Tuesday, January 27, 2009

Who knew?

It seems that Bob Rae has been right all these years:

"The NDP took power in the midst of one of the worst recessions since the Great Depression. Though they campaigned predominantly on the promise of a public auto insurance system, they backtracked on this policy, causing a split between Premier Rae and his more left-wing ministers. Initially, they increased spending in the public sector to stimulate employment and productivity. However, due to the unforeseen severity of the recession, it angered the business community while not doing enough to provide for public relief."[emphasis mine]

After all, it looks like ole Deficit Jim Flaherty agrees:

"Canada will have to weather large deficits to “do what it takes to keep our economy moving,” including cutting taxes while boosting infrastructure and worker training, Finance Minister Jim Flaherty said in tabling the federal budget Tuesday.

Flaherty promises billions of dollars in new spending — ranging from money for infrastructure projects to aid for worker training, and cash for enhanced employment insurance (EI) benefits — to help the country ride out the global economic downturn."[emphasis mine]

It was only a few months ago the Conservatives were telling we didn't need this, that everything was fine and that Bob Rae was unelectable because of the baggage from his days as NDP Premier of Ontario.

Funny eh?

Personally, I think the last thing we need is a "stimulus" package of any kind, certainly not one that willy-nilly cuts revenue (in the form of broad tax cuts) combined with huge, undirected increases in spending.

I would rather the government do nothing, except keep the books balanced. We could do that either the traditional Liberal way - no tax cuts, but cuts to spending - or the old Bill Davis, Red Tory fiscal conservative way - cut taxes, but also cut spending to keep pace.

I could live with either of those. It would hurt worse now, but in less than 5 years, we would be back probably better.

Instead we have a record deficit that will wreck our economy in the long run, that even this honesty challenged government thinks will run at least 5 years or longer. Our children and grand children will still be paying for this long after we are dead.

Andrew Coyne is, I hope, right - the only good side to this whole mess is it may mean the end of Conservatism in Canada.

Only about 3 years too late.


In case anyone wonders what I think of government spending to "stimulate" the economy, I think it is a terrible idea. I'll let Henry Hazlitt explain. And Peter Schiff.

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At 11:46 PM, Blogger JG said...

I'd say we should let the automatic destabilizers do their work, take measures to reduce consumer and business debt, and invest in infrastructure re: public transit, rail, road/bridge maintenance, sewers, etc. It's the cheaper time to do it, and it's necessary, so it's more than warranted.

Of course, most of this is what we should be doing regardless of the macroeconomic climate; I don't think Keynes ever called for the subsidization of home renovations. Maybe my dad can finish his basement now, though.

At 7:28 AM, Blogger Mike said...

Well even though I don't agree with Keynes, Josh, at least your way is still prudent spending. Not so with the Conservatives - they've thrown open the gates and invited very pig they know to feed at the trough and are running record deficits in order to cling to power.

Seems every bit of ridiculous pandering, spending and outright looting of the public purse through corporate welfare is being labeled "stimulus" and is being excused as "good Keynesian economics".

At 4:27 PM, Blogger JG said...

Well, my main concerns as a student are that whole "massive student debt" thing and the not-unrelated prospect of deflation. This budget - now likely to be passed thanks to the spineless Liberals - earns a big fat "F" insofar as student issues go. If only I needed new bath tiles!

(And I realise now that I wrote automatic destabilizers above. Read into that what you will. :))


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