Wednesday, June 26, 2013

Economic Obsessions

Those of us who are appalled by the Harper government have taken some hope for the future as we have watched the PMO implode. But Edward Greenspon warns that, when the next election arrives, it will probably still be fought not on Harperian ethics but on the Harperian economy.

Mr. Harper claims that he is obsessed by the economy. It's true that he is obsessed by a manifestly false proposition -- that wealth creates jobs. But Harper's real obsessions are two: The Liberal Party of Canada and pipelines.

Harper is particularly obsessed by the Liberals, now that the son has also risen. And he should have experienced a sinking feeling in the pit of his stomach yesterday, after President Obama did not give his full throated support to the Keystone XL pipeline. As for the economy in general, Greenspon writes:

It’s always difficult to determine whether an economy is half-empty or half-full. Certainly, last month’s job creation numbers were cause for optimism and first-quarter growth was on the upswing. Plans look on course to eliminate the federal deficit in 2015. But five years on, our reserves of resiliency are running dangerously low. There’s little room for manoeuvre should another shock come our way.

In the highly unusual type of “balance sheet recession” the world has experienced, the point is for the public sector to pump tons of stimulus into the economy while private players take a timeout and rebuild their finances. That’s what has happened in the hard-hit United States, where banks have bounced back, personal debt has fallen and house prices are rising again.

But households in Canada never paused. Their combined debts now stand at an astronomical 165 per cent of disposable income, similar levels to the U.S. at the peak of its folly. Canadians can only get away with this because interest rates are nearly subterranean. Once rates rise or housing prices fall, trouble will find us. On a recent visit to Canada, the pro-stimulus economist Paul Krugman expressed concern that Canada is primed to take some kind of hit.

It wasn't public debt that caused the Great Recession. It was private debt. And Harper's slashing of Employment Insurance and public employment has merely exacerbated the problem of private debt. In short, 2008 taught Stephen Harper nothing.

Unfortunately, Tom Mulcair doesn't have a high profile on the economy. And Justin Trudeau has no record on that file.  The prospects for the future are not particularly inspiring.


bcwaterboy said...

Your last comment Owen is the problem we face in Canadian politics, none of the opposition parties has successfully draped the economy and jobs flag as well as harper has. Ironic though is the fact that the harper gov't has done next to nothing "really" to stimulate the economy other than flashy ads about the tar sands industry. Astonishingly, they've all sat by idly as plant after plant closed, thousands of public sector workers laid off and line ups getting longer at food banks. If we measure the economy by the salaries and perqs of the 1% sure, it's getting better. Ask anyone under 30, not looking so good.

Owen Gray said...

That's precisely the problem, waterboy. The truth is that Harper is a lousy economist.

But he possess a master's degree in the discipline. It allows him to claim a knowledge that he doesn't possess.

Unfortunately, neither Mulcair nor Trudeau can claim such knowledge.

It would help if they could find people who credibly support an alternate economic vision.

Lorne said...

I have no expectations of Justin Trudeau coming forth with anything innovative when it comes to the economy or almost anything else, Owen. I see him as Stephen harper lite, a man with some personality but no real ideas.

As for Mulcair, I fear that in his efforts to dissassociate the NDP from its socialist routes, we will get much of the same as well, but perhaps he will do just a little better on the environmental front, given his past criticisms of the tarsands.

Owen Gray said...

I suspect that what we're dealing with is the effect of money on politics, Lorne.

Until we decide to publicly fund elections. we'll probably get more of the same.

ck said...

It's obvious to me that when we speak of Harper doing oh so well with the economy, despite leading us to the biggest deficit in history, and people, average working stiffs, actually swallow it.

The power of misinformation. It reminds me awhile ago, shortly after Obama's health care reform was being debated, Glenn Beck held those "8/12" demos. Some bloggers or online news reporters would go ask some of the demonstrators why they were there and why they did not like Obama. Most of the answers were along the lines of "He's taxing us like crazy!" or "We're being taxed to death!" When in reality, since Obama had taken office, personal income taxes remained exactly the same as when GW Bush left office, and in some cases, taxes actually went down. Never mind that these people should examine their pay stubs more carefully or not stop and actually look and see if they had less take home pay. No, they believed the rantings of Glenn Beck and his buddies.

Same thing here. Many of the right, it would appear, many of whom, average working folk, actually believe their taxes went drastically down since Harper took office. I never noticed that. Taxes only went down for th wealthy and corporations.

Speaking of which, many people, including the poor who may be unemployed, who may have even lost their jobs as a direct result of Harper's governance, still believe that the rich will lead them to the promised land somehow. They believe the same for the tar sands. Don't know why. But they do.

It has been rammed down people's throats that both the Liberals and the NDP are nothing but "tax and spend" and that the NDP and the Liberals cannot possibly put (necessary) tax hikes of any kind on the table without losing their shirts.

Remember those blue collar folks in the US all outraged over potentially having better access to more affordable health care for themselves and their families, but insist that the billionaires and most wealthy not pay any taxes at all. This appears to be true in Canada as well.

Great economist-- translation: when the wealthiest keep getting wealthier and somehow, some time down the road, everyone will be led down to the promised land. Everyone knows it. Even those less educated and blue collar--they actually support it.

Owen Gray said...

A lot of what Harper says he believes, ck, is demonstrably false. However, it's no accident that he has a huge communication staff.

Harper believes in the Big Lie -- if it's repeated often enough by enough government spokespersons, ordinary folks will believe it.

Anonymous said...

Where is Harper's economic plan? Where is Harper's job action plan.

All Harper has done for his economic plan is to, hand Canada over to China. Harper's Omnibus Bill gives China permission to sue Canada, if anyone blocks China's intrusions into our country. China took the 200 BC mining jobs. China also brought their own cheap labor, at the tar sands too. Chinese resource workers earn, $800 per month. There are nine mines and mine expansions going into, Northern BC, wonder who Harper will give those jobs to?

There may have been job increases but, for who?

Owen Gray said...

The rewards in the Harperian economy go to the few, Anon. One hopes that Canadians have figured that out.

thwap said...

I still believe that voters can be motivated by more than just dollars and sense.

It doesn't seem that there are opposition parties that can articulate why democracy is precious though.

I also believe that harper could be crucified on his economic incompetence. What makes it difficult to do so is the fact that so many opposition politicians have bought into, or are afraid to challenge, the orthodoxies that have produced harper's pile of garbage.

Owen Gray said...

You're absolutely right that Harper can be challenged on the issue of economic competence, thwap.

And you're right, too, about the opposition's lack of courage. They've bought into the same economic myths.