Ontario's new Premier: the poisoned chalice

The Ontario Liberals have chosen a new leader who will within days become Ontario's Premier.  She sets precedents as the first female and first gay in that post. Her victory was clearly a product of Wynne's excellent political skills.  She will need them. The weekend convention was greeted by a new Forum Research poll putting support for the Liberal party in third place.

Bob Rae once joked that he had always wanted to be Ontario's premier in the worst way and he got his wish. He was alluding to a situation that also confronts Kathleen Wynne, who politely refers to "facing challenges". Ontario's economy experienced a severe recession in the early years of the Rae NDP government in the early nineties. As a consequence the province's finances suffered a severe setback. There were political and media pressures to follow a program of  spending cuts to achieve a "balanced budget". Rae resisted at first but later became a strong convert to cutting spending. Wynne enters office facing a similar situation. However, the McGuinty government has already committed the province to make deficit reduction a priority. Rae's fate should have served as a warning. It is no accident that third place beckons.

In addition, the party has encountered a series of headline-grabbing scandals. TC's view is that the political damage from the Liberal government's program of austerity and the general sense of malaise that comes from economic stagnation are the greater problems. The confrontation with teachers whatever else it entails, ultimately stems from an effort to cut spending.

In addition, although we live in a world where many have difficulty recognizing it, austerity causes the economy to contract not expand. See this excellent post on "The Austerity Delusion" from the economics blog Not the Treasury View. It is true that Canadian provinces are subject to the international trade winds, and can see their own efforts to stimulate offset by recessionary forces from abroad. However, Ontario actually trades principally with a jurisdiction, the United States, now experiencing at least moderate growth as a consequence of the Obama stimulus - not large enough but producing far better results than the UK or Europe (see Austerity Delusion above). Getting the economy really moving again should be our top priority not deficit reduction.