09 May 2011

When is bad financial management good financial management?

Consider two events and the responses to these events by two different governments. The events are remarkably similar. A party is elected to government at a time when the economy is healthy and then is blindsided by a recession referred to as the worst financial crisis since the Great Depression. As a result, the government runs steep deficit budgets.

Thereafter, the similarity ends. One party is punished for its efforts—thrown out in the next election and condemned thereafter as financially incompetent. The other party is rewarded handsomely—re-elected with a solid majority, supported by almost the entire daily press, and praised for its financial acumen.

The first event is the election of the NDP in Ontario in the early 1990s and the second the recent election of the Conservatives federally.

The myth that Conservatives are fiscally responsible relative to the NDP is as persistent as it is wrong. An article by Tony Sanger, Senior Economist with the Canadian Union of Public Employees, in the Progressive Economics Forum clearly illustrate this fact. The attached chart from the article shows that over the past 30 years NDP governments have balanced their budgets 50 per cent of the time compared to Conservative governments' 37 per cent. Sanger also showed that comparing size of deficits as a share of GDP, NDP governments again came out ahead, illustrating that not only did the NDP balance their budgets more often but also ran smaller deficits.

Why this myth persists is an intriguing question. No doubt ownership of the daily press by that good friend of the Conservatives the corporate sector is a large part of the answer.


  1. I guess it's a strong indication that a budget deficit really isn't as big a problem to these people as they claim it is... not that that's a surprise, given the ability of the current government to skate the largest deficit in history through with a minimum of difficulty.

  2. And with the Liberals, so the last thing they want is an NDP govt in waiting because their corporitism would be @ peril, in terms of continuing sucking at the corporate welfare troff.