ANALYSIS | Why can't we afford more straight talk on the economy?

All the world distrusts politicians.  

It's certainly true in Canada. In a survey of the public's trust of professionals, politicians come at the bottom of the heap.   While three-quarters of Canadians trust pharmacists and doctors, the professionals at the top of a recent poll by Ipsos Reid, less than one in ten consider our national politicians trustworthy.  

Lawyers, auto mechanics and even journalists have a higher rating. The only people we trust less are car salespeople.  

The same suspicions can be found in the U.S. and, to a lesser degree, in European democracies as well. One in seven Europeans trusts politicians. But they have more faith in car salesmen than we and the Americans do.  

But if our politicians are indeed untrustworthy, it isn't just their fault. As voters we are all complicit because, after all, we pick them.   

What's more, we vote for them even if they break their most solemn promises. The champion promise breaker: former U.S. president Ronald Reagan.  

When he ran for election in 1980 he promised to reduce the size of government but he ended up making it bigger.  

He promised to cut taxes and did, only to raise them again a year later. The result: a shift in the tax burden from the rich and business to middle-class families.

Do promises matter?

Reagan also promised to balance budgets. But in his eight years as U.S. president he piled up more debt than all the previous presidents together had in a span of 200 years. That was the beginning of the spiral of borrowing that the U.S. is now having a hard time wrestling with.

Yet, in 1984, Reagan was re-elected in a landslide, winning 49 of the 50 states. Even now, more than 20 years later, he remains an iconic figure of the American right.  

The lesson here is that breaking promises doesn't matter, results do; and the U. S. did well on his watch. It didn't matter that the huge deficits he piled up shifted the burden from the voters of the 1980s to future generations.  

There's nothing wrong with that, many say. We call what he did economic stimulus and governments do it all the time.  

In fact, mankind has been borrowing from the future since biblical times, ever since, as the Book of Genesis tells us, Joseph was called in to interpret Pharaoh's dream about seven fat and seven scrawny cattle.  

The dream, Joseph told the Egyptian ruler, was a warning to prepare for seven years of hardship that would follow seven years of plenty. Pharaoh heeded Joseph's advice and ordered the granaries filled. In so doing, he averted a famine when hard times hit.

Saving for the lean years

The modern version of that is called Keynesianism, after John Maynard Keynes, the British economist who advocated government programs to stimulate business activity and job creation in economic downturns.  

Keynes is cited all the time these days. But there's one thing about Keynes the politicians hardly ever talk about. It is the other half of what he — and Joseph — insisted on, namely that governments must save money in the good years in order to be able to spend it in the bad ones. 

But asking people to save for a rainy day is not good politics when all that voters want to hear is what's being done for them now. When good times do roll around, politicians are reluctant to spoil the party by keeping taxes up, to replenish the coffers for the next bout of hard times.  

In the past 50 years, the U.S. has had only five years in which its federal government posted a surplus, four of them under Bill Clinton, a president whose opponents labelled him "a big spender."  

In Canada, we have been more restrained. Over the past two decades we have had as many years with budget surpluses as with deficits. (Compare that record to those paragons of financial probity, the Germans, who have only managed to balance their budget twice over the same period.)  

Our banks have not needed bailouts. Parliament — even in times of minority government — seems to work more effectively than the U.S. Congress.  

Good for us. But we are, of course, not immune to the economic turbulence sweeping the world. Nor, for that matter, are our politicians immune to the sins of fudging certain unpleasant facts.

Spoonfuls of sugar

Indeed, we seem to prefer them to dole out the bitter pills of reality with a little sugar coating, lest they set off a panic.  

U.S. Federal Reserve chairman Ben Bernanke did just that recently with two little words. The U.S. economy, he said, faced "significant risks."  

That was hardly news to anyone. But having Bernanke saying it without adding an antidote sent world stock markets slumping and made those "risks" even greater.  

Politicians — and policy makers like Bernanke — have to handle the bare truth with kid gloves.  

Once upon a time, when Britain stood alone facing the might of a seemingly invincible Nazi Germany, Winston Churchill rallied his countrymen by challenging them to shed "blood, sweat and tears" in the defence of liberty. It was — and still is — Britain's finest hour.  

Nowadays, anyone running for office who calls for sacrifices by the voters for the common good — not blood, just higher taxes and/or lower benefits — is an all but sure loser.  

When the politicians we elect abandon the easy nostrums they campaigned on for the tougher medicine needed to do their jobs properly, we rail at them for being untrustworthy.  

But then we also tend to blame them when they stick by their soft-soap promises and land us in bigger trouble.   Which, come to think of it, means that we, the public, are the untrustworthy fickle figures of politics. The bottom line: Politicians are us.