Saturday, November 29, 2008

A coalition if necessary but not necessarily a coalition

The signs of a deep world wide recession are all there. The US is already in their recession and many of the European states are showing similar signs. Even the Chinese have seen their economic growth slip from 11% to 7%, which in relative terms is a recession for them.

The residual strength of the oil patch has so far kept Canada out of a general country wide recession but the slip in oil prices and the increased difficulty in acquiring credit will bring the recession to Western Canada, resulting in Canada joining the rest of the world.

History has conclusively proven that governments cannot prevent recessions. They cannot reduce their length and they cannot do anything that provides more than just fleeting relief from their effects. History has also conclusively proven that recessions kill governments. No matter what governments do it is never effective and the inevitable failure of their actions just causes them damage that is fatal to their chances of retaining power.

The recession that is descending on Canada at this moment will be no different. It will kill whichever government is in power over the next 12-18 months. No amount of stimulus provided by that government will change that. Recessions have a life cycle and the only thing we can do, as citizens, his hang on and try to survive to the other side. Unfortunately, we are at the beginning of that life cycle so we have a long way to go before things will get better.

All political parties can do is hope that they do not have to govern during a recession. The sweet spot for political parties is to watch their chief opponent self-destruct during one and then win power just as the recession is ending. Then they can take credit for the recovery. Jean Chretien managed to get re-elected twice doing just that.

That is why I urge caution from Liberals in taking power by coalition. Do not believe your own hype. Jean Chretien and Paul Martin did not pull Canada out of a recession in the 1990s. It was already over when they took power. All they did was exploit the recovery to the advantage of Canada and the Liberal Party.

Circumstances are much different now. In a year or so whichever political party that is in government will be down substantially in the polls. That situation will be irreversible as the vicseral fear Canadians will feel as their jobs, pensions, and wealth disappear will turn into anger at the government that has failed to prevent it. If it is all the same to you I would prefer to see the Conservatives in that situation than the Liberals. If it were the Liberals they could potentially suffer the same fate as the PC Party of Canada in 1993 considering their already weakened state. And if you think I might be overstating that I would remind you that no one expected the virtual destruction of that party in 1993. Even in the days leading up to election day in 1993 commentators and pundits were saying the Conservatives would lose but retain Official Opposition status.

The Liberals should keep the idea of a coalition on the table and they should be serious about forming one if the Conservatives force their hand. However, they should be working over the next week to prevent it. I would suggest they put out feelers to the Conservatives to gain concessions from them in the economic update. The consession they should demand are early investments in infrastructure. The money is already there so just bring it forward. Of course, that infusion of cash in the economy will barely make a dent in the recession but infrastructure renewal is long overdue and squeezing this concession from the Conservatives is a way to finally begin that process while allowing the Liberals to claim victory. And I might add leaving the Conservatives on the hook for wearing the recession.

To those Liberals giddy with the idea of taking power in the coming weeks and to those Liberals who would think my suggestion would be a sign of weakness stop thinking in terms of days or weeks and begin thinking in terms of months. By this time next year the events of this week and next will be wiped out from the collective memory, washed away in the flood of bad economic news that will be flowing over the planet at that time.


Blogger MilitantLiberal said...

You sound as desperate to stop this coalition as some of the blogging tories. I suspect you are one of those Liberals who would vote Conservative before you would vote NDP. You guys scare me most of all. You are the only ones who can ruin this awesome development.

November 29, 2008 11:34 AM  
Blogger ottlib said...

Actually MilLib I would vote Green before I would vote for either the Conservatives or the NDP.

What terrifies me about folks like you is you are so drunk with the prospect of taking power that you are not looking at what to do or what will happen after that "awesome development" takes place.

You seem to believe that the Liberals will take power and all will be well. That is not going to happen.

Stop believing your own hype. The Liberals cannot work economic miracles. They will be as powerless to prevent the coming recession as the Conservatives and they will be powerless to prevent the fatal damage to them that will result from governing during a recession.

The Liberals are in the position to make demands of the Conservatives for some economic stimulus, take credit for the fleeting and transient benefit it will have on the economy and then watch as the Conservatives struggle to deal with the subsequent crushing of those benefits by the economic forces descending upon us.

That will result in a Liberal majority government in about 12-18 months.

Or they can take power now, with a weak and unstable coalition, flounder desperately during this recession to find solutions to problems that cannot be solved and then watch the Conservatives win a majority government in 12-18 months.

Take your pick MilLib. It should be quite obvious what choice I have chosen.

November 29, 2008 11:53 AM  
Blogger Aaron said...


I think that ottlib is sincere in his beliefs (as I think you are too) But in order to have a coalition you are going to have to bring people on board by answering their arguments.

Ottlib, the greatest dillemma I see is that the oportunity to replace Harper is now. In six months from now I would be uncomfortable arguing that the Governor-General is obliged to consider a viable alternative government with a signed agreement on a time frame of support(and obliged to say yes).

Harper has given every signal possible that he intends to rule ideologically and with brutality towards the opposition parties. The per-vote-public-funding issue may be off the table now but it will be back at the first moment that Harper has the upper hand, i.e. in six months or more when it will not be possible to take him down without an election. Coming out of a leadership convention broke and with all the sore feelings that entails, I suspect the effects of the funding cut would exacerbate this and set in motion a whole set of other problems with fundamental organization, a tipping point so to speak that would keep the Liberals from offering a viable alternative for more than one election cycle.

The fiscal update also was just awful. And, while I respect your approach on this from a politcal angle of what's good for the party, I think that it conflicts with the interests of the country. The Harper government has shown no engagement for sound fiscal policy. In fact, I believe that they will worsen the recessionary forces to a point that we will ultimately regret not having acted at this time. This is an unrepentent neo-con we're talking about here. I think that they will cause damage (for example to the manufacturing industry) that cannot be repaired.

November 29, 2008 12:32 PM  
Blogger MilitantLiberal said...

I take a more optimistic view about what the govt can do during a recession. I suspect you are mostly right about a govt's inability to stop a world wide recession, however it certainly can make a difference in the impact that recession has. Infrastructure spending, unemployment benefits etc. I don't think a coalition govt would necessarily have to wear the recession. I will give you that the entire exercise is fraught with danger.Even if it did only last 18 months it sure would make politics exciting again though no? I would also suggest that Harper won't go and tough it out in opposition again waiting for the implosion you say is coming.

November 29, 2008 12:49 PM  
Blogger MilitantLiberal said...

Aaron you smooth talker. Of course you are right. I regretted the undiplomatic tone of my first comment almost immediately. OttLib I love your stuff and I read it all the time. I am just so excited about the thought of this coalition and have been calling for it for so long that I really do fear any opposition that may derail it.

November 29, 2008 1:05 PM  

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