September 10, 2009


"We are all Keynesians now." U.S. President Richard Nixon in
1971

Just as there are no atheists in foxholes, there are no
resolute free-marketers during a recession.

Even our Conservative prime minister has temporarily
forsaken his belief that small government is beautiful for
the new religion. Now he is keeping his head down and
spending like there is no tomorrow.

Governments around the world have learned how to apply
Keynesian principles to kick-start economies.

All except the B.C. government, that is. Instead of priming
the B.C. economy through spending, our government is doing
just the opposite.

Kamloops' school trustees understand Keynesian principles.
Ken Christian is livid at the canceling of the facilities
grant and the failure of the B.C. government to fund
infrastructure programs. "Why would you take the one
infrastructure project that actually puts men and women to
work and yank the funding on it? It makes no sense," he
fumed.

While Premier Campbell talks green, his footprints turn
brown. He has cut spending on the Ministry of the
Environment by $32 million and introduced a tax on bicycles,
home renovations and energy-efficient appliances that reduce
household greenhouse-gas emissions. He has removed the
Innovative Clean Energy levy which raises $25 million to
fund clean energy initiatives.

But spending is just one part of the equation says Marjorie
Griffin Cohen, professor at Simon Fraser University and
research association for the Canadian Centre for Policy
Alternatives.

The other part is planning.

Long ago, governments half-heartedly applied the theories of
John Maynard Keynes only as a last resort. Their failed
attempts of restraint had dug the economic hole of the Great
Depression even deeper.

Like most governments today, they had some success in
creating jobs and stimulating the economy. Governments
built roads, bridges, national parks, and other
infrastructure.

However, it wasn't until World War Two that planning was
added to the mix. "What tends to be much less acknowledged
is that the war required much more than an unprecedented
injection of money into the economy. It required planning,
and planning on a scale that had never before seen outside
socialist economies," says Cohen.

Winning the war was the start of a massive social
intervention that now seems unimaginable. This single idea
mobilized massive government intervention to an intensity
that communists had earlier been criticized for: state
control of the manufacturing of tanks, ships and planes;
mobilization of agricultural production geared to feeding
troops.

The effects of state control were not only immediate but
generational; built into the fabric of society. Governments
set up child-care centres so women could go to work in
factories and on farms. Women received equal pay for equal
work. The state set up schools for large-scale training.
Night-time shopping accommodated shift workers.

While government spending is a short term fix, planning
creates a social infrastructure that benefits generations
that follow.

The inertia created by the big idea carried on after the
Second World War with Unemployment Insurance, Public Health
Care, Canada Pension Plan, Old Age Insurance, Social
Assistance, and Minimum Wage. Governments supported higher
education, training programs, housing initiatives. Crown
corporations invested in projects too massive for the
private sector.

Ever since the 1960s governments have lost their way,
sliding into the mediocrity of little ideas such as tax
reduction, cuts to health care, child labour, and punishing
the poor.

B.C. was the first jurisdiction in the industrialized world
to deregulate child labour and allow children as young as 12
to be employed for up to 4 hours on school days.

We need a government of big ideas. Although the Winter
Olympics in B.C. will inspire they fail to pull everyone
into a vision that includes rich and poor, corporations and
workers, left and right.

Keynesian principles provide a counter rhythm to the
cyclical dance of governments and market economies.
Governments pull when markets inevitably collapse and glide
when they are up.

The B.C. government can't even get the basic steps right.
Like a dancer with two right feet, they push while the
economy is falling.

"In many provinces, particularly in Ontario, Alberta, and
British Columbia, economic downturns have been greeted, not
with 'countercyclical' activities but with 'pro-cyclical'
ones. That means when revenues were falling, governments
cut taxes further, and cut stabilizing programs even more."

Even if Premier Campbell suddenly got rhythm, the big ideas
that propel society forward into a socially prosperous
future remain elusive.
 

David Charbonneau is the owner of Trio Technical.
He can be reached at dcharbonneau13@shaw.ca

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