Harper's economic record

Our old friend David Olive at the Toronto Star has a piece in today's edition examining Canada's economic record under Stephen Harper.  Economic stability was supposed to be one of the key planks in Harper's re-election campaign, but recent data, including a very mild recessionette in the first half of the year, have seriously damaged the story.  In any case, this being the Star, it's no surprise that Olive finds the Tories wanting in most respects.

Piling Peleon on Ossa, Olive compares Harper's record not just with those of other countries over the past decade, but also with what was achieved under previous Canadian Prime Ministers. The first of these strikes me as much more valid than the second. Broadly speaking, everyone was facing the same problems from 2007 on, so it's legitimate to measure one country against another. It's far less reasonable to draw comparisons between what Harper has done and, for example, what Pierre Trudeau did three decades ago.

Anyway, let's assess Olive's assessment.

• Job creation: Olive admits that Canada's record in this regard is better than the rest of the G7 -- but then tries to knock it down anyway. He argues that you'd expect more jobs to be created in a country that has higher population growth, as Canada does because of its high immigration levels. Why should this be so? If rapid population growth drove employment growth, sub-Saharan Africa would presumably be booming. Olive also notes that Canada's unemployment rate is higher than that in other G7 countries: true, but this is nothing new. Structural unemployment, especially in the Atlantic provinces, has always biased the national jobless rate higher.  

• Fiscal prudence: Olive correctly states that Harper, despite embracing austerity, has in fact presided over seven straight years of budget deficits. There may be a small surplus this year, but only because of fiscal finagling, as Olive outlines. Interestingly, he offers no comparisons with the rest of the G7 here, presumably because he knows that the fiscal performance of most other G7 countries, including the US and the UK, has been so much worse.  Finally, he contrasts Harper's performance with the decade of surpluses rung up by PMs Chretien and Martin. True enough -- but unlike Harper, that was achieved in an era of rapid global economic expansion, not near stagnation. 

• Economic growth: Olive has to admit that Canada's GDP has grown more than that of any other G7 country during the Harper years. He argues that growth was faster under PMs Martin, Chretien, Mulroney and Trudeau -- but then, as noted above, everyone else was posting faster growth back then too.

• Prosperity: Olive notes that growth in real GDP per head in the Harper years has averaged a "barely discernible" 0.4 percent per annum. Once again he offers no comparisons with the rest of the G7, for obvious reasons -- they did even worse -- but instead attempts to blacken Harper by comparing him unfavourably with every PM since the Great Depression!

Olive's sour conclusion is the best that can be said is that Canada under Harper muddled through the post-crisis era better than most other countries. And even for this modest achievement, Olive tries to assign much of the credit elsewhere -- specifically, to former Bank of Canada Governor Mark Carney. Here, Olive may actually be onto something. Unlike much of the rest of the G7, Canada did not have to undertake an emergency bailout of its financial system. Some credit for this indeed goes to Carney, and some to the late Jim Flaherty, who as Harper's Finance Minister took a very hands-on approach to the banks as the crisis unfolded.

Arguably, however, most of the credit for the stability of the financial system should go to Messrs Chretien and Martin. Back in 1998, two pairs of Canada's Big Five banks -- first Royal and BMo, and then TD and CIBC -- announced plans to merge, with the specific aim of becoming bigger players on the world stage. The government of the day disallowed the mergers; one can only speculate how differently things might have turned out post-2007, if those deals have gone ahead. Given Olive's zeal to deprive Harper of any credit for anything at all, I'm surprised he didn't mention that.