Friday, 30 March 2012

The Fabian Neo-Conservatism of Harper

Calgary Grit has made quite a bit out of Harper not drowning the social safety net in a bathtub with this budget and for the amount being spent:

OK, so it wasn't exactly the "transformational" budget we'd long feared or hoped for, depending on our allegiances. But it does provide a good look at what kind of Prime Minister Stephen Harper truly wants to be. 

This budget should tell us once and for all, that he's not a guy who wants to fundamentally change Canada. Sure, he's tossed a few symbolic gestures to the base, in the form of CBC budget cuts, the death of Katimavik, and a warning to environmental activists. But Harper remains the head of the biggest spending government in Canadian history, even after accounting for population growth and inflation.
It's important to note that, while Harper does have select projects he will recklessly spend on, overall his government is not "the biggest spending government in Canadian history" when seen in a proper context. In terms of raw numbers, inflation-adjusted numbers, or by population it might but, but in terms of the economy's size his government is an average to low-average spender. Data compiled by the OECD (table 25 from their 2011 Economic Outlook) shows just how modest government spending as a percentage of GDP is in Canada by historical standards. I've complied the OECD data, which includes estimates for 2012 and 2013, into the graph below. The hike in government spending as a percentage of GDP after 2008 is due to the (very modestly) expansionary fiscal policy response to the global recession. Harper's government, much to the chagrin of Calgary Grit or Andrew Coyne, is very normal and modest when it comes to spending.
Also contrary to Calgary Grit's assertion, eliminating a great, social capital enhancing, program like Katimavik isn't small stuff, even if it is small dollars. The program costs about $14 million a year, last year's budget had $278.7 Billion in program spending, so this youth skills development program amounted to 0.005% of program spending. This is a petty form of spitting in the faces of young and working class Canadians1 to save very few bucks. Likewise, raising the OAS eligibility age is a way of spitting at low-income seniors to save a few bucks.       


Calgary Grit, however, might be looking at this from a different perspective, as he is a Liberal. 


The budget also shows us he's not hunting for a legacy, quite yet. There are some "big picture" reforms in this budget, but they're mostly fine tuning - a speedier immigration process, changes to the innovation agendapension reformThese are all worthy initiatives if they work, but they likely won't ever find their way into history textbooks. They're also the sort of things a Liberal government would do.

He double links to a National Post article supporting his "innovation agenda" thesis - linking his "pension reform" to the same innovation article. But it's reasonable to take his pension reform remarks as referring to hiking the OAS eligibility age. The Chretien-Martin era started off with very brutal austerity, which did (to its credit) succeed at turning deficits to surpluses - but at the cost of causing a long-term healthcare crisis via downloading onto the Provinces and slashing various federal transfers. In Manitoba, during the bad ol' days of the 1990s, the PC government of Gary Filmon implemented austerity, partly in response to federal transfer cuts, that resulted in nurse layoffs - which was a costly loss of human capital2. Indeed, the blue Liberals massively cut government spending as a percentage of GDP through fiscal contraction - a legacy modestly continued by Harper's first year in government. So there is quite a bit of continuity between blue Liberals and blue Tories on willingness to sacrifice public social investment for deficit reduction and spending as a percentage of GDP, one can give Calgary Grit that.

But Harper seems less of a pure deficit hawk3 (a position itself irrational in times of global downturn) than a hater of broad-based social investments. In past budgets he's shifted Canadian social policy from direct public investment to being a plethora of less effective tax credits - serving to overcomplicate the tax code. The military will be sparred from program cuts and reckless spending on the F-35 deal is likely. Corporate welfare will likely exceed social welfare by a long shot again. Canada is becoming an Anglo-American corporate welfare state - in the worse sense of the term - under Harper's watch.

Most egregiously, the Harper Government shows a willingness for one-sidedly anti-worker interventions in labour disputes, even in private companies. Lisa Raitt muses about declaring the economy an "essential service".  Since strikes affect - to lesser or greater degrees - some section of "the economy" any strike could be regarded as hurting "the economy". That would increase the scope of government in labour relations massively, meaning more power to heavy-handed neocons who want to bust unions. Reagan era union busting is what makes America so economically regressive today and Harper's planting similar seeds in Canada.

Harper is also following Reagan's lead by implementing Dumb on Crime policies - like mandatory minimum sentences. He's escalating the war on drugs via tougher penalties in a harmfully stupid way that only empowers drug lords by restricting supply to a good with very inelastic (for addicts) demand. This is a major change in direction for Canada, taking us many steps backward from our trend of reforming drug laws and devising more sensible crime policy.

These are major, radical, changes that amounted over years in minority and then majority with mid-sized steps. Harper's successfully gnawing away at Canada's progressive legacy via a war of attrition. The major changes are becoming visible but some progressives are taking longer to see the full ramifications of Harper's one-tax-credit at a time approach to dismantling Canada's socially progressive institutions. It won't be a pretty sight.

1.Working class and poor families have less access to many youth programs than more affluent kids who can afford a month at top-rated summer camp.
2. Nurses take long to train, are in high demand, and many left for Alberta once laid-off
3. The 1990s blue Liberals were much more pure deficit hawks, rather than neocons with an axe-to-grind against low-cost social programs.

2 comments:

  1. You say, "[l]ikewise, raising the OAS eligibility age is a way of spitting at low-income seniors to save a few bucks." Could you substantiate this as you did with the Katimavik program? I would be inclined to think that OAS cuts would be a much more significant, both in terms of a decrease in OAS expenditures and the associated increase in productivity (seniors are, after all, very productive people).

    -AB

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  2. I'll try to get to it in subsequent posts. OAS is a bit more complicated as it's savings are over a longer period of time, so one would have to make some educated guesses as to what future program expenditures would be over the next few decades (and program expenditures can be affected by both economic cycles and parliamentary discretion). One would also have to factor in how much a higher retirement age induces "increased senior productivity" - OAS seems to prominently affect low-income seniors, many of whom generally have jobs that tend to wear them down over a lifetime.

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