Harper’s Five Disappointing Years

Today is the fifth anniversary of Stephen Harper’s electoral victory that ended 13 years of Liberal party rule. It’s worth recalling that this is a man who, before coming to power,  once described Canada as a, “Northern European welfare state in the worst sense of the term”.  Such a statement offered a glimmer of hope to classical liberals that Harper would set in motion, even if slowly given the constraints posed by a minority government, the roll back of the Canadian state.  Five years on, those hopes, slight as these may have been, have largely been dashed.

Consider Harper’s performance on the most basic measure of the government’s size: public spending as a percentage of GDP.  Since Harper took office, government expenditures are up from $209 billion to an estimated $278 billion in the current budget year, representing a 33% increase. As the economy has not grown anywhere near that pace, the upshot is that government spending as a percentage of GDP is up from 39% in 2006 to about 43% currently.

This reverses a downtrend during the Chretien-Martin years which saw the government’s share in the economy drop from 53% in the early 1990′s to 39% in 2006. As opposed to the previous Liberal governments, Harper’s Conservatives have augmented the size of government.

To be sure, Harper cut the GST. But it would have been preferable for his government to have focused more on lowering marginal tax rates for individuals. That would’ve been far more effective in improving people’s incentives to work, save, and invest. To his credit as well, Harper has proceeded with the cutting of corporate tax rates. Yet he was only continuing what the Chretien-Martin Liberals had previously initiated. Besides,  a more astute and ambitious Prime Minister would have sought the elimination of corporate taxes. After all, these are not paid by corporations but rather by the people who own shares in, or work for, them.

Then there is the Harper government’s most disgraceful move — to wit, its decision to nix BHP Billiton’s proposed takeover of Potash. In one fell swoop, the country reverted back to the dark days of Trudeau when foreign investment was seen as a threat to the national economic interest.  Not only did Harper cravenly betray free market principle to an arguably dubious political calculus, he set a troubling precedent for other politicians of the Brad Wall school of populism to invoke whenever another so-called strategic industry catches the eye of foreign investors.

An observer sympathetic to Harper’s situation might counter that he had to compromise free market principles due to his tenuous hold on power in a minority government. Harper, it might be said, needs to be pragmatic in order to convince the Canadian public to eventually reward him with a majority government. At that point, he will have a freer hand to reduce the influence of government.

So far, however, there is little to show for this strategy. The polls generally indicate that, were an election to be held today, he’d only win another minority government. It is time for Harper to rethink his compromising tack and to more assertively make the case for economic freedom.

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