Romancing a stoned and sluggish economy



In hard times, few articles of faith are more dear to the Harper Tories than the dogma of economic salvation through stimulus spending. After all, this is what kept Canada from losing its capitalist soul during the Great Recession. Was it not?

To hear the freshly minted Finance Minister Joe Oliver sputter you might wonder. “We worked hard to return to a balanced budget to throw it all away,” he told a business crowd in Toronto last week, alluding to the feather-weight, on-paper-only budgetary surplus of $2.2 billion for fiscal 2014. 

It was his first speech as the late Jim Flaherty’s successor, and he was, among other things, concerned about establishing his street cred.

“So do not expect a big stimulus program,” he announced with a thump.

Instead, now that the country is back on track, chugging away, it’s only fair and sensible to return the moolah to “hard-working, taxpaying Canadian families.” (Really, Mr. Oliver, is there any other sort?) “We’re going to, of course, be talking to people.”

All of which sounds mighty “Main Street” of the good fellow. Still, his posture towards the economy and his fellow citizens assumes certain facts that may not be in evidence – at least, not entirely. Have the happy days actually returned? 

True, the country has managed to avoid many of the predations that visited its allies and trading partners during and after the financial collapse of ‘08. Among other mercies, both large and small, the treasury wasn’t impelled to bail out any banks or credit unions.

But the nation’s economic performance cannot, in any rational way, be described as robust. We didn’t come sprinting off the blocks. Our gait was more tentative; like that of a late-night office worker skittering to his car in a bad part of town.

According to RBC Economic, in March, the unemployment rate across the county was 6.9 per cent, representing a 24-basis-point (0.24 per cent) improvement over the previous month. Year-over-year, however, the uptick was almost negligible, even statistically meaningless. 

That’s been more-or-less the story for real gross domestic product. In April 2013, GDP advanced by 13 basis points, then in December of that year, it dropped by 53 points, only to recover in January by 51 points. The net gain was a virtual (though not quite) zero sum.

Again and again, the indicators refuse to support the more populist brands of politicking. Manufacturing shipments swing up a couple of percentage points in one month; and down again in another. Inventories and unfilled orders continue to oscillate gently along the x axis, denoting a no-to-low-growth commercial environment.

Under the circumstances, does awarding Canadians with sums that would, per capita, amount to chicken feed represent the best use of any largess the federal government might one day find itself holding? Are there not more effective ways to stimulate the economy than helping each taxpayer save a few hundred bucks on his T2014 Schedule One? 

In fact, Mr. Oliver said it himself. “We need to discuss domestically the issue of skills shortage, infrastructure and productivity and how that is all addressed in our fiscal framework,” he declared after his speech in response to a question from an audience member. Moreover, he added, Too many Canadians are looking for work.”

But apart from restating the blindingly obvious (over and over again), this government’s chief lieutenants have been loath to embrace a more progressive, pervasive and enduring version of what they all agree worked reasonably well during the Great Recession.

If any lesson emerges from the past few years’ experience on the global roller coaster, it is that government stimulus spending can have important palliative effects on troubled economies. 

The other one is that such exercises in monetary loosening are almost never bold enough or targeted well enough to render the structural changes that are necessary to keeping an economy nimble, entrepreneurial and innovative. The western world can thank the corrosive policies of self-hating government archetypes, such as the late Margaret Thatcher, for that.

When times were hard, the Harper Tories genuinely adored the stimulus phase of their Economic Action Plan. Clearly, though, times change and so does romance.


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