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Tuesday, January 13, 2009

NDP to push spending increases and trade restrictions in meeting with Flaherty

During a January 6th pre-budget consultation meeting, the Canadian Taxpayers Federation (CTF) urged Finance Minister Jim Flaherty to balance the 2009-10 budget and provide tax relief stimulus.

Today, Flaherty is likely to hear very different advice as he extends his consultations to the opposition parties in parliament. New Democrat MPs Thomas Mulcair and Judy Wasylycia-Leis will meet with Flaherty this afternoon to advance their party’s socialist economic agenda.

The NDP is recommending affordable housing projects, restrictions on outsourcing, reforms to employment insurance, job training programs, auto bailouts and other spending increases to stimulate the economy.

Tax cuts or government spending, which is the better stimulus strategy?

In Economics in One Lesson, first published in 1946, Henry Hazlitt wrote:

There is no more persistent and influential faith in the world today than the faith in government spending. Everywhere government spending is presented as a panacea for all our economic ills. Is private industry partially stagnant? We can fix it all by government spending. Is there unemployment? That is obviously due to “insufficient private purchasing power.” The remedy is just as obvious. All that is necessary is for the government to spend enough to make up the “deficiency”.

...

Having put aside for later consideration the network of fallacies which rest on chronic government borrowing and inflation, we shall take it for granted throughout the present chapter that either immediately or ultimately every dollar of government spending must be raised through a dollar of taxation. Once we look at the matter in this way, the supposed miracles of government spending will appear in another light.

...

I have not spoken of the hundreds of boondoggling projects that are invariably embarked upon the moment the main object is to “give jobs” and “to put people to work.” For then the usefulness of the project itself, as we have seen, inevitably becomes a subordinate consideration. Moreover, the more wasteful the work, the more costly in manpower, the better it becomes for the purpose of providing more employment. Under such circumstances it is highly improbable that the projects thought up by the bureaucrats will provide the same net addition to wealth and welfare, per dollar expended, as would have been provided by the taxpayers themselves, if they had been individually permitted to buy or have made what they themselves wanted, instead of being forced to surrender part of their earnings to the state.

Cutting taxes and allowing investors to finance productive ventures in a gently regulated market would create wealth and jobs, and re-built Canadian industry for long-term sustainable economic growth. Government spending, by contrast, misallocates and destroys wealth, ultimately demands higher taxes and crowds out private sector activity.

Posted by Matthew Johnston

Posted by westernstandard on January 13, 2009 in Economic freedom | Permalink

Comments

Which is why the NDP, and Libertarian types will never understand each other. The NDP want to take from productive people, and give it to unproductive people. Even if they could do it efficiently, and without scandal, it would still be wrong.

"But even if I were convinced that such stimulus in this case would restore economic health much sooner than it would otherwise be restored, I would still oppose it -- on ethical grounds."

Don Boudreaux

I agree with Mr. Boudreaux.

Posted by: TM | 2009-01-13 5:00:05 PM


Me too, TM.

I keep BNN on in the background while I work, and I'm normally shocked by now instinctly statist and collectivist Canadians are, even those in the financial sector.

I just finished listening to Hal Jackman talk about the need for the state to limit executive compensation, for instance.

Does anyone care about, or understand, the free market anymore? Or individualism?

Posted by: Matthew Johnston | 2009-01-13 5:18:31 PM


Giving socialists/communists (NDP) a say in the economy or finances is equivalent to putting a 6 year old child in charge of the candy store.

Posted by: Alain | 2009-01-13 7:24:28 PM


BNN eh? I will check it out. I need something to make me more angry.

Alain, that is so true. Another image comes to mind and that is of a shark tank. The NDP would be the happless person, throwing raw meat (other peoples money) into the tank. If you talk real nice to the sharks they will learn to ration and share, for the common good.

Posted by: TM | 2009-01-13 9:30:05 PM


There are some free market people on BNN, just to be clear. But too few.

Posted by: Matthew Johnston | 2009-01-13 11:12:57 PM


Conservative types trying to claim libertarianism is funny to me. Conservatives can't get supply and demand, or the free market or they would not support a war on drugs. No self respecting Libertarian could justify punitive laws against drug use, or prostitution for that matter.

Building affordable housing and raising the poor to a more dignified existance would do far more to prevent crime than the conservative's stupid mandaTORY minimums.

Posted by: DrGreenthumb | 2009-01-15 12:06:55 AM


I don't support the war on drugs, DrGreenthumb, if your comment was directed at me.

Posted by: Matthew Johnston | 2009-01-15 12:38:45 AM


If you vote Conservative you do.

Posted by: DrGreenthumb | 2009-01-15 7:17:32 AM


Is it possible to vote for a party, without agreeing with or supporting all their policies?

Posted by: TM | 2009-01-15 10:23:10 AM


Greenthumb wrote: "Conservative types trying to claim libertarianism is funny to me. Conservatives can't get supply and demand, or the free market or they would not support a war on drugs."

Using that very same logic, Greenthumb, Conservatives should not support a war on crime either. Crime in general is at least as intractable as drug use, driven by the same laws of supply and demand, the prospects of elimination similarly remote.

Greenthumb wrote: "No self respecting Libertarian could justify punitive laws against drug use, or prostitution for that matter."

Your delusions to the contrary notwithstanding, you do not have a lock on what it means to be libertarian, or Canadian, or progressive, or enlightened, or any of the other self-congratulatory canards in which the Left couches itself in an effort to manufacture credibility out of empty air.

Greenthumb wrote: "Building affordable housing and raising the poor to a more dignified existance would do far more to prevent crime than the conservative's stupid mandaTORY minimums."

Then how do you explain the fact that the U.S. has followed just the approach you condemn, and now has one of the lowest crime rates in its history? People...who are in jail...are not elsewhere...at the same time...committing crimes. Why can't the Left grasp this? Or for that matter, the hypocrisy of opposing blood for oil while supporting blood for pot?

Posted by: Shane Matthews | 2009-01-15 11:19:47 AM


P.S. "Affordable housing" for the able-bodied amounts to rewarding failure and punishing success--a counter-productive, counter-intuitive, and discredited practice. If you oppose corporate bailouts, you must oppose "affordable housing" for all the same reasons, and also the fact that corporations, if rescued, can continue create wealth and jobs, whereas unemployed people in "affordable housing" contribute little besides crime and disease.

Posted by: Shane Matthews | 2009-01-15 11:26:16 AM


TM wrote: "Is it possible to vote for a party, without agreeing with or supporting all their policies?"

A better question might be: Is it possible to vote for a party whose platform you support on EVERY point? Does such a party exist? Not for most of us. Greenthumb knows it, too, but then, reality has never been terribly relevant when he's had a point to make.

Posted by: Shane Matthews | 2009-01-15 11:30:24 AM


Tax cuts at this point will do little to help the economy. They will only hurt us more in the long run if we build up the debt. Look what happened in the U.S. with Bush and his wonderful idea to cut taxes and make the next generation pay big time. Now I'm certainly not advocating tax increases. That would kill morale. We need to go after those who are creating big bills for us and taking more money than the government from our paycheques. Examples: energy companies, insurances, banks

Posted by: Tim Trudeau | 2009-01-19 5:52:32 PM



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