About that political instability - Macleans.ca

About that political instability


Economists consider what that other economist has said about the ruinous effect of an election right now.

TD Bank chief economist Don Drummond, a former senior Finance official, noted that during elections and for longer periods if the government changes hands, there is a slowing in spending by departments, particularly of discretionary spending.

However, the effect on Ottawa’s $12-billion infrastructure stimulus designed to fight the recession would be minimal, if at all, he added…

Economists have a little more sympathy for Harper’s contention that an election risks political instability and could affect confidence in markets and the economy in general, although even here, they say the prime minister is stretching a point.

Under normal circumstances, the shutting down of government during the six weeks of an election would have little repercussions on the behaviour of businesses, markets and consumers, noted Ian Lee, MBA director of the Sprott School of Business at Carleton University in Ottawa.

He pointed out that Japan, which fell the hardest during the recession, just recently completed an election and yet still managed to be one of the few countries to manage growth during the second quarter. By contrast, Canada’s economy shrank by 3.4 per cent during the period.


About that political instability

  1. In other words, the opposition wants to have it both ways. They want to argue that we need an election to change things, but that the election actually won't change things. OK. Whatever.

    • Er.. it IS John Baird who's on record saying that an election now will ruin the Canadian economic recovery.. so I think you need to do better then that, Dennis.

      • Scott, you may want to address my points about the opposition reasoning. Thanks.

        • Well, as Scott said it was Baird suggesting that an election was going to sink our economy. But the opposition isn't contradicting itself with these two statements: "Harper is steering us into the rocks. Having an election isn't going to make the economy worse." (If that is indeed what they're arguing).

          • I don't think you can avoid some degree of contradiction. You can't have it both ways. On the one hand, the argument is that we won't end up on the rocks with an election. On the other hand, the argument is that we have to avoid ending up on the rocks with an election.

            So, both sides are trying to manipulate the consequences of having an election, are they not? That's my point.

  2. The harder they fall, the higher they bounce. Japan fell so fast and so hard that a bounce was inevitable.