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.

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