Tory eco­nomic record worst in post­war history

Toronto Star - - OPINION - JIM STAN­FORD AND JOR­DAN BREN­NAN Jor­dan Bren­nan and Jim Stan­ford are econ­o­mists with Uni­for, Canada’s largest pri­vate sec­tor union. Their full re­port on the eco­nomic per­for­mance of post­war prime min­is­ters, Rhetoric and Re­al­ity, is avail­able at uni­for­votes.

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.

LARS HAG­BERG/THE CANA­DIAN PRESS

Far from un­leash­ing a busi­ness-led boom, Con­ser­va­tive Leader Stephen Harper has in fact presided over the weak­est eco­nomic era in Canada’s post­war history, write Jim Stan­ford and Jor­dan Bren­nan.

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