Keynes is Back!

On Monday I tuned in to the CBC to listen to the first public speech by Bill Morneau, the new Minister of Finance in Justin Trudeau’s Liberal government. The speech was given to the Toronto Region Board of Trade for the benefit of the Bay Street crowd. I have to admit, that I was favourably impressed.

Bill Morneau and Justin Trudeau

Morneau is a very successful Toronto businessman with a very good academic background in economics. Of all Trudeau’s cabinet appointments, this was the one which concerned me the most. Morneau had also been chairman of the C. D. Howe Institute, a right wing pro-business “think tank” that is firmly committed to the agenda of free trade and the free market economy.

Morneau remarked that at his first meeting with a group of government economists he sat alone across a long table facing a dozen of them. When he stated that the new Liberal government would not put a high priority on balancing the budget, he reported that smiles broke out among those across the table. They knew full well that the Canadian economy is going through a very rough period, and with the collapse of the markets for oil and minerals, the immediate future was not all that great. As a result, the weakened economy was providing all governments with less revenues.

The Bay Street crowd heard Morneau report that there will be a string of budget deficits, and they were starting with a $3 billion deficit left by the Conservative government of Stephen Harper. But the goals of the new government started with restoring economic growth. The Liberals would proceed with their promise of major government spending on infrastructure, a pledge of $125 billion over a decade. The tax cut for the middle class would also boost spending and help create jobs.

Despite their campaign promise, an annual federal government deficit could possibly exceed $10 billion. The plan was to revive the economy so that the debt-to-gross-domestic-product ratio would be reduced. The hope was to be able to balance the federal government’s budget by 2019, the year of the next election.

There would be no structural adjustment policies. Instead, the economic policies identified with John Maynard Keynes would drive the agenda. The Liberals could see the complete failure of the alternative, the structural adjustment programs pursued by European governments.

To top it off, Morneau’s presentation was outstanding. He was very clear in both English and French. He gave a well organized speech without consulting notes or reading a text. He looked straight at the audience and spoke with conviction.

What happened to the New Democrats?

Thomas Mulcair and the NDP

In contrast, there is the disaster of Thomas Mulcair and the New Democratic Party. What happened? At the beginning of the 2015 election campaign, the polls showed support for the NDP was slightly ahead of the other two parties. An NDP-led government seemed possible.

In his first speech to the Bay Street crowd, given at the Economic Club of Canada on June 16, 2015, Mulcair made it very clear that his social democratic party stands strongly for balanced budgets. This was the tradition of NDP provincial governments in Canada, he argued. Special praise was given to the Saskatchewan NDP  government of Roy Romanow, who came to office in 1991, balanced the budget and paid down the provincial debt. No mention was made of the fact that this was done by slashing health and social programs and raising consumption taxes which fell heaviest on those with low incomes.

Mulcair noted that there was one exception to this tradition: the Ontario NDP government headed by Bob Rae, who, he noted, had turned out to be a Liberal. Bob Rae’s NDP government confronted an economic recession in 1990-1 by cutting taxes on low income earners, raising taxes on those with higher incomes, and expanding a range of social programs designed to assist the weaker members of society. His government and its policies were praised by a long list of Keynesian economists.

Then came the shock from Quebec. In June 2015, in the middle of the election campaign, journalists in Quebec posted a video clip from the Quebec legislature, a speech Thomas Mulcair made in 2001, when he was a member of the provincial Liberal government. Mulcair praised the free market policies of Margaret Thatcher, criticized the Labour governments in Great Britain for “putting their nose in everything” while declaring that “government interventionism is a failure.” He declared: “let the free market thrive and get off the backs of businessmen and women.”  He was also very critical of the trade union federations in Quebec for their politics of the left, backing the Parti Quebecois. Mulcair brushed this off. He refused to say he had been wrong. 

Looking to the Saskatchewan NDP
Mulcair’s NDP was determined on this issue. In August 2015 he chose Andrew Thomson, former NDP finance minister in Saskatchewan, to be a star candidate in the Ontario riding of Eglington-Lawrence. Thomson had been elected to the Saskatchewan legislature in 1995 while Roy Romanow was premier. When Lorne Calvert became NDP premier Thomson joined the cabinet, serving as finance minister in 2006 and 2007.

Thomson is best known for his determination to reduce the province’s royalties on the oil and gas industry. He also cut corporate taxes and corporate capital gains. He took substantial amounts from the Financial Stabilization Fund – a pool of revenues held in the bank by the government, termed “a rainy day fund” – in order to balance the provincial budget. Thomson was used by Mulcair to stress the NDP’s commitment to their primary election promise, to run four straight balanced budgets. They would do what Stephen Harper’s government could not.

Recent public opinion polls show that Canadian support for the Trudeau Liberals stands at 52%. Support for the NDP stands at just 14%. It appears that Mulcair is in full control of the party, as he has announced that he expects to lead the NDP in the next federal election. So far there is no indication that there is any opposition to Mulcair within the federal NDP caucus or party.

It seems to me that the Canadian electorate made the right choice in the recent federal election. The Harper gang is gone, and the large majority of Canadians are happy with that. But it also appears that they made the right decision when they shifted their support from Thomas Mulcair to Justin Trudeau. With the world experiencing economic stagnation, Keynes is the correct road to take, not structural adjustment.

I Am Not Dead Yet

Our farm at Bulyea.

What happened? I have not posted on my blog since last June. That would seem to suggest that I am no longer around. But I am still here. However, I have been negligent in letting my readers know what is happening. I do have some excuses, but they may seem a bit lame.

The Farm
At the farm this summer, I once again had to face the problem of flooding and my inability to win the war with the beavers. We would take the major dam down, and they would just build it up overnight. There were too many beavers around, and the eradication process was unsuccessful. We made some tries.

The beavers have built a huge lodge in the lake which has formed in our back yard. Beaver experts (trappers) who have seen it say it is the largest they have ever seen. You cannot use dynamite any more since the events of September 2001. Then there once was the old tried and true farmer explosives made from ammonia nitrate and diesel fuel. Again, it is not a good idea to use this method for it will likely bring down the forces of law and order on your head.

So we went to the local gun shop and bought the latest explosives for destroying beaver dams and lodges. It is a chemical mix which comes in a relatively small plastic jar. The ingredients are carefully mixed simply by rotating the jar which is then placed on the dam or lodge. At a distance of more than 100 yards you shoot the jar with a 22 rifle. I checked it out on the Internet, and videos show that it is supposed to work. The experts do get impressive results.

Not having a good 22 rifle, I asked a farmer I know who does a lot of hunting to help me out. He obliged. We launched his fishing boat in our back yard and paddled out to the beaver lodge. The new lake at this point is about six feet deep. We set the plastic jar with the explosives, paddled back to shore, and my friend got out his 22 rifle with long rifle shells and a scope. A few shots that he took hit the jar, it jumped up, but did not explode.

So we went back in the boat to see what happened. One shell went right through the jar and out the back, but no explosion. We agreed that it probably did not go off because there was not enough force behind the shell. My friend went home and got his deer rifle and we tried that with a new jar of supposedly explosive materials. However, his scope was off and at that distance he failed to hit the jar after about 10 rounds. So we put off further action until next spring.

In addition
In any case, day to day coping with the flooding, and work finishing off the bathroom in the renovated residence,  took a great deal of my time over the summer and fall. I have also been doing research on my new project, the impact of climate change on agriculture and food. I have done quite a lot research and written drafts, but to date I have not published any of it.

I returned at the end of October to Peterborough, Ontario where I will be spending the winter; I will return to Saskatchewan and the farm in early April 2016. Right now I am reconstructing my web page, and the new program I am using is much more complicated that the one I originally used, and it is taking me a lot longer to learn how to do the work. But I will be done soon, and in early January I will once again be posting on my blog. If you are on Facebook, you will see that I am still commenting on the world of war and political economy.

The big change                                                                                             

Saskatchewan Wheat Pool No. 1, Bulyea

Stephen Harper and his gang of mean spirited conservatives are gone. He told an American right wing group one time that “you will not recognize Canada when I am finished.”  He tried his best to move Canada into the right wing conservative camp. But Canadians are basically middle of the road liberals who are not really interested in making the rich richer and getting tough with the poor. While the large majority of Canadians come from a Christian background, most want to have a generally secular society. The mainstream is not interested in fundamentalist religions and their politics. It seems to me that the majority of Canadians are satisfied to just follow along with the Americans as long as the Democrats are in office.

I am one of the solid majority of Canadians who are quite happy that Stephen Harper and his gang are gone and has been replaced with a modern liberal. Right now I am enjoying the Justin Trudeau honeymoon. I am actually quite pleased with the people he has put in the cabinet, especially the women. They are such a contrast and improvement over what we just experienced. .It is going to be a pleasant Christmas this year. The new Trudeau seems to be ready to lead and has indicated that his government is going to do what it pledged in the election campaign. His government will find the money to provide adequate support for the 25,000 political refugees from Syria. As he has said, “Canada is back!”

This is all bad news for the New Democratic Party which is stuck with Thomas Mulcair as leader. He is too much of a neoliberal. They are now down to 14% in the polls. The only way they are going to recover is to get rid of Mulcair and move back to being a traditional democratic socialist party. It wouldn’t hurt if they shifted to being an anti-war party.

In Saskatchewan there will be a provincial election in April 2016. The NDP has a very weak,  neoliberal leader, who follows the precedent set by Roy Romanow, Lorne Calvert and Dwaine Lingenfelter. All across the advanced capitalist world, electors are turning against the social democrats for moving to the right to embrace the neoliberal agenda, including structural adjustment policies. Until the Saskatchewan NDP faces up to this reality, they will be a weak opposition. They are down to 30% in the polls and are currently looking at another major defeat in April.