The crisis is over; the danger continues.
Stéphane Dion’s bid for unelected power has collapsed, Parliament is prorogued, and the Conservatives will remain the government for now.
The utter discrediting of Dion’s personal leadership within his own party buys the Conservatives a little extra time. No way will the Liberals dare face the electorate until they have replaced their leader.
That said: The position of the Conservatives has suddenly become much more precarious than it was 10 days ago. The mood in Parliament will likely be much uglier when it finally reconvenes. The enactment of budgets and other legislation will only become more difficult. All this will occur against a darkening economic horizon.
Through the early fall, the Canadian economy seemed resistant to the gathering troubles of the U.S. economy. That resilience has abruptly evaporated. On Friday, Statistics Canada released jobs numbers for November: 70,600 were lost, the worst monthly report since July 1982. Ontario has been hit hardest: 7.1% unemployment.
Those numbers will almost certainly worsen in December and January. On Thursday, U.S. retailers returned their worst monthly numbers in 35 years. Auto sales have collapsed, with expensive cars doing worst.
Recessions are dangerous times for incumbent governments. If you happen to be near a computer, take a look at this Statscan chart: http://tiny.cc/JMcLe. It shows Canadian unemployment rates since 1921. Now look at the post-1945 numbers. You’ll see spikes in unemployment in the following years: 1958, 1962, 1972, 1982-84, 1992-1993.
There also happened to be federal elections in 1958, 1962, 1972, 1984 and 1993. In every one of those elections, the incumbent party suffered major losses. Two of the losses (1962 and 1972) reduced a former majority government to minority status. Three of the losses (1958, 1984, and 1993) were the most crushing landslides in the post-1945 period.
This week’s positive poll numbers for the Conservatives will almost certainly prove fleeting. The Liberals will learn their lessons. They will get rid of Dion. Instead of trying to take power without an election, they will try to force an early election. They have to move fast. The world’s central banks have already deployed a huge co-ordinated monetary stimulus. The Americans and Europeans are planning an even vaster fiscal stimulus. Unless all previous economic rules are suspended, 2011 and maybe even 2010 should be a very, very favorable environment for incumbents.
For Conservatives, by contrast, these economic facts suggest four conclusions:
1) The government must do all it can to avoid an election in 2009. To do that, it must ensure that it always looks and acts motivated by broad public interests — so that any Liberal attempt to bring the government down looks selfish and cynical, as this last attempt did.
2) The government must constantly hammer home the message: This is not a made-in-Canada crisis. The Harper government has managed the financial system properly, has kept Canada’s affairs in better order than any other major economy — but inevitably, Canada has been swamped by the global credit crisis that originated in the United States.
3) It is deceptive and unscrupulous for any Canadian party to hold out the false hope that there is a Canadian economic policy that can end this global recession. The Dion-Layton duo calls for huge new government spending programs that would return Canada to the bad old habit of hopeless federal deficits — without making much of an impact on unemployment. Instead, Canada should be positioning itself for the world after the recession. If Canada keeps taxes low and its budget deficits moderate in 2009, Canada in 2011 could emerge as one of the strongest economies on earth.
4) In the meantime, however, it is vital that a Conservative government show care and concern for those who suffer as a result of a crisis not of any Canadian’s making. Emergency spending for temporary relief (summer jobs programs for young workers, for example) may well be called for. Ditto for one-time grants to municipalities to accelerate planned public works. This will be no time to seek savings in social welfare programs, health care or education. Above all, Conservative ministers must go (and be seen to go) where people are hurting, to listen to their problems and respond to their concerns. Conservatives may scoff at Bill Clinton’s politics of “I feel your pain.” But when people are in pain, a government that cannot much alleviate that pain had better at least feel it — and be seen to feel it.

dfrum@aei.org