If you can't call a recession what it is, you can't confront it

Earlier this month, Stephen Harper scoffed at his political rivals' use of less loaded terms to describe the terrorist threat. "If you cannot even bring yourself to call jihadist terrorism what it is," he said, "then you cannot be trusted to confront it, and you cannot be trusted to keep Canadians safe from it."Even if you think he's right, it has to seem odd that Harper's finance minister prefers fuzzier language to describe Canada's 2015 recession. Last Wednesday, Joe Oliver managed to inspire another stunned silence by alleging that Canada wasn't in a recession earlier this year and isn't in one now — despite the data showing otherwise."We're in a period of growth," he said, "and we're anticipating our surpluses to get larger in the years ahead."Can we get real? These false assertions represent nothing but an attempt at political fraud — and a pretty transparent one at that.First of all, Oliver should let Statistics Canada speak for itself. According to the latest data, the economy shrank a second straight quarter, putting the country in a technical definition of a recession.So no, Mr. Oliver; as a matter of fact, we are in a recession. Call it a dip, a downturn, a slight concavity in the economic landscape - it's still a recession.Secondly, the recent “surplus” that the Conservatives take pleasure in flaunting is outright phony. It was achieved through accounting gimmicks: reallocating contingency funds, selling off public assets, raiding the employment insurance surplus, and dismantling social services. In fact, the Conservatives have been criticized by the Parliamentary Budget Office for their periodic practice of under spending Parliament-approved budgets in many departments. Lapsed funds in fiscal 2014-15 totaled a whopping $8.7 billion.The recent plan to sell all CBC buildings, for example, raises questions about the accuracy and transparency of the 2015 federal budget. The document contained no mention of selling off any of these buildings – let alone all of them.Nonetheless, despite such gimmicks, the surplus itself is small enough to qualify as theoretical; equal to about one per cent of federal revenues, and 0.15 per cent of GDP. It's practically a rounding error.Thirdly, Oliver continues to make the bizarre error of conflating a federal fiscal surplus with economic growth. The two things can happen at the same time, but that doesn't mean they're the same thing. With another recession under our belt, we should be talking about the fundamental drivers of growth: working more (and working more productively); investing in people, innovation and capital (private and public); and producing goods and services that we can sell to the rest of the world.“We have a solid fiscal situation,” said Harper, “and that's why we continue to believe we're going to see solid economic growth this year.” But that statement doesn't make any sense. Use surpluses to make investments in economic growth and, yes, you can at least claim the two things are linked. Absent those investments, however, Canada's prospects of experiencing anything resembling “solid growth” are wholly imaginary.Economic activity is determined by the spending power available to buy what we collectively produce. There are four major categories of spending and thus, four main engines that can potentially lead growth: business investment, exports, consumer spending and government.According to Unifor Economist Jim Stanford, the first three are all sluggish. Business capital spending was mediocre even before oil prices fell. Exports fell steadily throughout much of the year, producing record trade deficits. And consumers, given years of record debt, are sitting on their wallets. At any rate, consumers can't usually lead the growth parade since they need jobs – quality jobs - before they can go out on a spending spree.In light of such multi-dimensional weakness, what benefit is there in imposing austerity on the public sector? None at all.In essence, national budgets are like family budgets. It's not smart for an indebted family to borrow more money to take a world cruise. But it's smart even for an indebted family to borrow money to invest in their kids' education. Similarly, public investments, just like family investments, build future wealth. Infrastructure investments, in particular, have been proven to create jobs, boost productivity, and allow faster growth. They make the debt-to-GDP ratio lower over time.Every expert who has examined Canada's crumbling infrastructure knows how badly it suffers from decades of deferred maintenance: bridges collapsing, water pipes bursting, sewers backed up, highways impassable and public transport in disrepair. Many schools are also falling apart, literally and figuratively. Yet deficit hysteria might jeopardize the potential for transformative investments.However, we mustn't lose sight of the last 70 years – how Canada fared after the end of the second world war, and the critical role that public projects, from the St. Lawrence Canada to the Trans-Canada highway, have played in speeding the nation's growth.The deficit hysterics are wrong. Harper and Oliver aren't simply unaware of the problem — they're refusing to see it.Ali Hamandi is a PhD Candidate at the Harvard Kennedy School of Government.