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The Progressive Economics Forum

Majority Conservative Government Ushers in New Era of Economic Stability

“The choice for Canadians is crystal clear,” said Harper. “Continuing our low-tax plan to complete the recovery and create jobs, financial security, stability and certainty for Canadian families and businesses. Or the high-tax, reckless-spending Ignatieff-NDP-Bloc Québécois agenda that will stall our recovery, kill jobs and produce political instability and economic uncertainty by re-opening constitutional debates. On May 2, I urge all Canadians to choose continued stability for Canada.”

Conservative Party News Release, April 30, 2011

So how do you like economic stability so far?

In the first week of stability-inducing majority government, Canada’s economy experienced:

– A decline of almost 400 points over the week in the TSX composite, the worst weekly loss all year.

– A decline of almost 2 U.S. cents in the value of the loonie.

– Turmoil in commodity and futures markets, sparked in part by new U.K. rules limiting speculative positions in the silver market.  The resulting downturn spread to other commodity prices (including oil) which had also been bid up by speculators.

– A miserable GDP report (issued the Friday before the election) showing that Canada’s real output was actually declining in February, casting doubt on the viability of the recovery.

– A jobs report issued this Friday that had a positive headline number (58,000 more Canadians working in April), but was gloomy in the details.  70 percent of those jobs were part-time, and almost two-thirds were in the public sector – many of them at Elections Canada working on an election that Mr. Harper said all along was “unnecessary” and economically damaging.  In the goods-producing side of the economy, employment was falling (largely reflecting the impact of a sky-high loonie on manufacturing).

Of course, none of these developments can be attributed to the outcome of Monday’s election.  But that is precisely the point:  Stephen Harper’s Conservatives can hardly claim to usher in economic stability, when the trajectory of Canada’s economy is increasingly determined by developments in global financial and commodity markets, which themselves are in thrall to the mood swings and enormous financial power of speculators and other short-horizon financiers.

Indeed, by integrating Canada’s economy more closely into the global commodity system, accelerating Canada’s precarious dependence on resource extraction and export, and reducing the extent to which government policy (whether through taxing and spending, regulation, or other tools) can smooth out the resulting economic peaks and valleys, it could be credibly argued that Conservative majority rule will make us more vulnerable (not less) to the sorts of economic instability that dominated the first week after their re-election.

And you’ve gotta know that if the election outcome had been different (with a Conservative minority, or – god help us all – another party actually coming first), last week’s turmoil would certainly have been blamed on the Liberals and the NDP, global market forces or no global market forces.  In that aspect, the Conservatives’ claim to be the guardians of economic stability is a non-refutable hypothesis.  If economic instability occurs on their watch, it is the result of “global market forces.”  If it occurs on someone else’s watch, it is the result of “high-tax, reckless-spending” politicians.

Canada suffered a serious economic downturn under Harper’s government, millions of Canadians continue to experience hardship and insecurity, per capita GDP and hourly productivity are still lower than when he was elected in 2006, and Canada’s economic performance since the financial crisis has been middling at best compared to the broad sample of industrialized countries.  Yet the Conservatives, with vague appeals to “prudence” and “good management” (backed by important, vocal support from business and the private media) played the economic card effectively in this campaign.  Some day we will adequately educate Canadians about how our economy really works, and the Conservatives will lose their “free pass” on economic credibility.

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Comments

Comment from Paul Tulloch
Time: May 8, 2011, 7:14 am

One would think with all the financial literacy that Harper has been pushing, somehow he might inadvertently arm voters with some tools to debunk his economic subtrefuge.

It is a key to refute the arms up, ‘ can’t do nothing it’s the world economy’ Tory tactic. (except post more action plan signs).

Comment from Denise Freedman
Time: May 8, 2011, 7:53 am

I’m not sure it is “financial literacy that Harper has been pushing,” Paul Tulloch, except in some sarcastic sense; more, to my mind, a financial orthodoxy.

Maybe, “the Conservatives’ claim to be the guardians of economic stability is a non-refutable hypothesis,” Jim Stanford, but it seems to me it is more an article of faith, governed by power so seamless few actually notice it, and others race after it, using the same techniques which, inevitably, lead to the same ‘conclusions’.

One of the lessons from a sociology course I took this year was that the most effective power is the most invisible.

Where is the financial heterodoxy? In the public square, that is.

How do we raise the profile of a heterodox ‘financial literacy’ that raises the bar of “financial possibility”? That counters voter suppression and realizes a political economic hope that is more than just a ‘moral victory.’

Comment from Todd
Time: May 8, 2011, 9:17 am

This article reminds me of something I read over at Left Business Observer after Bush got re-elected. Someone pointed out that, with so many people getting hurt and frightened by economic instability, that such instability actually instills in them even less of a desire for change, the reaching for what’s offered as familiar (if not safe) reassurance.

Comment from Bill Bell
Time: May 8, 2011, 9:25 am

I dunno. Aren’t Canadians supposed to receive some sort of education in the essentials of scientific reasoning? (Or, if that isn’t the case, shouldn’t they?) When Canadians can be made to believe that correlation is cause, in the absence of any kind of control treatment, it seems obvious that they have never learned anything about scientific method. No need to learn anything fancy about finance.

Comment from Denise Freedman
Time: May 8, 2011, 9:43 am

Remember the prorogation crisis, Bill Bell.

People actually believe, or so it seems, that we elect a Prim Minister rather like Americans elect their President.

Michael Ignatief was so frightened of being accused not only of Coalition, but also being supported by Separatists, that he not only hummed and hawed but finally rejected it.

This is not Science, though we see where Science has been relegated in the United States. This is how Economics has gone also, in my opinion.

Bill Bell: Do you accept the Science on Climate Change?

Or the Economics on Poverty?

Comment from AM in BC
Time: May 8, 2011, 11:14 am

* Positive feelings by the victim toward the abuser/controller
* Negative feelings by the victim toward family, friends, or authorities trying to rescue/support them or win their release
* Support of the abuser’s reasons and behaviors
* Supportive behaviors by the victim, at times helping the abuser
* Inability to engage in behaviors that may assist in their release or detachment

To me, this sounds a lot like what 30 years of TINA (There Is No Alternative), hammered home relentlessly by governments, business leaders, mainstream economists and the media, has produced in the Canadian electorate. If you’re wondering, it’s Stockholm Syndrome.

Comment from Paul Tulloch
Time: May 8, 2011, 3:04 pm

@Denise

Yes I was being sarcastic, we have joked about it before on the blog.

Comment from BB
Time: May 9, 2011, 1:41 pm

Education can’t solve this problem because science shows we don’t reason “rationally” you guys are under a false view of reason, see what has been discovered by science about human reasoning:

http://bit.ly/dYaWUc

Comment from Agent Oblivious
Time: May 9, 2011, 8:20 pm

What I don’t understand is how the conservatives believe they’re going to pull $4 billion out of the government through a strategic review, and be able turn an extra $6.6 billion in new spending over four years into a surplus. Does this really sound like Bush-style corporate catering at the expense of running a structural deficit, or am I way off?

Comment from Paul Tulloch
Time: May 10, 2011, 6:00 am

You know what we do need – a massive evaluation of the current state of the economy, while this majority is fresh. This will help us keep track of where the rad forward leads us.

This will include a major debunking of the economy. We need to start off fresh, and get the snapshot from both a qualitative and quantitative perspective. I was going to suggest the afb, but that is mirror budget related. We need a snapshot, a debunking and critique and finally a hard core pathway forward in terms of both vision and practical programs.

Comment from Ken
Time: May 11, 2011, 8:15 am

But I noticed in the papar today (Saskatoon Star Phoenix) that the rise of the NDP is causing some uncertainty, even while the Harper majority is going to be good for the TSX…

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