We are getting used to the fact that the Harper government makes policy by ignoring reality. Its 2008 attempt cut sharply in government expenses, just as the global economic crisis was getting under way, was our first major taste of that propensity. Back then, the government was thwarted by an opposition that controlled the majority of seats in the House of Commons. The expensive omnibus crime bill, including an important prison-building programme, has been a government priority despite official statistics and unanimous expertise showing that crime - and violent crime especially – is on the decline; cabinet ministers have simply been telling us to ignore Statistics Canada data as untrustworthy. The insistence on purchasing super-expensive and seemingly badly flawed F-35 fighter jets is also a display of big-time willful blindness (and never mind the question of why Canada might need such equipment, even if it worked properly).
So, we should probably not be surprised by Stephen Harper & Co.’s latest flight from reality. In Davos last week, the Prime Minister suggested that the federal government’ Old Age Security (OAS) programme was unsustainable over the next couple of decades because of the aging of Canada’s baby boom-dominated population.[1] While Harper’s Davos comments were both dramatic and studiously vague, his staff and cabinet ministers made things clearer over the following days: Canada is facing a crisis, potentially of Greek proportions (dixit Peter Van Loan, government House Leader), if we do not reform something about the OAS and the Canada Pension Plan (CPP) because expenses will explode over the “next generation” and there will be fewer workers to provide tax revenue. The solution being floated would push back the age of retirement from 65 to 67 years old.
The problem for the government is that its own commissioned studies show that Canada’s public retirement programmes are healthy and will remain so through the baby boom’s retiring bulge. Over the past several days, Harper & Co. have simply been ignoring this, and keep repeating that a crisis is looming and reform must happen. Given this government’s well established stubbornness and its majority in the House, media analysts are already saying that, although the debate hasn’t even started, reform is a done deal and Canadians will have to learn to retire later.
Clearly, the disease – let’s call it Flight from Reality Syndrome (FFRS) – is well established in the Canadian government, and it goes far beyond these big-ticket policies to a large array of less visible initiatives. That would be bad enough. What’s worse for all of us is that FFRS seems to be spreading. While The Globe and Mail reported on Monday that the government’s OAS/CPP offensive ignores its own research and that a variety of independent experts also agree with the no-crisis analysis, the same paper is editorializing today that the “PM is right to confront the need for pension reform.” On the basis of common sense and the same bare-bones financial numbers flaunted by the government’s spinners, the editorial argues that Harper is “raising the tough challenges now,” and good for him. First, “changing demographics (are) obvious to the point of staring many of us in the face – each morning in the mirror” – thanks, editorial writer, for that bit of autobiography, but it doesn’t tell us anything about the sustainability of the system. Second, the cost of the OAS is set to almost triple (in nominal dollars) over the next twenty years – and this is supposed to be enough information for us to know that the system is going to crash; but not so fast, say the studies and other experts, as a lot of contextualising is needed, such that, in fact, we can conclude that the system is doing okay.
Then there is Andrew Coyne in The National Post, who wrote on Monday as if he were a retirement expert – lots of numbers, ratios, a fifty-year look back and another fifty forward – that there is a “pension crisis” looming and that doing nothing about it is the way of “madness.” But most of Coyne’s numbers are about the whole of Canada’s social programmes, and in the little bit of what he says specifically about the OAS, he cites the same spinned government numbers (let’s be explicit about those: $36 billion today, $108 billion in 2030).[2] Coyne ends up admitting that the OAS is not in fact such a big deal on its own. But he writes that, in the context of the economics of Canada’s demography and social programmes, you need to start cutting somewhere, and “(r)eining in the costs of OAS is as good a place as any to start.”
Why is it “as good a place as any,” one might ask? We get a cogent, and fully political answer in Frances Woolley’s Globe and Mail “Economy Lab” blog: she wrote yesterday that while the government will not save a whole lot of money from an OAS reform, “it’s not the absolute savings that matter, it’s the savings relative to the political cost incurred” (emphasis in the original). Her political calculus could be wrong[3] but the point is, again, that the government is acting not out of its stated goal of averting a crisis (which is fictional), but for political reasons that have little to do with economic reality.
Why, though, am I saying that a Globe editorial and a Coyne column are worse for us than the government’s own case of FFRS? Surely, Harper & Co. are far more harmful than editorial musings, no matter how august? And of course they are. What’s scary is the evidence that FFRS is catching, and that the media are rather susceptible. Now, there’s nothing new in the media parroting government (and big-business) spin. But in the past, there has been a significant amount of media pushback when the Harper government stepped out of the reality-based community: the story of the crime bill vs. declining crime statistics is a good example of that.[4] It could be that as the government fictions its way to slashing social programmes, economically conservative outlets and commentators are more likely to catch a bad case of FFRS. It’s small comfort that it was the same Globe and Mail that drew attention to the reality-based, government-commissioned reports that should have given its editorial board pause.
[1] Harper also noted that Canada’s science and R&D strategy, and associated productivity growth, are failing, and that his government will have to deal with that too. There would be a lot to say about this, as the Harper government has been cutting sharply in science expenditures over the last two years, and is set to slash much deeper in the context of its impending across-the-board cuts. The government’s general hostility to science and knowledge, again exhibited in this OAS story, does not augur well for how Harper plans to tackle the issue of a science and R&D strategy.
[3] The same point is made in Gollom’s piece referenced above, but see Derek Abma in The National Post for an alternative perspective.
[4] In The Globe and Mail, Kirk Makin wrote last week that « Canadians (are) finally getting it : crime is on the decline », in light of a yearly poll showing a 9% increase, to 46% (not all that high, one would think, but improving), of Canadians believing that crime is going down. Considering the Harper offensive to the contrary, this is encouraging.
