Tuesday, March 25, 2008

This is your Finance Minister. And this is your Finance Minister on drugs.

Everyone today seems to be wondering what the hell Jim Flaherty's been smoking. Theories abound regarding the logic behind his recent rants against Dalton McGuinty, Dwight Duncan and Ontario in general - everything from a possible run at John Tory's job to punishment for the province's stubborn refusal to vote Conservative ever again.

One popular theory that even I was starting to suspect was true, is that Harper has written Ontario off entirely and is trying to gain seats everywhere else by indulging in Canada's second favourite sport: Ontario / Toronto Bashing.

There's just one trouble with that theory. The kind of people who form Harper's base out west are also exactly the kind of people who don't take kindly to the Federal government sticking its nose into Provincial business. Even the Saskatoon Star Phoenix, even while agreeing that cutting corporate taxes would probably help Ontario, is positively dumbfounded by Flaherty's blatant meddling.

Paul Wells has an excellent analysis over at Maclean's, and may come the closest to explaining just what the Conservatives might hope to gain from all this. For insight, he turns to the intellectual font from which all of Harper's political strategies spring. From the Book Of Flanagan:
"Our appeal followed the time-honoured advice for raising money by direct mail -- make people angry and afraid, and set up an opponent for them to give against."
— Tom Flanagan, Harper's Team

...As for Ontario's chances of becoming an equalization-receiving province, here's Don Drummond of TD Bank saying the biggest culprit if that ever happens will be the Harper-Flaherty government. "They seem to be bent on making Ontario's situation worse at the moment," Drummond says.

Of course they are. For then Harper will have created a bogeyman Ontarians can be angry and afraid of, so he can do some fundraising against them. It's what he does.

Happily, Duncan and McGuinty aren't buying any of it. They, like most of us here in Ontario, remember all too well what happened last time we listened to Mr. Flaherty, and aren't about to let it happen again.
Following Mr. Flaherty's advice would reduce the province's revenue by $5.1-billion. This would include eliminating the annual health premium - which costs each taxpayer up to $900 a year - and cutting the corporate tax rate to 10 per cent.

“You can't take $5.1-billion out and not close hospitals and not fire nurses and not make cuts to education and not give rise to dramatic increases in tuition and not fire water inspectors and not make cuts to social assistance,” [McGuinty] said. “It just can't be done.”

Regardless of all the political motives and machinations at play, what it comes down to is a battle between two fundamentally different approaches to economics: progressive vs. conservative, bottom-up vs. trickle down, Keynes vs. Friedman in an all-out death match.

We've tried it Flaherty's way before and it was an unmitigated disaster. If Duncan and McGuinty turn out to have a better approach to weathering the coming storm, it might just be enough to convince the rest of the country to try it as well.

At which point Mr. Flaherty can get some first hand experience in the ranks of the unemployed.

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