Are the Conservatives Conservative?

Politics in Canada

It is intriguing to see an economist flying in the face of Stats Canada data. That is Stats Can data showing that investment is declining irrespective of corporate tax cuts while economics professor Stephen Gordon asserts that these very same tax cuts are spurring investment. His argument being I presume, “Things would have been worse otherwise.”

This is reminiscent of nothing so much as it is the now thirty year long mantra and practice of tax cuts as the cure regardless of the illness.

Government surplus? Tax cuts. Government deficits? Tax cuts. High growth? Tax cuts. Low, no or negative growth? Tax cuts. Record corporate profits? Tax cuts. Low corporate profits? Tax cuts.

Discussions of the drawbacks to monomania aside, how is this “tide that will float all ships” working out so far?

Well south of the border where this program was first and most fiercely implemented thirty years ago the results are in and extremely clear. The investment and corporate classes are unsurprisingly making out very well indeed thank you very much. Meanwhile those who make up the bottom four quintiles have at best kept up with inflation. Many not doing even that well.

At the same time these same folks have seen their government saddle the country with an ever rising debt that will have to be repaid in some manner or other. Meantime decent pensions and employer paid medical care are disappearing. The other indisputable facts are that value added jobs have disappeared in the millions, exacerbating an already debilitating trade deficit. Unemployment, foreclosures and bankruptcies are very close to historic highs, and people’s principal asset – their homes – lost on the order of $8 trillion in value. This right on the heels of a multi-trillion write down on their 401K’s due to the bursting of the tech bubble.

Here in Canada we are witnessing a reprise of the American model. Like Reagan and the Bushes before him ‘The Harper Government’, self-avowed fiscal conservatives, have run up the largest deficit in the history of the nation. And like Bush Jr. doing so after inheriting a surplus. Also like the Americans we have tax cuts for the investment and corporate classes, and here too they are as a result making off with pretty much all of the economic gains. Meanwhile the bottom four quintiles of the population are finding themselves burdened with high levels of debt both public and private. There being perhaps no better example of this than the level of personal debt that students are now being expected to take on, at the same time that they will be on the hook for repaying most of the national debt being run up to fund said tax cuts. We are also seeing a rapid reduction in worker pensions, a reduction in the quality of social services, and an attack on the “luxury lives” of the public sector and private sector union workers.

None of these facts are in fact in dispute. What I’ve presented is instead by now an all too common laundry list of the poor economic outcomes that have been the direct result of the economic policies chosen by our leaders over the last thirty years. Stephen Gordon, and Stephen Harper for that matter, might well say in response, “Yes, well, things would have been a lot worse otherwise.” Even more likely is their saying, “The problem was we didn’t go far enough.”

Presumably by this they’d mean with deregulation, less social services, and more military spending. These being after all by general consensus the hallmarks of the last thirty years.

There would also be no shortage of expert commentators to echo this opinion about our putative timidity. With our media right there to present their “fair and balanced” point-counterpoint. All of which perfectly exemplifies Albert Bartlett’s famous pith, “For every Ph.D. there is an equal and opposite Ph.D.”

It is at this point that most Canadians who got this far in the debate, and most don’t, throw their hands up in despair at yet another “He said – She said” with dueling eggheads.

This despite the fact that – of course – most of us live in the bottom four quintiles. 80 being larger than 20 and all. It is amazing really that one can even talk about “the bottom four quintiles” in a democracy without getting laughed out of the room. Instead this is a highly respectable and well paid way to talk about, well, pretty much the whole of the country be it here or south of the border.

Meanwhile the Canadian government is choosing policy after policy that cuts the taxes of those who pay the most taxes. Aka. The wealthiest among us. Adding billions to our largest ever deficit, tens of billions to the national debt, and sorely stressing the services that the bottom 80 are truly dependent on. (Aka. ‘Austerity’) I don’t know about you, but if my enterprise had a cash flow problem I wouldn’t begin addressing the issue by telling those in the best position to pay to stop. Which is precisely the case with income splitting and corporate tax cuts.

I don’t know what’s more odd. That the Conservatives are running on the basis of being the best managers of the economy and fiscal conservatives or that this is the general consensus about their economic management bona fides. Yes their policies are best from a certain self-interested point of view of a few, factually the case. But it’s passing strange in a democracy to see so many of the “bottom eighty” in agreement with the Conservatives self-opinion.

At the same time military spending is at the highest levels since WWII and climbing. Billions more are being spent by every level of government on police, surveillance, and prisons. Again irrespective of the facts. In this case, the fact of the matter being that crime was in decline before this splurge and so as a taxpayer one would have expected a break as oppose to a rapidly rising burden. No such luck. Instead like the much proclaimed “peace dividend” after the fall of the Soviet Union the directional arrow seems stuck for our ships of state when it comes to such expenditures.

What is instead to be sacrificed are what the Americans call “entitlements”, what Canadians say defines them, and “luxuries” like pensions and wages. Be they public or private sector.

Economics is quite obviously not a science in the sense of physics or chemistry. This does not however mean that a few truths cannot be divined. For example, when you are trying to pay off your debts maintain your cash flow if you can’t increase it, and don’t spend money on things you can’t afford. Especially high-tech gadgets which provide no revenue streams. By the same token when you are flush, save for a rainy day.

On both of these elementary economic tests of sound management and fiscal conservatism the ‘Harper Government’ fails. The question of why this is not the received wisdom about this government, and very much the opposite opinion from the elite consensus, is a question for another time.

Jeff Berg is a freelance writer and activist whose focus is Energy & Emissions and their micro and macro implications ecologically, economically and socially. Read other articles by Jeff, or visit Jeff's website.