Harper criticizes Canadian, U.S. pandemic spending as ‘overkill’
He covered a range of topics, from Covid-19 to China to the economy. The interview may also have a political impact.
The timing: The Harper interview comes amid high expectations Prime Minister Justin Trudeau will launch the country into a summertime election campaign.
Its timing may raise a few eyebrows.
Polls have suggested Trudeau’s Liberals have a comfortable lead over Conservative Leader Erin O’Toole, who took over the top job 11 months ago. O’Toole has so far appeared to struggle in generating excitement within the party’s base.
Many Conservatives still hold Harper in high regard — and the party’s modern incarnation is seen as the operation that he built.
A recent survey by Maclean’s magazine suggested Harper would be more popular than O’Toole if he took the helm of the Conservative Party. The poll found that a return of Harper would slash the Liberals’ apparent advantage by two-thirds.
On the precise timing of the interview, the date is unclear, but the former prime minister noted it on Twitter on June 30.
“Congratulations to my friend @JTLonsdale on launching the American Optimist!,” wrote Harper, who is an adviser to Lonsdale’s Cicero Institute and his 8VC venture capital firm. “I had a great time sitting down with him in Austin the other week. I encourage everyone to follow along, Joe covers many important and interesting topics relevant to both business and government leaders.”
Here’s a sample of what he discussed:
Covid’s economic fallout: Harper, an economist by training who served as prime minister from 2006 until 2015, told Lonsdale that a lot of spending by countries like Canada and the U.S. was necessary in response to the crisis created by Covid-19.
“Now that our populations are increasingly vaccinated, the focus should be on economic recovery. I think it’s actually pretty straightforward, but it’s the opposite of what governments are doing,” he said.
Harper then drew comparisons between pandemic response and government handling of the 2008-2009 financial crisis, which unfolded while he was in office.
“The intervention, in global economic terms, has actually been about 10 times the size — 10 times more government spending of what it was,” said Harper, whose government has been credited with helping Canada smoothly navigate the crisis.
“Governments are just saying, ‘Look, this extraordinary macroeconomic policy has saved us from a complete crash during the pandemic, so why can’t we just do this forever?’”
The former prime minister also said that, at the time, people in Canada thought he’d run a large deficit. It was C$55.6 billion.
Harper observed that, for the 2020-2021 fiscal year, Canada’s deficit will be 30 percent higher than his 2015 budget. “If I had not raised a dime in revenue in 2015, my budget balance would have been substantially lower,” he said.
In April, Finance Minister Chrystia Freeland’s budget projected a record-smashing 2020-2021 shortfall of C$354.2 billion or 16.1 percent of the country’s gross domestic product.
An economic take on the U.S.: During the discussion, Harper also offered his fiscal analysis of the U.S. where he accused both political parties of ignoring overall fiscal policy.
“If I can be blunt here, the only priority of the Democratic party has been to maximize government spending regardless of how it is financed,” he said. “The only policy of the Republican party is to minimize taxation regardless of levels of spending.”
The former prime minister said the trajectory can’t go on indefinitely. “People believe the United States can continue to borrow countless trillions of dollars at zero percent. Not only do I believe that’s not true. I believe that’s actually coming to an end.”
More broadly, Harper warned Lonsdale that consequences are on the way — including asset inflation or “bubbles in everything” as well as consumer inflation, which he stressed will force central banks to raise interest rates. Higher rates will make all of the government spending much less affordable.
“Significant problems are coming… This is bad macroeconomic policy on an enormous scale,” he said.
The ‘woke notion’: Elsewhere during the conversation, Harper dismissed what he called “the so-called woke notion that America is fundamentally a racist country.”
He continued: “What I see is all these supposedly suppressed races trying desperately to become Americans and to join the United States.”
Harper went on to dismiss the ambitions of social justice activists on campus and elsewhere. “The adolescent egos of the woke university crowd is not an alternative governing philosophy for any society.”
Threats to Taiwan: Harper was asked about Taiwan’s position next to an increasingly aggressive China.
He nodded to growing worries in national security circles that China might try to forcefully take Taiwan much sooner than the world once thought.
“I’m not betting on it happening in the next two years,” he said. “Whereas 10 years ago, I would have said the chances of that happening were zero. I no longer think that’s the case.”
He added that it wasn’t very long ago when he would have said that Beijing had no interest in ending Hong Kong’s autonomy.