More Stimulating Debate
I spent my breakfast yesterday at the Economic Club's annual chief economist breakfast thingy - the news recap can be found here, with some economic polling data here. Although listening to economists at 7:30 am can be a chore, I was prepared to stay awake since, unlike Stephen Harper, these were real economists.
Before long, the talk turned to Deficit Jim's upcoming budget and what kind of stimulus we can expect (spoiler alert: not this one). I believe it was Don Drummond who made a series of good points, which I paraphrase here:
1. Given the scope of the problem and the fact that it was created outside of Canada, it's unlikely that whatever stimulus we bring in will be particularly effective in turning things around. However, it's a great opportunity to work on infrastructure projects now that costs are cheaper - so as to avoid the mess the PCs got Alberta into by building in a heated economy.
2. The stimulus needs to be used on projects that are immediate and it must be temporary in nature (sorry Dean). Immediate so that we don't need to wait to see the benefits, and temporary so that we can balance the books once things pick up.
3. Temporary tax cuts are about the worst possible thing Flaherty could do. In the US, they only injected about 10 cents on the dollar into the economy and, as we all know, reversing a "temporary" tax cut is a difficult political move to make down the road.
4. As one of the other economists pointed out, it rarely does any good to inject money into dying industries.
So what does it all mean? Well, the best thing the Tories could do would be to use this crisis as a "get out of surplus free" card and do some real long term good for Canada. Improve our infrastructure. Green the country. Create national projects that we'll benefit from for years to come.
Will they do that? Well, given this government's all consuming preference for short-term political pay-offs, I wouldn't hold my breath.
Before long, the talk turned to Deficit Jim's upcoming budget and what kind of stimulus we can expect (spoiler alert: not this one). I believe it was Don Drummond who made a series of good points, which I paraphrase here:
1. Given the scope of the problem and the fact that it was created outside of Canada, it's unlikely that whatever stimulus we bring in will be particularly effective in turning things around. However, it's a great opportunity to work on infrastructure projects now that costs are cheaper - so as to avoid the mess the PCs got Alberta into by building in a heated economy.
2. The stimulus needs to be used on projects that are immediate and it must be temporary in nature (sorry Dean). Immediate so that we don't need to wait to see the benefits, and temporary so that we can balance the books once things pick up.
3. Temporary tax cuts are about the worst possible thing Flaherty could do. In the US, they only injected about 10 cents on the dollar into the economy and, as we all know, reversing a "temporary" tax cut is a difficult political move to make down the road.
4. As one of the other economists pointed out, it rarely does any good to inject money into dying industries.
So what does it all mean? Well, the best thing the Tories could do would be to use this crisis as a "get out of surplus free" card and do some real long term good for Canada. Improve our infrastructure. Green the country. Create national projects that we'll benefit from for years to come.
Will they do that? Well, given this government's all consuming preference for short-term political pay-offs, I wouldn't hold my breath.
Labels: economic stimulus
posted by calgarygrit at
10:27 p.m.
14 Comments:
Great post, thanks for this Dan. It sounds like a really interesting talk. If only these perspectives would get picked up in the MSM.
By
Anonymous, at 12:59 a.m.
Ignatieff is advocating tax cuts.
By
Sean Cummings, at 7:07 a.m.
Don Drummond is the guy who made the most sense to you, eh? A veritable non-partisan economist if there ever was one!
By
Tarkwell Robotico, at 8:50 a.m.
What do you mean this government's all consuming preference for short-term political pay-offs? Is there another kind?
By
Robert Vollman, at 10:20 a.m.
However, it's a great opportunity to work on infrastructure projects now that costs are cheaper -
Wow.
Great thinking. That's an excellent argument.
By
Anonymous, at 11:13 a.m.
Iggy seems to be advocated the exact opposite of what don drummond is suggesting. So far (other than support for the auto sector) only Layton seems to be talking about national projects, greening Canada, etc.
By
Anonymous, at 11:25 a.m.
Hey what do you know? Iggy's take on tax cuts and Israel mirror those of the PM.
Go figure.
By
Anonymous, at 2:42 p.m.
Let me see if I understand your summary.
1. Don't panic. Take the time necessary to apply the stimulus deemed appropriate, but rushing headlong won't fix a problem created by economic forces outside of Canada.
2. Put an early emphasis on accelerating shovel-ready infrastructure projects. Do not create a structural deficit.
3. Government is wiser at spending your money than the people whose money it is, so don't let the people anywhere near their own money. Don't send them a Rebate. (And for goodness sakes, don't call the Rebate a Tax Break).
4. I hear the pr0n industry is looking for release from their stress. Cars, after all, might not be around in ten years.
Is that about it? Now can you count how many of these ideas are opposed by the Opposition?
By
Paul, at 7:41 p.m.
Reversing a "temporary" spending program isn't exactly an easy political move to make down the road, either.
By
Brian Dell, at 4:53 a.m.
This is all rather sensible advice and prior to all this coalition nonsense would have been the basic thrust of the CPC government's approach.
But you can be sure that any major departures from this advice will be due to pressure from the opposition, particularly the handouts to dying industries (autos, forestry, etc.).
That said, there is good evidence that temporary measures targeting business investment (e.g. accelerated depreciation) can be effective. Maybe we will see more generous measures in this regard since the consumer is not going to pull us out of this alone.
By
Steve Stinson, at 1:48 p.m.
"D.Drummond wrote:..Well, the best thing the Tories could do..Green the country. Create national projects that we'll benefit from for years to come."
"Steve said...
This is all rather sensible advice and prior to all this coalition nonsense would have been the basic thrust of the CPC government's approach."
Yeah, that's right where the CPC was headed pre-coalition: greening Canada. Nice work, BCE and Canwest. I'm waiting for the public education commercials explaining how buses cause lupus. I bet CTV releases a clip of Layton taking a shit, next election.
P.Huggan: how many Nazis does it take to ruin a post-modern experiment for a generation?
media: don't call us Nazis!!
P.Huggan: fine. How many douchebags...
By
Anonymous, at 10:32 a.m.
Jesus, rich Canadians. You even got Drummond belieiving how Green the Conservatives will be. You've brainwashed what was once an elite economist. I hope the unsustainable living and soon peers dying in hospital hallways is worth it...
By
Anonymous, at 10:37 a.m.
Despite the fact that Don Drummond is from TD Bank, he did not advocate greening the country (that was CG). Such spending is of a longer term nature and, I'm sure Drummond would argue, cannot be advanced quickly enough to offset current economic weakness.
Nonetheless, the Conservatives are spending plenty on green initiatives whether you admit it or not.
By
Steve Stinson, at 8:33 p.m.
Liberal platform was to take away $30B over four years from carbon emittors minus gasoline, and spend $20B or so on environment programmes. Plus match all the piddling Harper platform.
The NDP plan was to raise $20-25B in Cap-n-Trade permit auction revenue and spend all of that on Green stuff.
The two linked Harper initiatives are a "noncap"-n-trade system that on dishonest terminology alone is worse than doing nothing. The other link is for a good $1.5B public transit strategy. Harper had a great $5M rail tax break but is 2-3 orders of magnitude too small, like the rest of Con enviro platform.
Following Reagan's precedent that it is okay to increase human extinction odds to get paid, is the most evil thing a person can do today even if not legally or socially recognized as such. Under this trajectory our civilization will collapse within two centuries and burn coal until farming ends. The ethics of our society has changed from positive sum (the way it's been since language/writing) to cannibalism of the future, trillions of years before the universe will wind down.
Using natural gas to extract oil from sands makes me think of a moment.
I decided in my teens a family and a "career" weren't compatible for a while at least. At 16 I was gaining psycho-social maturity (VLTs put food/heat ahead of fucking), but by 17 was a jaded utilitarian drone. Not bitching about being born a healthy contemporary Canadian. But if I knew where I was headed in one year at 16, I would've made it the best year any person has ever lived, instead of biding time.
The sense of what could've been is identical to this moment of oil sands, to a moment after a nuclear war that never happened, and to the moment of pandemic that hopefully won't.
I never dream of 16 anymore, always 17. When I awaken, I can't be 16. But for example, the BC sourgas pipeline "terrorist" isn't even using below-ground explosions or refractory blast shaping. So maybe the future will still get a chance to hang on to 16 as long as you can...
By
Anonymous, at 3:07 a.m.
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