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The double-barreled title deals with two aspects of the credit crisis, the uncertainty over whether banks will start lending out the billions governments have been giving them, and Allan Greenspan’s agonizing reappraisal of his personal role in the credit crisis.

Joe Nocera, in last Saturday’s New York Times raised the key question of whether the US banks that have been receiving billions of funding under the bailout package will hoard it, use it to acquire other banks, or actually lend it out. As can be expected of a Republican administration that is still philosophically non-interventionist, there is little desire to get involved in managing how banks run their business. Nocera notes that, in contrast, the British government is requiring that recipient banks resume lending.

Starting from first principles, there is a good case for government to seek commitments that banks will expand lending. First, if the banking system has now become, in essence, a public utility, then the government, as representative of the public, should have enhanced decision rights. Second, we’ve learned that a key reason that the stock market crash of 1929 evolved to the Great Depression of the Thirties is that governments permitted credit, aka among economists as the money supply, to collapse.

Looking ahead to the Obama Administration (and back to the Clinton Administration), here is a suggestion. The Clinton Administration had several successes in inducing high profile organizational commitments to actions in the public interest. Two that come to mind are Labor Secretary Reich’s initiative to get brand-name clothing lines to commit to a rejection of sweatshop production and procurement administrator Steve Kelman’s initiative to get government agencies to commit to the principles of procurement reform. These cases are obviously much less complex than the credit crisis, but I think the approach is transferable. Summon the bankers to the White House to a public conference to get some sort of commitment to principles regarding the expansion of credit.

In Canada one similar issue that has arisen was whether banks would reduce their lending rates commensurate with reductions in the government lending rate. The banks’ initial reluctance to follow led to public criticism which led to the banks to pass on the entire rate cut to borrowers. The overarching issue is similar: economic instability has necessarily made bankers’ decisions a public policy issue.

Finally, Allan Greenspan will be bringing his “mea culpa tour” to Toronto on Friday November 7, for an event billed as “an afternoon with Allan Greenspan.” I detect a few ironies. The “afternoon” is scheduled for noon to 2 p.m., ending early so the audience can return to their trading desks to close out the week. The sponsor is TD Canada Trust, which has distinguished itself for its shrewd avoidance of subprime loans. Finally, the ticket price is $325 or $450. Given that he has now recognized the error of his ways, it seems only appropriate that Greenspan do the right thing and donate the entire speaker’s fee to the United Way of Greater Cleveland or some similar organization helping repair the devastating economic and personal damage his decisions have unleashed.

It’s now almost three years since my co-authors and I completed our research for our book Digital State at the Leading Edge. Since then I have continued to write about the key question the book addressed - whether IT is transforming politics and government - in my blog, first at www.intergovworld.com, and now here. I now have an opportunity to pull together these three years of observation. I will be presenting a paper at a conference in honour of Carleton University Professor Bruce Doern, one of Canada’s most distinguished public administration scholars. The papers given at the conference will then be published as a festschrift - an edited book honouring Professor Doern.

I am posting my Powerpoint deck for the conference presentation here and hope to receive some feedback. While we were writing Digital State at the Leading Edge, most of the e-activity we witnessed involved e-government, and the public servants we interviewed often commented that few politicians understood the potential impact of the IT in general and the Internet more specifically on politics. That has changed markedly in the last three years. In a way it’s not surprising, because politics is about winner-take-all competition, and the struggle for advantage usually leads to technological innovation. While the Obama campaign represents the leading edge of IT as applied to politics, the two Canadian election campaigns I closely followed - Ontario and the feds - displayed increasingly technological sophistication.
Two other themes I noted briefly in the Powerpoint presentation are the politicization of government’s online presence, driven by technologically savvy politicians, and a slowing down of initiatives in the area of online service delivery.

The Powerpoint presentation is necessarily brief, because presentations at the conference will be limited to 10 minutes, but I intend to expand on these themes in the paper that will follow. I will definitely appreciate your comments on the Powerpoint.

No, online politics weren’t as important in the Canadian election as they were in the Obama campaign. But US presidential campaigns, which run for almost two years, necessitate a focus on online campaigning, and Obama developed a particularly powerful model that combined a charismatic stage presence with online organizing - which I will say more about in future posts. Canadian campaigns, in contrast, involve a six week all-out blitz using both traditional and online media.

Looking back at the Canadian campaign, there are a number of ways online politics played an increasingly important role.

• Online vetting of candidates conducted more diligently by constituency organizations and citizen journalists than by national party offices led to approximately a dozen candidates being dumped.

• The online medium supported citizen mobilization in a number of ways. Most significantly, Quebec singer Michel Rivard’s “culture en peril” YouTube video, in three weeks, was visited 678,000 times in French and 191,000 in English. It contributed mightily to the Conservatives’ failure to achieve a breakthrough in Quebec. The online medium was where citizens went to protest Elizabeth May being shut out of the national leaders’ debate, and they achieved their goal - overnight. Finally, cyberspace was the place where strategic voting was organized, for example through the Fair Vote Canada Facebook group.

• YouTube remains the place to spread the word about candidate gaffes. In this case, Stephane Dion’s “false start” answering the question of how he would respond to the credit crisis if he were PM had 175,000 visits in just 5 days. I find it surprising that Harper’s gaffe about responding to the stock market crash by buying stocks had only 1500 visits in the same period, which suggests that the “not a leader” negative advertising about Dion was more effective than the “right wing agenda” negative advertising about Harper.

• Party ads got considerable attention online, for example 90,000 YouTube visits for the Liberal ad focusing on Harper’s plagiarism of Australian PM John Howard’s speech, 38,000 for the ad linking Harpernomics to George Bush, and 31,000 for Jack Layton’s “new kind of strong” ad. What we don’t know is how often they were visited on party websites, or indeed how frequently party websites were visited. Similarly, we don’t know how much money the parties raised through online donations, nor do we know how successful online initiatives like the Conservatives’ MyCampaign were. All that is closely held political information.

Another aspect of the online campaign that is apparent is that the media have put more and more of their commentary online. Judging by the number of comments, for example hundreds posted on Globe and Mail articles before the hard copies are delivered at 6 am, it is clear that the online readers are out there.

So judged by the standard of past election campaigns, yes, online campaigning and citizen engagement in all their manifestations mattered more than before.

Breaking a campaign promise at the start of a mandate can lead to heavy and long-lived criticism. Just ask Dalton McGuinty, who, facing a large and unexpected deficit, broke his promise not to raise taxes when he took office in 2003.

Whoever becomes prime minister after the October 14 election will immediately be confronted with the question of whether to honour the promise, made by all party leaders, not to run a deficit. The economic rationale for a deficit now is clearcut: when a recession hits the private sector, government can and must take up the slack and stimulate demand.

Even if the government doesn’t change its policies, we are likely headed for a deficit, because tax revenues will go down and transfer payments such as employment insurance will go up. To raise taxes or cut spending to avoid this automatic deficit will make the recession worse.

If the new government decides to run a deficit, there are two ways to do it. One would be to cut taxes, thereby putting money in consumers’ pockets. This is what the Conservatives did when they cut the GST earlier in the year, and what the US government did when it gave taxpayers tax rebates totally roughly $150 billion.

The second alternative would be to spend the money directly. A fiscal stimulus package could be built around the idea of rebuilding Canada’s infrastructure, with investments in areas such as health, the knowledge economy, and transportation. I prefer the infrastructure approach because I think it has a bigger immediate impact and puts in place investments (for example hospitals, research infrastructure, public transit) that will strengthen our economic performance in the future.

Given Canada’s strong federal finances, we can afford some short term deficit spending to stimulate the economy. The challenge will be to structure the program and define its terms, for example its duration, carefully. So we need both quick action and careful thinking. Let’s hope that our professional public service is hard at work on planning an economic recovery program, so they can hand it to the new prime minister as soon as the votes are counted.

How have the political parties used the online medium to prepare for, and respond to last night’s debates in Canada and the US? They are similar on the preparation, sending out email messages to their supporters urging them to host a debate party and suggesting what to look for in the debate.

But the big difference between Canada and the US is in the parties’ reaction to the debates. Overnight, both the Obama and McCain sites have posted extensive quotes from supportive commentators and polling numbers. YouTube is already full of debate excerpts, analysis, and commentary. The Canadian scene, by contrast, is extremely disappointing. The party websites have very little reaction to the debates, either quotes from commentators or poll numbers. The latest ads still dominate their home pages. Almost nothing has been posted on YouTube about the debate, either by the parties or by the public.

What is happening this year? I can remember that in the 2003 Ontario leadership debate, opposition leader Dalton McGuinty gave a strong performance against a tired Premier Ernie Eves, and the Ontario Liberals had every bit of supportive commentary posted on their site by the next morning. Maybe this year the campaigns are already exhausted, or perhaps they’ve concluded that the debate was inconclusive, so they’ll continue to hammer away in their advertising. But I’m disappointed that none of the Canadian parties has yet seized on the debates as an important part of their campaign narrative.