It's the Economy, Stupid - Election 2015

Just last night, the Globe and Mail (referred to these days as the Globe and Male) hosted an election debate on the economy.  Despite there being 4 national parties, only the boys were invited to attend, leaving Elizabeth May to operate a tweet-fest to weigh in with her points.

I didn't watch the debate.  Partly because it was on-line, partly because I'm not a great G&M fan and mostly because Ms May wasn't invited.  I've read the G&M's rationalization for this decision, but I don't buy it, and neither do lots of other Canadians.  Besides, I had better things to than listen to the boys natter at each other all evening.  I've read plenty about the economy and listening to them surely would not be very enlightening.  So the debate went on without my attendance.

I'm not going to even attempt to discuss who won, who lost, who butted in and was rude the most, who lied the most, who was unrealistic, who was original or not....  Who cares.  If you want to read a real economist's analysis of the Harper government's "management" of the economy, you can check here.  But here's what I think:

First, Canada is in the second recession since the Conservatives took power back in 2006.  I'm not going to blame them for either one.  Both recessions were caused by world events out of the control of the government.  However...

The first recession was at first denied by the Conservatives who tried to pretend it wasn't there.  Recall that the main reason why it didn't affect Canada so much was because we have more stringent rules governing the banking sector.  Harper can't claim credit for those.

The second recession, caused by falling world crude prices, has been a disaster for Alberta but it shows the dangers of putting all your eggs in one basket.  This is exactly what the Conservatives have tried to do, for 10 years.  Consequently we are seen as a single-industry petro-state causing our dollar to fall when oil falls.  This could be an advantage for exports, but we have a problem there too.

Despite corporate tax cuts, businesses are sitting on about $630B of "dead money", funds they haven't plowed back into the economy, as is so often claimed.  

So, revenue has been reduced, the dollar has tanked along with the price of oil and companies haven't been investing.  In fact, some are moving jobs out of the country, a process that has been going on for some time now.

The Conservatives have bet the farm on three things, all of which have not turned out well. They include: 1) betting on oil as an economic engine, 2) overstate the job creation record, and 3) irresponsible tax breaks.

Another analysis of the Conservatives' economic policies can be found here.  One telling quote puts it this way:

"Corporate tax cuts have been central to the Harper government’s economic agenda from the beginning. The result has been a huge loss of public revenues for little economic gain. In other words, the evidence strongly suggests that this signature Conservative economic policy has been a failure."

The Conservatives have been swooning about an unexpected surplus from the last fiscal year.  Many jokes and much serious discussion has been made about this.  What is important is this:

During the Harper decade, $160B was added to the National Debt.  It's hard to get excited about a $2B surplus faced with that.

A close look at this graph seems to reveal the national debt at around $1000B.  This strikes me as being the combined federal and provincial debt which IS around $1.2T.  Figures from Stats Can would indicate a federal debt of around $650B.  This blog takes data from a TD Bank publication and shows much the same information.

Various reports also note that inequality has been rising faster in Canada than in any other developed country, other than, perhaps, the USA.

A recent article from iPolitics, written by two real economists, has few complimentary things to say about Harper's economic policies.  Since the authors were closely involved in several federal budgets under two different governments, they might know what they're talking about.

Job creation?  Hard to say how much influence any government has on this.  For the record,  and for what it's worth, this is how this government stacks up:

Really, I don't think there is much here for the Conservatives to brag about.  We continue to be hewers of wood and drawers of water.  The Conservatives haven't done anything to foster any kind of value-added process here in Canada and continue to clutch onto the "trickle-down" theory of economics, one that has been shown to be misguided long ago.

In a way, it could all boil down to this:

This is apparently what the Conservatives are pinning their hopes on.  It's not sound fiscal management.  It's the usual smoke and mirrors.

[Update] - For a discussion of some economic issues that didn't get much or any mention during the recent "debate", consider these....

[Update] - A recent paper from the Centre for the Study of Living Standards, co-authored by former TD Bank/s chief economist suggest pretty clearly that neoconservative economic policies are not working and that social programs need to be revisited.

[Update] - A constant refrain from the Conservatives, whether federal or provincial, is that the NDP (or the Liberals) will "wreck the economy".  That certainly hasn't been true in my limited experience and I did live in Saskatchewan during many years of NDP government as well as some years under the Devine Conservatives (some of whom ended up in jail...).  In any case, this article reports the results of an analysis of a few decades of administration under various parties.  For what it's worth.