Tag: Economy

See? This is why you shouldn’t have voted Conservative!

Well, that didn’t take long.

I actually cannot believe that Parliament has just opened, and Stephen Harper already has me in a blind rage.

Step 1: Economic statement focus

Earlier in the week, I heard that the government’s economic statement was to focus on preserving a small surplus, plus some initial cuts.

I thought that was a very strange approach in a time when most economists, including conservative (small “c”) ones, seemed to be saying that spending and stimulus were the most important priorities at this time.

Still, I was only mildly irritated at this point. Sure, it suggested the Conservatives were bad economic managers. But I already knew that, and there is some comfort in being right. Plus, I still have a job, for the time being at least, and it’s Christmas. So why fuss about politics now?

Step 2: Cutting federal funding for political parties

This, I was not happy about, even before all kerfuffle arose.

Bully for the Conservatives that they’re so great at fund-raising they don’t need any help from the taxpayer. That’s what happens your party is the one that attracts most of the rich people.

But parties who attract more lower-income people who can’t afford to donate (NDP, Greens), or are currently in some disarray (hello, Liberals), still have the right to exist. No, more than the right; they must exist, or we don’t have a democracy. We have a Conservative dictatorship.

Step 3: The opposition rises

That is some hubris that caused Harper to think the other parties would actually vote for their own demise.

Now, it may well be politically wise for the other parties to say it’s the economic statement itself, and not the cutting of federal funding to political parties, that is the tipping point. I’ll come back to that.

But my opinion is that the party funding alone is enough reason to defeat this bill.

  1. It’s unbalanced. This bill came in to compensate for loss of other ways for political parties to raise money. Previously, corporations and unions could donate; now they cannot. Previously, individuals could give as much they wanted; now they’re capped at $1000. You can’t take the funding away without making other legal changes that allow the parties to compensate for that loss.
  2. It’s undemocratic. Funding is calculated on a per-vote basis (with the exception of parties earning less than 5% of the popular vote). It’s one of the very few ways in our system that (almost) every vote counts. Some people, particularly Green Party supporters, do cast their votes exactly for that reason: to get federal funds to their party of choice. Taking away the funding disenfranchises all who voted for a major party.
  3. It doesn’t help the economy. The amount is too small to matter. Now, there is something to be said for the mostly symbolic gesture. Freezing top-level government salaries and cutting perks also probably doesn’t really help the economy, but it’s just bad optics to be flying all over in first class while people are losing their jobs and savings. But party funding isn’t a luxury; democracies aren’t completely cost-free.

    If the Conservatives don’t want their share of that funding, they can give theirs back and dare the other parties to do the same (knowing that they won’t). That way the Conservatives can get on their high horse, where they like to be, without kneecapping their opposition.

But party funding probably is a dicey thing to defeat a government on, so the opposition is instead focusing on the content of the economic statement. And frankly, there is plenty to be against there, too.

  • Claiming they already stimulated the economy with 2006 tax cuts. Huh? Even ignoring that they selected the most non-stimulative form of tax cut possible—the GST—something you did three years ago is not going to have a new effect now.
  • Claiming a surplus based on bogus number, such as inflated projections for the price of oil.
  • No infrastructure programs at all, though it’s not difficult to find excellent candidates for these across the country.

But even at this point, I wasn’t quite in a blind rage. I was really kind of excited that the opposition was showing some teeth, and acting cooperative, and refusing to roll over for the bully at the helm. Until…

Step 4: Harper claims a coalition government is undemocratic

While we have been working on the economy, the opposition has been working on a backroom deal to overturn the results of the last election without seeking the consent of voters. They want to take power, not earn it.

Stephen Harper

Overturn the results? No consent of voters? Makes me crazy ever time I read or hear it.

Mr. Harper, the majority of Canadians voted against you and your party.

The majority of Canadians voted for four center-left parties who agree on a number of major issues.

Three of these parties won seats. Two are discussing forming a coalition government, with the backing of the third.

This could be the closest Canada has ever had to the makeup of the government reflecting their actual votes.

Step 5: ?

Who knows how this plays out. But if the Conservatives don’t change their statement, they deserve to go down over it. And that better not lead to an election!

In the midst of a global economic slowdown that may plunge Canada into a deep recession and threaten the livelihood of many Canadians, it would helpful if there were some adults in Ottawa. … While there is certainly a crisis, there is no semblance of crisis leadership here, and therefore no chance for national cohesion. The responsibility for that lies squarely on the shoulders of Stephen Harper.

— Globe and Mail editorial, How to compound an economic crisis

Martin Luther King dreamed of the day when men would be judged “by the content of their character.” By that benchmark, Stephen Harper has proved himself to be a nasty little man.

— Peter Blaikie, letter to the Editor, Muzzling the opposition

The miscalculations have been stunning. Mr. Harper’s strategy has accomplished already the near-impossible: to bring the Liberals and NDP together.

He had so many other, less partisan options at a time of economic crisis and grave national concern. That he acted in this fashion, at this time, was enormously revealing. And very sad.

— Jeffrey Simpson, Economist with a tin heart, politician with a tin ear

Whatever the debatable merits of distancing parties from taxpayers, this isn’t the time or way to change payments peripheral to dangers facing Canadians. It won’t save a single job, meaningfully reduce the ruling party’s runaway spending, or somehow make the democratic exercise cost free.

— James Travers, Harper has needlessly provoked this crisis

Excuse for me for not blogging, but I’ve been a crazy person

Woke up in a panic
Like somebody fired a gun
I wish I could be dreaming
But the nightmare’s just begun

Ever do that? Wake up from a dead sleep in full panic mode, heart pounding, mind racing?

It’s happened to me a few times in the past couple weeks, and it’s quite unpleasant. I do not recommend it. And as sleep deprivation accumulates, the brain gets less and less effective. For the first time, I feel I have just a tiny understanding of what parents of babies and young children go through.

Don’t know why I feel so bad
Is it the weather, or am I going mad?
Don’t know why I feel this way
I don’t know whether I’m coming or I’m going
Can’t cover up, ’cause it’s obviously showing

Normally, I’m a fairly calm person, not given to emotional outbursts. So the number of times I’ve heard “You’re stressing me out!” in the past few weeks must be some sort of record.

I didn’t actually know, before, that stress was catching.

“Nice to know you’re human, too,” I also heard. Well that’s over-rated, I say.

Standing on an island
In the middle of the road
Traffic either side of me
Now which way do I go?
I should have stayed at home
I should have never come outside
Now I wish I’d never tried
To cross to the other side

So what’s been bothering me? Well, I’m not going to say. It’s personal, and it’s nothing dire—no cancer, no house burned down. It’s just stuff, that’s led to a lot more introspection than I’m used to, which is clearly bad for me. Frankly, I’m getting quite sick of myself.

Lyin’ awake in a cold, cold sweat
Am I overdrawn, am I going into debt?
It gets worse, the older that you get
No escape from this state of confusion I’m in

The Kinks: State of Confusion

And anyway, it’s gone beyond anything real, and I actually am panicking about going in debt, even though I have no real reason to do so, upcoming trip to Europe or no. And hearing all this bad economic news—not helpful! I’m like a walking Dow Jones average, overreacting to every new bit of information.

I thought, maybe a news break would help, then noticed how much news permeates my life. I wake up to CBC news (business news at 6:45), get up and get the paper (hard to get to the Arts section without passing by Business news with all its downward red arrows), cook dinner to CTV News 1: Your News first! (Business report at 6:30 pm).

So anyway, that’s why I haven’t been writing about politics much. But I suppose I should say something about the federal election results.

Given how bad the Liberal campaign was, it’s fortunate Conservatives managed to lose the majority on their own, scaring the Quebecois with thoughts of arts cuts and 14-year-olds in jail. But they did get a stronger minority, one that will take two parties to bring them down. Stéphane Dion didn’t dither in doing the right thing and stepping down, though this means the Liberals will again be spending all their money on getting a new leader, and not on winning power. There’s been lots of talk of uniting the Left. I’d love to see it, but won’t hold my breath.

Most disappointing for me had to be the local results, losing two excellent Liberal MPs: Andrew Telegdi (by 43 votes!) and Karen Redman. Redman lost to yet another “holy roller”—a social conservative, against gay marriage, pro-life, etc. So the whole region is now “served” by undistinguished Conservative members who will be as muzzled in office as they were running for it.

At least south of border, knock wood and all that, election results are looking to be much more promising. In fact, I was listening to Mr. Obama read from his own Audacity of Hope book today. It was very relaxing. He’s so smart, so well spoken.

It did, indeed, provide me some escape from the state of confusion I’m in.

Canadian federal election: Week 2 recap

The Liberals were much more visible this week, taking my advice by taking on Harper on a number of fronts, including childcare. The Liberal team was emphasized, which seemed wise. Dion explained the Green Shift on The Current podcast, and was, to my mind, clear and convincing.

The NDP and the Conservatives, meanwhile, were busily injecting a rare note of humour into the campaign. The NDP experienced the resignation of not one but two, toke-smokin’, car-drivin’, former members of the Marijuana Party as candidates for the party in BC, because they apparently didn’t bother to YouTube them before offering them the nomination. And the Conservatives, of course, had the whole “death by a thousand cold cuts” kerfuffle. Am I a bad person because that made me chuckle?

Anyway, this inspired the fourth apology by Harper since the campaign began (emphasizing why he’s so reluctant to let his candidates speak to the media), but the first that seemed to stick. And stick. Please, enough with the calls for his resignation, already! Lack of regulation might be the serious issue here. A dark sense of humour is not.

The US economy provided some excitement, with huge companies collapsing and stocks going on a roller-coaster ride in the wake of the sub-prime mortgage crisis. It ended only when the Bush government reversed its laissez-faire policies and stepped in with massive investment. (Fun fact: $1 trillion could buy you 5 billion iPhones. Or 1 war in Iraq.)

Canada never allowed sub-prime mortgages, and so isn’t at risk of this exact same crisis. But there’s a more general lesson here about what happens when governments aren’t involved enough, when companies (banks, meat) that need regulation don’t get it, when governments are downsized to the point of ineffectuality.

[Harper’s] inability to think in a positive, passionate way about large political projects shows starkly at this tense economic moment. In policy, he prefers to act small. His favourite word is modest. “Our plan is simple, modest and practical,” he said about a tax break for home buyers. As if he’d rather do nothing but, in a pinch, will settle for the least possible. His modest GST cuts give little relief, but they whittle government revenues down so he can claim we can’t afford much anyway. This week, he announced a ban on tobacco ads, which are already banned, and sales to kids, ditto. I know this “modesty” reflects Stephen Harper’s political philosophy and he could rattle on passionately about why government should do the least it can, for the good of us all. It’s the reason he wants a majority: so he can do even less and eliminate more. But he may be the wrong leader at the wrong time.

Rick Salutin, Globe and Mail

Reason of the day to not vote Conservative: Income trusts?

You know, I wasn’t going to do this one.

Yes, it was a broken promise. The Conservatives promised not to tax income trusts, and then they did it anyway, basically rendering them extinct by 2011.

But see, I’m not against politicians second-guessing themselves once out of the election heat, really researching the issue, getting advice from experts. And if they determine that their promise really isn’t in the country’s best interest—that it could actually be harmful—then I’m all for them breaking it.

And I actually thought this was one of those cases.

An article by the quite conservative Al Coates, in the KW Record, of all places, caused me to reconsider this.

The rational for banning income trusts—the reason I thought it might have been wise—was to avoid two problems:

  1. Tax leakage, because the trusts pay no corporate tax—all profit go directly to investors.
  2. The “hollowing-out” of corporate Canada—great Canadians corporations being converted into trusts.

But as with so many of the Conservative actions, the decision was a complete surprise to the investors and companies involved. Investors were hurt financially (famously, a lot of seniors), and companies counting on funding from them were left vulnerable.

And Coates argues that the widespread, unintended effect of the decision was this:

Many of those trusts have become takeover targets by giant private-equity players. They are being taken off the map and the radar, folded internally into big pension plans, never again to be seen as income-producing opportunities for Canadians.

Al Coates

He gives the example of BCE, one I’m very familiar with, having relatives living through the nightmare of BCE’s takeover by the Teacher’s Pension Plan.

The buyout will be financed through borrowing and BCE will be taken private, dismantled, chopped into pieces and perhaps sold off in parts. Already, thousands of BCE mid-level jobs have been whacked and there will be more to come. [It’s so true!]

BCE is a cash-flow machine and its free cash will be used to finance the debt. The new owners of BCE—teachers and its American partners—will pay no corporate tax because, in the first place, pension plans don’t pay tax, and for the other buyout partners, there also are offsetting cash-flow and debt-service factors at work. Ottawa will be lucky to see a wooden nickel in ongoing corporate tax proceeds.

Al Coates

I’m so far from an expert in this stuff, it’s not funny. But it sounds like, just maybe, this is not a case of “tough but necessary” decision-making, based on sober second thought and analysis; it could be yet another hasty and myopic decision that will only weaken Canada’s economy in the long run.

And that’s a lot worse than just a broken promise.

Reason of the day to not vote Conservative: The GST tax cut

Update from 2023: Of course, this lower GST rate remains in place to this day, 8 years into a Liberal government, with no suggestion of change from any party, far as I know.

An easy one for today: Cutting the GST, a policy so bad it actually united right and left [link removed as no longer valid] in opposition to it.

I think Jeffrey Simpson’s “A triumph of politics over economics” [link removed as no longer valid] summarizes the issue best:

Personal and corporate income tax cuts, as every economist knows, tend to stimulate savings and investment, which is what an economy needs to become more productive and competitive, thereby raising overall living standards. Lower consumption taxes stimulate more—wait for it—consumption, some of which leaks out of the economy in the form of purchasing imports and taking trips abroad.

The GST cut is the triumph of base politics over sensible economics.

Thus far, the Harper government’s tax and spending policies have been deeply disappointing for the country’s competitive position.

The government will have drilled a $10-billion hole in federal revenues through the two-point GST cut that will do nothing for productivity and competitiveness when compared with every other available tax cut, as the economists interviewed by the ROB illustrated this week.

Both policies represented the triumph of politics over economics, and short-term political considerations over long-term economic thinking.

Instead of this nonsense, tax policy should involve raising the GST, introducing carbon taxes, and then offsetting these new revenues by reductions in personal and corporate taxes to make Canada more efficient, competitive, fair and green.

Jeffrey Simpson, Globe and Mail

(And as an aside, CBC’s Marketplace did an interesting story this year where they showed that, in many cases, the GST cut was just swallowed up by rounding, giving more money to the seller and less to the consumer. Examples included movie and theatre tickets, whose “price includes GST” didn’t change a whit as the GST rate did. The companies just made more profit on each ticket.)

Sigh. So more’s the pity that we pretty much stuck with this 5% rate now. Though both the Liberals and the NDP argued against the cut, neither will take the political risk of undoing it (despite Conservative ads claiming the contrary). Only the Greens, bless them, are willing to to pledge to raise the GST back to 6% and use the increase to fund mass transit in cities [link removed as no longer valid].

Reason of yesterday to not vote Conservative: It’s the deficit, stupid

2023 commentary: Well, this argument has not aged well. Certainly some Conservative governments (like Trump’s) continue to run big deficits, but so do a lot of Liberal ones, including a number cited below. Plus, whether this is such a bad thing is more of a debatable point now, especially with interest that until recently were at record lows. I had more links to sources for these points originally, but of course many no longer work, so I removed them.

Why do people just automatically think that Conservatives, right-wingers, are better at economics? How did they earn such undeserved plaudits?

Because it seems to me, based on evidence of recent years, that what’s most notable about the economic record of conservative governments is the size of their deficits.

Bill Clinton turned Bush Sr.’s $300 billion dollar deficit into a $200 billion surplus, only to have Junior Bush tax-cut and “war against terror” into the biggest deficit in the country’s history.

Ontario’s much-maligned NDP government managed to get to a balanced operating budget in recessionary times, only to have the Harris PC’s turn boom times into the biggest provincial deficit ever. Ontario was brought into the black by McGinty’s Liberals.

And federally? Well, yes, there again, the biggest deficit to date was accrued by the Progressive Conservative government of Brian Mulroney. It was the Liberals, again, who brought Canadians into their current position of budgetary surpluses.

Until… Federal government runs a $157M deficit in April, May (CBC News, July 2008).

So the Conservatives came in with about a $13 billion surplus, and they have squandered it all.

Leaving us with less nothing in reserve to get through the looming economic downturn.

Cost of Conservative tax cuts and spending: $13 billion and change.

Cost of nevertheless having the reputation of being “best for the economy”: Priceless.