Columnists

Murray Dobbin
In the shadow of Paul Martin: Can you trust the Liberals?

| June 26, 2015
Photo: Georges Alexandar/Michael Ignatieff/flickr

Here we go again -- the Red Book 3.0, yet another build-up of Liberal election promises just like the ones we've seen before (though I admit the one about changing the voting system might be hard to dodge). The most infamous, of course, was Jean Chretien's, which he held high and waved at every opportunity in the 1993 election. Co-authored by Paul Martin, it promised the world as we would like it: strong communities, enhanced medicare, equality, increased funding for education, an end to child poverty. You could almost hear the violins playing. But what turned out to be the most remarkable thing about the book of promises was the record number that was ultimately broken: all of them.

The only time you can trust the federal Liberal party is when they don't have a majority -- and even with a minority government they have to dragged kicking and screaming to do anything that does not please Bay Street. This fact needs to be repeated over and over again in the next few months leading up to the election as political amnesia is a dangerous condition to take with you into the voting booth. It's been 10 years since we had a Liberal government and even longer since we had a majority Liberal regime. A trip down memory lane might serve as a curative.

Revisiting the Martin regime

The effect of amnesia as it relates to the Chretien regime (actually the Martin regime) leaves most Canadians recalling Martin as the deficit dragon-slayer, saving us from our profligate, self-indulgent, entitlement culture and getting us back on the road to solvency. A few will actually recall that Martin chopped 40 per cent off the federal contribution to social programs -- but even that memory is diluted by another one: the legendary "debt wall" built exclusively of hyperbole and hysteria over the three years preceding the 1993 election. But few today would credit the fact, documented in my book Paul Martin: CEO for Canada?, that the 1990s under Martin's guidance was the worst decade of the century (except for the 1930s) in terms of growth, productivity, productive investment, employment and standard of living. Unemployment was higher during almost all of Martin's reign than it was as a result of the 2008 financial crisis. But what is worse, this so-called liberal actually made it happen. It was a deliberate strategy, fancied up in policy terms as a commitment to "labour flexibility." The social and economic carnage and the increased personal misery (an additional 300,000 unemployed) was staggering.

Yet because it was all couched in double-speak, Martin and the Liberals were never held to account. The finance ministry's senior officials convinced Martin that the principal cause of unemployment was not low demand but unmotivated workers. The solution -- make them more "flexible." The best way to do that was to ensure that unemployment remained high. The finance department's operating policy assumption (radical compared to the U.S. and other G7 nations) was that the "natural" level of unemployment was 8 per cent -- much higher than the 5-6 per cent that conventional theory suggested. But the spin never mentioned this number -- it was always about keeping inflation below 2 per cent, extremely low given the country was barely out of a recession. The Bank of Canada worked closely with the government, increasing interest rates whenever unemployment went below about 9 per cent.

The cost to the economy was staggering. The federal Human Resources Development Department calculated that Martin's excessive unemployment cost the country's GDP $77 billion just in 1993. Pierre Fortin, a distinguished economist at the Université du Québec à Montréal calculated the radical policy cost the economy $400 billion by 1996. A Canadian Centre for Policy Alternatives (CCPA) study calculated the total loss to all levels of government in foregone revenue and increased social security costs at $47 billion.

At the same time that he was pounding labour (he also slashed unemployment insurance eligibility and eliminated the federal government's role in maintaining decent social assistance rates) he was making the largest cuts to federal spending in the country's history -- including a massive 40 per cent cut to medicare, education and social assistance.

Throughout this period, the Liberal government and its cheerleaders in the media framed the exercise as "deficit fighting." But according to then CAW economist Jim Stanford, had Martin simply frozen federal spending and allowed unemployment to drop to 6 per cent, the deficit would have disappeared just one year later than it did. Martin knew all of this but two years after launching his "labour flexibility" program, he proudly revealed his actual goal in his 1995 budget speech to Parliament, announcing the massive cuts. He never mentioned the word deficit -- because that was not his target.

The cuts were intended, in Martin's words, to "redesign the very role and structure of government itself. ... as far as we are concerned, it is … [the] redefinition of government itself that is the main achievement of this budget. This budget overhauls not only how government works but what government does." Martin's biggest boast? "Relative to the size of our economy, program spending will be lower in 1996–97 than at any time since 1951."

To guarantee his handiwork would not be challenged by any future government, Martin, in 2000, introduced the country's largest-ever tax cuts: $100 billion over five years with the vast majority of the total going to high-income individuals and corporations.

Supporting a corporate agenda

Why is Paul Martin's appalling record relevant today? Because Liberal and Conservative politicians, with rare exceptions (like Stephen Harper), are largely at the mercy of their bureaucracies and the agenda of the economic elite at the moment. In Martin's case he was easily manipulated by his deputy minister David Dodge, in spite of the fact that Martin had a reputation for being supportive of activist government. His first budget in 1993 actually increased spending.

One of the Liberals' main election planks in the 1993 election was job creation. Supporting this goal was Martin's junior finance minister Doug Peters -- an exceptional economist with excellent standing on Bay Street having worked for the TD Bank as its senior economist for many years before jumping into politics. But in the end, Martin, a long-time corporate CEO, could not have made any other choice. Dodge just made it easy for him. Martin was a Liberal finance minister at a time of unprecedented corporate power and its merger with the state. His role was assigned to him before he even got there. (Dodge actually lobbied Chretien to appoint him.)

Liberal politicians, with few exceptions, are captive to their neoliberal advisers, bureaucratic apparatchiks and senior corporate power-brokers as soon as they actually get into power. This political capture would be even more true of Justin Trudeau if he ever becomes prime minister. Martin was not a blank slate -- he was sophisticated, self-confident, with strong personality and a well-developed liberal vision. He lasted a year.

Justin Trudeau, the man/boy, seems to have never had an original idea in his life nor any discernable vision of the country that drives his politics. No matter how long he is on the scene as a potential PM, I cannot get past reacting to him as if he is an MC at a high school prom.

He is all artifice. More than any Liberal party leader in the past 35 years, Trudeau is an empty vessel with little choice but to be filled up by his party's corporate brain trust. Bay Street desperately wants back into the game and the Liberals are their only option. While they have been given lots of goodies by Harper, they have been cut off from their historic role as the principal source of federal policy-making. (Harper doesn't care what they think.) In addition, the federal bureaucracy has been made to reflect the ideology of pro-business "efficiency" to such an extent over the past 20 years, a genuine small "l" liberal would have to replace most of it to get any advice contrary to the status quo.

Justin doesn't have a chance. The promises he makes will not be his to keep.

Murray Dobbin has been a journalist, broadcaster, author and social activist for 40 years. He writes rabble's State of the Nation column, which is also found at The Tyee.

Photo: Georges Alexandar/Michael Ignatieff/flickr

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