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Six Ways Harper Is Wrecking the Economy

Need evidence? Look south.

By Murray Dobbin 2 Oct 2008 | TheTyee.ca

Murray Dobbin writes his State of the Nation column twice monthly for The Tyee.

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Myth of the good manager.

It's perhaps understandable that Stephen Harper is far ahead of his rivals when it comes to poll questions about who is the best at competent "economic management." Like George Bush in the U.S., Harper has deliberately framed himself as the "strict father" figure -- in charge, hard-edged, a firm guiding hand when things are increasingly uncertain.

Dion just seems inept, unable to capitalize on the Liberals' mythic record of the 1990s.

Jack Layton, despite some good economic planks in his platform (including cancelling $50 billion in corporate tax cuts), is new to the economic policy fight. In virtually all previous elections, the NDP has avoided economic policy. Tagged as irresponsible spenders for a long time, this line still gets traction for Harper.

But the record tells the story and you would be hard pressed to find a government or a prime minister who has been more inept -- or more accurately, simply absent -- in guiding an economy. It is critical to understand that Stephen Harper doesn't actually believe in a "firm hand on the economy" because he is ideologically committed to a pure form of laissez-fair economics. While he claims the "fundamentals" are strong, he can take no credit for it and has no idea about how to avoid their deterioration. He believes in the "invisible hand of the market," not the firm hand of the state.

And stunningly, Stephen Harper believes this even as he watches the economy of the country he reveres enter into a period of spectacular self-destruction.

There are at least six areas where Harper's disdain for the economic role of government does harm to Canada's economy. They are:

1. Merging Canada with the sliding United States. Harper's overarching economic policy is deep integration: tying Canada permanently to the U.S. market, an economy that is headed for permanent chaos: a financial crisis, huge government deficits, consumer demand dropping like a stone, and demand for Canadian goods (even energy) in steady decline. It will only get worse, much worse. This isn't just a financial crisis, this is the end of the 60-year era of American global leadership.

Yet Stephen Harper is so married to laissez-faire ideology he seems incapable of recognizing the reality that virtually every other world leader is now trying to come to grips with.

2. Eroding our infrastructure. Harper keeps talking about us being competitive but he is squandering any competitive advantage we might have by failing to fund the rebuilding of our crumbling economic infrastructure. In the next decade, the infrastructure deficit will become a full blown crisis but Harper's $60 billion tax cuts means the government will have no money to respond to it.

3. Destroying our surpluses. Those tax cuts harm Canada in another way. Harper has put Canada on the road to budget deficits by eliminating the healthiest surpluses the country has ever had. When Canada's export economy gets savaged, as it will in the next year, the only fall back position is the domestic economy -- potentially one of the biggest in the world. But Harper's laissez-faire ideology once again prevents his government from stimulating that domestic economy through government spending. That would mean increasing the federal money for health, education and social assistance, creating a national child care program or putting millions into much needed home care. But even if Harper changed his mind and wanted to do so, his tax cuts make such economic stimulus virtually impossible.

4. Increasing risks by deregulating. Just as the world is calling for renewed government regulation and intervention on the economy, Harper is headed in the opposite direction on several fronts. His deregulation economic agenda will affect every other aspect of Canadian life: self-regulation in food safety; self-regulation in airline safety; "harmonising" regulation with the deregulated U.S. on pesticide residues on fruits and vegetables; abandoning separate Canadian testing of new drugs and much more.

5. Giving way too much to big oil. The specific example of the total deregulation of the tar sands development demonstrates that Harper's political dedication to the Alberta oil industry is such that he is willing to see the rest of the economy completely distorted. Unwilling to press for a rational, staged development, Harper has ensured that tar sands expansion will continue to keep the value of the Canadian dollar high and make our manufactured goods uncompetitive. In addition, unfettered tar sands plant construction drives up the price of building materials making other development prohibitively expensive.

6. No planning for growth. Lastly, Harper simply has no answer at all when it comes to promoting new long term economic growth in Canada and his laissez-faire ideology means that we are falling further and further behind those countries that are actually using the power and organizing capacity of the state to create sustained, modernizing economic growth. China, India, South Korea and Brazil are the growth centres of the world because they ensure a close collaboration between capital (business), universities and the government, carefully engaging in long-term planning of industrial development. Harper has literally no industrial development strategy or policy. Instead of focussing his tax cuts on growth industries, his across-the-board cuts see most of the billions go to the oil, banking and insurance industries -- the ones least in need of tax reduction.

Canada has lost 300,000 industrial jobs in the two and half years of Conservative rule, and under Harper's steady hand Canada has gone backwards in terms of the technological content of its exports. We are slowly devolving back to our status as a hewer of wood and drawer of water. Harper's response last week to the loss of Canada's best jobs? "I think you have to be honest with people: the government can't go in and say 'We can guarantee your job. We can't protect your job.'" He means that he won't protect their jobs.

Where have we seen this before?

Harper's economic strategy, if it can be called that, is looking more and more like George Bush's: tax cuts and military spending. While gutting our revenue by $60 billion over five years, Harper laid out a plan to spend $490 billion (in addition to the annual defence budget) over 20 years to build up the Canadian military. This economic policy is well on its way to bankrupting the U.S. and could do the same to Canada.

We could instead bring together unions, capital, universities and provincial governments and make Canada a leader in green technologies, potentially providing hundreds of thousands of high-paying jobs and literally thousands of profitable companies. But under Stephen Harper, Canada's economic ship of state just drifts.

Our economy is completely on its own, pulled this way and that, and ultimately down, by faltering corporate globalization and the catastrophic collapse of American casino capitalism.

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