Michael Ignatieff's alarming economic message.

A couple of weeks ago, Michael Ignatieff made a promise. "You'll never hear me talk down the Canadian economy," he vowed. "What I will talk down is the inability of this prime minister to tell Canadians the truth about what's actually happening, and what's actually happening is not a pretty sight."

It's hard to disagree with that last bit. The latest OECD projection is much gloomier than the last. It foresees Canada's unemployment rate rising to 8.8 per cent this year and 10.5 per cent in 2010.

That's very, very bad. But does it constitute, as Mr. Ignatieff said a while back, "the worst economic crisis since the Great Depression"? Or, as he put it more recently, "a once-in-a-generation economic crisis"?

Unemployment hit 12 per cent in the early 1980s. In the early 1990s, it rose to 11 per cent. So I suppose one could at least defend Mr. Ignatieff's second statement on the grounds that he didn't say precisely how long "a generation" is. Teenagers can reproduce, so maybe Ignatieff thinks "a generation" is 15 years. That would make his description technically accurate, if a little idiosyncratic.

Of course, a simpler explanation is that Mr. Ignatieff is being alarmist. It's not an accusation the Liberal leader often hears. But it does seem to fit.

Consider that in the same speech in which Mr. Ignatieff promised to never "talk down the Canadian economy," he attacked the prime minister for having compared Canada's situation favourably with that of the United States. "Mr. Harper is telling the country that we are in less worse shape than the Americans. We know, in fact, that for every 10 jobs lost in the United States per capita, 15 are being lost in Canada. Bottom line, Canada is losing jobs faster at the moment than the United States."

Which is true. And misleading. The key is the phrase "at the moment."

The American economy slid into recession at the end of 2007. There were massive job losses throughout 2008.

But Canada actually had substantial job growth throughout most of 2008 thanks to the lingering effects of the resource boom. Only in the last quarter of 2008 did the Canadian economy go into recession. So, yes, Canada suffered relatively worse job losses in the first quarter of this year, but this country's economy was at a different stage of recession than the American economy -- thanks to the fact that we had a vastly better 2008 than the Yanks.
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There's a reason why, for the first time in a very long time, the American unemployment rate is higher than ours.

As negative as Ignatieff has been, elements within his party have been worse. The economy-related blog commentary of Warren Kinsella -- Liberal strategist and Ignatieff adviser -- is best avoided by those prone to suicidal thoughts. Still more depressing are the Internet videos which have been sprouting like daisies since Kinsella joined Team Iggy.

In the latest, upbeat music plays and Stephen Harper is seen making a series of relatively positive statements about the Canadian economy. Canada has "the strongest fiscal position of any of the industrialized countries," for example. And "the structural aspects of the Canadian economy are very sound."

Then a buzzer sounds. The music stops. Several words uttered by Harper are plucked out of context and scorned -- because, apparently, it is axiomatic that the sky is falling and delusional to say otherwise.

Of course Stephen Harper deserves plenty of criticism. From September of last year to February of this, careened from Pollyanna to Chicken Little and back again.

But he's recently found his footing. His statements on the economy have been frank that things are bad and getting worse, but they've also been balanced and constructive. "Notwithstanding all the troubles around us," Harper said in one speech, "Canada has real advantages, real assets, and we should not hesitate to remind investors, partners and leaders around the world of the comparative strengths of our country."

Does that mean Harper's out of touch with reality? Not according to the International Monetary Fund.

Last month, an IMF team concluded "Canada is better placed than many countries to weather the global financial turbulence and worldwide recession."

The IMF singled out three reasons for Canada's "resilience." First, we have long had a balanced budget. As a result, over the last decade, net federal debt relative to GDP was more than halved. Second, "the authorities responded proactively to the crisis." That includes the government's January budget and the Bank of Canada's dropping of interest rates to a record low.
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Third, this country has "financial stability. Canada's banks were well capitalized entering the downturn and have avoided the large losses experienced in other countries. Moreover, credit growth has held up well, and financial strains are markedly less serious than elsewhere. This speaks to a strong regulatory and supervisory framework, as well as conservative practices by Canadian banks themselves, which have avoided the large toxic exposures that now weigh on some banking systems."

Now if you were, say, the leader of the Liberal party of Canada, you could take some comfort in the IMF's conclusions. They're good for the country. And they're good for the Liberal party.

After all, who balanced Canada's budget? Who paid down Canada's debt? Who kept Canadian banks on a short leash when all the other banks were running loose in the global village?

Liberals, that's who.

So one way you, as leader of the Liberal party, could respond to the current crisis is to say, "the situation is very, very bad, but Canada has many strengths that will help us get through these tough times -- and for that, you can thank the Liberal party."

Of course, the other way of handling the economic crisis is simpler: You wave your hands and go on about how the country is broken, everything is falling apart, and it's all the prime minister's fault.

In policy terms, option one is better. It's more accurate. It doesn't add to current troubles by scaring the pants off consumers. And it helps spread the word that Canada is in better shape than most and investors should have a look at this country.

But in political terms, that's too complicated. To paraphrase a Liberal strategist of an earlier generation, the best political messages are those which can be read on the side of a barn as you drive by at 60 miles an hour.

So which will the politician choose? The message that's good policy but not-so-good politics? Or the reverse?

Of course only an incurable idealist like me would even bother to ask.

"You'll never hear me talk down the economy," Michael Ignatieff promised. That's true, I suppose. If we don't listen to him.

You can contact Dan Gardner at the Ottawa Citizen.
E-mail: dgardner@thecitizen.canwest.com

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