rabble blogs are the personal pages of some of Canada's most insightful progressive activists and commentators. All opinions belong to the writer; however, writers are expected to adhere to our guidelines. We welcome new bloggers -- contact us for details.

Harper's Davos speech, fiscal profligacy and economic growth

Please chip in to support more articles like this. Support rabble.ca for as little as $5 per month!

The Prime Minister's speech at Davos was, I would bet, written by Stephen Harper himself. It bore the stamp of his long-standing contempt for the European welfare state.

He all but said that the Europeans had brought the crisis on themselves through trying to live beyond their fiscal means:

"As I look around the world, as I look particularly at developed countries, I ask whether the creation of economic growth, and therefore jobs, really is the number 1 policy priority everywhere?

"Or is it the case, that in the developed world, too many of us have, in fact, become complacent about our prosperity, taking our wealth as a given, assuming it is somehow the natural order of things, leaving us instead to focus primarily on our services and entitlements?

"Is it a coincidence that as the veil falls on the financial crisis, it reveals beneath it, not just too much bank debt, but too much sovereign debt, too much general willingness to have standards and benefits beyond our ability or even willingness to pay for them.

Canada, of course, is different. And he proceeded to reinforce the difference before his top 0.01 per cent audience by promising cuts to public pensions.

But -- does he have a case that the fiscal crisis of the advanced economies, especially the Euro crisis is due to fiscal profligacy and indifference to growth?


Per capita growth in Canada over the past decade has been no faster than in the EU. As Jim has just noted, growth under Harper's recent watch is no better than the OECD average.

Much of the Euro crisis -- as is the case with the U.S. -- is due to the socialization of bad bank debt by governments which had been reducing public debt as a share of GDP before the crisis.

The weak U.S. fiscal position is hardly due to above-average spending on social programs and public services, but rather due to recession and pre-recession tax cuts.

Japan has been able to finance a truly massive public debt because they borrow it from themselves.

Many countries with much larger public debts than Canada -- the U.S., Japan, the U.K. -- do not pay higher interest rates than us, for the key reason that they have independent central banks able and willing to backstop the debt.

The Euro crisis is not a crisis of fiscal profligacy, but a crisis mainly caused by the absence of a European central bank prepared to guarantee the debt of weaker members (and even that seems to be changing.)

There is no significant correlation across OECD countries between per capita growth and unemployment rates on the one hand, and the ratio of public spending to GDP on the other.

This article was first posted on the Progressive Economics Forum.

Thank you for reading this story…

More people are reading rabble.ca than ever and unlike many news organizations, we have never put up a paywall – at rabble we’ve always believed in making our reporting and analysis free to all, while striving to make it sustainable as well. Media isn’t free to produce. rabble’s total budget is likely less than what big corporate media spend on photocopying (we kid you not!) and we do not have any major foundation, sponsor or angel investor. Our main supporters are people and organizations -- like you. This is why we need your help. You are what keep us sustainable.

rabble.ca has staked its existence on you. We live or die on community support -- your support! We get hundreds of thousands of visitors and we believe in them. We believe in you. We believe people will put in what they can for the greater good. We call that sustainable.

So what is the easy answer for us? Depend on a community of visitors who care passionately about media that amplifies the voices of people struggling for change and justice. It really is that simple. When the people who visit rabble care enough to contribute a bit then it works for everyone.

And so we’re asking you if you could make a donation, right now, to help us carry forward on our mission. Make a donation today.


We welcome your comments! rabble.ca embraces a pro-human rights, pro-feminist, anti-racist, queer-positive, anti-imperialist and pro-labour stance, and encourages discussions which develop progressive thought. Our full comment policy can be found here. Learn more about Disqus on rabble.ca and your privacy here. Please keep in mind:


  • Tell the truth and avoid rumours.
  • Add context and background.
  • Report typos and logical fallacies.
  • Be respectful.
  • Respect copyright - link to articles.
  • Stay focused. Bring in-depth commentary to our discussion forum, babble.


  • Use oppressive/offensive language.
  • Libel or defame.
  • Bully or troll.
  • Post spam.
  • Engage trolls. Flag suspect activity instead.