Tag Archives: canadian economics

I smell an election – Part II

In this article , I suggested that an election will most likely be held before November 4.

I had no idea the Prime Minister would come out swinging the way he has been, poking jabs at Dion and treating him like a school-yard nerd, playing the bully role oh so well.

Coming out of a major caucus meeting, Prime Minister challenged Dion to pull the plug and Dion is nowhere to be seen all of a sudden. Dion’s lack of experience is clearly showing every single time these two mix it up. It’s like he’s cowering under the swingset waiting for his mommy to pick him up.

And the Harper government is coming out strong in a number of ways. A broad range of announcements are keeping them front and centre and they’re doing a great job of being sunny-bright and rosy when the economy is tanking because of their inability to acknowledge that our economy is not all about black goo in northern Alberta.

For example, Flaherty announced a $6 billion spending package, focusing on the infrastructure situation in the Province of Ontario. How can he do this when the Federal government is running a deficit? Is this a vision of more to come as the Conservatives spend desparately in a bid to maintain control over the Hill?

This issue exemplifies a massive contradiction in philosophy. When Flaherty was dumping all over the Province of Ontario (mainly because it’s a Liberal stronghold), he was calling for huge tax cuts to make Ontario more competitive. If McGuinty’s people complied, this Province would be running a deficit as well.

Also, the spending on infrastructure is not wise. ‘Infrastructure’ spending is a throw-back to the 50s, where politicians think tossing some short-term cash at the unemployed will solve all problems.

What we need is a commitment to invest in and build new industries. We don’t need more roads. Those should be bought and paid for by developers and the big box retailers. We need solar power and investment in Lower Churchill to save us from nuclear. We need to take action against the rising dollar and we need to find different markets so that we’re not at the mercy of the US dollar.

With election talk in the air, we’re starting to really see the way the Conservatives work. They talk tough. They shove and they shout. They use our money to buy their way out of the recession that they’re in the process of creating. They blame everyone but themselves for Canada’s economic situation.

What Canada needs to start doing is what the school-yard nerd does when subjected to this kind of taunting: get smart and embarass the hell out of them.

With any luck, someone will have the stones to fight back before the fall and call an election.

The Last Recession Spook

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Link to Full Story Here (warning: PDF).

Over the last two months, we’ve heard a lot of complaints from Conservatives who want to slash taxes and, in many cases, slash public spending as well.

Of course, this is wrong-minded economics. Anyone who’s picked up an economic textbook in the last 100 years knows that the way to avoid recessions is to take fiscal surpluses from periods of positive growth and spend them during periods of negative growth, hopefully avoiding any substantial downturn in the economy.

You treat the operation of the public sector the exact opposite of how you would if you were running a business. That’s why businessmen who become politicians are ultimately politicians you don’t want.

This report from the Centre for Policy Alternatives is a healthy read because it reinforces that notion. I’m going to cheat a little for you by providing some of the conclusions:

The 13 years of prosperity experienced by most of us from 1995 to 2008 resulted in healthy balance sheets for all our governments. Despite Mr. Flaherty’s two-year long campaign to give away our rainy day fund, we must remember that significant amounts of the surpluses were booked against our national debt. This is what allows us the fiscal resiliency to make social programs more robust and to improve them when they are needed most.

… We should not be hunkering down.

… We should not be thinking ‘look out below’.

… We should not be reining in our calls for change.