Andrea Horwath’s Debacle
I can’t remember the last time I laughed out loud when I saw election results. I almost spat a mouthful of my breakfast across the room.
Almost nobody expected Ontario’s Liberals to win a majority, least of all the NDP’s Andrea Horwath. Her decision to pull the plug on the Wynne government has to go down as one of the worst political miscalculations in recent memory.
While the NDP are putting a brave face on the results, there is little question this was a debacle of Horwath’s engineering. While once she was in the driver’s seat, now the NDP are once again relegated to third party status.
Moreover, it didn’t have to go down this way. She could have used the election to stake out the ground left of the Liberals. Instead, she did quite the opposite. As a result, the NDP picked up just one seat, although lost important seats in the crucial Toronto region.
In a story published by the Toronto Star days before the election, written by Linda Diebel, Horwath was portrayed as being deeply angry with the Liberals for reneging on promises made the previous year. She was so pissed that she apparently didn’t bother to read this year’s budget before pulling the plug. A budget many considered the most progressive seen in years.
But instead of running to the left and portraying the Liberals as corporate sell-outs, the NDP campaign steered right. They set out to curry favour with small businesses, and vowed to set up a ministerial post to chop waste. And they attacked the Liberals, while ignoring the far more dangerous Tories.
In fact, the Star’s Thomas Walkom ran a column in which he said that Horwath might be willing to support a Tim Hudak government and join them in slashing the civil service (the difference was that she wanted to chop managers and he wanted to chop frontline workers). Such willingness to embrace elements of the right’s agenda was what raised the ire of the 34 prominent leftists but also – it turned out – the Ontario electorate.
The NDP’s strategy is important because of next year’s federal election. The NDP, in 2011, went after the Liberals in order to pick up seats, which finally gave Harper his long-coveted majority. The question now is whether the NDP will dust off this strategy once again, risking the Tories sneaking up the middle. If they are smart (which is debateable) the party will stay clear of the sectarianism of the past and go after the Tories from the left. Indeed, Hudak’s policy of taking a hard right turn has shown how the right-wing message is not resonating.
Still, what is getting lost in the aftermath is the fact that all three parties have embraced, with varying degrees of severity, the austerity agenda. All three wish to balance the budget on the backs of workers and the poor. None of them are really prepared to raise sufficient funds by taxing the banks, brokerages, corporations and multinationals that do business in Canada. Or plug the numerous loopholes in our tax code that allow the aforementioned to exploit offshore tax havens to tremendous effect.
Recently, in one of France’s daily newspapers, Alexis Tsipras of the Syriza party of Greece’s radical left, gave an interview about the impact of austerity on his country. There is a good chance that Tsipras could be Greece’s next prime minister.
Greece’s economic woes lie in the fact that its political elite basically took on way too much debt without collecting enough taxes to pay it off. Since the credit crisis began, the elite has attempted to solve the problem by cutting government spending, slashing wages, laying off civil servants and selling state assets to the private sector. They have not clamped down on massive tax evasion by the Greek bourgeoisie and corporate sector. The result has been 6 years of painful recession and 27% unemployment.
Tsipras said the crisis has been used by German capital, the EU and the IMF to turn Greece into a low wage state. Indeed, massive unemployment, as we know, freezes and even deflates wage growth. Tsiparis’s analysis clearly applies to Canada, where cuts to the public sector and growing unemployment tend to cow labour demands for higher wages.
In fact, Hudak’s agenda was clear on this: along with cutting 100,000 civil servants’ jobs, he planned to slash corporate taxes and turn Ontario into the cheapest place in North America to do business. And to think the NDP were open to forming a government with these guys.
The NDP could have tacked left and used the current economic conditions to emphasize the necessity to have big business and the rich pay their fair share. It was a lost opportunity, one they paid a steep price for.
Indeed, look forward to the Wynne government eventually taking an axe to the public service. And the NDP will now be sitting on the sidelines instead of preventing real damage being done. And it was all very unnecessary.
Until people begin to look at political alternatives beyond the three mainstream bourgeois parties, economic expansion is not likely to occur.
I stopped reading at the phrase “36 NDP leftists”. If a columnist can’t get the facts right on something fairly insignificant like that (34 so-called NDP leftists is the correct number), I’m quite sure that the article as a whole contains a lot of misinformation and incorrect generalization. No thanks .
Andrea Horwath was very much to the left of the Liberals and the budget was progressive for 1 year after that it turn rightwards hard, and its the Toronto Star that said Andre was to the right of Marget Thatcher, which is utterly insane. Andreawas servely damage by the stars campaign of lies and misinformation and character assassination against Andrea and that is why her down town Toronto vote collapsed. I admit there has been a set back, but not one without long term benifits, she now has time to fundraise and prepare for the next election, and yes lessons were learned.
I’ll point out that out of the 34 only 5 were actually members of the NDP.
I could say many things here- but I will only say this- Ontario went through the worst recession in its history- and a stagnation from that recession- and at this unique moment and desperate time- a time where I believe previous generation were building up an organized resistance to the wealthy and the ravages of markets when they fail- this was perhaps the most insane moment in the history of the ONDP and its response to the economics of the day.
The roots of the party must be shaking their heads in their graves. And this whole- “well it was just trying out something new” excuse- is baloney and dangerous. It was advised by some inner circle and it was a disaster.
I personally think that if this is the new third wayism of the party then I think it is time to turn the lights off- and withhold the mortgage payment. What is a rump party anyway?
When your supporting information consists of links to Toronto Star columns… your credibility on anything that involves Ontario politics takes a hit.
Any column written by a progressive economist that doesn’t mention the hard shift to austerity that would make Mike Harris blush in the out years of that budget is completely missing the point.
A reader who works for a government agency and therefore cannot be identified, sent me a personal email in response to my blog posting on the Ontario election. With his permission, I have posted it below with my response:
“If I may say, taxing the wealthy and privileged more, in a recession, strikes me as being an emotionally satisfying response, but not one likely to revive the Greek economy. How will taxing the wealthy strengthen effective demand in Greece? Ontario’s debt to GDP ratio is well below 50%, with a majority of debt held internally. Why would it need to tax more when it can just run higher deficits? Raising taxes, even for those who deserve it (e.g. fat cat corporations and plutocrats) removes money from the economy. I suppose you could tax the wealthy more, and then reduce the earning classes taxes by an even greater amount. But either way, you get more bang for your stimulus buck by just reducing taxes and not raising them for the rich. Higher deficits is the only truly progessive response.
Seccareccia and Lavoie are really good on Europe — reducing Greece’s problems to poor tax collection rather misses the point that the whole Euro-zone project, the Matricht Treaty, etc., was designed in such a fashion as inevitably to impoverish the peripheral countries.”
My response:
I think there is a jumble of thoughts here, but from what I can glean you are saying you suggest that we should not tax the rich but simply run up higher deficits instead. That taxing the rich is bad for the economy, even if it’s emotionally satisfying.
I don’t think this is true. During the period of what is considered the golden era of American and Canadian capitalism – which stretched from the late ’40 to the mid-’70s – the gap between rich and poor was at its lowest point, and taxes on the wealthy and corporations at their highest. Fordism worked, and tax monies boosted the economy because so much of this cash flowed to workers (through jobs and social programs) instead of the 1%. That money was used by workers to buy goods and services. As a result, recessions were shorter and more shallow.
The move by neoliberal governments since the 1980s to de-tax the rich and corporate sector and destroy Fordism has led to less money in the pockets of workers and the middle class and more wealth for the 1%. The result has been less money to spend on goods and services, and therefore longer and deeper recessions.
By taxing the rich and corporate sector and spreading that wealth to working people and middle class, you pump more cash into the economy. And then all boats float upwards.
In Greece, they simply don’t collect taxes at a remotely sane level. The result is gross income inequality and mass poverty and an elite who keeps all of their earnings. Forcing the rich to pay their fair share would get workers working again, as that money would then flow into the economy and create jobs and a renewed economic cycle.
Moreover, running deficits means you are in hock to the rapacious bankers of the world, and their credit rating agencies. Running higher deficits is not a solution anymore.
Bruce Livesey
“Moreover, running deficits means you are in hock to the rapacious bankers of the world, and their credit rating agencies. Running higher deficits is not a solution anymore.”
Unlike Greece which uses a foreign currency (the Euro), Canada is a monetary sovereign. It can never be in hock the rapacious bankers except by abdication, because the federal government can create money out of thin air.
It can use that money to put people to work, wipe out 2/3 of all poverty by that measure alone, and do so without inflation because we have so much unused capacity. World War II involved high-deficit financing that drove the unemployment rate down to 1% and was then followed by a golden era of prosperity in the post-war years.
I highly recommend Keith Newman’s post in PEF:
MMT: What it Means for Canada
http://www.progressive-economics.ca/2011/08/12/mmt-what-it-means-for-canada/
Taxing the rich is necessary for reducing inequality, and should be done.
But it is a separate issue from federal government funding to provide services and reduce unemployment. The federal government is never revenue-constrained and can spend whenever it wants.
It is counter-productive to link taxing and spending, because the powerful rich, along with many middle-class allies, dislike taxation, and when higher taxes fail, so does the progressive spending because people are convinced it cannot be done. Let us not reinforce that myth.
_________________________________________
Modern Monetary Theory in Canada
http://mmtincanada.jimdo.com/
“Moreover, running deficits means you are in hock to the rapacious bankers of the world, and their credit rating agencies. Running higher deficits is not a solution anymore.”
Unlike Greece which uses a foreign currency (the Euro), Canada is a monetary sovereign. It can never be in hock the rapacious bankers except by abdication, because the federal government can create money out of thin air.
It can use that money to put people to work, wipe out 2/3 of all poverty by that measure alone, and do so without inflation because we have so much unused capacity. World War II involved high-deficit financing that drove the unemployment rate down to 1% and was then followed by a golden era of prosperity in the post-war years.
I highly recommend Keith Newman’s post in PEF:
MMT: What it Means for Canada
http://www.progressive-economics.ca/2011/08/12/mmt-what-it-means-for-canada/
Taxing the rich is necessary for reducing inequality, and should be done.
But it is a separate issue from federal government funding to provide services and reduce unemployment. The federal government is never revenue-constrained and can spend whenever it wants.
It is counter-productive to link taxing and spending, because the powerful rich, along with many middle-class allies, dislike taxation, and when higher taxes fail, so does the progressive spending because people are convinced it cannot be done. Let us not reinforce that myth.
It’s useless talking about how the new NDP might act like the old NDP.
Livesey writes: “Moreover, running deficits means you are in hock to the rapacious bankers of the world, and their credit rating agencies. Running higher deficits is not a solution anymore.”
Elite economic opinion in this country is rife with neophyte sentiments like these–so why is the Progressive Economics Forum providing more space for them?
Ontario suffered an economic calamity in 2009, and high deficits and debt were the natural outcome (remember, the Liberals, no matter what you think of their record, ran surpluses in the three years prior to the crash). Surely the issue during the election was that no party had a fiscal policy that was designed to both bring down unemployment and fill the demand hole in the economy. All three leaders, like Livesey, evidently, were committed deficit hawks, and so their overtures to the unemployed and underemployed rang hollow, because they truly believed that Ontario’s slow growth and low inflation were the result of the deficit; eliminate the deficit, they assured us, and recovery would follow.
Duncan and Sousa have had five years to convince us that this policy makes economic sense, but all they’ve succeeded at doing is taking demand out of the economy. Livesey would merely have us do more of the same.
Further to the comparison with Greece, here is an extract from an interview with economist Michael Hudson:
G: Can you tell us how specifically, the euro, the single currency, has restricted country’s ability to dig their way out of crisis.
Prof. H: Let’s compare how the US handled its bank bailout after 2008, and how Europe did.
In the US they didn’t raise taxes, and they didn’t borrow from foreigners. The Federal Reserve simply created four trillion dollars of credit electronically. That’s what a central bank is supposed to do. It’s supposed to create the money to monetize and finance government spending deficits.
The eurozone forbids this in two ways, and this is what the German court ruled in Karlsruhe last week. The European constitution prevents the European Central Bank from lending to governments. It won’t’ monetize debt that results from deficit spending – although it will create money to pay bondholders and speculators. It’s there to enrich the 1%, not the 99% – and even worse, it thinks that the main way to enrich the 1% is by impoverishing the 99%. That is why it is so dysfunctional and downright evil.
So, instead of creating the money that Europe’s central bank gives to the crooks – in the Anglo-American way – it actually make the taxpayers pay the crooks. This is completely unnecessary. You could just create money and give the crooks everything they want, without having to make things worse by taxing labor and industry to wreck the economy. But the eurozone aims deliberately to wreck the economy, in order to scale back wages. It thinks that whatever is taken from labor can be grabbed by the financial sector. There’s no concept of symbiosis, and that without a domestic market the debts ultimately will have to go bad.
The eurozone refuses to let a central bank finance government spending. Only commercial banks and bondholders can do this – and they charge interest. Crippling the central bank thus creates a huge transfer of interest to the commercial banks. Then, when the governments can’t pay, they go to Stage Two. That is where the governments have to pay by selling off the public domain: the land and natural resources, the forests, ports, electrical systems, natural monopolies basic infrastructure, roads and bridges. The economy is turned into a tollbooth economy. So you’re going back to feudalism. Ireland is back to the 14th century, quickly.
I voted socialism(CPC) because the NDP have been so far removed from Democractic Socialism and the CCF’s Regina Manifesto for so long(60 years?) it’s unregognizable as a political party for working people.
I’ll leave the economics to the economists, but permit me to correct two of the electoral “facts” upon which the assumptions of your electoral analysis rest.
If you want to talk about the 3 seats the party lost in gross, you don’t compare them with the 1 seat the party won in net. In fact the NDP gained 3 seats over dissolution (picking up Oshawa, Sudbury, and Windsor West), while it lost 3 seats in Toronto (Beaches-East York, Trinity-Spadina and Davenport).
Moreover, if you want to talk election-over-election gains rather than gains over dissolution, the party also kept all its by-election gains in southwestern Ontario (Kitchener-Waterloo, Windsor-Tecumseh, London West, and Niagara Falls). That’s a total gain of 7 seats alongside a total loss of 3 seats, for a net gain of 4 seats. Not earth-shattering, admittedly, but at least an accurate figure to work from.
The second statement I take issue with is the claim that in going after Liberal votes, the Federal NDP handed the Harper Conservatives a majority. There are several points to make about that:
* The NDP was also actively going after Conservative seats and targets in the last election, and came painfully close to winning them in a couple of cases where the strategic voting campaigns explicitly but erroneously advocated a Liberal vote … thereby leaving them in Conservative hands (Bramalea-Gore-Malton, Desnethe-Missinippi-Churchill River). They came within 8 points or less of beating another 6 Conservative MPs, four of them within 3 points. The mixed messages of the strategic voting campaigns did not help.
* It was actually vote-switching from the Liberals to the Conservatives in Etobicoke, York Region and Durham Region that cost gave the Conservatives 5 Liberal seats there. In North York and Peel Region — even if the NDP hadn’t gained a single vote — the Liberals would still have lost all 11 seats to the Conservatives, who out-hustled them in their own seats winning over blue Liberal switchers and previous non-voters. Liberal MPs like Martha Hall Findlay and Ken Dryden campaigned elsewhere in the country, assuming their own seats were safe. This is hardly Jack Layton’s or the NDP’s fault.
Comically, although the author bemoans vote-splitting, his proposed solution is for yet a further electoral alternative, so I don’t think we can take this electoral analysis seriously.
References:
http://www.punditsguide.ca/2011/05/splits-decisions-a-closer-look-at-vote-shifts-in-greater-toronto/
http://www.punditsguide.ca/2011/05/mommy-they-split-my-vote/
http://www.punditsguide.ca/2011/05/strategic-failure/
I am going to wade in here because I think at least one of my observations has gotten twisted around pretty significantly, and another one has engendered a rather bizarre reaction.
At the end of my response to a response, I mentioned that running higher deficits for a provincial government (because that’s what we are talking about here) is not a good idea, as it places you in hock to bankers and credit agencies.
Seeing as the Ontario government cannot actually print its own money, if there is a shortfall between revenue raised through taxes and government expenditures, the government usually must go hat in hand to bankers and borrow money to cover the difference.
I once interviewed former Ontario finance minister Floyd Laughren who told me about how much of his job entailed flying around the world and meeting bankers who were keen to lend the province money. During the Rae government’s reign, as people will recall, there was a bad recession in Ontario and the government ran high deficits to ameliorate the lack of tax revenues coming in the door. And stimulate the economy.
Yet that money comes with a price. The higher your debt, the higher your interest payments. And if the credit rating agencies believe your debt and deficits are too high, they lower your credit score, and boom, you are borrowing more expensive money. So yes, borrowing money is a good idea during recessions, but this cannot go one forever and without a price tag attached.
Raising more taxes by taxing the rich and corporations is a better solution, wouldn’t you think?
Finally, I don’t know where people got this bizarre notion that countries with sovereign currencies can just print more money when they have a cash-flow problem. If solving your economic problems was that simple, than they would just do that. Indeed, German’s Weimar Republic thought that was a nifty idea during the 1920s when they discovered they owed too much money, and we know how that solution turned out.
The reality of Greece is that yes, having the euro has fucked them, as is being tied to the financial pursestrings of the EU and German bankers. No one denies that. But this does not escape the reality that the Greek political elite screwed their economy and the country by borrowing too much money from foreign lenders which they had no intention of paying back. In contrast, the Germans – who are in the same economic union – did no such thing. I have visited both Germany and Greece in the past few months, and you sure as shit don’t want to be living in Greece these days if you’re looking for a job or trying to pay your bills. Managing your government finances sanely is good for your economy.
Finally, to the person who wrote to say the NDP did just fine fucking fantastically in this past election, then God help you. While this person seems to be suggesting that the NDP won a whole bushel of seats – the fact is they won one more where it really matters: They had 20 going in and they came out with 21. More importantly, because of Horwath’s idiocy of pulling down the government, the NDP lost the balance of power. That’s kind of a big deal. And they lost seats in Toronto, which is also a kind of a big deal.
At the moment, one of Horwath’s few allies is Warren “Smokey” Thomas (although at least one observer has wondered what sort of person insists on being called “Smokey”), the current president of OPSEU. From what I have read and seen, Thomas is a first-class moron. He has been deriding those unions, such as UNIFOR, who campaigned against Hudak and threw their support behind strategic voting.
Thomas, meanwhile, has said he would have been happy to see the NDP in an alliance with the Tories, where together they could axe a bunch of civil servant’s’ jobs. Thomas seems to think the Tories would have been fine just cutting the jobs of managers, as opposed to front-line workers. I think this is rather wishful thinking on his part. After all, during Harper’s minority government years, he managed to do enormous damage.
In fact, it makes you wonder if Thomas knows how to read: after all, this is the same Hudak who has assiduously attacked “union bosses”, threatened to introduce US-styled right-to-work laws, and would have tried and make union dues optional.
Thomas has complained that the Wynne government will be slashing jobs and continuing to freeze government workers’ wages, which is why he supported Horwath’s decision to trigger an election. This is likely true, but the NDP would have done the same thing (and did during the Rae years). The notion that Hudak, a white male reactionary who represents largely petit bourgeois rural voters, would be somehow better than Wynne as a partner, reveals how cut off from reality OPSEU’s president has become.
Which finally gets around to the matter of strategic voting. Unions like UNIFOR and other progressives, including myself, think that the Tories are a greater evil than the Liberals, both provincially and federally, and therefore the NDP should stop beating the shit out of the Liberals at every chance they get. The NDP brain trust doesn’t care about any of this, apparently, and are happy to allow the Tories to wreak their damage if it means more seats for the NDP.
This is not what Tommy Douglas would have thought. He was smarter than that. It’s a pity that the NDP supporters aren’t as clever as he was.
Please see Arun Dubois excellent piece on Weimar:
http://www.progressive-economics.ca/2011/08/19/mythologies-money-and-hyperinflation/
I’m always intrigued by people who tell me what Tommy Douglas would have thought – particularly when it is exactly the opposite of everything Tommy Douglas ever said. Ever heard of Mouseland?
In the recent Ontario Provincial election there was no mandate for Andrea Horwath and her ‘brain trust’ of hired advisors, handlers and organizers to turn the party to the right, to wage a right-populist campaign that so alienated labour unionists, social justice advocates and progressives. The Ontario NDP electoral campaign was the worst since Bob Rae tried to defend his odious Social Contract in 1995.
We, the undersigned, request the immediate resignation of Ontario New Democratic Party Leader Andrea Horwath, and call on the party to initiate a full leadership and policy review.
http://www.change.org/en-CA/petitions/ontario-new-democratic-party-andrea-horwath-should-resign?utm_source=guides&utm_medium=email&utm_campaign=petition_created
I know I’m way late on this one, but I wondered about three things:
(1) I’m not sure that Thomas Walkom’s column is enough to convict Horwath of willingness to back Hudak.
(2) I don’t like the analysis of Greece. Problems there involve too many other factors, like Germany’s internal devaluation before the economic crisis, a speculative attack, and a bailout package in which the Troika forced the government to attack its citizens.
(3) Weimar hyperinflation was caused by a massive collapse in productive capacity combined with punitive reparations. Just doesn’t make sense to bring it in here.
(4) That Pundit’s Guide writer isn’t, I think, saying Horwath did great or anything. It sounds to me like she or he just wants to clarify some side issues.
(3) Regarding deficits, I do think you’re giving too little weight to the business cycle. A provincial government does have to keep its debt-to-GDP ratio under control, but you still have to expect deficits during recessions and wait till the top of the cycle to start balancing them. Things are particularly tough these days with the federal government pursuing pro-cyclical policies and continuing to download onto the provinces, but if provincial governments pile on it will only make things worse. Won’t it?