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Election 2015: The political economy of balanced budgets

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Photo: KMR Photography/flickr

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First, disclosure. I wear several hats. In addition to being a progressive economist, I am  a member of the NDP. I have been since 1988. I will be voting for the NDP candidate in my riding and I just donated $100 to the party, with more to follow.

The recent promise of four years of balanced budgets by the Mulcair-led NDP has irked several progressive economists (see Marc Lavoie  and Louis-Philippe Rochon), who are puzzled over why Canada's social democratic party would eschew running deficits during a period of cyclical slow-down and probable stagnation. The quick answer is that the Mulcair team is not trying to convince mainstream economists (a relatively small, spread-out segment of the Canadian electorate) of the wisdom of post-Keynesian economic policy, but rather is trying to persuade the median Canadian voter (a problematic concept, for sure) that they would not be the Ontario Bob Rae government of the early 1990s.

Progressive economists sometimes refer to themselves as political economists. However, I fear we sometimes don't given enough attention to the political. To implement your economic policy platform, you need to win the electoral competition game. Our game is a majoritarian one, meaning winning 50 per cent plus one seat to form the government. In this federal election, that involves winning at least 170 of the 338 seats of the House.

Let's check the political arithmetik: at dissolution of the 41st Parliament in August, the NDP held 95 of 308 (versus the Conservative 159 and the Liberal 36). Note the increase of 20 seats from 308 at dissolution to the 338 up for grabs in the October election due to the 2012 electoral redistribution. Let's look at the distribution of NDP incumbent seats across the regions: Atlantic 6 of 32; Quebec 54 of 75; Ontario 19 of 106; Prairies 3 of 56; British Columbia 12 of 36, the North 1 of 3.

To form the government, the NDP have to win an additional 75 seats as well as retain their 95 incumbent seats to bring their number to 170. Let's assume they retain their seats in Atlantic, Quebec and B.C./North, but make no further gains in those regions; that's 73 seats. To form the government, the Mulcair NDP will need to not only hold onto their 22 seats in Ontario and the Prairies (19 and 3 respectively), but will need to win an additional 75 in those regions. An additional 75! This is quite an electoral challenge, and this I feel explains why the NDP have chosen a platform centred on balance budgets: to win the confidence of the dissatisfied moderate of Ontario and the West. Assuming the mantle of Tommy Douglas (and Roy Romanov) and not Bob Rae (and Glen Clarke and Darrell Dexter) positions themselves as such.

The Trudeau Liberals, needing to distinguish themselves from the Mulcair NDP, have taken the courageous stance and promised three years of deficit spending, investing in infrastructure. Will it persuade Canadian voters? With only 36 seats at dissolution, they have even more ground to gain, an additional 134 seats, to form the government! That would be quite the red tide, compared to the orange wave.

Political scientist Peter Hall once remarked:"Much of what goes on in the political arena is, in fact, a struggle among political entrepreneurs to define the way in which the electorate or potential followers within it interpret their interests." In the days leading up to October 19, it will be interesting to see how Mulcair and Trudeau teams perform in defining the interests of Ontario and Western voters.

Photo: KMR Photography/flickr

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