There’s one phrase to describe the two largest financial disasters in the past two decades: neo -conservative fiscal policies. When Ronald Reagan lifted restrictions on the savings and loan industry in 1986, the market responded in a bonfire of greed. Billions of dollars in real estate loans were underwritten by thousands of investors who lost their savings. Taxpayers of the United States were subsequently left with a debt of nearly $125 billion to cover bad loans made by S&L owners.
The second love affair with neo-con fiscal policies came on the heels of the 9-11 attacks on the United States. When President Bush told consumers to go out and buy to sustain the economy, the banking industry gleefully responded by lending money to high risk consumers. They were encouraged to buy homes with "sub-prime" mortgages, which, after a brief period of affordability, were programmed to kick in with impossibly high interest rates.
Steven Harper’s response to the deepening worldwide economic crisis is to impose the very neo-conservative fiscal policies which launched the US-led recession to global proportions.
But first, to stifle challenges to impose what turns out to be a very right-wing response to crises, the Harper government promised legislation that would cancel the $1.95 per vote for funding political party’s electoral campaigns. The government backed off when a surge of opposition forced the government to lamely cry "uncle".
Originally, Harper’s cabinet wanted freeze public service wages. This was clueless response because their lawyers should have informed them that to do so would violate collective labour agreements negotiated by Public Service Canada. And labour agreements now have protections in the wake of a landmark 2007 Supreme Court decision. In that case, another neo-conservative government, the BC "Liberals", tried to tear up agreements between the province and the health care unions.
While other countries are stimulating their economies with massive infrastructure investments, our PM hopes to sell our public assets and restrain government spending, contrary to the advice of leading economists, and the declared intentions of our leading trade partner south of the 49th. Why would he lead Canada into this isolated position?
Harper and his inner circle of ideologues subscribe to the late economist Milton Friedman’s School of PDF: privatization, de-regulation and free markets. Because the policies which underlie the thinking of conservatives are so repulsive to most Canadians, Harper must use the pretext of an impending recession to convince us that these measures are necessary.
Déjà vu. This is precisely the response that neo-conservatives follow during times of crises, according to Naomi Klein in The Shock Doctrine: The Rise of Disaster Capitalism. Just as the 9-11 attacks on the US gave private enterprise the necessary conditions to rake in millions of dollars in no-bid contracts to bomb and then rebuild Iraq (notably Halliburton), so too does an impending economic recession in Canada give the Conservative party the context to impose their neo-con policies on Canadians.