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Wednesday, December 31, 2008

Prescriptions for an ailing economy: Peter Holle

In “Canada West Foundation provides political leaders with a Keynsian-lite economic stimulus strategy,” the Western Standard reports on the Calgary-based Canada West Foundation study outlining the organization’s ideas for stimulating the economy.

The report contains the consolidated thinking of 25 leading western Canadian economic analysts who were asked what the Government of Canada should do to address the current economic slowdown.  The resulting report, Taking Action on the Economy, is designed to ensure that western interests and perspectives are part of any national strategy to address Canada’s slowing economy.

While the views of the 25 economic analysts “varied considerably,” some consensus themes emerged. One theme was that government spending as an economic stimulus is needed:

An effective stimulus package should act quickly by working through automatic stabilizers (e.g. employment insurance) to strengthen the existing safety net and put money in the hands consumers.  In the interests of speed, the package should rely primarily on enhancements to existing programs (e.g. tax cuts) rather than on the creation of new programs.

This stimulus package, according to the report, should include infrastructure spending and some reluctant support for the Ontario auto sector, which we have now seen in a form of a $4 billion government bailout.

A dissenting viewpoint among the 25 economic analysts came from Frontier Centre for Public Policy President Peter Holle. In “Prescriptions for an ailing economy,” Holle writes:

The federal government should avoid the temptation to assist specific sectors of the economy, such as auto and forestry that must downsize in the face of permanent reductions in the demand for their products. To stimulate demand immediately and to encourage the economy to adjust to difficult market realities, the federal government should lower the taxes that suppress growth and encourage the Bank of Canada to lower interest rates. The public sector, which comprises about 40 per cent of our economy, must participate in this change process during this time of difficult private sector adjustment. Now is a good time to modernize federal transfer payment policy and to improve the productivity of public spending.

Holle's list of economic remedies can be found here.

Posted by Matthew Johnston

Posted by westernstandard on December 31, 2008 | Permalink


Matt, Peter is right on the money eh? Wow, it is stunning how many people, including "economists" talk about the economic stimulus, as though it is clear to everyone that it is the right thing to do.

Posted by: TM | 2008-12-31 2:18:26 PM

Who's paying the "Canada West Foundation's" bills?

Posted by: JC | 2008-12-31 5:02:04 PM

Peter versus x number socialists parading as economists. Enough said.

Posted by: Alain | 2008-12-31 6:38:03 PM

Peter Holle is great.

Posted by: Matthew Johnston | 2009-01-01 1:37:57 PM

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