent even as public services, including health care, collapse. But Ireland, which has done everything the austerity crowd wanted, is in terrible shape too, with unemployment near 15 percent and real G.D.P. down by double digits. Portugal and Spain are in similarly dire straits.And austerity in a slump doesn’t just inflict vast suffering. There is growing evidence that it is self-defeating even in purely fiscal terms, as the combination of falling revenues due to a depressed economy and worsened long-term prospects actually reduces market confidence and makes the future debt burden harder to handle. You have to wonder how countries that are systematically denying a future to their young people — youth unemployment in Ireland, which used to be lower than in the United States, is now almost 30 percent, while it’s near 50 percent in Greece — are supposed to achieve enough growth to service their debt.
Harper claims that he is reforming OAS to save the young from an impossible financial burden. But youth unemployment is at record highs -- and the Canadian economy has lost jobs for the last six months. Harper proposes to do what Greece did -- at his urging.
Repeating the same policy and expecting a different result, Einstein said, is insanity. Stephen Harper is no Einstein.