Does the left gain when the economy is down?

There’s an interesting debate going on in the Globe and Mail about the role of the NDP and the reason why it doesn’t seem to be making headlines these days despite the economic downturn – the question Lawrence Martin asks (see Letters to the editor responses) in the article that kicked off the discussion is that, when capitalism is in crisis, shouldn’t the left see gains?

It’s logical to think that the NDP should make gains during tough times as people look for alternatives to the economic system that may be causing them hardship. This might partially explain the NDP’s surprising win in Ontario in 1990.

However, it’s also possible that a sinking economy might actually harm the left electorally. In good times, voters may feel more comfortable having their government deal with issues that people perceive to be left: addressing poverty and inequality, expanding social programs, funding the CBC, mandating environmentally-friendly behaviours, etc. In tough times, voters often focus on the economy as the sole issue, and the Conservatives have traditionally been best at branding themselves as economic managers. Besides, in bad times, governments of all stripes will tend to sound and act a little like New Democrats: showing concern about rising unemployment, wanting to curb or prevent poverty, speaking about education and training, penalizing arrogant corporate leaders, and actively intervening in the economy where it’ll save some jobs and earn points with voters.

I decided to see if I could see any relationship between economic ups and downs and federal voting behaviour for the past several decades. There are two charts I've created (click to enlarge). The one on top shows the share of popular vote received by right wing parties (Conservatives, Progressive Conservatives, Canadian Alliance, Reform party and Social Credit/Ralliement créditiste) and left wing parties (one bar shows just the NDP; another shows the NDP grouped with the Greens and the Bloc, which assumes we can lump those parties in as left) since 1972.

In the chart, the right-wing vote appears relatively consistent outside of the two big Mulroney victories in the 1980s. The drop in the NDP vote from 1993 to 2000 also stands out, but its vote is otherwise remarkably consistent from 1972 to 2008. The combined "left" vote begins to differ from the NDP as the Bloc emerged in the early 90s. The grouped left vote stands out as very strong in each of the last three elections, with 2008 representing a high water mark.

I included in the bottom chart two economic indicators. The first is the annual unemployment rate and the second is the quarter-over-quarter real GDP growth rate.

The unemployment rate curve shows two dramatic peaks – one in 1983 and one in 1993. Interestingly, the two biggest electoral shifts over the period also occurred around those times. The first, in 1984, swept Mulroney to power with the largest majority in Canadian history. The second, in 1993, did the opposite, nearly wiping out the Progressive Conservatives and vaulting the Chrétien Liberals into power.

What's striking about the GDP growth curve is the relative flatness since about 1981 and especially during the 1990s. In the past ten years, quarter-to-quarter growth has been mostly positive, but is relatively inconsistent, with 9/11 having a noticeable negative impact in 2001. The plunge at the end of 2008 appears dramatic when compared historically.

So can we conclude any relationship between swings to the left or right and economic downturns? Not likely, at least not based on the data I've presented. Interesting shifts in the popular vote do appear, but they don't seem to be dependent on economic upturns or downturns. Economic shifts probably do affect voter behaviour, but not in ways that are entirely predictable. Furthermore, the traction that a party may get politically isn't always evident in the electoral numbers. Having an influence on the policy process and in the marketplace of ideas – regardless of which party ultimately takes credit – is something that can’t be measured here.

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.

Another myth busted

Tories always like to go on about how they're the most fiscally responsible of the parties. A lot of Tories even identify this one issue as their reason for being Tory. It's not surprising then that Tories seem to always be convincing themselves that the NDP is secretly spending wads of money and driving us ever closer to bankruptcy and economic ruin. Popular culture even seems to support this: supposedly, if you're on the left, you're a do-good spender; if you're on the right, you're a prudent saver.

If the current election campaign is any indication, the idea of fiscally prudent Tories is a myth. With ten days to go in the campaign, the Tories are well ahead of the NDP in spending promises. According to Michael Benarroch, chair of the department of economics at the University of Winnipeg, the value of Tory spending and tax cuts is now up to $888 million. Promised tax cuts and new spending by the NDP, in comparison, total $400 million. Even the Liberals, who have no hope of achieving official party status, much less of forming government, have promised less than the Tories.

These are big numbers, but what do they mean? Well, the 2007-8 Manitoba budget forecasts $11.8 billion in revenue (to $11.6 billion in spending). Tory promises add up to 7.5% of budgeted revenue, more than double the NDP's 3.4%.

The real question is how will the Tories pay for their promises? I'd like to know what programs they'll axe, what assets they'll sell, or what taxes they'll raise or user fees implement to make up for their 7.5% bite out of the provincial budget -- or do they even know? If the Tories aren't that serious about winning, it would explain how they feel they can promise the sun, the moon, and Winnipeg Jets stars to anyone and everyone in the hopes of picking up a few seats. So much for Tory prudence, fiscal or otherwise.

It's the sort of Tory campaigning that makes even Tories not want to vote Tory. Just ask the federal Conservative Party, whose apparent embrace of social spending, Quebec and the environment has some party loyalists mulling over whether to refound the old Reform Party. No word on whether they've also approached Jean Chrétien to succeed Stephane Dion as Liberal leader.

No, the reality is that Tories don't mind spending our tax dollars at all. They don't even mind pouring those dollars right out the window, as long as they're going to pay for the right things. I'm still working out the Tory list of good and bad spending, but here's a summary of what I have so far:

Bad spending: social programs, housing, water stewardship, public education, poverty-reduction, pro-active solutions to crime

Good spending: tax cuts for Tuxedo-ites, selling off public telecoms at firesale prices, overpriced American health care consultants, new jails, bailouts for venture capital fund investors, $180 million private sports franchises

Ten days to go and the Tories are at $888 million. Will the Tories' promises surpass the $1 billion mark? In this election, just who should we worry about breaking the bank?