Tears have been dried, major resignations are in, and strategies for overcoming disproportional representation are in the hopper.
But the sleeper issue on the country’s agenda continues to doze.
One reason why all the pundits are talking about the politics of the recent election is that there is nothing to say about the political economy.
The Conservatives came out of the gate posing as the only party capable of managing the nation’s fiscal affairs. And nobody comprehensively challenged them on that or exposed their multiple failings.
Think about misspent billions on non-stimulating stimulus spending, the disappearance of heavy industry, and the trade-killing loonie sent artificially upwards by oil exports from one province.
This shortcoming betrays the fundamental flaw across the spectrum of opposition parties: their lack of capacity and confidence to generate a compelling economic alternative and put it at the centre of public discussion.
The Conservatives, by contrast, clearly understand the primacy of economic management and strategy in their presentation of self.
I was wiping away my own tears when I came upon an April publication in the Tulane Economics Working Paper Series that knocks out the entire Conservative case that tax cuts for high-income individuals and corporations are the key to sound economic development.
The paper, 47 pages of dreary mathematical formulas and methodological hair-splitting, shows what happens when persistent people do their homework instead of passing along stereotypes.
Senior author James Alm is among the most-cited economists in the U.S. – anything but a lightweight.
Testing 130 variables from 48 U.S. states, covering good and bad times from 1947 to 97, the paper establishes that ultra-conservative tax cuts damage economic performance.
Higher taxation of corporations and high-income individuals “is never significantly negative and is frequently significantly positive,” the authors say, probably because taxation goes to worthy causes like education.
Highway-building, one of the major spendthrift instincts of far-right governments (prisons, or “gulag Keynesianism,” being the other) and certainly a feature of Harper’s stimulus program, is shown to have had a generally negative impact since 1977.
This is likely the result of the law of diminishing returns under a fiscal philosophy where pavement is one of a few conceivable forms of government investment in infrastructure. (Enjoy the empty four-laner through New Brunswick this summer while pondering Conservative strength in the Maritimes.)
Blacktop thoroughfares are much ?favoured by the right because they subsidize car use and high-wage male construction employment with no spillover that improves equity. Bad economics but good pork-barrel politics.
The fact that conservative governments neglect to spend on projects that boost social protection of opportunities may account for the study’s conclusion that the election of Republican governments is “always negative” for economic growth.
But the opposition parties never went for the Tory jugular on the short-term, limited nature of stimulus construction projects as opposed to green and social service jobs. And while they did take on corporate tax cuts (the NDP says companies should only be rewarded for creating new jobs), they missed the main argument: it isn’t continuity of government that guarantees growth, as the Tories claimed, but, rather, equality.
The relationship between social equality – when spending power is spread throughout the population – and economic development has been demonstrated by many experts. This month, two more added their voices.
The May 12 issue of the New York Review Of Books has a piece by Nobel-winning economist Amartya Sen explaining why China does so much better economically than India. China, despite its dismal record on so many things, spends more on health care and popular education, especially for women.
And International Monetary Fund managing director Dominique Strauss-Kahn said in a recent speech to the Brookings Institution: “Ultimately, employment and equity are building blocks of economic stability and prosperity.” This understanding “must be placed at the heart of the policy agenda,” he stressed.
In any given month, there’s plenty of confirmation that minimizing social disparity makes for good economics. Yet in the deafening silence that is economic debate in Canada, no one wants to hear it.
news@nowtoronto.com
With files from Jeff Berg and Brian Cook.
