Harper’s hopeless housing promises

Over the past ten days, Stephen Harper has introduced three new housing policy promises. However, they won’t help the crisis of affordability. The pattern is familiar: make things worse and prepare to blame others.

  1. First, there’s the promise to allow first-time home buyers with RRSPs to take an extra $10,000 out of their retirement savings for a down-payment. This will likely have only a small effect, but whatever effect it does have will further heat up the housing market by increasing demand here and there. This makes the housing crisis worse. (Bonus negative effect: it eats into retirement savings.)
  2. Second, Harper promised to bring back a home renovation tax credit: people who own homes and spend $1000 to $5000 on renovations will be eligible to get 15% back at tax time. Again this isn’t much (and it’s poor tax policy too), but ultimately it helps drive up property values. This too makes the housing crisis worse.
  3. Finally, Harper says he would gather data on foreign real estate buyers. While there is certainly lots of capital sloshing around the world and some of it is landing in places like Vancouver and Toronto housing, it’s unclear how much of our bubble is due to foreign money and how much of these fears are a xenophobic blame-game. Data will be good, but given how Harper has been blaming all of Canada’s economic woes on external factors, this looks more like an exercise in something similar.

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It’s certain that we are in the midst of a housing unaffordability crisis—that much Harper gets right. His proposed solutions, however, continue in the pattern of the past few decades, a pattern that has created bubbling housing markets that have left many shut out and scrambling. (more…)

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Canada’s new recession and the push for alternatives

The Bank of Canada today cut its benchmark interest rate today to nearly record lows, now just 0.5%. In the face of an oil shock and other weakness, monetary policy is expected to do the heavy lifting of beating an economic funk. Today’s move reflects a poverty of economic policy from the ruling Conservatives and much of the political class.

Harper has been adamant that Canada’s downturn—now very likely a recession, about which his own Finance Minister  remains in denial—is the result of global forces. There’s nothing that can be done to counteract a host of external problems but to button down. The best a government can hope for is to maintain a fabled fiscal discipline.

However, there’s a disjoint between saying that policy couldn’t have been used to avert downturns like this one and screaming bloody murder anytime someone raises the prospect of even mildly activist, redistributive, old-school social democratic economic policy. If current policy is that ineffective, then perhaps it’s high time to try something else? “There’s nothing we could have done” is just a fatalistic cover for political choices.
(more…)

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Canada’s Austerity Consensus

I have a longer piece out in Jacobin today on tracing the roots of today’s austerity consensus in Canada to the 1990s. In a way, it’s me coming to terms with the last twenty years of Canadian political economy.

How exceptional is Prime Minister Stephen Harper and his crop of Canadian conservatives? For not just large- and small-l liberals, but also some leftists, the last decade has been an aberration — particularly compared to the alleged synthesis between responsible government and economic expansion that occurred during the 1990s. Yet while both public and elite consensus has shifted even further to the right since the ’90s, too often Harper and the current Conservatives are portrayed as an anomaly rather than a continuation.

The ultimate irony of the last two decades of austerity may be that Harper’s Conservatives have been able to rest comfortably on their laurels because of previous attacks on working-class power and livelihoods, even temporarily increasing public spending to save a system in crisis.

While the 1980s had laid some of the groundwork in Canada, the Right’s counterrevolution was not as successful as it had been under Ronald Reagan in the US or Margaret Thatcher in the UK. It was up to Canada’s Liberal Party, the centrist, “natural governing party,” to cement it.

PM CHRETIEN AND DEPUTY PM GRAY APPLAUD FINANCE MINISTER MARTIN

In his 1994 budget speech, Paul Martin — then the finance minister, later the prime minister — encapsulated the Liberal message:

It is now time for government to get its fiscal house in order. For years, governments have been promising more than they can deliver, and delivering more than they can afford. That has to end. We are ending it . . . Over the next three years, for every one dollar raised in new revenues we will cut five dollars in government expenditures.

The subsequent austerity drive was one of the most severe in the Global North, and remains the foundation for the Right’s strategy of death by a thousand cuts.

Taking this longer view of the political economy of Canadian austerity — and the nature of Harper’s conservatism — isn’t just crucial to making sense of the present. It provides more stable ground to fight for a less austere future. (more…)

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