According to Russell Investments, Canadian corporate cash balances have risen 18 per cent since the end of 2007 — an increase that the investment firm calls “staggering.” Companies are now sitting on $340-billion in cash and short-term deposits.

The Globe and Mail reports that a survey of Canadian corporate executives on the eve of a federal budget concluded that the economic outlook is strong enough that Ottawa shouldn’t make paying down the deficit its top priority. Instead it should look for ways to reinforce the recovery by putting money into education, training, transportation, infrastructure and R&D in order to “build a stronger economy so that will have less deficit in the end.” Yes they do expect the Harper government to keep its promise to cut their taxes.

The Harper government has decided that austerity is the means to fight their chosen public enemy number one, public debt, by cutting corporate taxes and reducing funding to the public sector including those civil servants that would regulate the private sector in the hope that the private sector will be reassured enough to invest in our economy. While the business community wants its taxes to disappear and the ability to pollute, it is aware of its dependency on the state. Instead of going begging the Canadian state needs to take action.

A major disadvantage of tax cuts for the wealthier and for corporations for the rest of us is that they often result in the retained revenue finding its way to investment outside our borders or into increased consumption of luxury goods from abroad. By contrast, economists estimate that infrastructure investment will have five times the positive impact on Gross Domestic Product (GDP) as corporate income tax cuts. Virtually all such government spending occurs inside our borders and improved infrastructure contributes both to long-term productivity and a reduction in public debt. Capital gains tax cuts would have less than one-quarter of the positive effect on GDP than governments spending on infrastructure would have. More discretion for the private sector means a less efficient economy.

There is good reason for the Canadian executive’s position on the public debt. The public debt as a percentage of GDP in Canada was significantly higher in 1947 than it is today. That debt was reduced dramatically by the 1970s, not by cutting taxes and reducing spending but, in part, by increasing spending on education, infrastructure, health care and research and development.

The effect was to increase the GDP and consequently reduce the debt to a fraction of what is was before. The debt grew because of tax cuts for the wealthy and corporations and high interest rates set by the Bank of Canada not public spending on health, education and welfare, never mind research and development and infrastructure.

Of course it isn’t only Conservatives that parrot the neoliberal line. “The government can’t pick winners, but losers pick government.” Canadian Deputy Industry Minister V. Peter Harder, cited in The New York Times, August 28, 2001.

This is an uniformed self-destructive mantra. Repeating it will not make it true. Looking to our conservative neighbors to the south we discover that U.S. federal funding was directly responsible for the cross country railroad, the exploration of space, atomic energy, the internet, the Global Positioning System (GPS), lasers, computers, magnetic resonance imaging (MRI), teflon and other advanced materials and composites, communications satellites, jet aircraft, microwave ovens, solar-electric cells, modems, semiconductors, storm windows, genetic medicine and biotechnology. Think of the possibilities for full employment, equality and the environment if more of this funding was directed at a green economy.

Research and development (R&D) has historically produced large social returns. However, the enormous economic returns from much research, especially basic research, are spread widely throughout society, and are not captured solely by the inventing firm. This makes the social rate of return greater than the private rate. The inability of firms to capture all of the returns from research means that there is a reduced incentive for them to invest in R&D, especially over a long period of time. For example, the discovery of quantum mechanics was partly responsible for the entire modern electronics industry, generating extraordinary total profits. But even if a firm could have predicted the tremendous benefits that quantum mechanics would yield, it would not have been a good private investment because the basic level of the research did not create sufficient immediately profitable products. Private firms will not invest in the necessary level of R&D because they tend to have short-term time horizons. Corporations that must maintain shareholders’ rates of return in a competitive environment cannot afford to undertake costly current investments for long run payoffs.

The Harper vision for our economy depends on the world’s most destructive environmental project, private banks that will leave no stone unpolluted or worker unexploited domestically and globally and an increasingly tax free, free trade and unregulated economy open for business.

We should be saying no to austerity. A vote for the Conservatives is to take the wrong side in one of the great economic debates of our time and leave us all too dependent on toxic oil and the power of our banks to determine our economic and environmental future.