So it has come to this. The left, which once got its inspiration from fearless union organizers and fiery socialist orators, is reduced to canonizing second-string cabinet ministers, little-known economists and anonymous bureaucrats. At least, these are the saints of Linda McQuaig's The Cult of Impotence, a book that turns the story of the Liberal government's elimination of the federal deficit into a saga of how elites got
their way at the expense of ordinary folks. McQuaig’s cast of unlikely heroes fights to save social programs and create jobs. They lose. The winners, by her account, are bond speculators, central bank governors and other deficit hawks perched in their corner offices.
It is an us-against-them tale told with flair. Take, for example, McQuaig’s portrait of Doug Peters, who served as junior finance minister during the first term of Jean Chrétien’s government. With a fiction writer’s eye for detail, she spins his story from a Prairie childhood, through setbacks as a late-blooming student, to an Ivy League PhD in economics and a stint as chief economist for the Toronto-Dominion Bank. Along with success, he acquires a social conscience. After jumping into politics as a Liberal in 1993, he becomes a lone voice inveighing behind closed doors against the spending cuts even-
An author asks why the corporate agenda rules
tually imposed by Finance Minister Paul Martin. Largely ignored, Peters retires before the 1997 election. McQuaig last shows him lunching alone at a bistro near his downtown Toronto condo—a rueful figure, but with his principles intact.
Peters shares with McQuaig’s other underdogs—including a Nobel Prize-winning economist who calls for a tax on international currency flows, and a Wall Street analyst who suggests Canada’s deficit is not so bad after all—an appealing independence of mind. They oppose the economic orthodoxy that has led most governments, including
the present one in Ottawa, to rein in spending and restrain inflation. The “myth” in McQuaig’s title refers to the prevailing view that governments dare not do anything else, for fear of incurring the wrath of financial markets. “Policies from the ‘popular’ agenda, such as full employ-
ment and generous social programs, are dismissed as out-of-date, impractical, no longer possible,” she explains. “Governments are seen as impotent to deliver them.”
McQuaig argues that politicians have greatly overstated the dangers of defying global markets. Yet she does allow that there would be some risk. In a key passage, McQuaig has Pierre Fortin, a Montreal economist she admires, explain what is at stake. Fortin admits that international investors are powerful, but insists that “we can have the kind of employment-creating economic policies we want—even if they
are not exactly what the financia1 community wants—provided we accept the consequences of a flue tuating dollar.”
A consequence worth weighing carefully. After all, fear of a fullblown currency crisis loomed large back when the Liberals were first deciding to make tackling the deficit their top priority But the way McQuaig sees the world, the prospect of a plunging loonie mattered only to big bond traders, who did not want to see the value of their Canadian holdings fall. She ignores what a devalued currency would surety have meant to everyone else: Canadian dollars in savings accounts and pay envelopes would suddenly have bought less ol everything imported, from California lettuce to Japanese sedans.
McQuaig is not so rash as to
suggest that the Liberals should have ignored the $42-billion deficit they inherited from the Tories. She asks: “Wouldn’t a more moderate course—such as the one long urged by Doug Peters, Pierre Fortin or the economists who contribute each year to drawing up something called the Alternative Federal Budget—have achieved sufficient deficit reduction, without destroying much of the country’s social infrastructure in the process?” That alternative course: boost spending, cut interest rates and accept the resulting higher inflation—all in a bid to stimulate the domestic economy and raise enough tax revenues to shrink the deficit.
Sounds like an all-too-familiar prescription, but with a strangely unfamiliar outcome. Readers will wonder why decades of deficit spending, punctuated by bouts of double-digit inflation, failed to do the trick in the past. McQuaig does not offer an answer. And then there is the way she couches her rhetorical question, claiming that the Liberal approach to deficit fighting entailed “destroying much of the country’s social infrastructure.” True, cuts in federal transfers to the provinces have squeezed university and hospital budgets, and benefits to the unemployed were scaled back. But payments to the elderly and aboriginals have been maintained. A mixed record—and fair game for criticism—but hardly one that amounted to shredding the social safety net.
Still, McQuaig is surely on to something. In an era when changes around the world seem to be driven largely by commerce, not democracy, thoughtful readers are hungry for ideas about how governments can again assert themselves. That is an appetite well worth feeding. Too bad The Cult of Impotence tries to satisfy it with leftovers.
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