Trudeau’s best hope

John Ibbitson, writing in the Globe and Mail, warns that “Financial crises can benefit 220px-Jean_Chrétien_2010harper-un-2013-lge-56a0e5913df78cafdaa62b42a party in government, if voters decide the leader is capable and committed … [as they did, he says, with only Jean Chrétien and Stephen Harper over the last 65 years] … More often, they’re a political disaster … [and, he adds, this Liberal regime confronts the ongoing socio-economic panics with several liabilities] … One big problem is that what matters most to them may no longer matter to Canadians … [because] … This government’s priorities include fighting global warming and income inequality, while promoting Indigenous reconciliation and protecting minorities. On Monday, as markets melted along with oil prices, and Canada recorded its first death related to COVID-19, the government introduced a bill to make offering LGBTQ conversion therapy a criminal offence. The legislation is important, but people have other things on their minds right now.” Exactly! While I do not dispute the importance of any of the Trudeau priorities, I do not, currently, see them as being at, or even near the top of the list for me and my friends and neighbours. Canada has several other more pressing issues on the table right now … and I’m not even sure the Trudeau Liberals are at the right table, at all.

I have been crying “recession” since before the last election, but Canadians chose, as Paul Wells advised, to believe that the climate crisis could no longer wait while the economic situation was not yet urgent. Except that it was, because, as Mr Ibbitosn says “Bill Morneau has presided over deficits every year that he has been Finance Minister. Critics have long warned that running deficits during times of economic growth would leave the government vulnerable in a downturn, which could send those deficits and the debt-to-GDP ratio through the roof. Expect the Conservatives to hammer this theme. The NDP will demand more help for workers who lose their jobs and for those being forced onto welfare. The Bloc Québécois will demand help for Quebec.” There is not much fiscal room left for Keynesian stimuli, Canada is already running record-high deficits. I understand the notion that one should borrow when interest rates are at historic lows, as Team Trudeau did, when that borrowing goes to fund long-term domestic, physical infrastructure ~ improving seaports and bridges, building pipelines, making rural broadband a reality, etc ~ which the Trudeau Liberals did not do; instead they ‘invested’ in global projects of dubious value, all in the name of virtue signalling, as Pierre Poilievre explained to the House of Commons just the other day.

If the deficits and unemployment numbers get high enough,” John Ibbitson says, “the opposition parties could combine to bring this minority Liberal government down,” as well they should, as soon as possible, before Justin Trudeau can do much more damage.

Screen Shot 2020-01-24 at 11.48.51Mr Ibbitson adds, and I agree, that US President Donald Trump is not the leader the world needs right now, but Canada (and Australia, Britain, China and Denmark and so on) do not need to follow Trump. They, most of them, anyway, have governments that can think for themselves and act in the best interests of their own countries.

But we have our own, home-grown problems. John Ibbitson says that “We face something we have never seen before: a public-health emergency coupled with an oil-price war converging at a time of unprecedented U.S. weakness. There is no handbook for this … [and, he explains] … Canada’s health-care system is always under stress; a large increase in the number of coronavirus infections could push it beyond capacity. Quarantines and travel bans were straining the global economy before the oil war. And we had the made-in-Canada economic drag from February’s Indigenous-led rail blockades … [and, if that wasn’t bad enough, he reminds us that] … Provincial governments have less fiscal capacity than Ottawa; they will need and demand additional transfers, further straining federal resources. The situation in Alberta could become very grim; the situation in Atlantic Canada already is.” To make matters even worse John Ibbitson says that “The Bank of Canada, which cut interest rates by 50 basis points last week, has much less manoeuvring room now than in 2008-09. How,” he asks the Keynesians “do you stimulate an economy through interest-rate cuts when rates are already so low?

And remember:” he says “The Trudeau government wasn’t very popular even before all this hit the fan.

But there. might be a silver lining. He reminds us that:

  • A first ministers conference was already scheduled for March 13, creating an opportunity to forge a joint federal-provincial response to the health and Premier_Moe_flagsScreen Shot 2019-09-12 at 06.40.45economic crises, along with an opportunity for governments of every level and stripe to spread the blame.” But I’m not sure that Jason Kenney and Scott Moe are going to make life easy for the prime minister unless he does an absolutely HUGE climb down on several of his policies;
  • The Conservatives won’t have a new leader in place until the end of June. The coronavirus spread and the fight over oil prices could have receded by then if Canada and the world somehow avoid falling into recession” and
  • Skillful management of these interweaving crises could bolster Mr. Trudeau’s reputation, strengthening the government in Parliament and increasing the odds of a third Liberal win in the next election.

I do not see much hope in the first and third points. I doubt the provincial premiers will be in much of a mood to help, nor will they have much capacity, and I have yet to see much “skillful management” by any Trudeau minister on any file for the past four years, why would that change.

Mr Ibbitson suggests that Canada’s Trudeau‘s best hope is that both the coronavirus and the oil-price wars will die down of their own accord before the Conservatives pick a new leader … that is, I guess, about as good a plan as Justin Trudeau is likely to make.

 

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