The Globe and Mail: Our last discussion of an election campaign down to the wire. Perhaps we can begin by raising some big economic issues that nobody has been talking about – but should be.
Eveline Adomait: Sometimes promises should be broken. As the election campaign draws to a close, let's look at the promises we really hope are never kept.
To start, I hope Liberal Leader Justin Trudeau breaks his promise to run a deficit. Given provincial deficit levels and jurisdictions, now is not the time for even modest levels. The federal government should collect enough tax revenue to spend on necessary projects.
I really hope New Democratic Leader Tom Mulcair supports the Trans-Pacific Partnership. To not participate in this deal is to throw most poor Canadians under the bus. Also, if Canada wants to be a provincial backwater, saying no to 40 per cent of the world's trade will do it.
I hope Conservative Leader Stephen Harper rethinks all his boutique tax cuts that help those who keep receipts and good records. This makes the tax system too complicated for no good purpose.
Christopher Ragan: Let me disagree here, strongly, with Evie. I think we should all hope that political promises are kept, and that people mean to keep them when they make them. If they don't, and if they only intend to keep some subset of the promises they make, then how are we to judge their statements and platforms and … their promises?
This is not to say that I like all of each politician's promises – I don't. But I think we need to have politicians who are prepared to make them, and ideally to think very carefully before they make them because they believe that promises made must also be kept. This is a very effective way for politicians to differentiate themselves from each other – and we need this in order to know just what it is we're voting for.
On the day after the election, only one party will be in power, and thus only one party leader will be in a position to keep his or her promises. So we should all want to vote for the person whose promises seem to us to be the best – either for us personally or for the country, depending on our approach to voting.
Jack Mintz: I agree that politicians should try to keep their election promises unless circumstances change, making their promises impossible to implement. In the past, we have had politicians promising policies like "no fuel taxes" or "no wage and price controls" or "get rid of the GST," only to renege later.
It's for this reason that voters should focus on the policy ideas proposed during an election, since they could be really bad ideas, undeserving of implementation. Last year's Greek election brought in an anti-austerity leader making promises that were impossible to keep, since he did not have the levers to adopt them. In the end, Prime Minister Alexis Tsipras has implemented even stronger austerity policies, since he wouldn't have gotten billions from his lenders.
Unfortunately, voters often don't pay enough attention to policy, choosing to focus more on a leader's style. To their regret, they discover that some really bad ideas, unsuitable for the times, get implemented in the name of carrying out promises. Or a government might sensibly drop the idea, creating mistrust. Sometimes better the latter than the former if the ideas are particularly harmful. We're still stuck with supply management, aren't we?
EA: I agree with Chris – my opening salvo was much too glib. But I also agree with Jack that promises shouldn't be a noose around a leader's head.
It might be that style is actually a "signal" to voters, who then use it to avoid the very difficult and sometimes impossible work of understanding policy implications. Voters are more likely to forgive a broken promise if they trust the person has good intentions and intelligence – their style. However, style is built over years and promise-keeping is one of the few ways an electorate can gain trust in that person, as Chris so eloquently pointed out. Fortunately, this long election created lots of opportunities for those who want to vet policies to do so.
(I have to say I was slightly ashamed of my cynicism after Chris's response. I also have to say that of all the bad promises made in this election campaign, Mr. Mulcair's assertion that he will not sign the TPP is the biggest noose. And yes, Jack, supply management is not going anywhere soon.)
JM: As this election wraps up, we can look back and ask what economic issues will be paramount for a new government, especially those not dealt with in this election. Canada's painstakingly slow economic growth will continue to be challenged by international factors for which we have no true answers to make Canada stand out from the rest.
Health care will remain much the same, as little is proposed to deal with a system that fails to innovate – Canada lags other countries in integration of services and patient-centred care. New money will be spent on public infrastructure, some unneeded except to garner votes. We also have few ideas to ensure approval of private infrastructure as people oppose windmills, transmission lines, pipelines, forest and mining projects for various reasons. New technologies will be adapted by business to reduce costs that will put pressure on unskilled workers unless they upgrade their skills.
Instead, this campaign focused on redistributive taxation, running deficits, new social programs and tax relief focused on the usual suspects, such as families, seniors, manufacturing and small business. Canadians may be yearning for change, but the solutions seemed to be derived from yesteryear, when the only ideas seemed to expand government, run deficits or increase taxes on the rich and corporations so long as the public doesn't have to believe they have to pay for the benefits.
Missing from this election were new ideas to achieve growth, innovative management of public programs and a new approach to regulation to move private infrastructure projects forward and deal with a host of issues varying from carbon pricing to labour-market flexibility. Perhaps we can get to something like the Macdonald Commission to spurn some new ideas for the future for a comprehensive economic agenda to spur growth advantageous for the whole population. Certainly, something is needed to get our economic agenda back on track, at least in my view.
CR: As usual, there is a lot in Jack's comments that demands some attention.
I cannot supply adequate responses on all his points. But the gist of his comment – that there are many big and difficult issues that were not addressed during this election campaign – is surely correct.
I think he's probably right that it is time for another Macdonald-like royal commission to examine how to improve Canada's long-run economic prospects. Such a commission could be charged to address many issues, including tax reform to encourage innovation and economic growth, pricing policies to improve environmental and economic performance together, policies to enhance competition in some of our highly regulated sectors, policy reforms to improve labour-market flexibility, and whether and to what extent government policies are needed to address rising income inequality.
These are tough issues and require smart people to think carefully in a practical and non-partisan way. I recommend we call it the Mintz Commission!
EA: The work of Angus Deaton (this year's Nobel Prize winner for economics) highlights the counterintuitive solutions to doing good for poor countries. The NDP platform wants to increase aid. Most of us would think more aid is a good thing, but in reality it can end up in the hands of oppressive leaders doing really bad things. It is much better for poor countries if we freely trade with them. Then the standard of living gets into the hands of the people who buy and sell, bypassing government officials – except for a few customs officers.
CR: Ah, this gets us into great territory for a debate. I am by no means an expert on foreign aid or on the many complex details of economic development, but I think I have now read enough to know that it is very complex. I don't think the "no foreign aid is best" position is likely to be correct, and nor do I think the correct position is likely to be "more foreign aid is all that is needed."
Three writers who span the debate beautifully are Jeffrey Sachs, Bill Easterly and Paul Collier. In The End of Poverty, Mr. Sachs argues that the main problem with our past experience with foreign aid is that we simply haven't done enough. "Big Aid," in his view, would encourage far better development for poor countries. Mr. Easterly, in The White Man's Burden, is much more skeptical about official foreign aid's power to do good. His view is that while some is quite useful, genuine and sustained development must come about organically, after developing countries build solid domestic political and economic institutions. Mr. Collier, who wrote The Bottom Billion, is somewhere in the middle. He is more open to the potential benefits of foreign aid, but less sanguine than Mr. Sachs unless many important details about the country are fully understood, including how geographic considerations can explain how policies that work in one country may not work in another.
I encourage anyone interested in learning more about development and foreign aid to read these three books.
The Globe and Mail: This was the last of five weekly discussions (yes, it was a long campaign!) among our trio. Thank you, economists, for your time and insights.
Dr. Jack M. Mintz is President's Fellow of the School of Public Policy at the University of Calgary. He serves on the boards of Imperial Oil Ltd. and Morneau Shepell, and is chairman and vice-president of the Social Sciences and Humanities Research Council of Canada.Eveline Adomait is an economics professor at the University of Guelph, a former TEDx speaker and author of Cocktail Party Economics: The Big Ideas and Scintillating Small Talk about Markets and Dinner Party Economics: The Big Ideas and Intense Conversations about the Economy.
Christopher Ragan is an associate professor of economics at McGill University, research fellow at the C.D. Howe Institute and author of Economics, the most widely used introductory economics textbook in Canada.