Steve Nash, Stephen Harper: Dealing With a Thousand Cuts
In the National Basketball Association, January 1st represented a sea change in the game. The league, long a favourite of mine went back to the “old leather ball.” Previously in the 2006/2007 season the NBA had used a new microfibre ball. Several of the league’s biggest stars had complained publicly about the new ball.
So what’s that got to do with politics, economics and finance? Well, it’s all about productivity and the land of a thousand cuts. It would seem NBA stars like Canadian Steve Nash got numerous small cuts from handling the new ball. The NBA, long conscience about their image decided it couldn’t continue. They didn’t want some of their biggest stars to get run down from the ball inflicting thousands of small cuts. Ditto for Stephen Harper. With the political and economic winds blowing, he can’t afford getting wounded by a thousand cuts. Finding his economic and political way in 2007 will surely be a challenge.
Making his way in 2007 may have become a bit easier last week. Wajid Khan, a Liberal MP who was named a special advisor to Prime Minister Stephen Harper last year crossed the floor last week. By doing that he changed the arithmetic in the House of Commons. The Conservatives with 125 seats and the NDP with 29 can now control the house. Freezing out the Bloc Quebecois will surely warm the souls of many southwestern Ontario Conservatives.
That may delay the election into next year. With four parties in the house and five in the political arena if you count the Greens, majority governments might become increasingly rare. That’s not rocket science and surely politicians realize it. I’m on the record as saying an election is coming by April or May, but now with this new political arithmetic, I’m not so sure. It doesn’t add up like it once did. Jack Layton may play the game completely differently than expected.
He has said it will be issue by issue with an emphasis on the environment. The NDP is unfortunately being squeezed by many political angles. At one time they were the champions of green causes. They may still think of themselves that way, but like it or not in the next election Green party leader Elizabeth May might steel the environmental show. The NDP will have to find even greener pasture.
For Harper the politics might be the land of a thousand cuts, but the economy might help heal them. The manufacturing economy has been helped lately by the loonie, which is heading south. Last June the dollar topped out at 91.05 cents only to trade at 84.91 at noon last Monday. A 7% decline in about seven months is huge. It’s welcome relief to those dependent on export prices such as manufacturing and agriculture.
The unfortunate thing is the manufacturing sector of our economy has lost a lot of jobs. Places like Wallaceburg don’t need any reminders of that. Statistics Canada reported last Friday that manufacturing employment was off 2.7 per cent, or 59,000, for the year (2006) and down nine per cent, or 216,000 jobs, since the decline started in November 2002. That’s a huge hurt partly caused by that huge four year run up in the loonie.
Statistics Canada chimed in with some other numbers. Ontario recorded job growth of 1.8%, which came mostly because of the service industry. Alberta, with its explosive energy growth had its best job growth in 26 years. It accounted for one third of the job growth as a whole across Canada. Also Canada’s unemployment rate was heralded as a 30 year low at 6.1%, although this wasn’t really true as we hit that low at one point last year.
For Stephen Harper much of this is very good news. However, let’s not be hasty in fawning over this perceived economic news. Last week our Bank of Canada governor was defending his lack of action in shoring up a falling Canadian dollar. At the same time oil prices plummeted $6/barrel last week. That sent shudders through the oil patch. Mix that into the economy and low energy prices have their own unique challenges. What’s good for motorists isn’t necessarily good for government tax coffers. It’s a minefield for any economist.
Some might say it’s like shooting a leather ball after handling a microfibre ball for the last six months. Stephen Harper had become used to a higher dollar with explosive energy prices. Now, he’s faced with the opposite. Combined with new environment minister John Baird’s mission to green up the oil patch it looks to me as the land of a thousand cuts. That’s Stephen Harper’s challenge. The question is will he drop the ball?