This is not to diminish the real strengths that Canada has displayed during the worst slump since the 1930s. When the prime minister boasts that this country has fared better than the United States, he is correct.
Nor has the Conservatives’ overall approach to government finances been insane. Harper and Finance Minister Jim Flaherty may talk tough about the need for other governments to practice brutal fiscal austerity. Yet their approach at home has been more nuanced than that of, say, Britain’s slash-and-burn, centre-right, coalition government.
But the secret truth of this recession is that Ottawa hasn’t had much to do with Canada’s relatively good fortune. Rather it has been our natural resources that — up to this point — have pulled us through.
As long as countries like China are willing to pay top dollar for petroleum and other commodities, the countries that possess such resources do well. Australia, a resource economy governed by the leftish Labour Party, has survived the Great Recession as handily as Conservative-run Canada.
To put it another way, Canada would probably be at about the same place today in terms of jobs and growth if the Liberals or New Democrats had been in power since 2008.
The Harper government’s failure is longer-term. It still operates under the assumption that free trade and free markets will conquer all. This is an old model. It is out of date. True, the Great Depression of the 1930s was aggravated because there were too many barriers to the free movement of labour, goods and capital. But the Great Recession of the 21st century is aggravated by the fact that there are too few.
This is the lesson of the crippled eurozone. It is also the lesson of Japan, which started to do better only after it elected a nationalist (and right-wing) government willing to challenge trade orthodoxy
Canada’s Conservatives, however, remain focused on Quixotic, old-style projects that seem doomed to fail.
Free trade? Harper wants a deal with Europe. But it looks like he can now win that pact only by giving away more than most Canadians with a stake in the project are willing to cede.
Canada has joined talks for the so-called Trans-Pacific Partnership. In theory, this sounds impressive. But should these talks succeed (and that is uncertain) they would require Canada to give up agricultural subsidy programs that remain popular in Ontario and Quebec.
In return, Canada would have market access to countries with which it already has trade deals (such as the U.S. and Mexico), countries that currently buy many of our resources duty-free (such as Japan) and countries that don’t count (such as New Zealand).
Free markets? Here the Harper government has focused on pipelines.
The Keystone XL pipeline was supposed to bring Canadian oilsands crude to the U.S. But now that they have discovered their own shale oil, the Americans need far less Canadian petroleum. In a New York Times interview published Sunday, U.S. President Barack Obama again hinted he might not approve Keystone.
Meanwhile, the proposed Enbridge Gateway pipeline from Alberta to the British Columbia coast appears stillborn. B.C.’s provincial government is opposed, as are First Nations along the route — all of whom have the capacity to tie up the project in court.
Jobs? The Harper government’s free-market solution has been to erode wages and import cheap temporary foreign labour, all the while allowing Canadian firms to outsource good jobs overseas.
Politically, this is unsustainable.
So yes, Harper and his government have seen us through some bad years. They could have made matters far worse but didn’t. In a roundabout way, they deserve credit for this.
But their overall plans for the economy are based on stale assumptions. What they do not understand is that the Great Recession is changing everything, politically as well as economically.
At some point, the Chinese won’t want to pay top dollar for oil. At some point, the Americans will conclude that jobs at home trump trade deals abroad. Then what do we do?
Original Article
Source: thestar.com
Author: Thomas Walkom
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