December 29, 2008

 

A very good point on the looming auto bailout...

From: The Wall Street Journal

Thatcher Wouldn't Have Gone Wobbly on Detroit: Keynesianism is proof you shouldn't "leave economics to economists."
By:
ANDREW B. WILSON
DECEMBER 20, 2008

There's a telling difference between the Big Three auto makers and the average American household today. It's the difference in their appetite for debt.

The auto makers want to borrow a huge amount of money from the only source that might be willing to extend additional credit to them: the federal government. They have nothing to lose because they are, in effect, already bankrupt.

By contrast, millions of gainfully employed but frightened people are fighting to stay out of bankruptcy. Without suffering any loss of current income, over the past year they have seen a third or more of their savings and personal wealth disappear into thin air. The last thing they want to do now is to borrow and spend.

Consider the simplified balance sheet of someone in his 40s or 50s who earns $100,000 a year and has two principal assets - the equity in his house and the money in his retirement account.

Let's assume that his only debt is the $300,000 mortgage on his house, which was appraised at $500,000 a year ago but is now worth just $400,000. Let's assume too that his retirement account - in line with the decline in stock prices - has taken a 37% hit over the past year, falling from $200,000 to $126,000.

So how is this seemingly affluent individual feeling about his personal finances?

He is, to put it mildly, in a state of shock. Even though his income has remained the same, in just 12 months he has lost a staggering 43% of his net worth, or personal wealth. His entire nest egg (the retirement account plus the real value of his house) has dropped from four times his annual income to just double.

The Federal Reserve can pump up the money supply, drive down interest rates, and pressure banks to restart lending. But this person only wants to replenish his savings and repair his badly damaged balance sheet. Despite the reports of a credit squeeze, local real estate agents and car salesmen will tell you that there is little demand.

The incoming administration is talking about spending hundreds of billions on public works with the hope of creating some jobs, but remember: 93.3% of Americans, though shaken, already have jobs.

So what to do?

The government must do something, and something fairly big, to jump-start the economy, an economist friend told me. His point was that the private sector is too shell-shocked to climb out of the hole it is now in, and government needs to take the lead. He also quoted the old shibboleth among economists - the "fallacy of composition" - which argues that what might be a good course of action for an individual can lead to disaster if widely adopted by members of the larger group. In this case, disaster could be the result if there was too strong a preference for savings over consumption.

I disagree with this whole line of thought. It reminds me of the open letter that 364 economists addressed to British Prime Minister Margaret Thatcher in 1981, condemning her for daring to cut public borrowing in the midst of a recession, which was contrary to the Keynesian orthodoxy at the time. They did not accept Mrs. Thatcher's reasoning that too much public-sector borrowing and government-directed investment could only crowd out private-sector borrowing and risk-taking.

They also implicitly rejected Mrs. Thatcher's strongly held belief that both governments and individuals must be guided by fundamental rules of common sense and frugality, in good times and bad. The economists described her thinking on this score as naive.

Mrs. Thatcher spurned the collective wisdom of the 364 economists, seeing their advice as just more of the same failed interventionist policy prescriptions which the country had followed for over three decades.

When she came to power in May 1979, the British economy, by every measure, was in worse shape than the U.S. economy is today. Inflation was out of control. Unemployment was high and rising rapidly. Job creation had been at a total standstill for almost a decade and a half.

No one has captured the Keystone Cop-like futility of government intervention to fix this or that problem any better than Mrs. Thatcher's long-time sparring partner and rival, Denis Healey, the Chancellor of the Exchequer in the Labour government that preceded her administration. Speaking of Britain's periodic bouts of wage-and-price controls to counteract inflation, he wrote: "Adopting a pay policy (i.e. limiting wage increases to a set percent) is rather like jumping out a second-story window: no one in his senses would do it unless the stairs were on fire. But in postwar Britain the stairs have always been on fire."

Clearly, some things have changed since Mrs. Thatcher's time. Inflation is more easily controlled today, due to intense global competition. But Thatcherite principles remain as valid as ever. The freedom of the marketplace is still the only effective mechanism for eliminating poor business practices, identifying productive investment, and providing long-term growth.

President-elect Barack Obama has said that he expects things to get worse before they get better. If the experience of the first Thatcher administration is anything to go by, that will certainly be the case. For one thing, some "hidden unemployment," as Mrs. Thatcher called it, will be flushed out into the open. This will be the case with the expected closure of the Big Three's "job banks," which pay almost full wages and benefits to several thousand auto workers for doing nothing.

With the elimination of much higher levels of "over-manning" in parts of British industry that were heavily unionized and subsidized, unemployment doubled to 12% in Mrs. Thatcher's first three years in office.

Yet by sticking to her policies of lightened regulation, reduced trade barriers, privatization of a raft of publicly owned companies, reduced taxation, and the adoption of laws to prevent abuses of union power, Mrs. Thatcher achieved something few if any of today's economists have begun to consider. She achieved a genuine, productivity-led recovery that transformed Britain from perennial basket case into the Europe's most improved and vibrant economy.

U.S. policy makers and professional economists should study her example in order to turn this time of crisis into useful and enduring change. As she herself said, "Economics is too important just to be left to the economists."

Mr. Wilson, a St. Louis-based writer, was Business Week's London bureau chief from 1981 to 1985.

Copyright 2008 - The Wall Street Journal

 

More evidence on the foolishness of Keynesian Economics...

From: The Wall Street Journal

Barack Obama-san
DECEMBER 16, 2008

As January 20 nears, Barack Obama's ambitions for spending on the likes of roads, bridges and jobless benefits keep growing. The latest leak puts the "stimulus" at $1 trillion over a couple of years, and the political class is embracing it as a miracle cure.

Not to spoil the party, but this is not a new idea. Keynesian "pump-priming" in a recession has often been tried, and as an economic stimulus it is overrated. The money that the government spends has to come from somewhere, which means from the private economy in higher taxes or borrowing. The public works are usually less productive than the foregone private investment.

In the Age of Obama, we seem fated to re-explain these eternal lessons. So for today we thought we'd recount the history of the last major country that tried to spend its way to "stimulus" - Japan during its "lost decade" of the 1990s. In 1992, Japanese Prime Minister Kiichi Miyazawa faced falling property prices and a stock market that had sunk 60% in three years. Mr. Miyazawa's Liberal Democratic Party won re-election promising that Japan would spend its way to becoming a "lifestyle superpower." The country embarked on a great Keynesian experiment:

August 1992: 10.7 trillion yen ($85 billion). Japan passed its largest-ever stimulus package to that time, with 8.6 trillion yen earmarked for public works, 1.2 trillion to expand loan quotas for small- and medium-sized businesses and 900 billion for the Japan Development Bank. The package passed in December, but investment kept falling and unemployment rose. By the end of the year, Japan's debt-to-GDP ratio was 68.6%.

April 1993: 13.2 trillion yen. At exchange rates of the day, this was a whopping $117 billion giveaway, again mostly for public works and small businesses. Tokyo erupted into domestic politicking over election practices, the economy went sideways, and the government fell. New Prime Minister Morihiro Hosokawa floated tax cuts, deregulation and decentralization to spur growth. But as the economy worsened - inflation-adjusted GNP shrank 0.5% in the April to June quarter - the political drumbeat for handouts increased.

September 1993: 6.2 trillion yen. Mr. Hosokawa announced a compromise "smaller" stimulus of $59 billion, along with minor deregulation. He dropped plans for an income-tax cut. The stimulus included 2.9 trillion yen in low-interest home financing, one trillion yen for "social infrastructure," and another trillion for business. The economy didn't respond. By the end of the year, Japan's debt-to-GDP reached 74.7%.

Is any of this beginning to sound familiar? There's more.

February 1994: 15.3 trillion yen. This stimulus included 5.8 trillion in income-tax cuts, 7.2 trillion in public investment, 1.5 trillion for small business and employment-support, 500 billion for land purchases and 230 billion for agricultural modernization. The income tax cut was temporary, effective only for 1994. The economy stagnated and Prime Minister Hosokawa resigned amid a corruption scandal. By the end of the year, debt-to-GDP was 80.2%.

September 1995: 14.2 trillion yen. The Socialist government of Tomiichi Murayama, with a wobbly coalition, rolled out a $137 billion whopper, with 4.6 trillion in public works, 3.2 trillion for government land purchases, 1.3 trillion in business loans, and more. Mr. Murayama resigned in early 1996, and in June Prime Minister Ryutaro Hashimoto agreed to raise consumption taxes to 5% from 3%, starting in April 1997, to reduce the fiscal deficit.

In 1994 and 1995, Japan spent 3.1% and 2.9% of its annual GDP, and (helped by central bank easing) the economy did respond with modest growth for about two years. Debt-to-GDP hit 87.6%.

April 1998: 16.7 trillion yen. When growth starting slowing again, the re-elected LDP turned to old medicine: 7.7 trillion yen for public works. The $128 billion grab-bag also included 2.3 trillion for the disposal of bad loans. The government announced four trillion yen in (again) temporary income-tax cuts, spread over two years. Mr. Hashimoto resigned in July after voters registered their discontent at the polls.

November 1998: 23.9 trillion yen. Desperate to get the economy moving, Prime Minister Keizo Obuchi rolled out the country's largest-ever stimulus, valued at $195 billion. The giveaway included 8.1 trillion yen in social public works, 5.9 trillion for business loans, one trillion for job-creation programs, 700 billion in cash handouts to 35 million households, and more. By the end of the year, debt-to-GDP hit 114.3%.

November 1999: 18 trillion yen. In a "last push," Mr. Obuchi's government spent 7.4 trillion yen to prop up businesses, 6.8 trillion yen for social infrastructure projects like telecommunications and environmental projects, and two trillion yen for housing loans, among other things. Debt-to-GDP reached 128.3%.

Japan's economy grew anemically over that decade, but its national debt exploded. Only in this decade, with a monetary reflation and Prime Minister Junichiro Koizumi's decision to privatize state assets and force banks to acknowledge their bad debts, did the economy recover. Yet recent governments have rolled back Mr. Koizumi's reforms and returned to their spending habits. But Japan does have better roads.

Now we're told that a similar spending program - a new New Deal - will revive the U.S. economy. How do you say "good luck" in Japanese?

Copyright 2008 - The Wall Street Journal

 

An economics lesson...

Keynesian Economics is wrong, a bigger Government does not stimulate an economy.

Watch this excellent video for more proof:


 

A coalition that is bad for everyone...

From: The Washington Times
http://www.washingtontimes.com/news/2008/dec/09/o-canada/

O Canada! What a political coup
By: Michael Taube
Tuesday, December 9, 2008

On Oct. 14, Canadian Prime Minister Stephen Harper and the Conservatives were re-elected with a larger vote share and number of seats. Less than two months later, the federal government is on the brink of collapse, thanks to a suspect coalition of liberals, socialists and separatists. It's an ongoing political crisis that will have a profound effect not only in Canada, but also the United States.

Let's recap. The Conservatives currently hold 143 out of 308 seats in parliament. It's an increase of 16 seats from the 2006 election, but Mr. Harper still governs from a minority position - he consistently needs support from opposition parties to stay in power. To begin the new parliamentary session, Finance Minister Jim Flaherty announced a controversial policy proposal: the elimination of public financing for political parties. Major and minor parties earn $1.56 for every vote they receive in a federal election, meaning that roughly $24 million in taxpayer money is doled out annually.

While the Conservatiess would take the greatest financial hit from this proposal - to the tune of $8 million - they're also the top party in terms of private fundraising. For parties such as the Liberals (who are heavily in debt), socialist New Democrats and separatist Bloc Quebecois, this financial loss would significantly impact their ability to campaign in an election. The opposition was furious, and it quickly became clear that the minority Conservative government had made a strategic error.

The three left-wing parties then decided to selfishly band together to defeat the Conservatives in a non-confidence motion yesterday. (Although they publicly claimed it was due to their frustration over the lack of a government economic stimulus package, most observers rejected this notion.) The Liberals and NDP would jointly govern, with the bloc holding the balance of power. In an astonishing decision, Liberal leader Stephane Dion, who lost the confidence of his own party after the federal election and is stepping down next May, would temporarily become the new prime minister. A 24-member cabinet would be established, with six positions going to socialists for the first time in Canada's federal political history. And there were rumors of Bloc members - and even the Green Party leader - being appointed to the unelected upper chamber, the Senate. The Conservatives scrambled to save themselves, and did so in a flabbergasting display on Dec. 4: They prorogued (or temporarily shut down) parliament before the vote. To do so, Mr. Harper had to ask for - and received - the consent of Governor-General Michaelle Jean, an unelected ceremonial official who is, in effect, the queen's representative in Canada.

To be fair, it's completely legal for Mr. Harper to ask the governor-general to prorogue parliament. But there was no historical constitutional precedent in Canada to shut down parliament before it had even started. The PM was therefore granted a political do-over, or "get out of jail free" card.

But the crisis is far from over. If anything, it just got worse.

Parliament has only been prorogued until Jan. 26, and a federal budget will be introduced shortly thereafter. The left-wing coalition is fuming, and I suspect they'll immediately defeat the government and throw Canada into another election. The Conservatives have only delayed the inevitable by a few weeks, and are little more than a lame-duck government. As someone who wrote speeches for this prime minister, it's a sad turn of events.

The incoming White House - and all Americans - should also take heed of this crisis. Canada is a significant trading partner and political ally, and this political coup doesn't work in their favor.

Sure, the Obama administration and Canada's coalition partners have some political and economic similarities. But when it comes to critical issues like the free market and national security, the Conservatives are far more in line with American values - and the incoming administration's beliefs.

Here are some examples: All three left-wing parties have espoused or currently espouse anti-American views; the NDP and BQ, along with some Liberal MPs, reject a greater role for the private sector; of the three coalition partners, only the Liberals support the war in Afghanistan and the need to root out al Qaeda; and two well-respected market-oriented Liberals, Frank McKenna and John Manley, decided against joining the coalition's planned advisory panel on economic issues.

Since taking power, Mr. Harper has successfully worked with President Bush to repair icy Canada-U.S. relations caused by previous Liberal governments. While Barack Obama and Mr. Harper are different political animals, my sense is they'll be able to work together to maintain our two countries' strong political and economic relationship.

That's not the case with the rag-tag coalition of Liberals and ardent leftists that might usurp power in January.

If they're successful, "a change is gonna come," to quote Sam Cooke - but it's a change that neither most Americans nor Mr. Obama would ever desire.

Michael Taube, a former speechwriter for Canada's prime minister, is a public affairs analyst and commentator.

Copyright 2008 - The Washington Times

 

A lesson for the right-wing...

From: The Washington Times
http://www.washingtontimes.com/news/2008/dec/11/reviving-the-gop-corpse/

To revive the GOP corpse: Solutions first, ideology second
By: Gary Andres
Thursday, December 11, 2008

Following the last two election cycles, a debate now rages about how to extract the Republican Party from the political ditch. Some argue the GOP lost its way by abandoning conservative principles. Profligate spending and too much big government are the culprits, they say.

Others blame corruption. Sex and lobbying scandals turned off voters, transforming the party from reformers to hypocrites.

Or maybe the electorate changed? The party needs to attract more swing voters by shifting to the center - capturing the 35 percent of self-identified conservatives is a necessary, but not sufficient, condition for winning majorities in the future.

All are partially right. But as Karl Rove wrote in Newsweek recently, this debate looks like a "pundit-driven shoutfest... that presents a sterile and unnecessary choice." And the conflict-driven media only amplifies the alleged intra-party war.

I'd argue there is more consensus than schism. The real problem may not be the direction of the party, but the quality of its ideas and the style of its language. Many Republican leaders are now coalescing around this theme. But the details - and how to apply a solutions narrative to federal programs - require more development.

True, fresh position papers or new slogans alone will not heal the GOP. Elections are won through a mix of messages, messengers and money. Successful campaigns also deploy superior tactics - like using technology to advance candidates, mobilize supporters and raise resources. Activists such as Patrick Ruffini, who began RebuildTheParty.com, are on the right track when it comes to technology and activist journalism.

Due to the challenges of detailing a full solution to the GOP's political problems in a 750-word column, let me focus on one recommended change: messaging - the narrative and ideas that inspire winning campaigns and political parties. Developing new ideas and more effective ways to talk about them - not changing ideology - is part of the solution for the GOP.

Some worry this approach is unprincipled pragmatism in disguise. Former White House aide Peter Wehner wrote in Commentary Magazine recently that deemphasizing ideology could devolve into expediency and "deal-cutting." That's certainly a risk, but it doesn't have to turn out that way.

Here's the real problem. Too often Republicans begin by talking ideology as opposed to solutions. They start with cutting taxes, balancing the budget and less government, but forget to say, "why?" Instead, begin with outcomes - more jobs, affordable health care and better education. Ideology is a means to these ends - not the end itself.

Many Republican governors understand these narrative nuances. Minnesota's Tim Pawlenty has it right when he says the GOP must appeal to "Sam's Club" as opposed to "country club" voters. Mississippi Governor Haley Barbour said in a recent interview that his party needs to ask: "How do free markets and capitalism apply to the question: Can I make a living?"

Excessive "ideology-speak" particularly harms Republicans with swing voters. Research shows these Americans are more interested in solutions than philosophical debates. Promoting ideology first makes Republicans sound out of touch or even wacky to those who don't live and breathe politics.

How would Republicans apply this approach to an issue such as health care? Instead of starting by offering a tax credit, why not say this: "We understand your anxiety. We will make health care more affordable by allowing insurance companies to compete and giving you a chance to purchase health care that best fits your family's needs. You and your doctor, not the government, should decide what works best, Republicans will further cut costs by taking on trial lawyers to curb frivolous lawsuits. Let's also use American ingenuity and technology to reduce your health-care costs. Taken together, these changes will make health care more affordable for you and your family." Changing tax policy may be a means to the end, but it's not the final goal - affordability and quality are.

Republicans should apply this outcomes-based approach across the policy spectrum - promoting exceptional schools, providing better jobs, raising stagnant wages, creating independence from foreign oil. How? This can be achieved through competition, markets that spur innovation and lower prices, a government closer to the people, and modernizing bureaucracy. But note the ideological underpinnings are the period in the sentence, not the opening line.

This solutions first, ideology second approach is emerging as a way forward for electorally beleaguered Republicans. Many GOP governors such as Tim Pawlenty of Minnesota, Haley Barbour of Mississippi, and Bobby Jindal of Louisiana are on the forefront of developing the ideas and rhetoric that apply conservative principles to real-world problems. Congressional Republicans should import these statehouse smarts to improve their damaged Washington brand.

Gary Andres is vice chairman of Dutko Worldwide.

Copyright 2008 - The Washington Times

 

Why we must remain strong for Afghanistan...

Canadian military casualities in Afghanistan and the resilience of modern Canadians:
What have we become as a nation?

Some interesting perspectives:

So far this year, Canada has suffered 25 military casualties in Afghanistan, with a total of 100 dead over 6 years since 2002.

Contrast this with the 24 Canadians murdered on 9/11 in 40 minutes.

World War 2 losses on D-Day alone:

In the Normandy area of France where fighting raged from June until August 1944, some 5,002 Canadians were killed in action, 70 Canadian soldiers killed in action on every single day of the battles that took place there.

In the Italian Campaign:

In the Far East:

World War 1 losses in France in just three battles in 1915 and 1917:

In Korea from Feb 1951 to July 1953: 516 Canadians killed and 1,550 wounded.

And in 2008, Toronto has nearly 60 homicides. The bulk, according to Police, are gang-related.

Before the year is out, Canada will have over 600 murders from province to province.


 

The public speaks...

From: CTV News
http://www.ctv.ca/servlet/ArticleNews/story/CTVNews/20081208/ignatieff_coalition_081208/20

Ignatieff wouldn't bolster coalition much, poll finds
Updated: Dec. 8 2008 12:14 PM ET
The Canadian Press


OTTAWA - A new poll suggests that a proposed Liberal-NDP coalition under Michael Ignatieff's leadership isn't much more palatable than an alliance under Stephane Dion.

The Canadian Press-Harris-Decima survey found that only 32 per cent of respondents favoured a coalition led by Dion, with 59 per cent opposed.

Asked if they would support a coalition led by Ignatieff, 38 per cent were supportive, with 50 per cent still opposed.

The poll found that almost 70 per cent of those surveyed felt Prime Minister Stephen Harper's Conservatives should stay in power, although 41 per cent blamed them for last week's political crisis and 39 per cent said Harper should resign.

However, 51 per cent said Harper should stay on.

The poll, conducted Dec. 4-6, questioned just over 1,000 people as part of an omnibus phone survey and has a margin of error of 3.1 percentage points, 19 times in 20.

The poll also suggests that 46 per cent of Quebecers feel Harper should resign, but the margin of error is much higher for the provincial breakdown.

Jeff Walker, Harris-Decima vice-president, said the result suggests the coalition concept didn't grab voters.

"While many believe Mr. Harper is the chief architect of the problems that currently face Parliament, the coalition concept under Mr. Dion has failed to generate broad public support as an alternative government," he said.

"For the Conservatives, the most damage in the past week seems to have come from the province of Quebec, where a plurality believe Mr. Harper should resign as leader of the party and a majority blame the Conservatives more than anyone else for the parliamentary crisis."

Copyright 2008 - CTV News

 

An article on the prorogation...

From: The National Post
http://www.nationalpost.com/news/story.html?id=1046102

Prorogation, then and now
By sending MPs home rather than face the judgment of a hostile House, Stephen Harper is following in the footsteps of Canada's first prime minister
By: Barbara J. Messamore
Published: Monday, December 08, 2008

Justin Trudeau likened Stephen Harper's request for prorogation to a panicky student pulling the fire bell to avoid an exam. It is not an altogether inapt analogy. The move was undoubtedly intended to delay certain defeat in the House of Commons. Apologists for the measure might dress it up in more statesmanlike terms, citing the need for breathing space, for cooler heads to prevail, to consult opinions across the country and such. But the conclusion is inescapable: had Harper and the Conservatives not requested prorogation, they would have almost certainly fallen to a nonconfidence vote. Had that occurred, Harper would have been compelled to resign, and Governor-General Michaelle Jean would probably have called upon the opposition to form a government. A dissolution of Parliament a mere seven weeks after the last election, with a viable alternative ministry standing ready, would be unlikely.

That said, was the Governor-General correct in accepting Harper's advice to prorogue Parliament? The answer is an unqualified yes.

Only in the most extraordinary circumstances would the governor-general be warranted in refusing the advice of the prime minister. As Prime Minister, Harper is entitled to use this manoeuvre to buy a little time to see if he can garner sufficient support and to test the ability of the coalition to maintain the allegiance of enough Liberal, NDP and Bloc members. Should even a handful of these members buck party discipline in these unusual circumstances and reject the coalition, a very different picture might emerge in the weeks ahead. And some members may have reservations about the coalition based upon feedback from their constituents.

There is nothing in the coalition agreement that is constitutionally suspect, despite overblown rhetoric likening it to an attempted coup. But of course, there is political risk attached to it. Supporters of each of the three parties involved could well find the alliance distasteful on a number of scores, and those who have watched the value of their investments plunge still further in the wake of recent events may wish to punish those who seem to have exacerbated a climate of economic instability by promoting political instability.

For Harper, too, there is political risk in what he has done: His overt evasion of the verdict of Parliament is permitted constitutionally, with the governor-general's consent, but it has the appearance of a slick and unprincipled political trick worthy of that consummate master of political gamesmanship, John A. Macdonald. And indeed, if we look back into Macdonald's political career, we can find one of the most relevant constitutional precedents. On the face of it, it might seem surprising to draw upon examples from the 19th century. Yet the fundamental workings of the parliamentary system have not changed in many basic respects. Ever since the 1848 advent of colonial self-government - "responsible government," as it is usually called in Canada - the principle has been that the executive must command the support of a majority of the legislature on key pieces of legislation, on confidence measures like those associated with finance. (External matters, of course, continued to be under the purview of the imperial government until Canada gained that power incrementally in the 20th century.) Whether he was a British appointee or, after 1952, a Canadian, the governor-general was meant to be an impartial arbiter who would be guided by the principle of ministerial responsibility and would refuse the advice of his ministers only under the rarest of circumstances.

In 1873, the governor-general, Lord Dufferin faced a request for prorogation from Conservative prime minister John A. Macdonald. The Pacific Scandal had broken that spring. The Liberals had evidence to show that key Conservative ministers, including Macdonald himself, had accepted money from Sir Hugh Allan, who hoped to be awarded the contract to build the railway to British Columbia. A commission of inquiry was summoned to investigate allegations of Conservative corruption, and more and more damning details were emerging by the day. With Parliament scheduled to sit in August 1873, Macdonald feared a non-confidence vote and asked Dufferin to prorogue the House rather than allowing a vote on adjournment.

Members of the opposition, led by Liberal Alexander Mackenzie, along with former Macdonald supporters who had fled the Conservative standard, signed a memorandum to the governor-general pledging their support for a new Liberal ministry. The press was full of advice for Dufferin on prorogation: Dufferin should not regard himself as merely the "recording clerk of his ministers," forced to collude in every iniquity they planned, the Liberal Globe insisted. For the governor-general to allow his office to be used to shield a guilty ministry would throw the Crown into disrepute, they charged.

Dufferin agonized over the correct course of action, writing torrents of letters to anyone who might be able to shed light on the matter, but swearing all these unofficial advisors to secrecy and asking them to burn his letters. He complained of the absence of precedent and the fact that "the very men who were bound to advise me were those most interested in cajoling me into some false move." The message from the British secretary of state for the colonies, Lord Kimberley, did not provide much guidance: "We shall be sure to give you all possible support... unless you made some egregious blunder." Yet in the end, Dufferin accepted Macdonald's advice and prorogued the House.

Of course, for Dufferin and for Macdonald the prorogation did not end the dilemma. Parliament reconvened in October, and while the governor-general feared that he might actually have to force Macdonald from office, the prime minister at last had to accept that he had lost support and tendered his resignation. Dufferin reflected with satisfaction that Macdonald's fall from office could now be said to be unequivocal, not the result of any precipitant action on the part of the governor-general.

While Harper's ministry has not been implicated in any wrongdoing, the parallels to the present case are strong: Only under the rarest of circumstances would the governor-general refuse the advice of her ministers. She must allow them to avail themselves of every constitutional remedy. Should they go down to defeat in January, it will not be through any involvement of the governor-general.

The verdict of the House will in the end prevail. Political scientist Frank MacKinnon has likened the governor-general to a constitutional fire extinguisher - conspicuous and brightly coloured, but seldom used. Harper may have pulled the fire bell, but until we see the flames the reserve powers to refuse ministerial advice need not be used.

Barbara J. Messamore teaches history at the University of the Fraser Valley. She is the Author of Canada's Governors General, 1847-1878: Biography and Constitutional Evolution.

Copyright 2008 - The National Post

December 28, 2008

 

An American point of view on our attempted coup...

From: The Wall Street Journal

Canada's Conservatives Overreach
By: MARY ANASTASIA O'GRADY

DECEMBER 8, 2008

On Oct. 14 Stephen Harper won re-election as Canada's prime minister. In most modern liberal democracies that would be interpreted as a voter preference for Mr. Harper's leadership to continue. But soon after election day, Canada's hard-left New Democratic Party and the separatist Bloc Quebecois Party began plotting to overthrow the PM in Parliament. And last week, with the help of the Liberal Party, they tried to schedule a vote of no-confidence to carry out their plan.

Mr. Harper fought back by appealing to the governor general for permission to suspend Parliament until Jan. 26, and on Thursday she granted his request. His survival now depends on whether the anti-Harper coalition holds together over the next seven weeks.

This power grab on the heels of Mr. Harper's victory, though perfectly legal, is one for the record books in staid Canada. Americans, however, may be more interested in what brought the three-party, anti-Harper coalition together. It was an attempt by Mr. Harper to do away with public financing of political parties.

There is a similarity between how Canada's Conservatives finance their campaigns and how U.S. President-elect Barack Obama did it. Both could afford to forgo public money because, for both, voluntary giving amounts to much more.

First a little background about the last Canadian election. Mr. Harper's Conservative Party did not win a majority, but it did pick up 16 seats. With 143 MPs against a total of 114 Liberal and New Democrats, Mr. Harper appeared reasonably popular with Canadians and poised to advance his moderate Conservative agenda.

The Liberals had promised during the campaign that they would not form a coalition to defeat Mr. Harper if they lost at the polls. But then Finance Minister Jim Flaherty announced on Nov. 27 that Conservatives would seek to eliminate the public subsidy that goes to the five largest political parties. Mr. Flaherty has been looking for ways to slash government spending and argued that this cut would save $30 million.

Maybe so, but the other side saw it - not without reason - as an attempt to starve them to death. That's because Canada's left-wing parties rely heavily on the government, which provides C$1.95 (about $1.50) to each party for every vote they received in the last federal election, providing the party won at least 2% of the national vote.

The Conservatives would appear to be most hurt by the cuts. Based on the subsidy formula, they earned some C$10 million in public funding in the last election, while the Liberals garnered only C$7.7 million, the NDP C$4.9 million, the Bloc Quebecois C$2.6 million and the Green Party C$1.8 million.

Yet the Conservatives are in the best position to live without the subsidies because their base gives voluntarily to their cause. According to CBC News, public funding represents only 37% of total Conservative Party revenues whereas for the Liberals it is 63%. The NDP's public funding is 57% of budget, for the Bloc it's 86% and for the Green Party it's 65%. In other words, take away public money and the Conservatives could outspend their competitors by a wide margin.

Where do the Conservatives' private donations come from? Not corporations or unions, which are not allowed to make political contributions. Only individuals can give and only up to C$1,100 each. This means that Conservatives have a broad base of financial support not unlike Mr. Obama, whose vast fund-raising abilities among what he said were grassroots givers allowed him to opt out of public financing altogether. The similar reality in Canada - not a lack of leadership on the economic crisis, as the opposition claims - is what triggered the call for a no-confidence vote just weeks after the federal election.

Liberal leader Stephan Dion, who was defeated on Oct. 14 but will take over if the coalition prevails, denies that it is a coup. He likens the move to Mr. Harper's attempt to unseat Paul Martin's Liberal government in May 2005. But that took place 11 months after an election and Mr. Harper wanted another election. In this case, the three-party coalition wants to take over but hold no new election.

Mr. Harper is being criticized by members of his own party for overreaching with a minority government, and he has withdrawn the proposal to cut the parties' public funding. But things may yet backfire on the Liberals. The no-confidence vote cannot succeed without the separatist Bloc Quebecois. In effect, that means that the Liberals are handing power to the separatists in exchange for their promise to help bring down the elected PM. Canadians know that this power play will mean increased instability in federal leadership and that's not likely to go down well.

Write to: O'Grady@wsj.com

Copyright 2008 - The Wall Street Journal

 

An urgent message for all...

From: The Conservative Party of Canada

December 02, 2008

Two months ago Canadians voted in a general election. They made a clear choice. Stephen Harper was given a strengthened governing mandate to address the global economic crisis.

Canadians did not give Stéphane Dion a mandate to lead Canada. He was personally rejected by voters just as he was subsequently personally rejected by his party.

Nor did Canadians give the Liberals a mandate to form a coalition with the NDP. In fact, the Liberals explicitly promised there would be no coalition with the NDP. And they certainly did not give either the Liberals or the NDP a mandate to govern with the Separatists, the very people who want to destroy Canada.

Yet, yesterday, in a shocking display of undemocratic arrogance, a socialist-separatist driven coalition announced that they will try to overturn the results of the election and seize power without first going back to the voters. The new socialist-separatist driven coalition is an attack on Canada’s democracy as the proposed leader of this unelected, illegitimate, coalition remains Stéphane Dion, whom Canadians would still reject as Prime Minister were another election held today.

The new socialist-separatist coalition is an attack on Canada’s economy - as it would empower NDP - whose discredited left-wing ideology is so risky that even the Liberals call it “economically damaging”. And the new socialist-separatist driven coalition is an attack on Canada itself. For no responsible national leader would ever give power to a group that wants to destroy one of the most peaceful and prosperous nations ever to have existed.

It is time for Canadians to stand up against backroom deals that would usurp the elected government without the people’s consent. It is time for Canadians to stand up against coalitions with discredited socialists that would put our economy at risk. It is time for Canadians stand up against alliances that would provide a veto to the separatists who would destroy our country. It’s time to Stand up for Canada. It’s time to Let the people speak.

Take action NOW:

December 03, 2008

PARIZEAU ENDORSES COALITION

Parizeau set to get the weak, unstable and disoriented federal government he always dreamed of. Now, more than ever, we must all Stand up for Canada.

It is becoming increasingly clear that Stéphane Dion and Jack Layton have sold out their principles by signing a separatist pact with the Bloc Québécois - a pact now blessed by hard liner Jacques Parizeau, a former PQ Premier. Hard line separatists like Jacques Parizeau have only one objective: the establishment of a weak, unstable and disoriented federal government that will forever be incapable of acting in the national interest.

Thanks to Stéphane Dion and Jack Layton, Jacques Parizeau is set to get the weak, unstable and disoriented federal government he always dreamed of - all without obtaining the democratic consent of the Canadian people.

PARIZEAU’S DREAM: “A weaker government in Ottawa is eminently satisfying. It’s not in the best interest of sovereignists that many people still consider Ottawa as a stable and serious government. The image must be one of a weak, disoriented government, which will become weaker and more disoriented in the future. This is perfect.” - Le Soleil, January 19, 1991.

PARIZEAU’S (EMERGING) REALITY: “Former Premier Jacques Parizeau applauded without reservation Gilles Duceppe and the Bloc Québécois’s recent “impressive victory” in forming a coalition government in Ottawa.” - Journal de Montreal, December 3, 2008.

TAKE ACTION: Canadians want an effective federal government that will govern in the interests of all Canadians. They don’t want their federal government de-stabilized by separatists who only desire a weak, unstable and disoriented federal government. Stéphane Dion and Jack Layton have made their choice. It’s time we made ours. Now, more than ever, we must all come together and Stand up for Canada. There can be no separatist pact without the consent of the Canadian people.

Take action NOW:

Authorized by the Registered Agent of the Conservative Party of Canada


 

Well said...

Please consider signing this petition: http://www.canadians4democracy.ca/

From: The Western Standard
http://westernstandard.blogs.com/shotgun/2008/12/bloc-blessed-ju.html

Bloc-blessed junta is undemocratic and most unfair to NDP and Liberal voters
By: Liam O'Brien

Monday, December 01, 2008

It's not surprising that Jean Chretien of Adscam and "Culture of Entitlement" fame is now trying to pull the backroom marionette strings and replace our democratically elected federal government. What sparked this railroading? Not the economy and not "economic stimulus" - well unless you count the stimulus/subsidy for politicos paid for by Canadian taxpayers.

The Liberals, Bloc and the NDP got upset at the mere suggestion that before politicians ask Canadians to tighten belts in face of economic challenges, politicos might have to do the same. They were terrified. After all, they're “entitled to their entitlements” - our tax dollars to fund their political ads, staffers, and pollsters. Eighty-six per (86%) cent of the Bloc Quebecois’ political budget is funded by your tax dollars. That’s thanks to a system started by Chretien and jealously guarded by Dion and Layton.

Thought we stopped this graft years ago? Think again. They're reaching out from the grave, desperately trying to end one of the first governments in years that actually showed at least some stability, reason and focus in its economic approach with real and even pre-emptive tax cut and infrastructure stimulus.

Even in recent days, the government has shown that it’s willing to work with the other parties - they’ll even introduce an early budget and shelve the political subsidy cut. The government is clearly responsive. Got a problem with the ways things are going? They're obviously willing to talk. Why not, in this time when we need stability, give the government a chance to do its work? Why not show the world we are a mature, civil and fair society and respect the results of our own election?

We now know that while Prime Minister Harper was standing for this country’s economic interests at the G20 and elsewhere, the NDP was already plotting this power grab with the Bloc Quebecois. While they want to bring down the just re-elected government, they don’t want to face the voters for any democratic approval of their plot.

This is actually most unfair to those Canadians who voted Liberal or New Democrat. These parties just finished an election where they explicitly campaigned against any “coalition.” There’s no mandate for this. Had NDP and Liberal voters known those parties wanted to write a blank cheque to the Bloc Quebecois, many might have voted differently. You don’t need to like the current Prime Minister in order to see how profoundly undemocratic and unfair a Bloc/Liberal/NDP backroom coalition would be.

The people have spoken. They didn’t want a leaderless or poorly-led Bloc-blessed junta united only by partisan hatred of the Prime Minister. They didn’t want cabinet decisions made with care to Gilles Duceppe’s whims and approval as top concern and this country’s economic future as an afterthought. Many said the economy was threatened enough when Quebec sovereigntists took power in Quebec last time. The result of having this happen in any way in Ottawa would not only be political lunacy, it could be catastrophic.

Most analysts believe that at best this hate-based coalition could only last a matter of months - time enough to just cause damage and set back work already started by the previous government. Where’s the stability or sense in this? How is this anything except an unwarranted power grab? This allergy to democracy is unhealthy. It sends the wrong message to the world.

Like him or hate him, the Prime Minister was quite correct when he said Canada's government should be decided by Canadians - not backroom deals. It should be our choice. Well, we've chosen. Let the opposition know they need to come out of the backroom and let the current democratically elected government continue to do its work.

Copyright 2008 - The Western Standard >> Permalink

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