Saturday, December 13, 2008

Some Thoughts On "Interventionism"

Worldwide bailouts are like protectionism. It can hurt us - depending on our own government's will and ability to do something about it. With most of the civilized world providing bailouts to vast tracts of industry, our Conservative "Government" continues to sit on it's collective hands. The actions taken by the majority of world governments- with many more "actions" to come, are propping up industry and business, which may otherwise fail.

In the "good old days" we used to call this protectionism. Currently - with the death of "wide open free enterprise" - we are seeing these "protectionist" measures being undertaken by all nations. We all know what has happened to Canadian lumber mills when the US acts "protectionist" (during good times) (perhaps a bad example, since it wasn't the markets that screwed the Canadian lumber products, as much as it was the Conservative sellout of that industry). We have seen Canadian farms get destroyed when the US, EU, and South Americans begin subsidizing their farmers.

What is occurring with the Harper government's inaction is very similar to the whole world adopting protectionist measures, while Canada let's our industry hang. We are quietly watching, in awe-struck horror, while experts tell us they have no clue what this government is doing, or why they are not acting. We are waiting for a Finance Minister who could not manage a Province's economy (Ontario - Mike Harris years), let alone a whole diverse nation.

The basic "problem" (not really a problem for anyone but conservatives) for the Conservatives is that they do not believe in "interventionism". They believe in the most "Darwinian" theories of economics. Of course, more moderate thinkers (most of the world's economic experts, and most all of Canada's) clearly believe that government intervention is NEEDED to help drive and steer large scale economies. The "mega projects" of the 70s and 80s drove development in the 90s. Especially in the resource sectors. Smaller nations, with wide-spread populations always require more government direction. Our Conservative masters don't get this. They mimic the nation to our South - which has 1/2 the geographic area, 10 times the population, vast resources of "illegal labor" from across their Southern border, and a more temperate climate across most of their land.

It is quite obvious that our Conservative government is only going to move on the crisis after goading by the opposition, consultations with the opposition, and the threat of defeat. They want to set up the scenario where the opposition can be called "tax and spend socialists" because they have created a "pop culture" false notion that these are "bad things". They want to ensure that it is clear to Canadians that they are "ideologically opposed to it", but the opposition forced them to. It is, however, a dilemma for them, because while the prevailing notion is to have serious bailouts throughout our economy, they actually don't believe this will work. That is not to say these measure are "guaranteed" in any way to "work" like a "magic bullet". The bailouts are more than likely a good measure to help keep the impact of a protracted recession to a minimum. More government targeted spending will be required to further boost the economy.

What can or should we be thinking of? This is THE time for all those "grand" projects which we have always intended to do, or know need doing. The kind that employ tens of thousands. Here are a few examples:

1) Twin every km of the Trans-Canada Highway - including bypasses of towns/cities, where required.

2) Key bridges. In BC I can think of a few: Vancouver to the Island, Trans-Canada at Port Mann, etc.

3) Rail links - Calgary-Edmonton, Southwest Ontario, Eastern Canada (Atlantic), Lower Mainland BC. These have the added impact of being "green" transport, and will help local industry like Bombardier.

4) Northern Highways and Railways - Over the past 2-3 years we've heard a lot of "hot air" about "the North" (or should we say "Canada's North"). Guess what? It's a good time to do something about it. Imagine permanent rail links to the Beaufort Sea. Imagine a coastal highway along the BC Coast - up to Alaska, or into the Yukon, and up to the Beaufort Sea? Imagine a year-round highway linking all key Northern cities and settlements. How about a Northern "deep water" harbor/port facility to link with that railway? This would not only create jobs in the rural North, it will ensure we are exercising our sovereignty in the North and Arctic, AND developing the region with infrastructure, which will be necessary during the next resource boom - whether that be Beaufort Sea or MacKenzie oil, minerals and ores, uranium, or diamonds.

5) Infrastructure replacement. How long do we have to wait before we see the next bridge collapse, or parking structure "failure"? Canada has serious infrastructure problems. Projects undertaken during the Pearson and Trudeau eras have outlived their sustainability. The ideologically Conservative government of Mulroney didn't need to replace a lot of these - but also didn't care to (not their ideology, those mega-projects - they used to bash Trudeau over them). The Chretien/Martin governments had other challenges - settling Canada's debt and bringing a huge Mulroney deficit under control. The "good times" of the past 4-5 years saw some infrastructure projects - The Liberal "Infrastructure Works" Plan which saw thousands of infrastructure projects across the land take wing. Under the Harper government, we've seen nothing of the kind. Just lip service.

All these "great Canadian dreams" have a time and place. When attempting to spur development, replace infrastructure, and create jobs, a recession such as the one we're in is the perfect launching point.

It is interesting how the Harper government treats infrastructure, research or (what they term) "interventionist" spending. Besides being "ideologically averse" to it, they really don't have a clue on how to do it, and where it is most needed. Their ideology just does not have a space for it. Tax cuts and "austerity measures" are all they know. They will also just throw out numbers that sound big. A couple of million dollars seem like a lot to an awful lot of average Canadians, but when you realize that suburban family homes in Vancouver, Calgary, and Toronto approach $1 million regularly (and many, many surpass it), it is a drop in the bucket. Imagine what a new bridge or road costs in one of those cities? The Conservatives will tend to make announcements on spending in a lot of areas - whatever polls tell them - but they will trick Canadians with these "big sounding" numbers, which cannot buy any real development in terms of infrastructure. They will then turn around and hand out "tax cuts" to business (that includes the GST cut, which basically all went to businesses - I never saw any price cuts) and their rich friends.

As a Liberal opposition, our best gameplan will be to be a "government in waiting", with a clearly laid out plan of spending and infrastructure investment. It should be - as I have stated in the past - very public, to prevent Harper from stealing it, while ensuring the public knows it is "we" who acted. As Liberals, we are nation builders, and this time requires nation-building - in the truest sense. Infrastructure and R&D investments will pay off in multiples when the economy swings back up. We don't want to take a back seat to other nations who HAVE spent on their infrastructure. We don't want to fall into the US trap of bailouts for "corporate friends of the government". Government intervention is a necessary part of any liberal democracy.

Time for us to take the lead in this discussion, and put the NeoCons in the back seat, where they belong.

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wilson said...

Iggy said he will not give PMSH a proposal, because he wants Harper to 'wear this recession'.

Iggy's special advisor says:
''Spending as much as $30 billion in a single gulp, as some have speculated may be the ballpark number under consideration by the Liberal-NDP coalition that's seeking to oust the Conservatives, would be irresponsible, says TD Bank chief economist Don Drummond.

"There's no way there'll be a single-year stimulus anywhere near $30 billion," said Drummond. "That would without any trace of a doubt shift us from a short-term deficit to a long-term structural deficit"

He added that "you can't spend that much money that fast" and suggests $8 billion of stimulus would be a manageable target.''

WesternGrit said...

My point is that IF we re perceived to be "consulting" with the Cons (meaning telling Harper how to work his way out of this mess), we should be making it VERY public. If our leader believes in letting Harper "wear it", by stating "he's the PM - he has all those paid experts in the depts.", he is very right. This is also an effective strategy. No matter what happens, Harper will wear the mess. Best for us to stand aside, but if we're drawn into the "feigned" bipartisanship Harper may try to show, then best to be very public about our views...