Can the NDP challenge Harper on the economy?l

The NDP’s announcement that it will push for a national minimum wage if elected is good news and suggests that the party may finally be overcoming its decades-long aversion to engaging its Liberal and Conservative adversaries on the question of the economy. It’s too early to tell if they will follow up with other policy commitments and weather the expected attacks. The social bottom-feeders at the Canadian Federation of Independent Business, ever eager to promote policies that harm their members’ interests, have already attacked. Their knee-jerk response — “wage inflation and higher unemployment” — has been disproven so often that they should be embarrassed to drag it out.

The minimum-wage pledge accomplishes two things: it addresses the issue of inequality which Canadians say they care about, and it implies a perspective the NDP needs to expand on: that if you really want to see some economic growth then you have to put money in people’s pockets, especially low-income people who spend every cent they get.

The NDP really doesn’t have much choice but to take on the economy as a key election issue because it has gradually abandoned many traditional social democratic policies. They have abandoned foreign policy, where the NDP has historically staked out at least a small, more moderate position (peacekeeping, honest-broker, middle-power influence). It is now in lockstep with the Conservatives on virtually every front — from Libya and Israel to Ukraine. Mulcair will be forced by his own policies to have a “me too” foreign policy which simply bolsters Harper’s dominance of the issue. Much the same is true on the tough-on-crime front.

This situation effectively means that the party is left competing for votes on a political battleground exclusively defined by the Liberal and Conservative parties. And that means that it has to figure out how to be “competitive” on the issue of the economy and jobs.

The Conservatives are extremely vulnerable on this issue but have managed to still claim to be good economic managers — because no one effectively declares that the emperor has no clothes. Trudeau is extremely weak on the economy as well and his party power-brokers are essentially on side with Harper’s neoliberal doctrine of “getting out of the way” of corporate decision-making — in other words, leaving economic policy exclusively up to the private sector.

With their huge advantage in fundraising and therefore TV ads, the incumbent Conservatives will largely determine the issues the election is fought on. And there is nothing to suggest that it will be any different this time around: promoting Harper as a sound economic manager. Attacking the Harper record during a four-week campaign won’t cut it. The NDP needs to start now and begin to erode the Conservatives’ undeserved reputation.

The minimum-wage pledge is a good start. They could follow up with the novel idea that good economic managers actually, well, manage. Managers examine their company (country) and develop strategies and long-term plans to build its strengths, address its weaknesses and facilitate growth based on its natural advantages. It used to be called industrial strategy. Harper has none and in fact both the Paul Martin Liberals and Conservatives have abandoned this pre-NAFTA economic policy in favour of a radical free-market theory that gives corporations the almost exclusive right to allocate capital. In effect, Harper is AWOL as a genuine manager.

If he were running a company, he’d be fired. That’s how Mulcair could — and should — frame the issue.

One of the most damning results of this ideological recklessness (which includes massive corporate tax cuts) is that corporations in Canada are sitting on over $600 billion in idle cash. In other words, they aren’t allocating capital at all — they are hoarding it. This is grossly irresponsible and if ever there was a compelling reason for returning to active economic management through a strategic industrial development approach, this idle money is it.

The Canadian economy is in deep trouble, falling far behind the U.S. in job creation and recovery stats. Last week Statistics Canada reported the loss of 111,600 private-sector jobs in August. That figure screams, “Whatever you’re doing, it isn’t working,” and Mulcair should be repeating it over and over again.

He could also use the example of Tory government in Britain to argue the need to ratchet back this country’s “labour flexibility” policies — the ones implemented dramatically by Paul Martin and continued by Harper. This phrase is just a euphemism for driving down both the wages and bargaining clout of labour. The British government’s Business Secretary recently declared that labour was now “too flexible” — that the country needs wages and salaries to rise at the expense of profits to generate a recovery. “We do not want to reproduce the American experience, where — over a decade — wages have stagnated, even in a period of economic growth.”

There are other themes the NDP could pursue to expose the sheer incompetence of the Harper government (and the most recent Liberal governments) on the economy. By systematically denying labour its fair share of increased productivity over a 30-year period and keeping labour cheap, the government encourages business not to invest in new plant and equipment. Why? According to Bruce Kasman, head of economic research for JPMorgan: “We haven’t seen much allocation of resources to capital. Because labour is cheap, we are seeing companies substitute labour for capital.”

Kasman asks rhetorically how an economy dependent for 70 per cent of its GDP on domestic consumption can recover if people can’t spend. The exact same question applies to Canada (where the figure is 57%).

Cheap labour means low demand, low demand means billions in idle capital — and that means that two of the three big spenders in the economy are hobbled by government policy. The third big spender is government itself and Harper is determined to hobble it as well — creating surpluses that he can, once again, distribute as tax cuts to the wealthy and corporations. Government spending as a percentage of GDP — (up to 15 per cent of it going directly to private business) declined dramatically by almost one-third from around 24 per cent to 15 per cent under Paul Martin. Harper continued the trend until the NDP forced his minority government to increase spending in 2008-2009 and has decreased it since then back to 2006 levels.

This presents Mulcair and the NDP with the opportunity to frame both the Liberals and Conservatives as responsible for the perfect storm of economic decline, making any kind of sustained economic recovery virtually impossible.

Harper’s record on the economy is appalling and a concerted campaign by the NDP could erode Harper’s carefully constructed image between now and the 2015 election. But that leaves open just what alternative policies the party could put forward. Here, too, Mulcair could find support for progressive policies from an unusual source — the International Monetary Fund.

Regrettably, he is unlikely to avail himself of the IMF’s recent pronouncement on how to deal with income inequality. Infamous for its imposition of draconian austerity policies on countries around the world, the IMF has shifted ground, finally recognizing that inequality is a threat to economic recovery and a potent source for eventual social unrest. Last March the Fund’s deputy managing director, David Lipton, declared that the principal solution to unsustainable inequality is redistributive taxation — in other words, tax increases on the wealthy and corporations. While Mulcair is committed to rolling back some corporate tax cuts, he has pledged not to increase taxes on the 1% or their accumulated wealth.

Mulcair’s trial balloon on the economy front — if that is what his proposal for a federal minimum wage is — leads him inexorably to a package of economic policies that can only be implemented by gradually increasing the government’s share of GDP back towards 20 per cent and higher. That’s what it will take to rebuild infrastructure, save medicare from Harper’s new formula, allow more young people to attend university, implement an industrial strategy that focuses on renewable energy, mass transit and high tech, and to enhance and expand social programs to increase the social wage and decrease inequality.

It’s encouraging to see the NDP take a first small step in addressing the next election’s key issue. But without dealing with the issue of revenue and taxation a challenge to Harper on the economy will come up short.

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