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Friday, November 26, 2010
Are You Stimulated?
Looks like only 25%:
More than 75 per cent of money earmarked for the largest federal infrastructure program was left untouched last year, a lag the Liberals say undermines the Harper government’s claim the stimulus spending spree is creating new jobs.
Of the $2 billion allotted for the flagship Infrastructure Stimulus Fund, only $493 million was actually spent, a departmental performance report shows.
The program, pegged at $4 billion over two years, is intended to help provinces and municipalities fund water, transit, sewers and road projects.
Among the many problems with stimulus spending - as opposed to genuinely needed infrastructure upgrades and maintenance - is that by the time money gets spent, the economy has already recovered, or is in the process of recovering. Modern business moves at the speed of light, modern government at the speed of bureaucratic horse and buggy. Government may have gotten much bigger since the days of Sir John A Macdonald, but not much faster. Between the environmental assessments, and the lobbying efforts of municipal governments and contractors, it can take years before unionized shovels hit public pavements.
Let's put aside whether governments are best able to build and maintain sewers, water pipes and roads. Let's instead take the conventional opinion at face value, that only the government can effectively and efficiently provide these "public goods." But why must it be the federal government? Isn't it the responsibility of individual counties, towns and cities to provide these basic bits of infrastructure? You might say that municipalities don't have the tax base to support these large scale projects? So why are they being built? If there is no tax base to support an infrastructure project, perhaps that's because there is insufficient demand for the service. Just so many roads to nowhere.
For the last twenty years or so a pattern has emerged of local governments passing the buck upward, demanding higher levels of government help meet their fiscal shortfalls. The explanation - or excuse depending on your perspective - is that begging up is a result of downloading responsibilities, such as welfare and public housing.
The downloading of services in the 1990s was a product of the fiscal exigencies of the time. While the ideal solution would have been to shut down many of these public services, had that not proven politically feasible, many services should have been re-uploaded. They weren't for reasons of political strategy, not sound public policy.
Paving roads and fixing sewers is not the sexy end of the modern Leviathan. Neither is running housing projects or managing welfare rolls. Too depressing. Politicians like handing out big cardboard checks to photo-op appealing crowds: Children, small animals, doctors, scientists and certain ethnic groups. Every dollar spent on a basic service, which most people take for granted, is a dollar not spent pandering to potential voters. No one will be grateful that you filled that pothole. It's your job after all. They might, however, remember a politico helping to get funding for a local hockey rink (or an NHL arena if you live in Quebec).
The end result is ill-funded public infrastructure, and a federal government that then plays the white knight riding to the rescue. But a federal government that concerns itself with filling pot-holes in Moncton, and digging drainage ditches in Moose Jaw, is playing a part never envisioned by the Fathers of Confederation. Certainly John A Macdonald wanted a highly centralized government, but he would have balked at spending his time - and federal resources - on humdrum local services, rightly in the purview of an alderman.
A Canada in which the federal government, which means the PMO, is the financier of all projects great and small, is a Canada in which the power of the federal government is in practice unlimited. It is a Canada in which a long chain has been created between those who receive a service, and those who are ultimately responsible for its upkeep.
One of the basic maxims of English speaking societies has been that government should be kept as close as possible to the people it serves. Basic stuff is kept local, the bigger stuff moved up the jurisdictional ladder. If a pothole needs to be filled, call your local councillor, not the Prime Minister of Canada. It helps ensure the process is faster and more accountable. It also helps to roughly match supply and demand, by matching expenditure to the appropriate tax base. A local politico, or bureaucrat, will have a better feel for local needs than one a thousand miles away, in one of Ottawa's concrete or Gothic towers. It's a not a free market approach, but it's not the all encompassing state either.
Posted by Richard Anderson on November 26, 2010 | Permalink
So the Liberals are unhappy that the government did not spend even more of our money; what a surprise. While I agree that governments cannot effectively stimulate the economy, it is unrealistic to expect a minority government to do otherwise when the opposition and multiple lobby groups continue to demand even more spending. The bottom line is that the result of government interference in the economy ends up being negative, but until both politicians and the people (the most important) understand this it is not likely to change.
Posted by: Alain | 2010-11-26 11:08:35 AM
I guess this is just another example of the fact that stupidity breeds more stupidity. It was stupid, idiotic, and downright criminal for that socialist pig, Harper, to spend even one cent on stimulus. We all know he was going to use to buy his precious majority. So, now that we learn that 75% of the monies are unspent, should we rejoice? No. It just shows that government limps along, at a snail's pace, and puts money in all the wrong places. Worse. Once Harper gets wind that government is spending the money slowly, he will just order the program to continue longer: because any monies unspent, in Harper's mind, means fewer votes for the Tories. So spend, spend, spend. Longer and harder until the money is long gone.
Posted by: AB Patriot | 2010-11-26 3:23:24 PM
What all levels of government seem to forget is that there is only one taxpayer. At the rate they are taxing me I often wonder why the hell I even bother going to work. The money I do bring home is then taxed on every purchase, utility or required service to feed all three levels of government and the hundreds of dubious portfolios better known as black holes. Like gun registry,indian affairs, hrc, cbc,anti everything programs,save everyone in the world aid programs and on and on (and on).
No wonder the savings rate is zero and credit card debt is at a all time high. The majority of working canadians are 2 pay cheques away from insolvency. We are not all that far away from Ireland, Spain, Greece or the good ol USA. And yet, I do not see a single politician that feels we are overtaxed or that we have too many hands squeezing that single teat known as the taxpayer.
No economy can grow if the consumer is broke and all I can see is more and more taxes and user fees while our leaders pander to every group of activists loud enough to warrant throwing money at to shut them up.
Perhaps in the long run it wont matter because when we are truly taxed out, the nanny state will take care of us. Worked for Stalin, Hitler, Pohl Pot, Mau and so many other countries that had complete control. Tax on. After all, we voted you in.
Posted by: peterj | 2010-11-27 6:31:25 PM
Those who believe government stimulous actually works as intended, should welcome natural and man made disasters. The BP Oil leak in the Gulf of Mexico for example surely "stimulated" the economy.
Posted by: TM | 2010-11-28 1:32:57 PM
Those who believe government stimulous actually works as intended, should welcome natural and man made disasters.
Posted by: TM | 2010-11-28 1:32:57 PM
Has'nt done much for Haiti. Considering the vast outpouring of goodwill ,not to mention the incredible amount of money sent and promised, it seems not much has changed for the people over there. I would sure like to know where all their "stimulus" money went and why the "National Enquirer" is not on this story since they seem to be the only paper left that will do some non-pc digging for the facts behind the bs and is probably the only paper willing to take on a lawsuit. Bet they will find that aliens took the money.
Easier to believe than the official versions that it is being used to help the people.
Posted by: peterj | 2010-11-28 3:16:30 PM
peterj, exactly right. Haiti illustrates two things. One is that you cannot stimulate the economy by breaking windows (nor by natural disasters). The other is that corruption makes problems much worse.
Posted by: TM | 2010-11-28 8:53:31 PM
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