Saturday, November 29, 2008

Bennett replayed

Wow, R.B. Bennett is back.

At the very time when fearful and uncertain Canadians are looking to elected leaders to put aside their petty squabbles and work toward staving off a looming economic recession, what does our newly elected Conservative government do? They pull a complete flop on the economic front and use the crisis instead as an opportunity to attack their opponents.

It sounds like an earlier Tory Prime Minister,
R.B. Bennett, who came to power amid the Great Depression only to declare it over in 1930 when it was really just getting underway. His then-refusal to provide anything in the way of economic stimulus sounds like our current finance minister's declaration that no more spending is presently needed and, in fact, that cutbacks are the answer!

Bennett's ideological devotion to laissez-faire-style government and his belief that "the sole function of government is to favour private enterprise" is strikingly similar to the thinking of the current government, whose worship of tax cuts as the cure for all ills is so devout that they actually believe that last year's tax cuts will somehow prevent next year's recession.

Another tenet of R.B. Bennett's Tories was that government assets = bad. Modern day Tories believe the same and so have proposed a
fire sale of $2.3 billion of crown corporations and other federal property in a supposed attempt to prevent a deficit. As blogger NDP Outsider suggests, maybe the best time to sell one's assets isn't in a buyer's market. Once again, blind ideology trumps common sense.

R.B. Bennett also took the opportunity to beat up on anyone he thought a political opponent. Under the guise of preventing communism, he revised Section 98 of the Criminal Code to do away with the fundamental democratic right of being innocent until proven guilty where association with supposedly subversive organizations was concerned (you could be put away for simply showing up at a rally or meeting). This was used to arrest members of far left organizations as well of members of that old Tory bogeyman: labour unions.

The thinking among Tories apparently hasn't evolved much since Bennett's days: they made sure to
ban strikes and bypass collective bargaining for public sector workers in this week's economic update, something that's puzzled even the Globe and Mail, which is hardly a pal of the unions. Maybe the Tories didn't want to be outdone by Bennett in repealing rights (collective bargaining is a charter-protected right) or attacking political opponents. Why bargain when you can simply take out the club?

The federal Conservatives also decided to open a new front against the opposition by doing away with federal public financing of political parties, hardly an issue at the top of the public agenda. So much for the new era in civility that the Tories seemed to be all in favour of
a mere two weeks earlier. So much for putting aside the House's characteristic squabbling to focus on our most pressing common problem. So much for real leadership.

One might have thought that here was Harper's golden opportunity to cement his brand as statesperson and leader by reassuring Canadians, by listening to ideas from all sides, and by working together to move forward. In such a scenario, it wouldn't be hard to envision him being rewarded with a majority government in our next trip to the polls. Instead, he squandered the chance and now faces the prospect of losing power to an opposition party coalition no one dreamed possible a week ago. Thursday's smugness became Saturday's
backpedal. My favourite reporter question to a fuming Harper: “Sir, did you make a mistake?”

Of course, R.B. Bennett eventually relented and opted for a big fiscal dividend in an effort to boost the economy, but by that time, Canadians had suffered through more than five years of tough economic times. In what we can only hope is another parallel with R.B. Bennett's Conservatives, the Tories went on to be crushed in the following election and then spent the following 22 years in the political wilderness. Let's just hope we don't have to endure five years of clueless leadership before repeating that history.

Further reading: The
economic update and responses by Jeffrey Simpson, Dan Lett, Thomas Walkom, The Globe, and Pierre Berton's book The Great Depression.

Photo: A Bennett Buggy, named after Depression-era Prime Minister R.B. Bennett, was the term used for a car pulled by a horse, after the owner could no longer afford gasoline.

Tuesday, November 18, 2008

Predicting recessions

This is a funny video posted today by Jason Kirby of Macleans.

It shows a variety of panel interviews over the last couple of years with some wall street loud mouths, really exposing how completely vacuous is the advice most of them give. Of the talking heads, only Peter Schiff had any real understanding that the American economy was in serious crisis. It's worth a watch.

When Schiff speaks of paper wealth versus real wealth and productive capacity, it reminds me a lot of Jim Stanford's argument in his very interesting book Paper Boom.