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.