Lawrence H. Summers, the Charles W. Eliot university professor at Harvard, is a former treasury secretary and director of the National Economic Council in the White House. He is writing occasional posts, to be featured on Wonkblog, about issues of national and international economics and policymaking.
The Canadian Liberal Party won an overwhelming victory in Monday's election. Voters decisively rejected the ruling Conservative Party and placed the Liberal Party far ahead of the left wing New Democratic Party. This is obviously important for Canada. But there are also two lessons here for American political observers.
First, polls often get it wrong. As in Britain, and now the Canadian election, results were much more decisive than had been expected. A Liberal majority looked extremely unlikely two months ago. Even three days ago, I suspect Liberals would have been thrilled if they could have counted on a clear plurality of the vote. An era when less than 10 percent of voters respond to pollsters, and where mass opinion changes rapidly, will be one where Election Day is again a day of drama.
Second, in an era of extraordinarily low interest rates and slow growth, it is becoming increasingly clear that progressives do best when they reject austerity and embrace public investment. The British Labour Party and the Canadian NDP sought to demonstrate their soundness by embracing budget balancing as an objective. Their results were terrible.
The Canadian Liberals on the other hand were rewarded for a very different choice. As incoming prime minister Justin Trudeau told the Financial Times, “People keep telling me we have made a risky choice in this time when there is this political mantra of balanced budgets as a way to demonstrate responsible leadership. I am on the side of economists who say: Why put off investing when we have an opportunity now?”
Indeed, many Canadian political commentators noted the strategic importance of the Liberals’ infrastructure pledge. Martin Patriquin in Maclean’s called the infrastructure plan “the all-important wedge to isolate the NDP." Michelle Gagnon in CBC news identified the announcement of deficit-funded infrastructure spending as “the first turning point." And, as noted on Bloomberg, “Trudeau entered the campaign in third place and his numbers began to increase after he broke from his rivals to favor three years of deficit spending, in part to fund an infrastructure blitz aimed at stoking Canada’s sluggish economy."
More infrastructure investment is not just good economics. It is good politics. Let us hope that American presidential candidates get the word!