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The Progressive Economics Forum

Dumb ideas for fighting the downturn

The financial crisis and economic downturn have led to some silly ideas, namely, completing the Doha Round of trade talks at the WTO, and in Canada, a variant around eliminating inter-provincial trade barriers.

BC Premier Gordon Campbell has pressed for the latter, in spite of scant evidence that any meaningful barriers actually exist (the perception, however, runs deep with the CBC’s conservative media panel the other day endorsing the idea). Having signed the Trade Investment and Labour Mobility Agreement with Alberta, only to see the momentum stop at the Saskatchewan border, Campbell is pushing again on this non-issue as a “solution” to our current woes. At best this is more gimmickery from Campbell that panders to the perceptions for political gain; at worst, it will drive deregulation at a time when we need more regulation and more regionalized responses, not less.

Yet, Campbell rejects a real solution to the economic challenge, running deficits, that is essentially the mainstream view right now. In fact, we are on schedule to see a BC replay of the federal election come May, with both the Liberals and NDP saying they will never run a deficit. This means we will be putting off any meaningful action until Summer 2009 (I review the existing Liberal and NDP plans here and here).

As for Doha, it is worth noting the context. The developing world did not want this round of negotiations but they were strong-armed through just after 9/11/2001 to “save” the global economy from that crisis. Those very same countries have fought the press from advanced countries to dismantle what remains of domestic policies, while refusing to reduce barriers to goods from the developing world. That’s why there has been a stalemate for the past five years. And in spite of calls for resuscitation I see no movement on the positions of advanced countries to lower barriers to make life easier for poor countries.

Like Naomi Klein argues in The Shock Doctine, crises often lead to new justifications for pre-existing agendas. But even if all went forward, the Doha Round completed next month and the last trade barrier remaining in Canada eliminated, would this matter to the economic crisis? A big no, I’m afraid, and if anything these would tie up resources we need on other fronts. So focus, people, we have some work to do – we need real international and interprovincial cooperation on a stimulus package that averts a catastrophe.

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Comments

Comment from Travis Fast
Time: November 23, 2008, 8:47 pm

Look if you want fight deflation just ask yourself what would a contrarian of Friedman do? That is, what public policy, according to Friedman, would increase a downward price stickiness? Fun times, fun times.

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