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The Canadian economy is just fine, thank you.

I’ve been reading the paper this morning and thinking about next week’s Canadian election.  I had planned to vote Green.  My rationale? I’m deeply opposed to the Conservative copyright legislation introduced earlier this year; I can’t see Stephan Dion as Prime Minister of Canada; and I like the idea of supporting the Green party because I think raising awareness of environmental issues in politics is super important. We all have to live on the planet, and like many Canadians I don’t think that the Conservative party is treating the environment as seriously as it should.

However, the economy trumps all and at the moment I think I’ll be voting Conservative after all.  Ironically parroting George Bush’s lead south of the border, our opposition leaders have ratcheted up their shouts that the “sky is falling”. But they know that the Canadian banking system doesn’t have the same structural weaknesses that the US system does.  They know that our government has been spending down the debt and cutting taxes, not financing a war in Iraq.  And they know that Canadians don’t have the same level of indebtedness as Americans.

Yes, the US fallout is going to hit us here.  The sensible solution is to do what your personal financial advisor would tell you — tighten your belt, pay down your debt, and wait out the storm.  If you don’t believe that, then think back to 1990, when Premier Bob Rae and Finance Minister “Pink” Floyd Laughren tried the opposite and attempted to spend Ontario out of a recession.  In just four short years, they went from a balanced budget under David Peterson’s Liberals to a forty billion dollar debt.  They ballooned the Ontario bureacracy to manage all that spending and then when they couldn’t manage the ordinary functioning of government within budget (never mind the spending programs) they forced civil servants to take unpaid days off — the so-called “Rae Days”, leading to province-wide mass protests. And it was all for nought – they never did effectively manage the economy through that downturn.  To fix that mess, we got Mike Harris and his “Common Sense” revolution, which gutted schools and medicare to pay down debt accumulated under the free-handed spending of Mr. Rae.

So I’ll be voting for a steady hand on the wheel, rather than ill-conceived and unneeded “bailouts”. And that means that it looks like I’ll be voting for considered economic management rather than any of the three hysterical ninnies who would like to lead the country in Mr. Harper’s place.

As they say in Quebec, “Je me souviens”.

{ 17 comments… add one }

  • David Megginson October 8, 2008, 5:48 am

    On the other hand, our economy (especially the company list on the TSX) is *much* more resource-dependent than that of the U.S., and a recession causes resource prices to plummet.

    If the recession lasts a while, look for overcapacity and layoffs in mines, oil drilling, etc., falling house prices in Alberta and Newfoundland, and lots of losses in people's RSPs (which have a lot of Canadian stock) and pension funds, making people feel poorer, and thus spend less.

  • S. Brent Faulkner October 8, 2008, 6:14 am

    Hey Alec… funny, but I was thinking much the same as you just yesterday. How "the sensible approach" could be a bad thing is a hard argument to win.

    I was also thinking that this entire A B C movement that seems to be gaining some momentum will do nothing more than help the conservatives stay in power (albeit with another minority), since all it does is distribute the votes of the discontented between the other parties instead of actually choosing another candidate.

    Cheers.

  • Shai Berger October 8, 2008, 6:15 am

    well put!

  • Gary Patton October 8, 2008, 7:37 am

    Good analysis, Alec.

    And you may wish to check deeper into the views of experts on the "other side" of the Global Warming Debate. If they're right, and there's tons of non-media-hyped-let's-not-create-a-crisis data to support them, Mr. Harper's Government has taken the real leadership approach.

    And Gillian, your "better track record fiscally", by the Liberals is absolutely correct if by that you mean their Party spent Canadians into incredible debt for over 20years, starting with the Trudeau, that the Conservatives, historically, have used our surpluses to pay down.

    Je me souviens …aussi!

  • Gillian October 8, 2008, 10:07 am

    Alec — Agree in principal. BUT history shows, federally at least, that the Liberals (for all their faults) have a better track record fiscally.

    Stephen Harper is less “hysterical” than the opposition, but that is messaging not policy.

    My 2 cents.

  • Mitch Brisebois October 8, 2008, 12:19 pm

    Gillian, the Liberals have benefitted in the past from unpopular but necessary Conservative policies – migrating the manufacturing tax to the GST, free trade, for example. These took a while to have a positive effect on the economy.

    As for Canada’s economic position right now, I’m really glad I don’t live in Iceland!

    Let’s not rock the boat with foolish “government intervention”!

  • Alec October 8, 2008, 1:01 pm

    Gillian – you are right historically. Nobody can argue, for example, that under Brian Mulroney’s watch the deficit he inherited from Pierre Trudeau ballooned. And nobody can argue that Paul Martin is the guy who gets credit for slaying that deficit. All we can do today is look at what various groups today are saying about their policies.

  • Mum October 9, 2008, 8:00 am

    "Je me souviens, aussi" and I have lived a lot longer than you. I remember when we did not have medicare which was brought in by the Liberals during a minority government. I also know that the Conservatives under Harper has managed to spend an 18 billion dollar surplus in 2 1/2 years on what? I suspect a lot of it was spent on advertisements trashing the liberals before the writ came down and was thus disguised as government spending rather than party spending. Harper is big on public/private partnership which rally means that the tax payer will make somebody rich because "Joe Private" would not enter into such an arrangement without expecting a big profit. I could go on but it gets boring and scarier. Suffice it to say that I don't trust Harper and his henchmen (Poileivre, Jaffer, Flaharty (sp),McKay, etc) because they really are not clear about what they are going to do. Remember the promise about cutting wait times in hospitals? Anyway, you get my drift!!

    Yer everlovin' MA

  • Alec October 9, 2008, 8:24 am

    Ma 😉

    The Conservatives have more than 4x the campaign money that the liberals have. That's one of the reasons we have a campaign right now is because they're ready to go and the libs aren't. If Harper can force the Liberals to spend now it's going to be a very long time before they're ready for another campaign. Heck, Stephan Dion hasn't even paid off the bills for his leadership campaign.

    You don't have to like what Harper's doing, but neither is it dishonest. It is exactly the tactic that Chretien used in 2000 as the Canadian Alliance was being formed. He knew that if he waited to call an election, they might be able to organize, raise funds and so on. So he dropped the writ, and won a third majority.

    The reason that the Conservatives have so much money to spend this time, by the way, is that the Conservatives, especially old school Reform members, have historically been very good fund raisers. They're populists, first and foremost. The Liberal party has never been as good at fund raising from individuals. Liberals WERE very good at raising money from corporations, however, and when Chretien's 2003 campaign finance reforms eliminated the role of corporate and union donors it eliminated a huge funding base for the liberals (and the NDP).

    Ironic isn't it? Conservatives as successful populist fund raisers and Liberals as the struggling "natural governing party" who can't raise a dime…

    As for the surplus — you will recall that the very first thing Harper did was to knock down the GST. Again, you may disagree with the policy (and I do, as I feel he should have kept those taxes and continued to pay down the debt), but what has happened has been pretty transparent. Canadians voted for tax cuts in the last election, and it wiped out a good chunk of the surplus. It's unsurprising. Given the choice, most people vote themselves bread and circuses.

  • Mum October 9, 2008, 9:43 am

    …and what about putting Baird, Ambrose, Jason Kenney, etc into cabinet posts? I imagine that in our riding, if Kieth Martin loses, Troy de Sousa will have a plum post. That man is a person of such character that, since your blog is pretty public, I would not want to express my opinion for fear of being sued! I did not vote for tax cuts in the last election. I happen to think that we need to help the poorest of us and the only way is through the tax system. Just this morning Harper stated that he does not support safe injection sites which means that we can look forward to more cases of AIDS and other diseases.
    I don't know if you saw the speeches that Harper and Dion made at the Empire Club in the last couple of days. Dion was pretty impressive. I won't even mention the positions of the conservatives on green house gasses and polution which should concern us simply for the sake of our children and grandchildren, MA

  • MGU October 9, 2008, 11:40 am

    So, Alec, I guess you'll be voting strategically! Dad

    PS None of the opposition leaders has been behaving in the way you describe. Maybe you have swallowed messages from the Conservative WAR ROOM.

  • Mum October 9, 2008, 11:49 am

    This is my last entry on this subject although you can imagine that your political junckie mother has a lot more to say. We did not need an election at this time since the opposition was unashamedly cooperating with Harper on everything he introduced in parliament and he had passed a law for fixed elections. Harper has lied when he said that it was impossible to govern with an uncooperative opposition and he has disregarded his own law on fixed elections. This election was called because he had a war chest and he foresaw a recession coming which would not be popular with the voters. He figured that this was his best chance. Well, it looks like the best he can do is obtain an even smaller minority or even lose. The money spent for nothing is staggering and I hope the voters punish Harper big time!

    Yer everlovin' MA

  • Alec October 9, 2008, 12:08 pm

    Not at all Dad. I'm pretty easy to figure out as a vote. Economy, then other issues. If the economy feels like it's in good hands, then I look at social issues, the environment and so on. If there's an economic threat that needs to be managed, then everything else takes a back seat.

    I watched Jack Layton call for an emergency all party meeting on the impact of the US economy on Canadians, Stephan Dion go off script during the debate to announce a 30 day emergency program after the debate, and Elizabeth may calling for a "proactive approach". These three don't have a plan, and they're making it up as they go along.

    It makes a guy like me head for the hills.

  • Alec October 9, 2008, 1:12 pm

    Hey Ma – I agree that we don't need an election, and I won't defend him for that. It seemed clear from the beginning that the outcome wouldn't be substantially different.

  • Alec October 9, 2008, 3:20 pm

    Vis a vis green house gases, I’m not against a carbon tax. I’d rather see the carbon tax introduced WITHOUT attendant tax cuts elsewhere until we know the impact on the economy. I don’t think that the scenario of a quick transfer of taxes from one sector of the economy to another, based on emissions rules, is a realistic scenario. None of the “green” parties actually understand all the implications, and people who think they do are dupes. My suggestion would be to gradually introduce the tax, and just as gradually put the money into programs, on a trailing basis, as the tax produces revenue.

    But what do I know? I’m not in government. I just have to balance income against expenses in my personal life and my business on a day to day basis.

    As far as safe injection sites go… well, that’s my beef with all big C conservatives. They conflate morality with health issues, morality with personal choice issues, etc. Give me a tight hand on the finances and a libertarian viewpoint on personal choice any day.

    But at this point in time, Ma, there’s no way I’m voting for any leader running around with his or her hair on fire claiming that the economic sky is falling. I don’t believe it is, and I sincerely believe that attempts to “fix” a non-existant “problem” will create many more problems than they will resolve. The last thing we need is more government meddling in the economy.

  • Jim Courtney October 9, 2008, 7:57 pm

    Your argument got some support today from the World Economic Forum.

    Well put. For once our unique banking system and mortgage markets are different from the U.S financial environment. The scary scenario is that Dion and Layton don't want to acknowledge theses differences — after all their anti-American stances in the past (some of which have been to our benefit). In this case they prefer to "copy" the U.S. actions — which are not required here.

    The challenge is to make sure we can (i) ensure we minimize the impact on exports to countries under duress and (ii) ensure there is credit available to business (especially small business) in times when even the banks effectively don't trust each other for short term loans.

    Harper, however, has not been very good at presenting and articulating these arguments. He needs a good "marketing communications" consultant.

  • Jim Courtney October 9, 2008, 11:58 pm

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