Tory economic record worst in postwar history
Stephen Harper’s Conservatives have always portrayed themselves as the most capable managers of Canada’s economy. And since pocketbook issues usually dominate any election campaign, that reputation — deserved or not — served them well in the past.
This time around, however, the economic terrain is proving less friendly. The closer we got to the fixed election date, the worse the economy became, undermining the “stay the course” message at the heart of Conservative strategy. Indeed, Canada slipped into outright recession in the first half of 2015. Undaunted, the prime minister shrugged this off as “a couple of weak months,” and promises better times around the corner — but only if Canadians re-elect his party.
Economists can debate whether this year’s recession — the second on Harper’s watch — is already over, or whether falling business investment and rising consumer debt will delay a rebound. But the most damning aspect of the Conservative legacy is not a short-term cyclical downturn. It is a longer-run failure to stimulate growth, job-creation, innovation, and investment.
After all, the only reason the oil price slump could tip the whole country into recession is because the economy had so little momentum in the first place. We’ve endured years of subpar growth (“serial disappointment,” in Stephen Poloz’s words), long before the present downturn arrived.
Yes, the 2008-09 financial crisis was part of the problem: but it’s not the only recession Canada has experienced, nor was it the worst. More importantly, the slow and inconsistent recovery from that downturn ranks as the weakest in postwar history. Then, before the damage was really repaired, Canada slipped into recession again.
We have developed a comprehensive portrait of economic performance under every Canadian government from 1946 through 2014, based on official data on 16 conventional indicators (everything from employment and labour force participation, to growth, productivity and indebtedness). Our results refute the self-congratulatory rhetoric of Conservative speech writers.
Far from unleashing a business-led boom, Harper has in fact presided over the weakest economic era in Canada’s postwar history.
For example, from 2006 through 2014 (not even counting the current downturn), Canada experienced the slowest average economic growth since the Great Depression (measured by the expansion of GDP after inflation and population growth). Harper wasn’t even close to the next-worst prime minister: another Conservative, Brian Mulroney.
Across other indicators, too (including job-creation, productivity, personal incomes, business investment, household debt, and inequality), the Harper government ranked last or second-last among all postwar governments. Its overall ranking was the worst of any prime minister since 1946.
The Conservative failure to elicit more business investment and exports has been especially damaging. Those are the two most strategic components of spending in a market economy. Conservatives promised that expensive corporate tax cuts (costing $15 billion per year) would boost investment, and that signing more free trade deals would do the same for exports. But neither worked. Exports hardly grew at all under Harper (the slowest in postwar history), and business investment was stagnant, now declining. Government spending cuts, enforced in earnest after the Conservatives won their majority in 2011, only exacerbated the macroeconomic funk.
In short, the Conservatives’ austere, business-led strategy has produced stagnation for the economy, and incredible uncertainty for Canadians. Families worry rightly that the traditional dream of shared prosperity is slipping away from them, and from their children.
On its own, of course, economic growth cannot solve all of society’s challenges. We must simultaneously ensure that economic gains are fairly distributed, maintain a proper balance between private consumption and public services, and invest in sustainable environmental practices.
But without growth and job creation, all those challenges get harder, not easier.
Canadians can work and produce more than ever. There are more of us, we are better educated, and our productivity has grown.
We can have more of what we need, not less, including higher wages, better jobs, and stronger public programs. All we lack is the opportunity to put our capacities to work in decent jobs.
The Conservative trickle-down vision, focused on enriching corporations and the investors who own them, has failed bitterly. We need an alternative vision, both hopeful and pragmatic, to mobilize Canada’s idle human and financial capital and build an inclusive, prosperous economy.