A DOUBLE-DOUBLE BAD IDEA:
There's a bitter joke making the rounds among policy wonks these days: "What think-tank is most influential with the Conservative government?" And the answer: "The Tim Hortons Think-Tank."
If an idea flies with the crowd lining up for coffee and donuts, the theory goes, then it might show up on Stephen Harper's agenda. If not, forget it. How else to explain the sheer, calculated politics behind some of the government's most prominent, but intellectually questionable, policy initiatives?
Cutting the GST. Reinstating the long-lost baby bonus, in the guise of "child care" policy. Wading into the impassable swamp of federal-provincial fiscal relations, vaguely promising to keep everybody happy. It's hard to find a high-falutin' policy expert (even a rightwing one) who agrees with the logic of any of these initiatives. And they will all cause headaches for Ottawa down the road.
But with a pre-emptive election looking likelier all the time, and the Conservatives focused ruthlessly on winning a majority, federal actions are now driven by politics, not policy. The Harper team has judged each of these initiatives to be a potential vote-winner, hence they charge ahead.
There's one federal initiative elbowing its way onto the political radar screen, however, that badly flunks the Tim Hortons sniff test. Ottawa is negotiating a free trade deal with South Korea that will likely serve as a template for subsequent deals with Japan and China. Despite increasingly agitated opposition from some of Canada's most important industries, federal negotiators have fast-tracked the talks-meeting the Koreans every six weeks, seeking a deal by year's end.
This represents the reincarnation of the good old-fashioned elitist approach to policy-making. Only a true policy wonk, armed with ethereal printouts from a computable general equilibrium economic model, could seriously claim that the average Canadian will receive any measurable benefit whatsoever from a deal with far-off Korea.
Canada and Korea have a modest, oddly unbalanced trading relationship. Canada exports under $3 billion worth of products to Korea each year, mostly resources (coal, wood pulp, and aluminum are the biggest). We import twice that much from Korea, mostly high-tech manufactures: motor vehicles, computers, and electronics. The result is a $3 billion deficit, equivalent to the loss of about 15,000 Canadian jobs.
This imbalance got much worse following Korea's 1997 financial crisis. Korea's exports to Canada are up 90% since 1997, while our sales to Korea are actually 10% lower. Korea has relied on export-led growth, while tightly capping imports (through various tools, including macroeconomic levers, taxation …