Politicians sly regarding economy’s performance

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This article was published 17/08/2015 (3714 days ago), so information in it may no longer be current.

With each passing week in this incredibly close, three-way federal election campaign, it seems more likely voters will flock to the leader and party they believe to be the best economic stewards.

As most voters know, the economy is struggling. Low oil prices and lower demand for Canadian resources and manufactured goods have stalled economic growth. Government revenues have slowed considerably as a result.

Voters will look in earnest for some indication of which leader and party will help Canada navigate these difficult economic times. Even though, if we’re really being honest, none of the parties can alter the macro forces affecting the economy.

In economic terms, Canada is but a leaf in a global wind. Our economic fortunes are affected by events such as the debt crisis in Greece, the currency devaluation in China and the war between oil-producing nations that has resulted in a crude-oil price war. The economic policies offered up in the current election campaign may dampen or mitigate some of the effects, but they are unlikely to do anything to change those macro forces.

That won’t stop the parties from claiming they have the solutions to all our economic problems.

The political debate over Canada’s economy is rife with misconceptions and flawed arguments. This is partly due to our collective lack of knowledge about how economies work. However, it is also a reflection of the fact political parties and special interests use intellectually dishonest arguments.

A prime example can be found in the current campaign. The NDP and Liberals frequently criticize Conservative Leader Stephen Harper for having the worst economic performance of any prime minister.

Opposition critics have used the fact the Conservatives have run five consecutive deficits as evidence they are bad on economic matters. This allegation was amplified in a union study that claimed — based on a comparison of 16 economic indicators — Harper had the worst economic record of any post-war prime minister.

It does not help the Conservatives that Canada’s economy has shrunk for five consecutive months. Economists are still debating whether this qualifies as a recession; opposition parties have already declared it a double-dip recession.

Are the allegations fair? In most instances, opposition parties and the special interests are confusing, deliberately so, economic performance with government performance.

In fact, most of the numbers we use to assess the relative health of the Canadian economy do just that — measure the economy. They are not necessarily measurements of the performance of any government.

Consider that to come up with the “worst-ever” label, the union analysis included indicators such as household debt, business investment, exports and productivity. A government could, theoretically, invoke policies that could modestly affect all of these indicators. However, the forces that drive these indicators are generally beyond the reach of any federal government.

A government’s economic record is mostly a reflection of the times in which those governments were in power. Governments lucky enough to hold power during robust economies look like geniuses; those that lead through recessions look like buffoons.

In the current federal campaign, opposition parties have found success using all of the negative indicators to pummel the Conservatives for their poor economic performance. The assault on the Tory record seems to be working; several opinion polls show Harper’s ranking as best leader on the economy has been eroded.

Now, voters are somewhat split on whether Harper, NDP Leader Tom Mulcair or Liberal Leader Justin Trudeau would be the best to lead on the economy. That is telling, in and of itself, given neither Mulcair nor Trudeau has any record on which to base that opinion.

It should be said, however, the Conservatives deserve no sympathy. While in opposition, the Tories played the same intellectually dishonest game with economic indicators when assailing the economic record of Liberal governments. And in power, Harper has consistently boasted of his ability to balance the budget is evidence of his government’s economic acumen.

Unfortunately for the Tories, balancing the budget is not proof of good economic performance. Just as it is untrue to allege a deficit is evidence of poor economic performance.

Nonetheless, Harper has become desperate to convince voters his government has, in fact, balanced the budget, despite abundant evidence to the contrary.

Informed observers have suggested the combination of low oil prices, a moribund economy and deep tax cuts will likely push the current budget into a very modest deficit. So modest it really shouldn’t be an issue at all for voters. Unless, of course, Harper makes it an issue.

And that’s what he has done. Harper continues to claim he has balanced the budget. Harper believes producing some sort of surplus will give him traction against opposition attacks.

That is likely why the Conservatives have arranged to have the final numbers for last fiscal year (2014-15) released this fall.

A surplus just before the election could give Harper traction as he tries to regain his top spot as best manager of the economy.

In reality, a small deficit or surplus isn’t proof of anything. It is, however, a valuable political weapon that will be used to perpetuate a deeply flawed debate over which party and leader are best able to manage the economy.

dan.lett@freepress.mb.ca

Dan Lett
Columnist

Dan Lett is a columnist for the Free Press, providing opinion and commentary on politics in Winnipeg and beyond. Born and raised in Toronto, Dan joined the Free Press in 1986.  Read more about Dan.

Dan’s columns are built on facts and reactions, but offer his personal views through arguments and analysis. The Free Press’ editing team reviews Dan’s columns before they are posted online or published in print — part of the our tradition, since 1872, of producing reliable independent journalism. Read more about Free Press’s history and mandate, and learn how our newsroom operates.