Tuesday, October 20, 2015

Canada Votes Against Austerity

Canada was clearly tired of austerity budgets, government giveaways to business, and the damage to the economy that both caused. With the ruling party and the largest opposition party both pledging continuing austerity, voters turned out in large numbers to support the Liberal party, which had promised a more economically active government. The two leading parties when the campaign started lost almost half of their seats to the Liberal party.

Canada’s big bet on oil exports didn’t look so smart this year after two years of declines in the global price of oil, and concerns over global warming have dampened enthusiasm for fossil fuels. The shift from simplistic cost-cutting to economic reforms ought to help Canada’s flagging economy recover from the rout in oil. Aside from the obvious problems with the heavy reliance on oil, the larger lesson in the election is about the political risk of austerity budgets. Government austerity, most of the time, is a code word for shifting wealth from the majority of people to a wealthy minority, and that obviously does not provide a formula for broad-based prosperity. If you keep taking things away from taxpayers year after year without delivering results, it doesn’t take too many years before the story gets old.