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Spendthrift U.S. consumers caused global recession: Harper
David Akin, Canwest News Service
Published: Thursday, March 12, 2009
OTTAWA - Prime Minister Stephen Harper said the global recession was caused by American consumers and investors who believed in the "unconservative" idea that they could borrow without consequences.
In a speech Thursday night to a group of supporters attending a fundraising dinner for a conservative think-tank, Harper delivered a frank diagnosis of the world's economic problems, took a swipe at U.S. President Barack Obama's stimulus plan, and suggested the federal courts and bureaucracy was filled with Liberals who did not share his Conservative government's agenda.
"Imagine how many Liberal insiders and ideologues would now be in the Senate, the courts and countless other federal institutions and agencies - I should say, how many more," Harper said to the laughter of the mostly conservative crowd of about 300.
"Imagine what a carbon tax would be doing to our economy in the middle of this global recession."
The group had gathered to kick off a three-day conference organized by the Manning Institute for Democracy, a think-tank headed by Preston Manning, the Reform Party founder and one of Harper's first political bosses.
Manning set up the group to bring together Canadian small-c conservatives, some of whom have criticized the Harper government for an economic stimulus plan that, to their eyes, is too liberal.
But in his speech, Harper gave a passionate defence of conservatism in what has become an era of big-spending, big government.
"We are in a global recession principally - and we have to face this - because a lot of people on Wall Street, because of a lot of people in the private sector more generally - homeowners or consumers - pushed or bought into a very unconservative idea: That they could live beyond their means," Harper said.
"Regulators may have failed to prevent it but, in the end, it was a failure of the private sector to live according to the values we as conservatives know to be true."
But Harper suggested that volatile mix of cheap and easy-to-get credit, along with consumers and investors who failed to consider their long-term financial health, did not infect Canada in the same way.
"Thankfully, Canadians, among few nations in the Western world, did not embrace this idea so recklessly," Harper said.
"Our banks upheld prudent lending standards. Our regulators maintained sufficient but not excessive oversight. Our consumers exercised more restraint and our government made affordable tax reductions, tax reductions that did not drive us into a long-term deficit."
Some conservatives, though, say Harper should have lowered taxes and run a deficit-free budget as the best cure for the economy.
Conservatives lit up the blogosphere this week with complaints that Harper, in speeches last week, quoted liberal economist John Maynard Keynes.
Indeed, Harper himself used to be a harsh critic of Keynes's central idea, which was that governments should go into deficit in bad times and run surpluses in good times to keep an economy on an even keel.
In his 1991 thesis to earn a master's degree in economics, Harper argued that "Keynesian fiscal policy is subject to the influence of political parameters that lessen its effectiveness as a stabilization tool."
In other words, Harper argued that Keynes was wrong.
But beginning last fall, Harper changed his mind in response to the rapidity and depth of the global recession and, as a result, brought in a budget with one of the biggest deficits in decades.
"We are, as Conservatives, in response to massive failure in the marketplace, are using the public role of government to act. When billions, maybe trillions of private capital, is sitting on the sidelines because of fear, pessimism and panic, the government must step in to restore confidence, protect citizens and to stimulate the economy," Harper said.
Harper also took several shots at his political opponents, what he called "that toxic coalition brew of Liberals, socialists and separatists. You know, I always wished they would do that and (former Liberal leader Stephane) Dion finally did it."
He said his government's spending decisions are being made for the long-term benefit of the country and that any deficits will be temporary.
"Don't let anybody tell you (the opposition) would have done the same things," Harper said. "They would not have brought in any tax reductions at all."
And Harper seemed to criticize Obama's fiscal stimulus plan, which raises taxes on those earning more than $250,000 a year. He suggested Canada's Liberals would have done the same.
"(The opposition) didn't tell you the taxes they would raise - and we're seeing that in the States now. Their spending plans would have been permanent, not temporary, that spending would have gone mainly to left-wing special interest groups . . . not hard-working Canadian families and communities."
Nonetheless, Harper conceded that, as a conservative, he believes governments have an important and central role.
"Conservatives don't believe big government - the welfare state - is the solution to all problems. We didn't believe it before the recession. We're not about to start believing it now. But neither can conservatives believe today that the marketplace - that which I call Wall Street - is the solution to all problems."
Harper told the group that his version of conservatism is summed up "in three Fs: freedom, family and faith."
He said individual freedom is vital but it must be tempered by family and faith.
In Harper's mind, faith has less to do with a particular religion and more to do with morals, he said.
"Faith in all its forms teaches . . . that there is a right and wrong beyond mere opinion or desire. Most importantly, it teaches us that freedom is not an end in itself, that how freedom is exercised matters as much as freedom itself."
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