As finance minister, Chrystia Freeland’s new job of leading the Canadian economy out of trouble will be a bit like conducting an orchestra while a large portion of the musicians stand on their chairs and jeer.
The analogy is inadequate, because there is no job like running a national economy during a time of crisis — especially with a minority government. But Freeland has an advantage in that, so much more than her predecessors, she has already sketched out the score.
Like great war leaders, such as former Canadian insurance salesman Arthur Currie at Vimy Ridge or the idle and awkward youth who became the Duke of Wellington and faced Napoleon at Waterloo, successful finance ministers are proven in the field.
Among those already jeering are those who say Freeland is not qualified.
Canada is a trillion dollars in debt. Our new finance minister has no financial experience or education. It’s time for an election.<br> <a href=”https://twitter.com/hashtag/cdnpoli?src=hash&ref_src=twsrc%5Etfw”>#cdnpoli</a> <a href=”https://twitter.com/hashtag/cpcldr?src=hash&ref_src=twsrc%5Etfw”>#cpcldr</a><br> <a href=”https://t.co/8enFmUjFsI”>https://t.co/8enFmUjFsI</a>
Tough as it is to make money in business, the task of running a country’s finances is by comparison colossal. And it must be done in public view.
“The restart of our economy needs to be green,” Freeland said in her first day on the job. “It also needs to be equitable, it needs to be inclusive and we need to focus very much on jobs and growth.”
Economic rough draft
To help us imagine how the new finance minister might begin solving such diverse — and some would say — conflicting problems, there is in her case a unique resource available.
As a long-time journalist and author whose articles are easily available in the internet age, Freeland has left open a picture window into her economic thinking open to anyone whose interested.
Besides proving that she can absorb complexity at the highest level and synthesize it into something almost anyone can understand, as a journalist Freeland has met with and commented, revealingly, on economic and political actors around the world.
“Voters care deeply about big ideas and will elect the leaders who take the trouble to engage them,” she wrote approvingly for Reuters as she paraphrased the thinking of newly elected Calgary mayor Naheed Nenshi in 2011.
Laid bare as an unflagging supporter of capitalism, she points out that one of the system’s biggest flaws in its current format is the still growing rich-poor divide which, if it continues, she insists, will likely bring that system to its knees.
“Global capitalism wasn’t supposed to work that way,” Freeland wrote.
Looking for the invisible hand
One advantage of depending on the “small-government” capitalist free market system so often backed, at least with lip service, by conservatives, is that in theory, the role of the politician is relatively simple: back off and let the invisible hand do its job.
Intervening to make things work better is so much more difficult and error prone. But with the economy shrinking due to COVID-19, the wealth-gap widening, and the deficit exploding, a traditional small-government policy of austerity and low taxes seems untenable. It is deeply in conflict with Freeland’s stated views.
So far the money distributed, including Friday’s announced $37-billion extension of the Canada emergency response benefit (CERB) by the federal government has been useful in tiding us over an economic shock that few expected.
But even if the bottomless piggy bank of modern monetary theory works, most proponents of government spending believe it cannot outgrow GDP forever, but must rekindle the economy so that the spending eventually pays for itself.
That is harder but not necessarily impossible, according to economists like Mariana Mazzucato, author of The Entrepreneurial State, who debunks the idea that governments must stand by helplessly as the titans of business decide how money should be spent.
Pumping money into green growth as Europe and even pro-coal Australia have done certainly has widespread support from the expanding environmental business sector and if packaged wisely, could have even broader appeal.
“…”As technologies change, we can capitalise on our strengths in renewables to continue to lead the world in energy exports,” said Angus Taylor, Australia’s energy minister.” <br><br>Australia aims to become renewable energy export superpower – <a href=”https://t.co/Fhyp0utIg8″>https://t.co/Fhyp0utIg8</a> via <a href=”https://twitter.com/FT?ref_src=twsrc%5Etfw”>@FT</a>
Following Australia to become a “renewable energy export superpower” is hardly crazier than the billions spent by former prime minister Stephen Harper to promote a similar plan for fossil fuels, or Prime Minister Justin Trudeau’s multi-billion dollar investment in a pipeline, now that oil prices are falling and demand shrinking.
But to create jobs, especially in the booming tech sector, means creating businesses and keeping them from being bought up by foreign giants.
“Immediate action must be taken to create a domestic supply chain of capital, both public and private sector, working in tandem to support all entrepreneurs,” wrote a group of venture capitalists in the Hill Times last week. They say they have a plan to make it happen.
And how to stop the slide into greater inequality? The Green Party last week added its support for a universal basic income. The New Democrats have pushed for universal child care. Gradually raising the federal minimum wage toward a living wage might do the trick. Alternatively, some Conservatives have called for an election to stop out-of-control spending.
With her hands on the purse strings, Freeland knows there is only so much money to go around.
But with so much in flux and so much money spent already, she may have a window to make significant change. Tax historians have suggested this might be a rare moment when Canadians would support a more distributive tax regime.
Radical changes are risky. They can lead to radical errors. But time is of the essence. And the window may soon close.
Freeland’s task is no cake walk. Without a majority government the job may be impossible, as a cacophony of opposition from entrenched and divergent interests overwhelms the conductor’s timely measures.
Follow Don on Twitter @Don_Pittis