MAY: Harpernomics 101: Oil, debt and fantasy math

[Oscar]

Harpernomics 101: Oil, debt and fantasy math

[ http://elizabethmaymp.ca/news/publicati ... tasy-math/ ]

On Thursday, February 5th, 2015

Stephen Harper’s fiscal strategy is being undermined by an economic nightmare. This one isn’t coming out of the eurozone or the United States. No, this time it’s the prime minister’s own policies that are the nightmare.

True, Canada rode out the 2008 financial meltdown better than most. Our prime minister was quick to take credit for that, but the credit should have gone to the previous administration for rejecting the banking industry’s demands for deregulation. Ironically, had Harper’s party succeeded in persuading the government of the day to accede in the banks’ demands, he would have had a much rougher ride.

He was lucky – lucky that our banks were regulated and unable to join in the high-risk global derivatives market, lucky that he had inherited large surpluses. Even before the financial crisis hit, Harper shifted our budget from surplus to deficit. That’s bound to happen if you slash revenues while spending more. Our first quarter in deficit arrived before we had spent a single cent in stimulus investments in response to the recession.

While the media, pundits and politicians focus on the relatively minor question of whether we’ll have a small surplus or small budgetary deficit this year, they’re ignoring the problem of the national debt. Stephen Harper – a person who likes to call himself a fiscal conservative – has increased the national debt to its highest level ever – over $600 billion.

Twenty-four per cent of that debt was accumulated by Stephen Harper as he borrowed money to give out economically foolish boutique tax cuts. It’s one thing to bribe voters with their own money. It’s a step beyond shameless to borrow money to do it. The interest payments on the debt will cost Canadians $29 billion this year alone.

One might imagine that Harper’s high-spending ways would come to an end in tough times. Not so: The current federal civil service is larger than it’s ever been before. While spending on environmental science and support for veterans was slashed, more bureaucrats were hired to audit environmental groups, to work in Corrections Canada and Canadian Border Services. One big growth area in federal employment has been in information officers; their numbers are up by 15 per cent as they work to control – and limit – our access to government information.

Since Harper became prime minister, productivity has fallen, innovation has grown stagnant and our exports have tilted back to what previous industrial strategies sought to avoid. For years, successive governments sought to move us away from relying on raw resource exports, to create wealth through value-added production. To use a Conservative-branded turn of phrase, Harper’s “laser-like focus” on putting all our eggs in the bitumen basket did not include processing the bitumen before shipping it out.

And now, it seems, his luck has run out. Maybe he didn’t see Saudi Arabia coming. But the OPEC oil shock of the early ’70′s was not that long ago. Of all global commodities, oil is the one that is most open to manipulation, creates the most security threats and launches the most wars.

Anyone who understands economics knows that an economy is more resilient to nasty shocks when it is diversified. Truth is, Canada was never all that dependent on the oil sands, which amount to only two per cent of GDP. It’s not that large a contributor to our national revenue. And many sectors of the Canadian economy will benefit from the lower dollar.

If I were prime minister right now, I would be finding every policy tool available to give those sectors that benefit from an 80 cent dollar some rapid ramping-up to expand their workforces. One prime example is tourism. For some inexplicable reason, Harper appears to hate tourism. Policy after policy has hurt the sector – from eliminating the GST-HST rebate for foreign visitors (a cheap goodwill gesture), to added visa requirements, to slashing the budget for tourism ads, to undermining seasonal employment through the EI system.

Over the last few years, not one penny was spent in the U.S. market to promote Canada as a dream vacation. Where ten years ago Canada was in the top seven for world tourism destinations, we’re now 18th.

The only spectacular photographs of Canadian wilderness paid for by the Government of Canada in the U.S. were used to promote the Keystone pipeline. Just one Keystone ad in the New Yorker last year cost over $200,000. Still, tourism employs over 600,000 Canadians and contributes over $30 billion to our economy.

It was announced recently that Harper is prepared to spend over $20 million for a major ad campaign targeting Europe, the U.S. and Asia. The international PR firm FleishmanHillard has won the contract. And the ads will promote the oil sands.

When will someone stand up to say “the economist is naked?”

[Oscar]

COLLIER: COMMENT RE: MAY: Harpernomics 101: Oil, debt and fantasy math

-----Original Message-----
From: KEN COLLIER
Sent: Sunday, February 8, 2015 7:12 PM
To: Elizabeth May
Cc: Elizabeth May, Green Party of Canada
Subject: Harpernomics 101: Oil, debt and fantasy math

Hello Ms. May,

re: Harpernomics 101: Oil, debt and fantasy math Feb 5, 2015.

[ http://elizabethmaymp.ca/news/publicati ... tasy-math/ ]

Before you get too enthusiastic about tourism, you might look into the many critiques of it. In Canada, it tends be sharply seasonal. It therefore skews activity and funding into those short seasons, leaving the personnel and infrastructure without use or employment in the 6-10 months that activity is "off-season".

Tourism tends to be rather a negative on the environmental front. It is not just people looking at trees and water. It is clearcutting forests to make ski slopes, campgrounds and chalets. It is roads, power lines, gas lines, sewage and garbage. Tourism is airplanes, and therefore airports, with freeways and parking lots. Tourism is carbon exhaust, fuel spilled in rivers, lakes and oceans, salt and chemical sprays and diesel fumes.

Tourism requires not only the capital (buildings, docks, hotels, restaurants, vehicles), but also training that is quite narrow in its goals and applications. That training is not very adaptable, so its trainees tend to get stuck in --- well, tourism.

Tourist facilities and tourism is not very insurable against its risks. Weather is a major one. Access, as above, is another. Health risks abound. The insurance industry, for all its greed and tricks, is also quite shy of those risks.

Should we eschew tourism? No, probably not.

It should be limited to those nature- and environment-oriented activities that can occupy locations and people as close to year round as possible - a relative rarity in Canada. It should not deny Canadians access to their own natural splendours through fencing off facilities, beaches, shores, viewpoints. It should largely consist of types of tourism within the price range of the vast majority of Canadians as well as visitors. Tourism should not take agricultural or fishing lands and grounds out of production. It should not be a threat to our First Nations, upon whose land tourism often tromps with heedless feet.

If we want tourism in our cities, the activities should not oppress people with low levels of education and therefore income. We don't need more sex trade, dangerous, ill-supervised, non-monitored, liquor- and drug-fueled jobs. We don't need more tourist activities dominated by organized crime. We don't need tourism in which government becomes dependent on gambling and other so-called sins to finance public activities that should be funded through a fair system of taxes, royalties, duties and so on.

Maybe one tourism answer is for the public sector to take a really large stake in it, rather than handing resources over to the privateers.

Yes, Stephen Harper's economics based on oil and debt is ruinous, but watch out what you might wish to replace it with.

Ken Collier,
Mission, BC