Canadian election underway:Close race according to polls; deficit hysteria plagues all three of the major parties

Conservative Prime Minister Stephen Harper visited the Governor General on Sunday requesting Parliament be dissolved and a general election called for Oct 19. This unleashed what will be a 78 day campaign the longest in history since the nineteenth century. Initially this will allow the Conservatives to outspend their rivals by a substantial margin since they have been more effective in raising campaign contributions which are 50 % covered by taxpayers. The longer campaign raises the ceiling on allowable expenses and the Conservatives having much more money to spend will take full advantage of this. Critics of Mr.Harper including a number of political leaders called this action cynical. Time will tell if the electorate shares that view.

Mr.Harper launched his campaign on two themes security and the economy. This is a curious choice given that there are signs that the collapse in oil prices and the turmoil in in European capital markets and the slowdown in China suggest the strong possibility that the first quarter of negative growth will continue in the second quarter with the result being announced in the middle of the election. This emphasis upon Conservative strength in running the economy  in dangerous times may backfire if the electorate decides that tough times are getting worse and the government is responsible.

Each of the three major parties have displayed deliberate politically cynical ignorance in discussing the issue of deficits and the economy. For starters Mr. Harper accused the New Democrat leader Thomas Mulcair of advocating reckless spending programs which would result in Greek like debt and deficits.This is clearly a blatant falsehood. As the economy slows increased public spending is a good idea not a bad one.Mr. Harper who is a trained economist knows this. Indeed despite his preference for fiscally conservative policy after the crash under pressure from the opposition parties he undertook a substantial stimulative deficit which helped  protect Canada from the full shock of global economic collapse. This is to his credit and ought to have cured him from his case of deficit hysteria. Regrettably it appears not to have.

Mr.Mulcair for his part foolishly criticized Harper and his government for running these necessary deficits when he ought to know and certainly some NDP insiders know as there are among them some of my former students that the crash and recession was the worst since the great depression and the data on jobs lost, spike in unemployment and public finances will reflect these facts.

Mr. Trudeau the Liberal leader is not an economists but has economists on his team who know full well that balancing the  operating budget over the cycle is desirable but one must not obsess over a given year particularly when the economy is in decline and expenditures are rising and revenues falling. One should also separate the capital infrastructure budget from the current operating budget. So rather than trying to make electoral points on living within our means Mr. Trudeau ought to avoid Mulcair’s blunder as much as possible.

I remain cautiously optimistic  that if the journalists do their job in the questions they pose about the facts of the last decade this election will diminish deficit hysteria rather than inflame it.

The latest poll of polls has the NDP with 33.2%, the Conservatives with 30.9 % and the Liberals with 25.9 % The Bloc Québecois 4.7 % the Greens 4.7 % and others 0.7 % But it is a long way to October 19.

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About haroldchorneyeconomist

I am Professor of political economy at Concordia university in Montréal, Québec, Canada. I received my B.A.Hons (econ.&poli sci) from the University of Manitoba. I also completed my M.A. degree in economics there. Went on to spend two years at the London School of Economics as a Ph.D. student in economics and then completed my Ph.D. in political economy at the University of Toronto. Was named a John W.Dafoe fellow, a CMHC fellow and a Canada Council fellow. I also was named a Woodrow Wilson fellow in 1968 after completing my first class honours undergraduate degree. Worked as an economist in the area of education, labour economics and as the senior economist with the Manitoba Housing and Renewal Corporation for the Government of Manitoba from 1972 to 1978. I also have worked as an economic consultant for MDT socio-economic consultants and have been consulted on urban planning, health policy, linguistic duality and public sector finance questions by the governments of Manitoba, Saskatchewan,the cities of Regina and Saskatoon, Ontario and the Federal government of Canada. I have also been consulted by senior leaders of the British Labour party, MPs from the Progressive Conservative party, the Liberal party and the New Democrats on economic policy questions. Members of the Government of France under the Presidency of Francois Mitterand discussed my work on public sector deficits. I have also run for elected office at the municipal level. I first began to write about quantitative easing as a useful policy option during the early 1980s.
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