In the Chamber -- Grant Mitchell's Blog

The Conservatives and the economy

Posted 10/22/2008 by Grant Mitchell

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Why does anyone think that the Conservatives can manage an economy?

The Liberals left them a $13 billion surplus after overcoming a $42 billion deficit left to us by the preceding Conservative government. Harper is now on the verge of a deficit and may actually already have created one. The first two months of this fiscal year the government was in deficit. Harper increased spending in his first budget by $32 billion. He has created the biggest spending budget in the history of the country.

Moreover, the Liberals handed the Conservatives the best performing economy in the G8 and it is now the worst performing economy in G8. Canada’s economy has underperformed the US economy so far this year. Canada has experienced 9 consecutive months of declining productivity.

Productivity remains a serious problem for our economy. Yet Harper reduced the GST, one of the least effective tax policy options for stimulating productivity, when he could have reduced corporate and income taxes.

How can Harper say that he can manage an economy when he is clearly someone who is ideologically opposed to much intervention in anything, let along the economy? (In fact, I like to say that the Conservatives think that government has little to do in society except build the military and put people in jail.)

The US has had much more experience with right wing governments and recently with a very right wing one. Looking at their experience you can ask again the question: Why would anyone think that conservative governments can manage economies? Consistently, the stock market, a proxy for the economy, has underperformed with Republican Presidents, and the US dollar is often weaker. Notably, the biggest market meltdown in history, literally (I am not exaggerating), has occurred on a Republican’s watch. This has been attributed at least in part to the fact that the Republican regime neglected to enforce banking regulations that were in fact already on the books.

Interestingly, it is this type of laissez-faire governing ideology that is evident in the Conservatives’ decision to reduce the intensity of regulation of the meat packing industry, leading directly to the listeriosis crisis. Four months before the outbreak, the requirement for the company to notify inspectors of a problem was waived.

Watch for a declining GDP or at least limited growth under this government and expect a deficit in the very near future.


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