"Harper's been ricocheting around like a rubber ball from, ‘Don't worry, be happy' to, ‘The sky is falling.'”

PM's pessimistic talk makes bad situation worse, critics say

BRIAN LAGHI and STEVEN CHASE
Globe and Mail
December 16, 2008

OTTAWA — Prime Minister Stephen Harper was accused yesterday of exacerbating the economic downturn by spreading pessimism when he should be taking a leadership role by disbursing hope.

Mr. Harper, who said in a television interview on Monday that he has never seen such uncertainty about the future, came under fire for giving in to fear at a time when Canadians need their Prime Minister to offer a more positive outlook – both to relieve anxiety and to keep consumers spending.

“I think human behaviour drives recessions and recoveries, and confidence in the future drives human behaviour,” said Liberal MP John McCallum, a former chief economist for the Royal Bank of Canada.

“Especially during difficult times, leaders have to inject confidence and hope into their citizens and Stephen Harper has done precisely the opposite with these comments.”
Related Articles

Mr. Harper told CTV on Monday that he had “never seen such uncertainty” about the future and that he was personally “very worried” about the Canadian economy. He wouldn't rule out a depression, saying it “could be” possible, although he quickly added he believed the world had learned enough from the 1930s to avoid another one.

Peter Donolo of the Strategic Counsel polling firm said Mr. Harper may have erred in trying to demonstrate to Canadians that he feels their fear.

“Part of political leadership, national leadership, is giving people a sense of confidence and a sense of hope,” Mr. Donolo said. “My guess is he's trying to compensate for what was widely perceived to be a lack of empathy about people and their economic anxiety.”

He said Mr. Harper's message has been inconsistent.

“He's been ricocheting around like a rubber ball from, ‘Don't worry, be happy' to, ‘The sky is falling.'”

However, economists said such comments from Mr. Harper might have scared Canadians six months ago but they predicted consumers are mostly inured to dire talk after months of awful economic developments.

“Under normal conditions that could possibly send a chill into consumer and business confidence, but I would say under present circumstances it would probably land only a glancing blow because people have been so battered with bad news in recent months that there's very little one can say any more to spook consumers,” said Douglas Porter, deputy chief economist at BMO Nesbitt Burns.

Robert Fairholm, director of Canadian forecasting at the Centre for Spatial Economics, said he thinks Mr. Harper is reflecting prevailing views.

“Consumer confidence has already dropped to deep recession levels – so will his comments push them further down? I suspect not,” he said. “People are already extremely worried.… I don't know if anybody is really hanging on the Prime Minister's words.”

Oct. 7: "I think there are probably some great buying opportunities emerging in the stock market as a consequence of all this panic."

Asked whether he would unequivocally rule out a deficit under his government: "Yes. ... Yesterday I think I was asked one question about whether we would run a deficit and I said, 'No.' That's my answer."

Oct. 11: "The fact of the matter is independent analysts, including the International Monetary Fund, say that Canada is not going to go into recession with the current world environment and its current set of domestic policies. We're the one country that's going to continue to show some growth."

Nov. 23: "The most recent private-sector forecasts suggest the strong possibility of a technical recession the end of this year, the beginning of next.

"I am surprised at this. I am also further surprised, more importantly, by deflationary pressure that we're seeing around the world. This is a worrying development, one of the reasons why it may well be necessary to take unprecedented fiscal stimulus."

Dec. 15: "The truth is, I've never seen such uncertainty in terms of looking forward to the future. .... I'm very worried about the Canadian economy."

Asked whether the situation could turn out to be a depression: "It could be, but I think we've learned enough about depression; we've learned enough from the 1930s to avoid some of the mistakes that caused a recession in 1929 to become a depression in the 1930s."