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Friday, January 30, 2009

Okay, so the budget's not conservative -- but will it stimulate the economy?

Whether or not we can agree that the disaster that is the 2009 Canadian budget is necessary politically is up for discussion. More to the point is whether or not the budget will be anywhere near successful in achieving its stated goal of cushioning Canadians in the face of recession and coaxing the economy into recovery.

Tasha Kheirridin, with whom I've disagreed often over the past few years, has a great article over at the National Post's Full Comment.

One line in particular, which appears at the top of the article, is important to understanding what a disaster this budget will be for Canada:

The government cannot put money into the economy without taking it out of the economy first. Thus activity does not increase overall - it is simply redirected.

I can never get over the fact that people don't seem to get this. The government does not create wealth. It can take wealth from Canadians and direct it towards goals that Canadians wouldn't have pursued otherwise (though doesn't that seem odd?) or it can borrow against the taxes of future Canadians (thanks, kids!) to do the same thing.

Essentially, what any "bailout"-themed budget or bill is going to do is take money from the parts of the Canadian economy that have been productive and will continue to grow, or at least recover quickly, in the face of this recession and move that money to parts of the Canadian economy that have been failing or will not recover quickly. Further, intelligent, persuasive, and productive people will become lobbyists as the pot of government handouts becomes larger and work at redirecting wealth and economic activity rather than creating it -- deepening the effects of this redistribution.

How will increasing the proportion of the economy that isn't self-sustaining help us recover from a recession quickly? You've got me. But at least some conservatives and libertarian Conservatives are shaken enough by the budget to start bringing these questions to Canadians' attention.

Posted by Janet Neilson on January 30, 2009 in Economic freedom | Permalink

Comments

Janet, people don't think in terms of economics. They think in terms of emotions.

How horrible it would be for people at GM to get layed off. How horrible it would be for people to lose their investments, etc.

So Wesley Mooch just keeps throwing policies around, hoping something might work, all the time just making it worse.

Posted by: Mike Brock | 2009-01-30 4:02:57 PM


Mike, I agree.

My dad used to say he had the cure for the common cold; two weeks. Similarly I can say I have the cure for our current economic woes; about 2 years.

In time, the economy will recover whether we do nothing or not. However, when it recovers, the Keynesians will say "see, it worked." And our brave politicians will take the credit. How will we ever prove it would have recovered had we done nothing?

Janet, it is even worse than you say though, because the inefficiency of government spending means we don't just move the money around, it means we move less of it around.

Posted by: TM | 2009-01-30 5:20:50 PM


Mike - I can't help but think how *horrible* it's going to be when this doesn't work and the party that swoops in to save the day ends up spending even more. ;) At least if Harper fell on the budget when the spending didn't work we'd have someone willing to reform the system (at least I'd hope so) waiting in the wings.

I'll admit that this isn't what people think of when they see a recession looming, but it's not a complicated idea, either - nor is it one that couldn't have been brought forward when the electorate was still opposed to deficit spending and bailouts.

Posted by: Janet | 2009-01-30 6:50:38 PM


Okay, so the budget's not conservative -- but will it stimulate the economy?

No

Posted by: JC | 2009-01-30 7:37:11 PM


The poor Harper budget was, is just one big mistake

but the bigger worry is Obama does not in reality care what Harper says and he insists on buy Americain.. now that will cause a big deeper Canadian depression

Posted by: Thenonconformer | 2009-01-30 7:44:21 PM


Excellent.

Posted by: Ker | 2009-01-30 10:54:38 PM


And that protectionism will cause a monumental depression in the US.

Posted by: DML | 2009-01-30 11:42:49 PM


The federal Budget has a big emphasis on Job retraining and on extending social welfare, unemployment insurance. How firstly will job retraining, and for what kind of jobs too? How will job retraining help anyone when most people are no longer are buying made in Canada goods, Canadians now included.. oil fromn the oil sands included...

Posted by: thenonconformer | 2009-01-31 2:48:31 AM


PS:

"When you have victory in your sights, you don’t give a political opponent time to regroup and get stronger. You move forward, bring them down, and defeat them in an election.

Ignatieff’s acceptance of the budget was a poor tactical decision. It enabled Prime Minister Stephen Harper to receive a pass on his questionable analysis of Canada’s economic stability during the federal election, the “now you see it, now you don’t” proposed elimination of political party subsidies, and the constitutional crisis we recently faced. The PM needed cover to rebuild his shattered image (which he’s been doing since Parliament was prorogued last December) and implement an economic stimulus package – and now he’s got it. "

http://network.nationalpost.com/np/blogs/fullcomment/archive/2009/01/31/michael-taube-michael-ignatieff-s-big-mistake.aspx

and I had said THE SAME THING BEFORE THE BUDGET WAS ACCEPTED..

No question about it, the hoped for coalition’s collapse, Stéphane Dion’s fall, unexpected Michael Ignatieff’s rise and Stephen Harper’s realignment have rather all lead to serious negative effects for all Canadians especially for Harper, Ignatieff.. Not unexpected for the big loser, one step forward, two steps backwards Stephen Harper who now has an official Liberal chaperon as well so that it will be perilous times from this point forward for the Conservatives and the Liberals

On top of that ” Liberal leader rules uneasy roost.. One disgruntled Liberal MP called me to say that all opposition critics and senior committee members will soon be issued mandate letters to explain their roles and responsibilities. The move is unprecedented, the MP said. “Trudeau said MPs are nobodies 50 yards off Parliament Hill. This guy [Ignatieff ] wants to make us nobodies on Parliament Hill. It’s outrageous, and he’s heading toward a mutiny in six to eight months unless he’s high in the polls,” he said.Mr. Ignatieff has followed Prime Minister Stephen Harper’s lead in establishing rigid internal discipline, including slapping down MPs who have spoken out on issues when they were not authorized. “Iggy’s a control freak — he’s worse than Harper,” the MP said. ” http://www.nationalpost.com/opinion/story.html?id=f8dcba59-be0d-4036-93c3-a3980e66e6e6

A negative management style, being a Bully, Dictator, oppressors is very typically Canadian management style for the losers especially.. that is why I have often written about control freaks.. http://thenonconformer.wordpress.com/2008/07/07/control-freaks/,
Also do rather see also my many posts on how to deal with control freaks.. abusers.. for example http://thefocusonthefamily.wordpress.com/2008/07/17/the-too-common-abusive-silent-treatment/
http://thefocusonthefamily.wordpress.com/2008/08/12/more-about-control-freaks/
http://thefocusonthefamily.wordpress.com/2008/07/03/verbal-abuse-is-always-unacceptable-too/


http://postedat.wordpress.com/2009/01/30/bullies-thugs-proud-oppressors-war-mongers/

Posted by: thenonconformer | 2009-01-31 12:57:35 PM


Let's all remember that Harper got his start in politics through the Young Liberals. I suppose there are certain spots that particular leopard will never change...

Posted by: Werner Patels | 2009-01-31 1:59:38 PM


I suppose there are certain spots that particular leopard will never change...
Posted by: Werner Patels | 2009-01-31 1:59:38 PM

Oh my. The "Calgary Observer" speaks.

Posted by: The Stig | 2009-01-31 4:42:54 PM


Let's all remember that Harper got his start in politics through the Young Liberals. I suppose there are certain spots that particular leopard will never change...

Posted by: Werner Patels | 2009-01-31 1:59:38 PM


In light of his (PM's) most recent budget, that's a reasonable observation.

Posted by: JC | 2009-01-31 6:11:02 PM



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