The Breakdown of the Conservative Consensus

For the past 30 years or so the prevailing economic consensus amongst the political classes of the Western world, particularly the English speaking world, has been a conservative one.

It all began around the late 1970's when the then prevailing liberal consensus, which had lasted since the latter years of the Great Depression, began to break down.  It came into full force in the 1980's with the elections of Ronald Reagan and Margaret Thatcher.  In Canada it came into full force with the election of Brian Mulroney and the findings of the MacDonald Commission on the Canadian economy, which were released soon after his election.

The conservative consensus was:

• The uncritical belief in free trade.
• Government regulation was a bad thing.
• Taxes were too high and needed to be reduced.
• Government spending was too high and needed to be reduced.
• Social programs were ineffective and reduced economic activity.
• Deficit financing was bad and should be eliminated.  (This one was mainly given lip service.)
• Unions and organized labour was too powerful leading to a reduction in competitiveness and economic activity.  That power had to be curtailed.

It took more than a decade for this consensus to solidify.  Politicians, conservative academics and the media began a concerted effort to convince ordinary people that they would be much better off following the conservative consensus.  They claimed that following it would lead to greater economic success for everyone and not following it would lead to more of the economic upheaval that characterized much of the 1970's.  They were successful.  By the end of the 1980's the conservative consensus was pretty well set and any government, even progressive governments, that proposed going back to the liberal economic policies of the 1970's did not enjoy lasting success.

For that first decade conservatives were more circumspect about pushing their agenda too hard.  They had to bring people along slowly and they still had to deal with the Soviet Union appearing to be a viable alternative to capitalism.

That all changed in the 1990's.  The consensus was set and the Soviet Union collapsed leaving capitalism as the only game in town.  That lead to the proponents of the Conservative consensus to begin pushing the boundaries of their ideology.  That lead to the election of the first neo-conservatives, including our very own Michael Harris, who pushed deep tax cuts and deep government spending cuts.  They sold this by stating that the tax cuts would increase economic activity enough to make the tax cuts revenue neutral.  Their sell job worked although their claims were proven to be completely false.  

Eventually, the neo-conservatives began to ignore the ordinary person claiming that tax cuts for the wealthy and business along with the government cuts was the way to go.  Again, for a time their sell job worked.

However, under the surface things were not going very well for ordinary people in the West.  Free trade lead to globalization, which lead to massive job losses.  Reductions in government spending lead to their inability to assist those who lost their jobs in a meaningful way.  Reduction in taxes to the wealthy and the neutering of organized labour has lead to unprecedented inequality in the West.

This has been going on for two decades and it is finally coming to a head.  Brexit and the election of Donald Trump are the results of this situation.  Both happened because "populist" politicians managed to tap into the anger and and deep uncertainty that living under more than 30 years of the conservative consensus has created.  Of course, those politicians are just pushing more to the same while stoking hatred of the "other" to "explain" the plight being experienced by these ordinary people.

That will only work for so long.  You can only promise to fix a problem and then do the exact opposite of fixing it for so long before people begin to direct their anger at you.  Inevitably it will lead to change, not just of government, but of a new way of governing.

We may already be seeing the beginning of the breakdown of the conservative consensus.  

In 2016, Bernie Sanders was a credible candidate for the President of the United States despite the fact he admitted he was a socialist, a democratic socialist to be certain but still a socialist.  If he would have attempted to run as a socialist in 2008 he would have been creamed.  

Here in Canada, in 2015, our very own Liberal government ran on a political platform that included running deficits, while their two main opponents ran on promises of balanced budgets, and they won handily.  That is significant.  Governments routinely broke their promises of balanced budgets but they at least promised it.  No government in recent memory has realized any success by promising to run deficits.  The government also ran on introducing a carbon tax, a new tax.  Again that has been unheard of for decades but they were still successful.  As well, both of these promises have been kept and the most probable outcome of the next election is still a Liberal majority.  Two policies that go against the prevailing economic orthodoxy and they are still realizing success.

In 2018, more and more candidates running in the mid-term elections in the United States are versions of Bernie Sanders.  Despite this the consensus amongst the political classes in the US is they will be successful in at least retaking the House of Representatives, perhaps retaking the Senate and taking their fair share of governors' mansions in the States.  We will have to wait and see if that really comes to pass.

There is a change in the economic consensus taking place.  We are seeing the beginning of the end of the conservative consensus, which will be replaced by a progressive consensus in due time.  It is early yet and the proponents of the conservative consensus may be able to mount a rear guard action effective enough to slow down the transition but that is all they are going to be able to do, slow it down.  Their lack of effective policies to actually help ordinary people, to mitigate the impact of technology on the nature of work and to mitigate the impacts of climate change will lead to the conservative consensus being cast aside, probably within the next decade.

The New NAFTA

I have had a chance to review the new USMCA agreement and my greatest response is "Is that it?"  Is that all we got from over a year of negotiations?

I realize this all started because of the ego and stupidity of the current occupant of the White House so I guess it is probably a bit of a blessing that things have not been changed drastically but I am still kind of surprised at just how much it has not been changed.

Then again, since we were dealing with a bloviating windbag it is impressive that the Canadian negotiating team did not have to make significant and potentially detrimental concessions in order to secure the new agreement.  

As I stated here I am not a true believer in free trade agreements in general and the NAFTA in particular.  It has done some good but it has also done alot of bad for the Canadian economy since its implementation.

All that being said there are a couple of changes in the new agreement that I believe make it somewhat better than the original.  The first is the virtual elimination of Chapter 11.  The idea that a company can no longer sue a government for taking actions to protect the environment, food and water supply and labour standards is an improvement.  The second is the change in the energy provisions that used to force Canada to sell its energy resources to the United States even during shortages, potentially leaving Canada short of these resources for its own use.  Brian Mulroney essentially sold Canada out on that provision in the original Canada/US FTA and it is significant that when the US asked Mexico to do the same thing in order to join NAFTA the Mexicans told the Americans to get bent (diplomatically of course).  This provision was one reason for the discount that Canadian firms had to sell their energy products to American firms so maybe the elimination of this provision will help improve that situation in the future.

The media and the other political parties are being their usual obtuse selves.  The other parties because the agreement is a win for the government, albeit a limited one, and they cannot have that.  They have to find some fault with it so they have focused on dairy.  It is true that the dairy industry has to allow more access to its markets but the amount is not that great.  It can easily be absorbed by the industry on its own and with the promised compensation the government has indicated they will give them no one in the dairy industry is going to lose their shirt.

The Globe and Mail had another angle yesterday in their Saturday paper editorial.  There is a provision of the new agreement that states that none of the signatories can enter into a free trade agreement with another country without approval from the other signatories.  This provision is aimed directly China.  The Globe and Mail seems to believe that this is a somewhat unreasonable infringement of Canadian sovereignty, which is silly.  Free trade agreements by their very nature are huge infringements on the sovereignty of the signatories and they have always been that way.  There is a reason why the Liberals ran a political advertizement showing a guy erasing the border between Canada and the US during the Free Trade election of 1988.  Everybody knew that the new FTA would reduce the sovereignty of both Canada and the US.  That did not seem to bother the Globe and Mail in 1988 or since.  Now they seemed to be bothered by this one provision.  Is this an indication that the Globe and Mail has a limit to how much an agreement can impact Canadian sovereignty or is this just the Globe and Mail quibbling because they believe they have to find something to criticise the government with in this treaty?  My guess is it is the latter.

The new USMCA is a slight improvement on the old NAFTA but it is still a flawed agreement like the NAFTA.  I doubt its will change how the three partners deal with each other in a significant fashion which kind of makes the whole past 13 months kind of pointless.  The government was forced into this situation by a sociopath so I guess we can be satisfied that the agreement that was finally signed should not do significant harm to the Canadian economy and society.

Populism is here to stay

So says none other than Stephen Harper in an op-ed piece in yesterday's Globe and Mail.

I do not totally disagree with this assertion but I do not believe that it will have as much of an impact on our political system as some believe.  Many believe the recent success of some populist politicians in Canada is a harbinger of their takeover of the political system.  This belief is based on a very superficial analyses of these successes and if you look a little deeper into them you will find that maybe other factors than just populism lead to their success.

The other assumption of Mr. Harper is he seems to believe that right-wing populism is the only kind around.  The problem with that assertion is right-wing populist politicians are just spouting more of the same conservative dogma that we have been seeing from the Canadian political establishment for the last 30 or so years.  They are just being more in-your-face about it.  Those policies have failed to improve the lives of Canadians.  In fact, they have made them worse off and the political establishment knows this.  That is why they are doubling down on them while attempting to distract people with debates about niqabs, immigrants, asylum seekers and terrorists.  The time of the conservative consensus in Canada is coming to a close and they know it and are terrified by that fact.

It is only a matter to time before some left-wing populist begins to take advantage of this situation.  It may take another few years but the swing of the pendulum back to the left will begin in a relatively short period of time.

So Mr. Harper may be correct but it will probably not play out as he currently assumes.

Fahrenheit 11/9

My wife and I went to see the latest Michael Moore film last night.  It was what I expected, being typical Michael Moore fare.  I liked the film.  It was entertaining and in many places it was enlightening.  However, there were a couple places where I thought he missed the mark somewhat.

In general he did a very good job of describing an America where those that would govern have completely lost touch with those that they would govern.  This is not a situation unique to the United States.  All of the Western countries are going through a period where the ruling elites have almost completely lost touch with their citizens.  The problem is made worse in the US, however, by the prevelence of money in their political system.  Ms. Clinton raised and spent more money on her failed bid to win the US Presidency than the Canadian federal government and all of the Federal Parties spent on the 2015 election combined.  And by a huge margin I would add.  Power corrupts but money greases the wheels for that corruption and that is what is happening in the United States right now.  The segment in the movie describing the Flint, Michigan water crisis and how it came about is a great demonstration of that.

There were a couple of arguments in the film where I believe he is off base.  He spent a fair amount of the film describing how the Democratic Party establishment was and is undermining left wing candidates in the Party, from Bernie Sanders to many candidates currently running as Democrats in the mid-term elections.  He puts this effort down to the fact that the Democratic Party takes money from many of the same donors as the Republican Party.  Although there is some truth to that it is probably not the whole picture.  The Tea Party movement in the United States is an extreme conservative movement that rose up around two decades ago.  In that time it took over the Republican Party and Donald Trump is its progeny.  I am no fan of Mr. Trump for many reasons but one big one is the historian in me knows that extremism breeds extremism and history has demonstrated that nothing good comes from extremists battling each other.  It invariably leads to hardship, injustice and authoritarianism.  And it sometimes leads to war.  The current crop of very left-leaning candidates in the Democratic Party could be the beginnings of left-wing "Tea Party" movement and as with the real Tea Party movement it will continue moving farther to the extreme left, which will inevitably lead to a left-wing version of Donald Trump.  Preventing that from happening is in the best interests of society so any attempt to impede the movement towards extremism is a necessity.  The Republican Party completely failed in doing that and the United States is living with the consequences.  If the Democratic Party fails to keep a lid on its extremists then the situation in the US will become much worse.

The second argument where he was off base was to compare the situation in the US with with the fall of the Weimer Republic, to Adolf Hitler, in the 1930s.  Mr. Moore's comparison, in the film, is compelling but it was superficial and somewhat misleading.  To compare the two situations is to compare apples to elephants.  The Weimer Republic came into existance in Germany in 1919, after centuries of Germany being lead by autocrats.  There was no democratic tradition in Germany before 1919.  The democratic institutions of the Weimer Republic were weak and ineffective because of that.  So when Adolf Hitler managed to win enough votes to become Chancellor (Prime Minister) of Germany just 14 years after the establishment of the Republic he had no problem subverting the new democracy.  The United States has more than two centuries of democratic tradition to fall back on.  Its democratic institutions are effective and robust.  If any US politician had designs to do what Hitler did in Germany he would find it impossible to pull off.  The price of freedom and democracy is eternal vigilence and Michael Moore effectively reminds us of this fact but he let himself go too far by inferring that the US was on the verge of going the way of Germany of the 1930s.

Other than those two quibbles I would say Fahrenheit 11/9 is a good film and I would highly recommend going to see it.