"We're not asking Canadians for a mandate to spend 30 days figuring out what to do" - Macleans.ca
 

“We’re not asking Canadians for a mandate to spend 30 days figuring out what to do”


 

That was Diamond Jim Flaherty on Oct. 7. Ah, nostalgia. It’s a good thing he wasn’t asking for 30 days to figure out what to do, because it wouldn’t have been nearly enough. It wound up taking Diamond Jim more than  60 days to name a counsel of economic advisors — who now have 30 days to help him figure out what to do. No hurry though! ‘A’ for effort!


 

“We’re not asking Canadians for a mandate to spend 30 days figuring out what to do”

  1. I also like the bit about Harper government implementing ‘real plan’ by keeping budget balanced. If rumours of $30 billion deficit/stimulus spending are true, I think Cons are in deep trouble come next election because many economic cons will sit on their hands and not vote.

    • Do you really believe this because quite frankly the people staying home next election will be the ones who who really don’t see a choice anymore … as their party pic one is becoming a mongrel which is basically what a coalition or at the least the propostion of one will do. Strangely enough this idea may turn out to be very fortunate for the CPC and might just be a factor in the CPC getting the 12 more seats that we need for a majority.

  2. Don’t be too quick to prejudge the outcome of this exercise, jwl – in fact, these people should be just to your taste. They are anything but Keynesians.

    If one wanted a genuine debate on policy, one would not have appointed people with such a uniformity of economic views. Makes you wonder why they even bothered to go through the exercise. I guess expectations that the federal government should implement a Keynesian style stimulus are so strong that they need a committee of laissez faire, continentalist, corporate capitalists to buttress their arguments for their preferred policy – do nothing and let the market sort it all out.

    Of course, that is not entirely fair – the Harper Conservative government is contributing $2.7 billion to the auto bailout and another $1.3 billion to the pension fund / ABCP bailout. So there’s lots of money for cars and banks. Remains to be seen how much money will be made available to help individual taxpayers.

  3. You’ve never read a word Mike Lazaridis has said or written about higher education, or read anything about Carole Taylor’s BC carbon tax, have you Mulletaur. Uniformity of economic views is easier to spot in a group if you don’t pay a lot of attention to their economic views.

    • I believe that BC Carbon Tax is all Gordon Campbell, why is it that Taylor has left her post as Finance Minister?

  4. One wonders though Paul, whether Jim will only hear “Blah, blah, blah tax cuts. Blah, blah blah, tax cuts”. Not listening and hearing only what they want to hear seems to be a specialty of this government.

  5. Mr. Wells,

    Thanks! You should treat us to flashbacks like this more often. I particularly enjoyed reading the old comments, like this one by hosertohoosier:

    “Why, exactly is that [the election call] strategically unsound? Parliament was not functioning and Harper (or whoever wins this election) needs a clear mandate if they are going to be able to address the crisis decisively. Even with a minority, Harper gets a honeymoon period when he can make tough decisions that might be unpopular in the short-run.”

    Wow. He sure called it, didn’t he?

  6. Fair enough, Paul, but I just don’t think higher education or carbon taxes are going to be on the agenda for the present exercise. I guess we’ll see.

  7. Howdy PW– I must apologize for deliberately going off-topic, I quite enjoy your blog and read it all the time– but for lack of a better venue to ask this, I query “Why after 3 days of fighting is there only a small newswire mention of Gaza on the MacLean’s site?” Yes, I know it’s not your decision at all and I’m off topic, just sayin’… and I’m in the mushy middle on this whole issue so not judging MacL’s lack of coverage from one perspective or another… just surprised…

    Keep up the good work on Inkless Wells.

  8. Patience folks – the Harper bunch forever repeat and repeat – we’re working hard and we’re getting it done.

    Uh huh….good thing they aren’t surgeons in a trauma unit.

  9. The name is Deficit Jim

  10. Sisyphus, you could try linking to something relevant. The Progressive Economic Forum? Only the Star would see failing to appoint one of those as an oversight.

    • It’s not the Star. It’s Linda Diebel’s blog on the Star site. If you’re going to be ignorant, it’s better to be precise in your ignorance.

      • If you’re going to be pedantic, it’s better to be less arrogant in your pedantry.

        • I’d keep this up but i fear a wallop of irony from Mr. Wells.

          In any case, feel free to observe the tender offerings of corporate and bank economists. They’ve served you so well so far.

          • Haha, truth. Wells’ Wallops are legendary. They haunt my dreams.

          • Especially the Wallops of Christmas Still To Come.

      • It’s not the Star. It’s Linda Diebel’s blog on the Star site.

        Splitting hairs like that does not make one’s argument more precise. Quite the opposite in fact. It’s a Star-hosted blog site, and it is consistent with the typical Star editorial stance. If you link to Paul Wells’ blog, it would not be incorrect to say you’re linking to MacLeans.

        By the way, I think bank and corporate economists are full of shit as well. They are more shills for their own employers than they are actual economists anyway. Basically PR specialists who do some number-crunching on the side. After spending the past 15 years studying economics (most of it informally, I only have an undergrad degree in it) I have become quite even-handed in dismissing economists in general, regardless of political bent. The overwhelming majority of them have deluded themselves into thinking that their field of study contains some precision and prescience that simply does not exist. Policy wonks in Japan have spent the past 20 years designing “stimulus packages” and “economic reforms” to fix their economy, yet they remain just as screwed now as they were in 1989. Only now they have massive government debts – courtesy of years of failed efforts to “revive” their economy.

        NO economist can figure a way out of the current mess because there IS no way out of it. One of the few voices of reason I’ve heard in all this is Peter Schiff, who comes right out and states that not only is a long, deep recession – possibly a depression – inevitable, it is necessary. And he’s not even an economist. His training is in accounting and finance. Economists will earn my respect when they finally start admitting that they don’t have the answers, and that the economy cannot be controlled by policy makers as though it were a video game.

        • That’s nice. You’re living up to your name. I’m going to live up to mine by going to watch the Raptors game.

          • And Sisyphus bails on yet another argument.

  11. For an interesting read: http://www.garth.ca/weblog/ and please keep an open mind, you will need all your strength this year and more. By the way Harper spent millions of your dollars using the 10% mailing clause to have Turner defeated ….. nara word from Duffy or Wallin …. not a peep!

    Think Harper/Flaherty ….. and think DOUBLE ZERO

    • On the one hand “please keep an open mind” but on the other hand Think Harper/Flaherty ….. and think DOUBLE ZERO.

      Well, I just don’t know what to think. Should I keep an open mind, or should I think DOUBLE ZERO (whatever that means)? Hmmmm… tough call… you know what, I think I’m just not going to read Garth Turner. That’s probably my best bet.

    • You’d have to pay me to read Garth Turner.

  12. Paul:

    Thank you for standing tall…. If the pen is mightier than the sword then the profession pen is mightier than a Atomic Bomb….. Canadian journalist and writers armed with the truth can save lives… we need y’all more than ever ….

    For those who would jump on Harper’s Separatist band wagon …. STOP AND THINK ….. what is going on in Gaza and has been for years …. What has been going on Quebec for years ….. Hello Canada …. these hard working Canadian people who contribute to same money pot all Canadians draw from but have chosen to voice their opinions via a peaceful political Canadian Registered Political Party …. Having said that if Harper was working (?) even 5% as much for all Canadians as M. Duceppe is working for Quebec we would all be far better off. Williams and Duceppe think why are they so popular with their voters ? are the lights on yet. THEY HAVE PUT THEIR PEOPLE FIRST!

  13. If we’re going to drag out those blasts from the past, how about my fave from this past election, the one that goes something like “you don’t get to do ‘redos’ when you’re running a trillion-dollar economy,” which was in reference to a flubbed response to a question.
    For added fun, break out the drinks and pull out that same quotation in reference to an October ‘economic stimulus’ package that blathers on about ‘belt tightening’ and almost brings the government down.
    That’s my fave for 2008.

  14. Why shucks! No hurry at all. They will get around to putting people first – at the head of the line-up for EI. They will have longer office hours, LOL!

  15. Context Paul,

    It’s all about the context.

    At the time Dion was touting this magic plan as the end all and be all, I and others were stating how entirely normal this grand plan is. In fact I specifically wrote (mocked actually) at this site how having meetings with economists was precisely what any government of the day would do. And is, in fact, precisely what this government is doing.

    Saying how this government is doing what they were mocking Dion for misses the point completely.

    It’s like Dion bursting on the scene with a new grand plan of getting to work in the morning: TAKING THE CAR!!! And then we laugh at it as being so rediculously un grandish,

    and then you come along and point the finger alleging hypocracy when one drives to work in his car.

    • Slightly fair point, kody. I, too, was saying to myself “Well, duh!” when Dion’s master plan was to talk to smart people. BUT: What I recall of the political landscape at the time was not that “talking to smart people” was an obvious given and a poor replacement for a philosophical approach to reaching a decision. What I recall was that it was mocked as a dumb idea.

  16. No, in fact Harper said “we’re already doing that.” It wasn’t a “plan” at all. It was just mechanics of governing.

    Of course this all is in the context of the left thinking a grand government “plan” can stave off downturns (which it can’t, and attempting to do so can make things much much worse – like say, facilitating the perpetuation of an inefficeint industry rather than allowing normal restructuring to create efficiencies).

    Harper fought, and still fights (though political realities dictate some give), such grand plans.

    Dion came along and purported to have one, when in fact is was not one at all.

    THAT, boys and girls, was the point of the mocking, and the point Wells belies with this post.

    • If one chooses not to cherry pick their economic theories, I think the data shows that government stimulus can help if a downturn is caused by a demand shock (Keynes/Galbraith), but not if it’s caused by a supply shock (Friedman). There seems to be a little bit of each going on here. People not buying American cars because they’re laid off or it’s too hard to get a loan because of bank failure would be a demand shock. People not buying American cars because the price of gas is too high would be a supply shock. People not buying American cars because they’re junk isn’t shocking either way (pun intended), but is the main reason Detroit is so susceptible to any kind.

      Generally, the main drawback of government intervention in a recession is inflation if it’s caused by a supply shock (EG 70’s oil crisis). Basically, sellers increase their prices to match increases in the money supply for a net cancelling out effect, which hurts people on fixed incomes.

      The kind of government intervention the nanny-state & market-forces economics mostly deal with is setting interest rates & controlling the money supply. Too high, inflation. Too low, recession. Studies of bailouts to specific firms our industries gets into arcane combinations of finance, psychology & sociology; Game Theory & the like. It’s all about choice & general strategy. Will all companies behave more responsibly (increase maximum gain for all), or will some choose to look out for number one (increase personal gain at a cost of a greater loss to all players — a bigger piece out of a smaller pie, more or less.) To know how players will choose, you need to know what each player thinks other players will choose. There’s also the issue of enforcement costs — it may be possible to force players to make responsible choices against their will, but this always comes with a cost (interestingly enough, this is also a major element of privitization studies).

      I’m not aware of any serious attempts to combine macroeconomics with Game Theory & its ilk. Game Theory would imply a rational individual will make different choices in the same macroeconomic situation, depending on what decisions that individual believes other individuals will make. Multiple rational choices really goes against some of the major assumptions of most schools of macroeconomics. You’d have to formulate different economic formulas for each possible combination of individual strategies. This probably gets too messy & complicated for nanny-staters & free-marketeers, who like their elegant grand theories & pretty crossing lines on papers. Gailbraith kind of got into this stuff without making any elaborate theories (he tended to think elegant theories got in the way of understanding the real world), and there’s an emerging field called Behavioural Economics which covers this type of stuff, but I don’t know too much about it as of yet. It’s still more of a combination of hypotheses & observations than a coherent school of thought. (& being economists it’s uncertain whether they even form a group of coherent individuals, let alone a coherent group of individuals.)

  17. Media trivia of the day:

    Every single news report on the economic downturn,

    every single one,

    is premised on the notion that it is the governments’ responsibility to work through the difficulties. “Not fast enough”, “Not doing enough”, “Not big enough” are the catch phrases.

    What doesn’t even enter the thought process, is the notion that the market itself will right things. More efficient companies which are better managed will take over the poorly run ones; chapter 11 restructuring will cause the “big three” and others like them to cast off the shackles of rediculously cumbersome union agreements and other drags on production and efficiency and, in the end, creating much more profitable (for the workers, shareholders and all Canadians) companies; inefficiency and redundancy aren’t rewarded rather than gifted; short term band aids creat longer term economic turmoil on a far grander scale down the road; ect, ect.

    Nope. The union/statist worldview is adopted whole cloth as if no other perspective even exists.

    “Why isn’t the government doing more?” is the only question that need be asked in today’s headlines.

    • ‘ Why isn’t the govt doing more?’ No kody this isn’t another piece of yr socialists and unionists an liberals don’t want us to succeed theory. The media allways stresses the negative, regardless of who’s in power, it’s easy to verify – don’t believe me. Go back and look at some of Trudeau’s less than complementary views on them[ media] it’s one of their least endearing traits, but they’re not choosy – wait until Obamas’ honeymoon is over. ‘ why isn’t…’ probably resonates in many households these days, whether it’s sensible or not. Funny how people get that way when their world is implodng or at least threatening too.

    • I agree with some of this, but I think the notion that the market itself will eventually right things is so entrenched in the public discourse it just doesn’t always get mentioned. Media headlines are as trite & one-sided as you say, but sometimes a headline is only a headline. Sometimes more efficient companies take over less efficient ones; but probably more often, the more efficient ones are bought out by larger, less efficient ones. How many small, efficient software developers have been acquired by Microsoft? Large players often act to remove smaller players from the game before they become a threat. (Preston Tucker, anyone?)

      Even us moderately pro-labour types mostly agree Detroit has some pretty strange union accommodations. Management more or less bought the union’s clout in Congress with them to get the laws they wanted. The idea is that union & management should come to the table with certain positions & negotiate concessions on both sides; management making all the concessions in exchange for political power is probably a situation that never occurred to the founders of the collective bargaining process. Is this a union problem or a management problem? Either way, it’s brought about some unprecedented & potentially disastrous results, allowing Detroit to avoid facing reality for a few decades longer.

      The other issue I see is the costs of the market correcting itself. I don’t think anyone will disagree that resources used by Detroit could be much more productive elsewhere, but resources don’t magically allocate themselves to the most efficient user. While efficiency arguments sound pretty on paper, it will take a long time for industry to regrow to current employment levels. This cost is born by workers & society at large. New jobs will be in other locations. Workers will have to leave their houses behind, losing all the equity they worked to build in them, and start again in new locations. Older workers stand little chance of being rehired, and will lose everything with no chance of starting again. New infrastructure will need to be built; this will be paid for by tax dollars. This is a process that won’t be a disaster if it happens over several decades, but will be one if it happens quickly. It comes down to two questions: Firstly, will a bailout prevent or at least slow a total collapse; & secondly, will the long-term costs of the bailout be more than the long-term costs of a collapse. Friedmanites cover the costs of government intervention in detail, but ignore the costs of “market” solutions.

      We’re not facing a choice between a good option & a bad option; we’re looking at which choice is the least disastrous, and the fact is, nobody knows. The concept of a natural market state is just a thought experiment dreamed up to make sense out of statistical data; powerful players on all sides try to manipulate the playing field to their advantage, making any “invisible hand” balancing an impossibility in the real world. If the “invisible hand” forces were the only ones at play, so the theories go, profits beyond what you get in the bank with safe guaranteed deposits should be impossible. If higher profits exist, markets aren’t competitive.

      Would it be better to let the industry collapse & bail out the individuals, compensating them for some of the costs of interim unemployment, relocation, etc., & give money for potential replacement firms to grow to levels where they can cover the loss of Detroit? If it could be done well, probably, but can it be done that well? (What’s government’s record on picking winners in this situation? Will it all go to jurisdictions with powerful politicians?) How long will it take? Five years? Ten years? Longer?

  18. Diane, LOL!

    MYL, good point. My recollection of the debate was a similar, “well, duh” that I didn’t think anything much of, until the next day when Harper made such a big deal about how Dion was ‘panicking’ by coming up with such a preposterous idea. And the thing I STILL don’t understand is why all the parties agreed to change the format of the debates to include half the time devoted to the economy, when none of the rest of them had anything better to say than Dion’s rather obvious “see what the reality of our situation really is and discuss with experts what to do about it”. I mean, Harper dismissed the plan as dumb, but gave us absolutely nothing–well, unless you include the “economy is fundamentally sound” crap. Why agree to spend half the time on a subject on which you have nothing to say?

    • Because despite having nothing to say. Your modern politician can’t resist saying it; nothing, that is.

  19. Paul, every time I read anything you write I feel a little bit gloomier about the state of our country.

    I think that’s what I miss most about your French period. When you ragged on French politics I could smile at your accurately-aimed thrusts and say “that could never happen over here” just because your rapier was, for the moment, directed elsewhere.

  20. Raging Ranter is right. Economists’ theories have zero practical application.

    There is nothing that our govts can do except to rein in our central banks and chartered banks and make sure our banking system stays afloat. Canadians and Americans spent decades on a wildly delusional spending and speculative binge built on the unshakeable certainty that there really is such a thing as a free lunch via stocks and real estate . We had our central banks encourage this delusion via totally irresponsible monetary policies. But we are beginning to see that there is no free lunch and there is no way out of this fix except, as Mr/Ms Ranter says, a really painful economic contraction.

  21. Jim Flaherty can only find his pay cheque in less than 30 days.. Like Harper, Prentice, Manning, Moore, he can’t really do anything else effectively no matter what the time he has