May 11, 2006

THE ICEMAN COMETH
Canada's New Prime Minister, Stephan Harper, Starts Governing

John Chuckman

Stephan Harper's first budget, while making little economic and social sense, makes a great deal of political sense. Tidbits of spending are distributed to enough disparate groups to aim at luring a majority-making coalition of diverse interests. At the same time, Harper toughly enforces quiet from party members known for blurting out embarrassing, socially-backward views.

His minority government represents little more than an intense public relations effort to achieve majority government, free of existing artificial restraints. The hazards this represents are suggested even under current restraints.

Why do I say the budget makes little economic sense? Every trained economist, including Harper, knows that skewing taxes back to favor consumption - his lowering of the GST (Goods and Services Tax) - is in principle unsound policy.

But if you were determined to re-tilt taxes to favor consumption, a tiny change is not the way to do it, because it is costly and inefficient to re-set the system for a consumer gain of one percent. A huge effort is now needed to re-program or replace countless cash registers and calculators, not to mention the reprinting of forms, receipts, and reports of many kinds.

In economics, often, events that mean one thing for individuals mean something else for the community. Thus, Harper's small change in the GST, which will be almost imperceptible to consumers in their individual purchases, still will manage to deprive the federal treasury of a substantial annual sum.

The measure does keep a campaign promise, but it was never a sensible promise, tailored, as it was, to appeal to people's prejudice towards a tax that features in most purchases, a promise offered without explaining the necessary consequences for federal finances.

It is dishonest to speak of Harper's daycare policy because he truly doesn't have one. His hundred-dollars-a-month give-away is simply a new baby bonus, as economically and socially useless as the old one. Harper's crowd likes to talk of choice - a word that has become sacred writ with America's Right Wing in everything except wars - but there's no choice purchased for a hundred dollars a month in the daycare market. If you were thoroughly honest in your conservative principles, you would forget the new baby bonus and just tell everyone they have their own choices.

But that wouldn't do politically, would it? Harper's new baby bonus will flatter with the stay-at-home type of mothers, including importantly the Christian Right ones who see what they do almost as a sacrament, while offering a small resource for grannies raising their second generation. Poor women will get no daycare out of the monthly cheque. Still, who doesn't like receiving a cheque every month with your name on it?

I don't like being cynical, but, since this policy of Harper's is itself almost pure cynicism, additional cynicism is not out of place. The Liberal candidate who said before the election that the cheque would mean cigarette-and-beer money for many was being quite honest before he was silenced.

Harper’s rejection of Kyoto puts his party’s short-term interests ahead of the nation’s international undertakings on a deadly-serious problem. His talk about a “made in Canada