Are we in a recession or not?  That has been at the forefront of news reports this week as the government exercises damage control in the one area they don’t want to show weakness in, the economy.

A recession is defined as two back-to-back quarters of declining growth.  We have already seen the economy shrink through the first four months of this year and all that remains to be seen is whether or not there was a dramatic turnaround in the spring that put the trend in check.  All the evidence points to that not happening, but until the official numbers are made available from statistics Canada we will have to rely on private sector economists who are stating we have entered into a recession.  Among those in this camp is the Bank of America Merrill Lynch.

This is tough news for Finance Minister, Joe Oliver, who was himself an investment banker with Merrill Lynch and is now claiming that Canada’s numbers are being misperceived.   In addition to that he is also blaming the problems on external factors which is a convenient way to deflect any blame from his own government at the very least. Whether it is smart for the Finance Minister to stick his head in the sand of denial is one thing, what it may be is politically expedient.  The problem with that is by refusing to admit there might be a problem there is little chance that a solution will emerge.

That may be a good thing since the kind of solutions favoured by conservative politicians in western democracies may be the reason we have never really found stable footing since the economic crisis of 2008.  That is the belief that lowering the taxes on profitable corporations and the wealthiest among us will result in economic activity that will ultimately rebound the economy.  It is the concept of trickle-down economics which has proven to be more of a belief than anything else.  In reality the concept as applied in the west has not really panned out, especially for workers who have always been among the first casualties of recession.

The reason for that is simple; once a recession is declared companies tend to horde instead of invest.  That is among the reasons why untargeted tax breaks are the wrong reaction to the phenomenon.  All it ends up doing is creating more wealth to horde and in no way guarantees a determined response to move back into stronger economic growth and stability.  A better response is to target tax breaks for those companies and businesses that are proving they are investing in themselves and creating or maintaining jobs.

With an election on the horizon the Finance Minister is asking for us to believe that we will soon be sailing on smoother economic seas.  It is a convenient way to encourage people into forgetting that his government has had ten years to steer the economy.  Under their watch we have shed permanent full time jobs and gained low-wage, precarious, part-time and temporary jobs.  Something isn’t working and no amount of belief is changing that.