Thursday Morning Links

This and that for your Thursday.

- Ellen Russell is the latest to highlight how right-wing governments see deficits as a plus in their efforts to minimize the potential for future public action:

It is obvious that Harper is not too upset when it comes to the deficit. Despite his claims to be a fiscal conservative, he cannot give away money fast enough in corporate tax cuts or military spending. Parliament can't even get a straight answer out of him about the price tag of his anti-crime campaign or his F35 fighter jets. I guess that standards of fiscal accountability and transparency only apply when Stephen says they should.

Harper wants to spend freely on his political agenda, while having an excuse for refusing to implement the sorts of government programs that would make a real difference for Canadians who are struggling after the latest economic downturn. Better yet, he wants to portray his refusal to help Canadians in need as a virtue.

- Which leads nicely to Marc Lee's post on what factors actually matter in boosting the economy that Harper claims to be focused on:

So much of “competitiveness” (whatever that means) policy is focused on the supply side (tax cuts, deregulation) to induce additional gains on the margin (forget that investments made under a high degree of uncertainty, and other factors like environmental problems). But are not these microeconomic gains on the margin almost always swamped by macro forces, and in fact, investment is more determined by demand conditions, anyway. That is the one robust conclusion of a review of econometric analyses from the IMF I read a few years ago.

That is, if the economy is booming and demand is strong, business will invest even in the face of tax and regulatory hurdles. But eliminate those taxes and regulations in the midst of a recession, and they will have no meaningful effect because business won’t invest anyway due to weak demand. This is basic stuff, for anyone who’s thought about Keynes I know. But it is a big reason why most economists, business commentators and politicians that focus on supply side gains and neglect demand conditions get it wrong.

- But then, Matthew Yglesias is right to note the effect of corporate solidarity in distorting any debate about budgets (which goes a long way in explaining why useless supply-side policy is always the first to be considered):

This brings to mind the phenomenon that’s sort of the obverse of union decline—the extraordinary level of solidarity manifested by the corporate executive class in the United States of America. There are plenty of individual firms that benefit from this or that public sector spending stream, but essentially all business organizations are solidly united in opposition to essentially all possible ways to enhance government revenue. On financial reform, it’s not merely that the big banks opposed the Dodd-Frank bill, but there was absolutely no counter-lobbying from firms in the non-financial economy in favor of it. And that’s not to say that Dodd-Frank was the greatest thing since sliced brad, but there were no proposals coming out of corporate America for any financial regulatory overhaul of any kind. Yet clearly something went badly awry in 2007-2008. But the business class united behind TARP, then united to oppose any regulatory reforms, and is now united against any return to pre-Bush levels of taxation on rich people.

We’re so accustomed to this kind of thing that we take it for granted, but I don’t think it’s obvious ex ante that business lobbying should be such a simultaneously solidaristic and nihilistic venture. Presumably most American firms would, in fact, benefit from the existence of a sensible and sustainable financial regulatory scheme. But there’s no lobbying activity whatsoever dedicated to creating it.

- Scott Reid points out why it's exceedingly dangerous to let a "people don't care about politics" message take hold - particularly if we're headed into an election in the near future:

But the question remains: Why don't voters care?

Well, first of all, let's not be quite so (condescending). Actually, many people care. But Harper's team argues they're not the right people. Those offended by Harper's machine-like assault on the principles of honest conduct and fair play are already part of the Ottawa scene. Or worse, they're dedicated voters of the other parties.
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It is (the media), in particular, who tell us repeatedly that "no one cares." And all too frequently, there is little, if any, suggestion that part of the media's function is to serve as a check on abuse of authority. Put another way, if Woodward and Bernstein had followed the same method we sometimes witness in Ottawa, they would surely have shrugged off Deep Throat, explaining that no one cares about such a technical, complicated story and that, in any event, Nixon's triumph over McGovern rendered the matter moot.
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People don't give a tinker's damn if Harper is rotten to his political opponents. They care if he's rotten to them. And so far, the Liberals have not convincingly made the case that Harper's contempt of Parliament translates into a threat that resonates personally with the public.

If the Liberals hope to make Harper pay a price for his misbehaviour by forcing an election campaign, they have — to say the least — much labour left ahead. Standing double digits back of the Conservatives, falling behind in Ontario and floating somewhere between 23 and 26 per cent in popular support, it seems a peculiar time to call the question. Indeed, it could well make things worse.

Because, IF Harper were to wage and win an election campaign this spring, you can be certain that he — and others — would be quick to claim that he was right all along and that no one really does care.

- And finally, a special St. Patrick's Day edition of what thwap said.