Monday Afternoon Links

Assorted content for your holiday reading.

- Murray Dobbin highlights the Harper Cons' regular support for the irrational, then points out the policy focus from the NDP which can best serve to point out the difference between the Cons' world and the Canada most voters will want to live in:

So if we can expect even more irrationality in the next four years, where might Harper be vulnerable to a rejuvenated civil society and a resurgent NDP Opposition? One area is the economy. where Harper will continue to try to maintain his edge on other parties. He is very vulnerable here, as the dollar continues to rise, the U.S. economy declines and the housing bubble eventually bursts.

The appeal to the irrational will not work if the economy begins to tank. This is one area where Opposition forces need to focus and not get distracted by Harper's efforts to keep his base happy.

The same applies to the jet fighter issue. If the economy begins to decline (and with it revenues), as many expect, this outrageous expenditure will be more and more vulnerable and it must be a focus of opposition, both the NDP and civil society. The government is right now looking at billions of dollars in spending cuts. Asking Canadians whether it should come from Medicare or jet fighters will be a potent political question.
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The last two major issues for which even Harper's Christian base demands rational policy are Medicare and economic security for seniors. Harper knows that seniors vote in much higher percentages than the general population and the NDP put the issue squarely on the agenda before the election. It needs to stay there -- both because it is good policy, and because it will make Harper's budget slashing more difficult.

Medicare will be Harper's biggest test. He hates it and would dearly love to get rid of it altogether, but if he does not tread carefully and slowly, it could be his downfall.

- J.J. McCullough raises some good points as to why it's somewhat misleading to talk about being able to unite multiple parties as representing a united left in Canada. But I'd think it's worth drawing a distinction between how Canadian politics have operated to date, and how they figure to play out in the future - and with the most powerful federal party being one that's working much harder on drawing ideological distinctions than previous governments have normally done, I wouldn't think it's out of the question that Canadians could have their choices far better defined by 2015 than they have been in the past.

- Erin follows up on his post about the difference between wage- and profit-driven economies with a prescription for Canada:

In large, relatively-closed economies (the Eurozone and United States), it would probably be sufficient to raise wages and redistribute income, allowing higher aggregate demand to then boost business investment.

These same pro-labour policies would be desirable in Canada, but given import leakages, the additional domestic demand may well be insufficient to spur investment. Therefore, Canadian progressives also need more direct policies to spur investment, such as public capital spending (whether on infrastructure or through Crown corporations) and targeted incentives for private capital spending.

- And on a related note, the wage/profit distinction leads to a point from Paul Krugman which seems to me to have wider application than merely an assessment of which measure of inflation to adopt for the purposes of setting monetary policy:

I’ve suspected that what we’re really seeing is the inadequacy of even core inflation as a way to purge transitory effects of volatile prices: the measure takes out purchases of food and energy, but it doesn’t take out indirect effects of raw material prices on costs. New research from Goldman Sachs (no link) seems to support that view: it finds that core inflation is getting a temporary bump from the prices of imported raw materials, and will probably subside if the commodity surge is in fact over.

This in turn suggests that policy should really be based on some kind of “supercore” inflation. Should this simply be wage growth? Adam Posen at the Bank of England has certainly gone well down this route, arguing that the relatively high rate of even core inflation in the UK reflects one-off factors and that stagnant wages show that there are few risks. And I totally agree with Posen about the UK policy issues.

Yet there are problems with a wage target — mainly, you don’t want to base policy on the notion that wage gains are always a bad thing.