Fundamental to our understanding of democratic politics across the developed world is that conservative parties stand for relatively low levels of government spending, while those on the left of the political spectrum are prone to higher spending. A new study, released yesterday by the Montreal Economic Institute (MEI), blows a hole through that conventional wisdom.
“When you look at the behaviours of various parties over long periods of time in different governments, the pattern is that there is no pattern,” said MEI’s president and chief executive officer, Michel Kelly-Gagnon in an interview with me yesterday. “The parties that are supposed to be more in favour of big government end up spending less than we might expect. And the parties that are supposed to be fiscally conservative sometimes end up being spendthrifts.”
MEI’s study examined government spending in Canada, Quebec and the U.S., dating back to the Pierre Trudeau, Robert Bourassa and Richard Nixon administrations respectively. “In all three cases,” reads the report, “it is actually left-wing governments that most reduced the relative size of government.”
MEI reports government size as the ratio of public spending to gross domestic product.
Under Liberal Prime Ministers Jean Chrétien and Paul Martin, that ratio fell by 32.5%. The current government, under the leadership of Conservative Prime Minister Stephen Harper, drove the ratio up after the financial crisis. It has since reduced the size of government to roughly where it was when the Conservatives took office in 2006.
In the U.S., Republican President George Bush grew the ratio more than any other, by 39%. Democratic President Bill Clinton shrank it by 14.3%.
Is this simply a matter of parties running for office from the left or right, as the cliché goes, and then governing from the centre? Partly, said Kelly-Gagnon. “Parties, when they form governments, regardless of their declared ideology, have to be responsive to the economic environment.”
Context matters, Kelly-Gagnon told me. Clinton’s numbers look great because he enjoyed strong gross domestic product growth during his presidency. Harper had a financial crisis to deal with, and he therefore had to implement a level of stimulus spending that ran contrary to his party’s small government plans.
The report draws two conclusions. First, our perceptions about left- and right-wing political ideology don’t reflect the realities of the last four decades. The data tell a far more nuanced story. Second, we’re far better positioned to debate the role (and size) of government in a non-partisan fashion than we might have expected. The fact that actual decision-making hasn’t been as tied down by ideology as we may have thought means we can be more pragmatic about, for example, the austerity-stimulus debate that continues to rage around the developed world.
It’s worth a try, anyway.
More on government spending:
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