Sound Management or Foolhardy Ideology?

Posted 08.09.13

SHAWVILLE, QUEBEC | More than a year ago, Japan's new prime minister, the conservative Shinzo Abe, announced his government was giving up on "austerity" measures because twenty years of austerity had not yielded any economic improvement. When Abe announced a 100 billion dollar spending plan to stimulate Japan's economy, the experts called the plan, "Abenomics," and waited for Japan to sink.

Meanwhile, the economies of Greece, Cyprus, Portugal, Italy, even France, plus the austerity flagship, the USA, sank further in their balance of payments, deficit spending, and job creation.

Canada, we were proud to keep repeating, had stayed afloat since 2007; what a marvel of economic management, to stay afloat. Prime Minister Harper built his and his party's reputation on "staying afloat."

Canada couldn't afford such stimulus, of course. Then this summer, Mexico, our brother nation sharing the continent with the gigantic US, announced it was also breaking ranks with the experts and would also spend 100 billion on stimulus over five years. Curiously the Mexican economy has not only been staying afloat, too, it has actually been growing during the financial melt down, but not growing enough. More stimulus. No more magical thinking about austerity!

The question is if our big, rich country can't afford any stimulation, except in Tony Clement's riding, if we can't do it, how can our poor brothers south of the border?

Mexico is investing in high--speed rail lines, 5,410 kms of highway upgrades, four airports and seven ports, and telecom expansion. This spending pours into the manufacturing sector, which is the job-creator.

Mexico's president, Enrique Pena Nieto, went further: "Nobody can doubt that better infrastructure translates into more competitiveness and productivity, which will ignite economic growth and social well-being." Obviously, Mr. Harper isn't listening.

Back to Europe, we find the IMF backing down on its austerity hard-line; even Eurozone economists are reporting glum results. The famous "marketplace", our new religion, isn't responding to spending cuts, and reducing taxes for multinational corporations and the rich means more money flowing to overseas tax shelters, not to innovation and research, job-retraining, and re-tooling (despite our magical thinking).

The question for us here in Aylmer isn't about Mexico or Japan or Greece. It's about the federal civil service. Its about federal spending cuts, long-term and immediate. It's about federal and provincial failing support for Mr. Nieto's "social well-being."

Federal job cuts -- and the threat and fear of more job cuts by our region's largest employer, the feds -- are smothering our local economy. So why stick with a failing formula? And why call that "sound economic management?"


Copyright © 2013 Fred Ryan/Log Cabin Chronicles/08.13