Whatever Happened to Election Debates on Economics?

Tears have been wiped dry, major resignations are in, and thoughts about ways of overcoming disproportionate misrepresentation allowing Harpers Conservatives to turn 39 per cent of all votes into a majority government are in the hopper.

But the sleeper issue on the political agenda continues to doze.

One reason why all pundits are talking about the electoral politics of the recent election is that there is not much to say about political economy.

The Conservatives came out of the gate posing as the only party capable of managing the economy. And nobody persistently challenged them on their multiple failings – think about misspent billions on non-stimulating stimulus spending, continuing high unemployment, the disappearance of heavy industry from Canada’s landscape, and an export-killing loonie driven artificially upwards by oil exports from one province – let alone presented a compelling alternative.

With a opposition divided among Greens, new democrats, Liberals and the Bloc and an absence of deep going criticism of their signature issue , economic management, – in itself a major shift from recent days when Conservatives highlighted divisive social and regional issues as their calling card – the election was inevitably the Conservative’s to lose, and never the opposition’s to win.

How times have changed. It isn’t that long ago that the Conservatives led with their divisive social policies. They have certainly learned a lot – not just about cunning ways to target and mobilize their vote, but also about the ability to stay on-message with a key issue.

Conservatives conducted in-depth, diverse and country-wide focus groups with 120 people, who told them what should have been obvious — that the key issue was brass tacks economics and job creation, not ideology or parliamentary ethics and rectitude.

One thing you have to give Harper and his managers their due for: they do on-message with a perfectly straight face, especially when no-one calls them on it.

I was wiping away my own tears over this when the Twittershpere brought to my attention an April publication from the Tulane Economics Working Paper Series that undermined the Conservatives main pitch: that tax cuts for high-income individuals and corporations were the key to economic growth and jobs.

The Tulane paper, 47 pages of dreary mathematical formulas – this is the first publication to use “orthogonal distance regression (ODR) to deal with the likely presence of measurement error in many of the variable,” the intro claims – showcases the kind of results that come from people who do their math homework instead of relying on prejudices and assumptions.

Senior author James Alms is among the five per cent of most-cited economists in the U.S., anything but a lightweight. The paper establishes — using hard-to-refute testing of 130 variables from 48 U.S. states from 50 years covering good and bad times between 1947 to 1997 — that far-right tax-cutting damages economic performance.

Higher taxation of corporations and, high-income individuals “is never significantly negative and is frequently significantly positive,” the authors say, probably because, I deduce, taxation goes to worthy causes such as education, which invests in raising the human d social capital of an area.

Highway-building — one of the major spendthrift instincts of far-right governments (prisons, or “Gulag Keynesianism” being the other) and certainly a feature of Harper’s stimulus program – is shown to have had a generally negative impact on economic growth since 1977. Presumably this is the result of the law of diminishing returns, in a North American landmass where pavement has long been the most legitimate form of government investment in make-work projects or infrastructure development.

Enjoy the empty four-laner through New Brunswick this summer while pondering why Conservatives did well in the Maritimes, and appreciating that highways are much-favoured by the right because they subsidize car use and high-wage male employment in construction, with no spillover effect that improves equity. Bad economics but good porkbarrel politics.

The general neglect by rightwing US state governments of protection of social opportunities may account for economists’ finding that election of Republican governments “is always negative and often significantly so” in impacts on economic growth.

One reason why low corporate taxes can have such a damaging impact on job creation, which again came to me grace of social media, may be explained by a planning report from Philip Langdon of New Urban Network. It shows that boxstore retailers pay taxes of about $8500 an acre, compared to taxes of $40,000 and more from “mixed-use” stores and residences. This is a case study of how cuts to corporate taxes translate into a virtual subsidy to a job-killing form of retail at the expense of neighbourhood retailers.

And from an old media standby, the May 12 issue of New York Review of Books, comes the latest from Nobel-winning economist Amartya Sen explaining why China does so much better economically than India. Despite its dismal record on so many things, China spends more on healthcare and popular education, especially of women.

And from a very old, respected and frequently pro-establishment source, the International Monetary Fund, comes the speech of managing director, Dominique Strauss-Kahn in a recent speech to the Brookings Institute: “Ultimately, employment and equity are building blocks of economic stability and prosperity,” he said. This understanding “must be placed at the heart of the policy agenda.”

Alas, a short time after giving this controversial speech, Strauss-Kahn was arrested on sexual assault charges.

Who’d have thunk that a little looking around could find such an abundance of confirmation that social equity makes for good economics?

What does it take to hear this message amidst the deafening silence that is economic debate in Canada?

With files from Jeff Berg and Brian Cook

(adapted from NOW Magazine, May 12-18, 2011, with changes that make the original more
understandable to people outside of NOW’s catchment area in Toronto)

Matched by other that inequality bad for bus

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