Try seeking a recovery as if Canada weren’t in election mode
If Prime Minister Stephen Harper could wave a magic wand and make the Canadian economy boom, you’d think he would do it now.
It’s well-known that one of the main barriers for an existing government to get re-elected is a sagging economy. And despite Conservative Finance Minister Joe Oliver’s boasts on job creation and growth, there are plenty of signs that Canadians are hurting.
Oil and the loonie are plunging. And while Bank of Canada governor Stephen Poloz would prefer us not to use the word “recession” because it is “unhelpful,” it seems clear that Canada is in or close to that.
- Recession talk looms over federal election campaign planning
- Bank of Canada’s Poloz calls R-word ‘unhelpful’
The fact that governments cannot snap their fingers and fix the economy is in some ways reassuring. It shows that the conspiracy theorists who think the world is being controlled by powerful cliques in smoke-filled rooms really are just wacky.
Part of the problem is that politics is complicated. Despite his government’s ability to pass practically any legislation, in so many ways, Harper’s hands are tied by external forces and those created by his own party.
That is why an imaginary government that did not have to worry about politics might do things differently.
One of the most obvious things to do when an economy is weakening is to spend. While it may be smart to run surpluses when the economy is booming, you don’t have to be a fanatical Keynesian to think it’s good to spend that surplus when the private sector economy is shrinking.
In this case, Harper is partly restricted by his own ideology. Switching from a balanced-budget, small-government focus to Keynesian largesse would seem like a flip-flop and could alienate a neo-conservative core.
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