Munk Dialogue with Andrew Cyone: are we in a recession - or a growth trap?

The government wants to be able to claim the credit for the good times, and the opposition wants to be able to blame the government in the bad times. So they're both kind of heavily invested in what every economist can tell you is a, a completely ridiculous claim.

[instrumental music] The dreaded R word has surfaced once again in the public debate. Are we in a recession or not? It's become a political issue in Canada. A bit of a ping pong ball bounced back and forth between the conservatives and liberals, and various think tanks and experts on the sidelines. To help break it all down, explain what it means, a pleasure to welcome back into the studio Andrew Coyne, a regular contributor here at the Munk Debates. Andrew.

Good to be with you.

So what's your take on this? Uh, and before we get into the semantics of technical versus non-technical, how would you characterize the state of Canadian, the Canadian economy today?

Uh, it's the same as it was two weeks ago, which is, uh, we have really slow growth. We've had really slow growth for many years. It's been getting slower and slower and slower really for about 50 years now [laughs] actually, if you go back. Uh, you know, we used to grow in the '50s and '60s at 4 or 5% per year after inflation. Uh, now we grow at maybe a third of that, if, if we're lucky, um, and even slower in the last six months. So, uh, uh, that's the context here, is we have a long-term, um, you know, trend growth rate that's very low now. Um, that's much more important to our well-being than whether the line squiggles 0.1% in, plus 0.1% or negative 01.1% in any given quarter. But it's a, it's a game we play every few years in this country. Uh, it, it's the, it's the same game whether the, uh, liberals are in government and the conservatives are in opposition, or the conservatives are in government and the liberals are in opposition. Uh, and that is, um, you know, the minute you can get two quarters that are below the zero line, no matter how little, then you get to say the R word.

Mm-hmm.

Uh, gotcha. And both sides play it, and in fact, both government and opposition play it regardless of party because it suits both of them to pretend that governments have a lot of influence over the short-term-

Mm

... rate of growth of the economy.

Mm-hmm.

The government wants to be able to claim the credit for the good times, and the opposition wants to be able to blame the government in the bad times. So they're both kind of heavily invested in what every economist can tell you is a, a completely ridiculous claim. Governments cannot control the short-term-

Yeah

... squiggles of the economy. Um, they can make things worse, I suppose, but they, they have very, very little ability to just gin up, uh, you know, fast growth in any kind of short-term sense. What they do have some influence over is the long-term growth rate. Again, mostly for ill. Mostly, you know, if they could just avoid doing bad policies-

Mm-hmm

... we'd be growing a lot quicker. But there's also some positive things governments can and should be doing to c- contribute to it. Um, what we haven't seen a lot of is either of those things from, again, from governments of either the liberal