Sunday, September 20, 2015

His Time Is Up

Stephen Harper doesn't know it. But he's yesterday's man.  His policy prescriptions have long since passed their best before date. Tom Walkom writes:

When he came onto the political scene in the late 1980s, Harper was on the cutting edge of what was then the new conservatism.

Like Thatcher, he was determined to shrink government.

In Harper’s view, a properly sized government would get out of the business of funding social programs like medicare.

Its main economic task would be to remove anything, including tariffs and regulations, that interfered with the free market. 

He wasn't the first to advocate such policies. Ironically, it was the Liberals before him who advocated smaller, passive government:

Under Jean Chrétien and Paul Martin, the federal Liberals too adopted the new orthodoxy of free trade, low taxes and balanced budgets.

In fact, it was the Liberals who, in 1995, obligingly took apart much of the welfare state they had helped create.

The effects were dramatic. In 1995, federal spending accounted for 22 per cent of Canada’s gross domestic product. By 2006, it had dropped to 15 per cent.

As spending on social programs like welfare and employment insurance fell, the Chrétien-Martin Liberals used the resulting surpluses to lower personal and corporate taxes. That, in turn, made it politically more difficult to introduce new spending programs. 

 But times -- and the problems that accompany them --  have changed:

Put bluntly, the needs of capitalism have changed.

Business remains remarkably productive. But it cannot translate that productivity into profit unless customers have the wherewithal to buy its goods and services.

Right now, too many don’t.

The world economy is limping. Europe is in a mess. Japan is stagnant. The U.S. recovery is slow.

The new miracle economies that the world had been counting on, like Brazil, are no longer quite so miraculous.

Even China, with its strange amalgam of communism and cutthroat capitalism, is faltering.
Now the OECD is calling on governments to take up the slack. And former bank economists, like Don Drummond, write that it's time for government to stimulate the economy:

Mainstream fiscal conservatives, such as former Bank of Canada governor David Dodge, say the government should fret less about deficits and instead spend on useful infrastructure.

Even the normally tight-fisted International Monetary Fund wants advanced nations to loosen the purse strings.

A paper released this week by the Ottawa-based Centre for the Study of Living Standards and co-authored by former TD Bank chief economist Don Drummond concludes that market forces alone cannot get the economy out of its funk.

Government, the paper says, must play a more active role, through measures such as investing in public works, improving access to child care and offering direct grants to promising businesses.

Mr. Harper's time is up. This election will tell us if Canadians have finally cottoned onto that fact.



Anonymous said...

Sigh ... I wish it were true.
Only, progressives in Canada have to learn how to defeat the enemy (Harper) rather than themselves.

Owen Gray said...

I agree, Anon. If progressives keep insisting that they themselves are the enemy, yesterday's man will live on to do more damage in the future.

zoombats said...

The introduction of a fair tax system could achieve good results. Everyone should pay their fair share to help one and another. If everyone paid a fixed rate based on their income we could manage.I spent half of the year in Hong Kong where we pay a fixed rate of 15%. There are an incredible amount of rich people in HK and all who live there from poor to rich get good healthcare and can live within their means. They have a strange political system undeniably but people are allowed to live their lives freely

Owen Gray said...

I suspect Harper would support a fixed rate, zoombats. What he doesn't support is proportionality. For him, the notion that those who have done well have social obligations is a bridge too far.

Mogs Moglio said...

Was Steve at this party?

Regan and Bush #1 were there I suppose Harper was not but he sure delivers the same agenda that's not only EXPIRED it's STALE.

Toby said...

On the surface, the flat tax rate has it's merits. In practice most of it's proponents lobby for loopholes for themselves. The most loophole is for interest earned on investments thus while a laborer would pay his percent of his income the investor would pay nothing.

In Canada, our tax problems could probably be solved simply by collecting what is already due. The failure to collect from those hiding their wealth in so-called tax havens is a terrible loss to Canadian fairness.

Owen Gray said...

I've seen this one before, Mogs -- and it applies to Harper as much as it did to Reagan or Bush.

Owen Gray said...

Precisely, Toby. We've been living under the illusion that if we treat the wealthy better than the rest of us, we'll all be better off.