Not so fast, Mr. Flaherty

Lana
Lana Payne
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Now is not the time for the government to bail out of the recovery process

Jim Flaherty should keep his musings to himself. And he shouldn't allow his ideology to interfere with the nation's economic recovery efforts. But then, self-control isn't one of Mr. Flaherty's strong points.

The federal finance minister ought to realize that anything he says is not just fodder for the political arena. In these uncertain times, the public contemplations of a country's finance minister can have more serious implications than usual. They can damage a country's confidence - both business and consumer - in the economic recovery that Flaherty is so desperate to announce.

Jim Flaherty should keep his musings to himself. And he shouldn't allow his ideology to interfere with the nation's economic recovery efforts. But then, self-control isn't one of Mr. Flaherty's strong points.

The federal finance minister ought to realize that anything he says is not just fodder for the political arena. In these uncertain times, the public contemplations of a country's finance minister can have more serious implications than usual. They can damage a country's confidence - both business and consumer - in the economic recovery that Flaherty is so desperate to announce.

We saw that last week. Leading into the meeting of G8 finance ministers, Flaherty speculated about it being time to slow down government stimulus and develop an exit strategy for government spending. He linked his reasons to a few indicators that the economic crisis might be letting up, including some stock market gains.

Of course, these positive signs are largely a result of government stimulus spending.

His musings prior to the meeting and a statement at the end of the G8 session - that merely referred to the fact that the finance ministers discussed the need to prepare exit strategies for stimulus spending - were enough to send stock markets into a nosedive. It indicates that confidence is fragile and a recovery is far from a sure thing.

Those uncomfortable with government economic activism have been looking for any bright light to justify a return to the unfettered global capitalism that got us into this mess.

Flaherty has said he'd like to see a return to "free markets," which is code for the lack of government oversight and regulation that led to the global financial and economic meltdown that has gripped the planet.

Paul Krugman, an American economist, author, Princeton professor and winner of the Nobel Prize for Economics, says now is not the time to abandon the rescue.

Krugman also predicted the economic crisis long before those adhering to conventional wisdom admitted the world's economy was in for more than your average slowdown.

In a recent column in the New York Times, Krugman noted that this recession is the third time in history where cutting interest rates, the conventional way of perking up the economy, is no longer an option.

"When this happens, unconventional measures are the only way to fight the recession. Yet, such unconventional measures make the conventionally minded uncomfortable and they keep pushing for a return to normalcy."

Normalcy for a fiscal conservative like Flaherty unfortunately is a return to the free-market ideology that has been such a disaster for families and communities all around the globe.

And Krugman warns that despite a few positive signs, like a bounce in the stock market, unemployment is still high and increasing. "It's way too soon to declare victory."

He notes that it was just a few months ago that the world was on the verge of economic disaster and it has been deficit spending that has kept the globe spinning.

"Suddenly, critics are demanding that we call the whole thing off and revert to business as usual," says Krugman. "Those demands should be ignored. It's much too soon to give up on the policies that have, at most, pulled us a few inches back from the edge of the abyss."

Yet Flaherty, if he had his way, would do exactly that. And one of the reasons is he does not want to be tarred with a big deficit.

But these are extraordinary times and they call for anything but business as usual. And Canadians should be wary of any plan Flaherty says he has to get the country's books back into the black.

After all, much of this projected deficit is not related to stimulus spending.

The deficit is also a result of the squandering of billions of dollars in surpluses by the Conservatives.

In other words, this is a deficit that is in large part of Flaherty's own making. He wasted billions leading into the recession.

Even with the United States bleeding jobs and sinking under the weight of the sub-prime, and knowing how tied the Canadian economy is to its southern neighbour, the finance minister continued to make bad economic decisions. In fact, he refused to even admit that we had a problem and continued to empty the fiscal cupboard.

The Opposition parties have called for Flaherty's resignation. They say Canadians have lost faith in his ability to steer Canada to recovery.

There is no doubt that this is politics, but there are plenty of good reasons to suggest that this finance minister be returned to the backbenches.

The job of finance minister requires more than the bumbling, court-jester ways so far exhibited by Jim Flaherty.

In these troubled times, Canada needs someone with a firm hand on the wheel, not someone weaving back and forth across the double lines.

Lana Payne is president of the Newfoundland and Labrador Federation of Labour. She can be reached by e-mail at lanapayne@nl.rogers.com. Her column returns July 4.

Organizations: New York Times, Conservatives, Newfoundland and Labrador Federation of Labour

Geographic location: Canada, United States

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Recent comments

  • Tim
    July 02, 2010 - 13:17

    It is obvious from her historical writings that Ms. Payne certainly does not support the Conservatives. She is most definitely entitled to her opinion, however the tone is often simplistic and political, and reads like a transcript from a debate of political strategists as seen on television.
    The issues raised are by all means legitimate, but this column is often more irritating than it is informative or thought provoking.

    Does anyone else feel the same way or if I out to lunch (or suspected of of being a Conservative insider....*shhhhhhhhh*) Which I am most definitely not by the way.

  • Gerald
    July 02, 2010 - 13:11

    I shudder to think about the state our economy would be in had the coalition taken control of government.
    As for the surplus inherited by the Conservatives, they gave it back to the people to whom the money belonged in the first place.

  • Tim
    July 01, 2010 - 19:57

    It is obvious from her historical writings that Ms. Payne certainly does not support the Conservatives. She is most definitely entitled to her opinion, however the tone is often simplistic and political, and reads like a transcript from a debate of political strategists as seen on television.
    The issues raised are by all means legitimate, but this column is often more irritating than it is informative or thought provoking.

    Does anyone else feel the same way or if I out to lunch (or suspected of of being a Conservative insider....*shhhhhhhhh*) Which I am most definitely not by the way.

  • Gerald
    July 01, 2010 - 19:48

    I shudder to think about the state our economy would be in had the coalition taken control of government.
    As for the surplus inherited by the Conservatives, they gave it back to the people to whom the money belonged in the first place.