What's in a Liberal-Conservative government?

In politics the big question is who gets what? The party that has the most acceptable answer does not necessarily win an election, but you need a good answer — a coherent policy — to build public appeal.

Differences over economics are at the heart of politics. Indeed, who gets what is the big question in economics as well. Traditionally, in Canada, the dominant economic narratives originate with business. Then the mainstream media take the corporate story straight into prominence in political debate, unencumbered by criticism.

The results of the last 20 years of pro-business policies are being documented by the Canadian Centre for Policy Alternatives at its growing gap website. Marc Lee has shown how the tax system has become less fair for middle and low income earners, David Green and Kevin Milligan have demonstrated how upper income groups get more, and everyone else gets less, and Armine Yalnizyan has documented the worsening plight of the lowest income Canadians.

As well as pro-business policies, for the last 20 years Canada has had what amounts to a Liberal-Conservative government. It has made no difference whether it was led by Mulroney, Chrétien, Martin, or Harper, the policies were the same; and opposition to business accounts of economic reality, from labour, farm organizations, and social groups has gotten short shrift in policy debates within the successive governments. Correspondingly, as the CCPA series shows in detail, living conditions for the majority have failed to keep pace with economic growth, and productivity gains.

Business tells us that economic success depends on private investment taking advantage of competitive markets to generate profits. So when business says the role of government is to create a climate favourable to private investment, what they really mean is governments should promote profits. In 2008, cutting corporate income taxes, and eliminating taxes on capital is what business wants, as these measures increase profits directly: less for government, more for corporations.

Today, both the Liberals and the Conservatives favour the business agenda of tax reduction, and compete with each other in promises to corporations. While the Liberal party has talked about poverty as one its three priorities, along with the environment, and prosperity, it has not addressed the issue of a worsening distribution of income for most Canadians. The Conservative stock answer on increasing personal well-being is to cut income taxes, but it has taken the progressivity of the income tax system — the more income you have, the more you benefit from society, the more you contribute in taxes paid — off the table. Worse, it has brought forward its opposite: regressive taxation; the idea that the more you make, the even more you should be able to keep.

In Canada, there is rightly concern about the regional distribution of income. Indeed, under the constitution, governments have an obligation to reduce regional disparities. Governments debate the fairness of the equalization system as some resource rents soar (oil and gas), others plummet (softwood lumber), and traditional manufacturing disappears. Business groups do not like equalization. Various attempts are currently underway to blame transfer payments to the Maritimes for economic problems in Ontario.

The New Democrats have been raising the issue of a prosperity gap. For sure, with the U.S. economy now in recession, and the Windsor to Quebec City corridor suffering from the downturn, the question of who gets what is about to become more directly relevant to political debate.In the postwar period governments recognized the need to stimulate the economy in a recession. Transfer payments from rich to poor, and middle class citizens alike, provided automatic assistance as incomes declined. But the balanced budget mantra of the pro-business Liberal-Conservative regimes takes recession protection away from people who have already been losing ground. And the two decades long cuts to unemployment eligibility and benefits, and the withdrawal of transfers for social assistance, remove the social safety net from those most in need.

Naturally, a Liberal-Conservative government stands ready to bail out the banks for gambling in foreign mortgages, but not to protect the majority of Canadians who see their incomes erode.A campaign to share productivity gains fairly, raise average real wages from the 1970s levels, and implement a progressive income tax would at last reverse the growing gap. The public needs to hear more about who get what, and what can be done to improve the distribution of income.

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