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Harper Economics: The worst of all possible worlds

Prime Minister Stephen Harper

In a perceptive article entitled New research council mandate shows Conservative's hostility to free market, National Post columnist Andrew Coyne takes aim at the government's recent announcement of plans to shift the focus of the National Research Council from fundamental scientific research to an industry-orientated one. Coyne uses the opportunity to examine the underpinnings of what passes for economic thinking under the Harper Conservatives, zeroing in on a fundamental confusion of the Harperites -- the scrambled, dog's breakfast of misapprehensions of what public and private sectors are suited to doing.

Businesses operating under the rubric of market capitalism are exceedingly good at innovating, and driving processes towards profitable outcomes. Indeed zombie capitalist structures such as corporations (phantom "persons" under the law) have this as their sole raison d'être, and they can move literal and figurative mountains to achieve that objective. However, they are remarkably poor at anything outside of those narrow confines. Moreover, they will level anything that stands in the way their profit-making agenda. Unchecked, this tendency leads rapidly to the worst excesses of capitalism, examples of which could be adduced here by the thousands, if not millions.

The neo-liberal/libertarian response to the morass that inevitably results is:

1) To either not care in the least (the wealthy being able to bubble themselves up in gated communities and lifestyles); or

2) To conjure up Randian notions of "objective self interest" in which supermen (and women) with omniscient knowledge miraculously buffer such excesses with far-sighted wisdom (see: What's wrong with Rand: Objection to Ojectivism).

Andrew CoyneThe Marxist-Leninist response transformed into state capitalism, which sucked such capitalist excesses into the mechanism of the state itself, managing them with maximal inefficiency, producing minimal results, and displaying the same levels of corruption and cronyism as ever before.

The more intelligent approach is to clearly distinguish between public and private sectors allowing each to do what they are able to do best, and keeping the latter on a strict leash lead by the former. Which brings us back to Coyne who observes:

"Governments … should do what markets cannot. They should not try to do what markets can. This is a matter of scarce resources, if nothing else: the more government spends in areas where it is not needed, the less it will have left to spend in areas where it is essential. As a maxim, government should only do what only government can do."

The National Research Council (NRC) has been a leading scientific and engineering research institution in Canada for almost a century. It is nationally and internationally renowned for its achievements in fields as diverse as astrophysics, molecular sciences, nanotechnology, biotechnology, measurement standards, marine sciences, biodiagnostics, nutrisciences, and a suite of engineering disciplines. While it's important to note that the mandate of the NRC has varied considerably since it was founded in 1916 -- some of it's activities have been spun off into separate agencies, and in recent decades it has embraced many engineering initiatives and projects which have applied applications -- it has also been an important pillar of pure scientific research in Canada. These are programs in basic science that may have general value to all in terms of understanding our physical, chemical, and biological universe, but frequently may not have specific industrial or commercial applications.

 

This isn't -- as Coyne points out -- the kind of research that industry undertakes, nor should it. Moreover, the proper role of government -- representing, as it ought, the public interest -- is not to subsidize applied industrial or commercial research. If such research is of value, corporations are perfectly capable of undertaking and bankrolling it themselves, rolling such R&D costs into their pricing structures and marketing plans. By compelling the NRC towards commercial ends the government both squanders public funds -- which could constructively be used for other purposes -- and inevitably tilts the supposedly level market playing field with an infusion of public dollars for some enterprises at the expense of others. As Coyne points out, "If a product, firm or industry is really a "winner," it shouldn't need a subsidy. If it isn't, all the more reason it shouldn't get it." This is a fundamental principle of market economics that the Harper Conservatives have repeatedly failed to comprehend. Hence, the endless selective bailouts, subsidies, and tax credits of Harper Economics. If there is a reason why this shouldn't be called "corporate welfare" pure and simple, I certainly can't imagine what it might be.

In an editorial for the Ottawa Citizen entitled, Pure research is the practical approach, David Moscrop writes:

"The new mantra [efficiency, productivity, and shortsightedness] will fit well with a government and a council who have forgotten the scientific and social value of the freedom of creativity, and who through the pursuit of technocratic narrow-mindedness will do a disservice to both Canadians and industry in the long run."

Coyne correctly identifies this muddle-headed approach as an inability to distinguish between "pro-business" and "pro-market." It's clear that this attempt to corrode the public mandate of the NRC as an investigator and purveyor of basic science is fundamentally "anti-market". Coyne demonstrates the folly of this approach and then advocates for a "pro-market" one as the solution:

"It [a 2008 report entitled Compete to Win] ably represented the views of most economists, that the best stimulus to productivity is competition, the more of it the better. Among other things, it advised opening up protected sectors such as telecommunications and transportation to foreign investment."

However, what's missing in Coyne's analysis is an appreciation of the fact that an unfettered market (e.g., opening up protected sectors) ends up serving the public interest incidentally, if at all, and is liable to lead to even more disastrous outcomes than an anti-market approach. In pursuit of unending profits, infatuated by unceasing growth, and left to their own unregulated devices, corporations will inevitably and increasingly encroach upon public space with inevitably and increasingly disastrous consequences.

The Global Financial Crisis of 2008 is a particularly excellent example -- a complex and concatenated series of unregulated, market-driven, financial fiascos that threatened to bring down the global economy. Details could be the subject of an essay in and of themselves, but the salient point is that an unregulated pro-market playing field leads inevitably to such outcomes. Then, in the true spirit of disaster capitalism (à la Naomi Klein), to a subsequent dramatic erosion of democracy and vast transfers of wealth from the working and middle classes to the über-rich as fears of the consequences of collapse overwhelm rational thought. This might sound extreme had we not had such a quintessential recent demonstration of these phenomena.

Returning to Coyne's thesis, he concludes his article by observing that:

"It is simply wrong to refer to the Harper government as "free market" in orientation. Its economic policy is, and has been for some time, heavily interventionist -- perhaps the most interventionist of any government since Trudeau's."

Prime Minister Stephen HarperHowever, under "Harper Economics," we now have the worst of all economic worlds. Not only is it selectively interventionist in the pro-business-anti-market sense highlighted by Coyne, it also actively opposes market regulation and the place of public value on the economic playing field. It has crafted an economic policy that takes the worst elements of public and private sectors, wedding them together in an approach that serves neither and is destined to undermine not only economic, but social and environmental values as well. Harper Economics are a testament to how far astray ideological-fixation, the disregard of facts and evidence, economic illiteracy and innumeracy, climate change denial, and contempt for the basis of social welfare can lead a government.

Christopher Majka is an ecologist, environmentalist, policy analyst, and writer. He is the director of Natural History Resources and Democracy: Vox Populi.

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