NATIONAL

DOWN IN THE SLUMPS

JOHN GEDDES March 3 2008
NATIONAL

DOWN IN THE SLUMPS

JOHN GEDDES March 3 2008

DOWN IN THE SLUMPS

Recessions are bad news for everyone, including the parties in power

JOHN GEDDES

In the run-up to the Feb. 26 federal budget, bickering between Conservatives and Liberals over who’s the better economic manager is hotter than usual. With Canada facing a possible recession as the U.S. economy slumps, the Tories accuse Liberals of making spending promises that would drag Ottawa back into deficit. Liberals counter that reckless Tory tax cuts left the government with little room to manoeuvre in tougher times. But would the Liberals benefit if Stephen Harper’s minority lasted into a serious economic slowdown?

The history of voters punishing the parties that rule through slumps goes back almost to Confederation. John A. Macdonald’s Conservatives were swept from power in 1874, after the financial panic of 1873 triggered an international depression. Those who remember their history might doubt the linkage: wasn’t Macdonald ousted over Pacific Scandal revelations about railway money financing his party? In fact, all elections turn on multiple factors, from specific scandals, to more vague time-for-a-change mood swings among voters.

This much, though, seems certain: recessions usually hurt incumbents. Since 1926, when reliable monthly data began being kept, Statistics Canada says there have been 13 reces-

sions. The first lasted from June 1929 to February 1933, ushering in the Depression, and the most recent from April 1990 to April 1992. During that time, the Liberals held power for 45 years, the Tories for 21. The two parties clashed in 12 elections that took place either during those recessions, or after a government had weathered one. The incumbent party won, and avoided being reduced from majority to minority, in only three post-recession elections. In the other nine, the party in power lost outright, or was bumped down to minority status.

But even that record might actually understate the danger a governing party faces going to the polls after a recession. A closer look at the three elections in which a government retained its majority in a post-recession election suggests exceptional circumstances. Ail three were closely related to World War II. After the 1937-38 recession, the last gasp of the Depression, William Lyon Mackenzie King’s Liberals held power in the next election. But the vote didn’t come until 1940, by which time the war had obviously eclipsed any memories of the ’37-38 slump.

The two other cases in which a sitting government held its majority in the next campaign after a recession both occurred after the relatively short, shallow slowdowns between 1947 and 1954, now largely forgotten, that interrupted the economy’s cruise into postwar prosperity. Through this period, the Liberals kept their majority in successive elections. But economic unsteadiness was, arguably, rarely a dominant issue in this stretch. Since then, every election immediately after a recession has seen a party ousted from power, or demoted from majority to minority.

In some campaigns, economic gloom was an obvious backdrop. Few doubt that Brian Mulroney’s Tory landslide in 1984 was helped by the way the 1981-82 recession had battered the Liberals. Jean Chrétien’s 1993 annihilation of the Conservatives followed the painful 1990-92 recession, which had surely deepened public weariness with Tory rule.

Just as often, however, the impact of a recession is subtle and debatable. How much did the 1970 recession contribute to Pierre Trudeau’s Liberals being knocked down to minority in 1972? Did the 1953-54 recession do much to help John Diefenbaker end the long era of Liberal rule in 1957?

Clearly, recessions don’t always defeat governments. Some Tories even argue that Stephen Harper stands to benefit if the current U.S. slump pulls Canada into a mild economic contraction. They would package the Prime Minister as a more reliable leader for unsettled times than the untested Dion. It’s an intriguing strategic notion, but also a nervy bet against the evidence of history. M