Monday, December 1, 2008

Dion about to be come PM of Canada

I believe it is entirely democratic for Stephane Dion to become Prime Minister. If more Parliamentarians support him than Stephen Harper, then c'est la vie. There should be a substantive and irreconcible economic policy difference if there is to be a change of government, however. That condition for a democratic, orderly change of government seems to be satisfied, in that there's apparently a fundamental disagreement over the amount of money the government should be spending in 2009.

However, one has to ask whether there is really a mandate for the spending spree (aka "stimulus") that the Liberal-NDP coalition is clearly about to embark on. Fact is, blue or business-friendly, fiscally conservative Liberal supporters together with Tory supporters form a majority in Canada. Were the Canadian government of the last three years a hard right government, it would be one thing, but the reality is that federal spending increased substantially during this period... certainly the budgets have not been remarkably "un-Canadian" in any way. But the next Liberal-NDP budget might well be "un-Canadian" in the extent to which it diverges from Canadian budgets since 1984. Keep in mind that it was a Liberal government that balanced the budget in the 90s and moved forward on a corporate tax cut agenda. That had the support of the majority of Canadians. It is far from clear that Canadians support deficit spending, and an auto and forestry industry bail-out in particular.

According to the coalition's announced policy framework, there will be
- Support for culture, including the cancellation of budget cuts announced by the Conservative government.
- Support for Canadian Wheat Board and Supply Management
- Immigration Reform
- Reinstate regional development agency funding...

The first is ultimately a relatively minor matter budget-wise, or at least the extent to which Canadians seem to vote on it is out of proportion to its impact on the budget. The second, support for supply management, is anti-free trade and accordingly unsupported by most economists. I don't know what John Manley's role is supposed to be when there is explicit support for policies like this. Keep in mind that the Tories weren't exactly aggressively dismantling supply management in the first place. "Immigration Reform" in the context of what the political debates have been means a dialing down of efforts to prioritize skilled worker immigration over family immigration; social policy pursued at the expense of economic policy, in other words. The last point refers to the boondoggle of regional subsidies, again something the Conservative government has pedaled softly on, such that one can only imagine a significant ramping up of the dubious practice under a new Liberal-NDP coalition.


A lot of people will focus on the reference to "Canadians and Quebecers" in the preamble. As far as I'm concerned, this is largely optics. If it makes Quebecers (isn't it Quebeckers?) happy, I tend to be libertarian about such things. I'm more concerned that the focus on "supply management" and "regional development" means national economic policies that harm the country, with particular harm to Alberta and west.


Mark Samborsky said...


What do you think of the idea that trade-surplus countries like China should be applying fiscal stimulus in times like these instead of trade-deficit countries? Martin Wolf's December 2nd article on discusses this point (if you can access it).

Brian Dell said...

I'll see if I can get access it. But just off the top of my head it seems obvious that countries like China whose growth is skewed to investment over consumption should be the ones going on spending sprees...