PMJT: The First 100 Days
- Thread starter Edward Campbell
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PuckChaser said:
The only OECD country (besides Canada, and I question the current numbers) that currently runs a surplus is Norway. I do not understand our fetish surrounding deficits.
Our central government debt to GDP (depending on which source you use) hovers around 30%, which is enviable. The overall government debt (includes provinces) to GDP ratio is less encouraging, at around 93% - up from 76% in 2008 - but it is trending down, and nowhere near the US level of 123%.
Debt as a percentage of GDP worries me more than deficits - a view shared by many economists. If deficit spending on things like infrastructure increase GDP (and hence the indebtedness ratio) then I have no issues with the idea - deficits for "entitlements" that do not have a positive impact on GDP - not so much.
So, all of that to say that we are the only country other than Norway (a very special case) that runs a surplus....
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PPCLI Guy said:
With competent leadership, Alberta could have been Norway. Instead, it's back to the '80s with Please God let there be another Oil Boom. I promise not to piss it all away next time.
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ballz said:
You say that now, but at the time we were on what, like the 3rd election in three years? I'm sure you would've been all hunky-dory about blowing more millions on yet another election resulting in the status quo.... again.
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Altair said:
Lol... fascist. Hyperbole has to at least have some root in truth.
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PPCLI Guy said:
Debt is there to be paid back, that's why its a liability on a balance sheet. The government is constantly telling us to take on less debt, be fiscally responsible, but you advocate the "do as I say, not as I do" model? In 2013/14, the Federal government spent $29.3B CAD on debt interest charges, or basically more than DND and a few other departments combined. That's a pretty big pot of money we piss away every year. Imagine the infrastructure Trudeau could buy with almost $30B a year. He might actually be able to afford all his campaign promises.
I also remember the old say, "If everyone else jumped off a bridge, would you do it too?"
Brad Sallows
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>Disagree all you want, but if they felt eap was a bad idea, something they shouldn't do, then they should have stuck to their principles and not done it.
A similar discussion took place on these fora regarding Senate reform - the CPC should immolate themselves for principles, blah blah blah. It would be very convenient for the other parties. However, few people in politics or interested in politics believe that the best way to achieve their aims is not to first obtain and retain control of the legislative assembly. You may keep beating the drum calling for ideological purity.
>Like I said, it was fine that they ran eap themselves to stay in power. I'm just calling on them to own up to that decision.
Now you're trying to redirect the discussion to something else. Don't bother. The CPC never denied running deficits. The EAP was right out in the open, and the government openly stated that it would maintain transfers and allow revenue growth and other spending restraint to eventually restore balance. The point is whether the CPC can fairly criticize the LPC for the deficit spending the latter wants to do. I have explained the distinctions between the reasons for running deficits, and why the distinctions are relevant to attaching value judgements of "good" / "bad" (or "less harmful" / "more harmful" for those who are adamantly opposed to deficits under any circumstances). You are at liberty to pretend there is no difference.
A similar discussion took place on these fora regarding Senate reform - the CPC should immolate themselves for principles, blah blah blah. It would be very convenient for the other parties. However, few people in politics or interested in politics believe that the best way to achieve their aims is not to first obtain and retain control of the legislative assembly. You may keep beating the drum calling for ideological purity.
>Like I said, it was fine that they ran eap themselves to stay in power. I'm just calling on them to own up to that decision.
Now you're trying to redirect the discussion to something else. Don't bother. The CPC never denied running deficits. The EAP was right out in the open, and the government openly stated that it would maintain transfers and allow revenue growth and other spending restraint to eventually restore balance. The point is whether the CPC can fairly criticize the LPC for the deficit spending the latter wants to do. I have explained the distinctions between the reasons for running deficits, and why the distinctions are relevant to attaching value judgements of "good" / "bad" (or "less harmful" / "more harmful" for those who are adamantly opposed to deficits under any circumstances). You are at liberty to pretend there is no difference.
Brad Sallows
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Debt-to-GDP ratio is a popular measure because it is thought to be a useful proxy for "affordability". A more accurate measure would be debt-to-revenue.
The pitfall is that people who are looking for excuses to spend will pick a value of that ratio and claim that as long as the actual ratio is below threshold, all is well - which is true, unless maintenance of the ratio is destabilized. Program spending proceeds apace, so that the deficit is structural, and the spenders indulge themselves right up to their self-imposed threshold.
The problem should be obvious: a recession or change in the cost of servicing debt destabilizes the ratio in an upward direction. If structural spending is already in deficit, the deficit grows itself and squeezes out program spending (or the government turns the screws on sources of revenue, which tends to depress economic activity - hence GDP - and worsen the ratio). Again, I observe that all of the factors which helped break our 1980s federal fiscal death spiral are not currently available to us (ie. dollar is already low, inflation is already low, cost of servicing debt is already low, taxes are already low, most of the opportunities to liberate trade restrictions have been taken, none of our major trading partners show signs of imminent resurgence, the operating surplus can not be improved except with measures which would be increasingly politically difficult for a CPC government and are beyond acceptability for a LPC government).
The pitfall is that people who are looking for excuses to spend will pick a value of that ratio and claim that as long as the actual ratio is below threshold, all is well - which is true, unless maintenance of the ratio is destabilized. Program spending proceeds apace, so that the deficit is structural, and the spenders indulge themselves right up to their self-imposed threshold.
The problem should be obvious: a recession or change in the cost of servicing debt destabilizes the ratio in an upward direction. If structural spending is already in deficit, the deficit grows itself and squeezes out program spending (or the government turns the screws on sources of revenue, which tends to depress economic activity - hence GDP - and worsen the ratio). Again, I observe that all of the factors which helped break our 1980s federal fiscal death spiral are not currently available to us (ie. dollar is already low, inflation is already low, cost of servicing debt is already low, taxes are already low, most of the opportunities to liberate trade restrictions have been taken, none of our major trading partners show signs of imminent resurgence, the operating surplus can not be improved except with measures which would be increasingly politically difficult for a CPC government and are beyond acceptability for a LPC government).
Altair
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If the CPC didn't want to immolate themselves as you put it, that's fine. But don't go pinning it on the LPC NDP and BQ that they ran deficits. Not going to fly. That's the decision they made to retain power.Brad Sallows said:
I don't think I am. I started this by pointing out that they were being hypocritical for saying that the NDP and LPC would run deficits while they themselves had run significant deficits. Every time I mention it people say that they were forced to do it and that's where the conversation starts to veer off. I might add, that while I do not argue with your economic points, good vs bad deficits, but those are not arguments the CPC made. They simply said that they other guys plan to run permanent deficits. The discussion never really expanded beyond that.
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Altair said:
I rest my case
ballz
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CombatMacgyver said:
Yes, I do say that now. I guess you missed this part in your rush to respond to the first sentence...
ballz said:
PPCLI Guy said:
GDP measures consumption by measuring spending. It does not measure the strength of an economy. Any government spending increase will increase the GDP, whether it is on infrastructure or on "entitlements." They both have a positive effect on GDP. This is the problem with using the GDP to support spending. *Of course* it grows the GDP, but at what cost? (government debt)
It doesn't measure *production,* which is the true measure of an economy. Neither infrastructure or entitlements directly increase production. Infrastructure can create efficiency and pave the way for more production, if its useful infrastructure and not a bridge-to-nowhere. The government is poor at deciding what infrastructure will have the most positive impact. They generally believe that a bridge-to-nowhere will boost the economy because it boosts spending. We can thank John Maynard Keynes for this type of idiocy.
Jed said:
Maybe we just need to take a closer look at Keynesian theory and realize we should stop trying to use it.
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ballz said:
So just to get this right: You're saying that you don't like the approach the Conservative Party took and you would've found it preferable had they called yet another election but in hindsight you agree with the path they chose?
What is this, Schrodinger's political theory?
Yea, I'm confused...
edit: typo correction
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Keynesian economics? The interesting thing is that you don't have to do anything to provide stimulus for the economy other than govern responsibly. The system works automatically. When the economy craters, revenues go down and social program spending goes up. The system simply responds with a deficit. Many would argue that special stimulus spending is unnecessary. Building productive infrastructure that will lead to lower costs down the road is a great idea but infrastructure that creates ongoing future costs maybe isn't so good.
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E.R. Campbell said:
Didn't see this response - amongst all the other.
I get the benefits of having sympatico people working with you, and acting as your intermediaries, but that argument can apply to the people that interact with your cabinet, your parliament, your provinces, your civil service, your bankers, your press.
In most jobs you don't get to pick the people you work with. You get them issued to you. I am not keen on having my parliamentary representatives pick a government leader and then discover that he or she comes with a complete Court of social engineers for whom we are expected to pay.
If we pay for them then we should issue them - the neutral civil service. And if they aren't neutral (say for example they demonstrate bias by booing one PM while fainting at the feet of another - not that that would ever happen) then they should be fired and their successors disenfranchised and rendered truly apolitical.
Brad Sallows
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>But don't go pinning it on the LPC NDP and BQ that they ran deficits.
If you want to be precise, the EAP is pinned on the opposition - they applied pressure; the CPC reacted. The remaining deficits are pinned on the recession - the CPC didn't have to lift a finger for the balance to switch from surplus to deficit.
If you want to be precise, the EAP is pinned on the opposition - they applied pressure; the CPC reacted. The remaining deficits are pinned on the recession - the CPC didn't have to lift a finger for the balance to switch from surplus to deficit.
Altair
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And again, I don't agree.Brad Sallows said:
The opposition applied the pressure, sure, but the CPC did not need to cave to it. They did, they own it.
Was EAP on the way in regardless? Yes, most likely unless the GG agreed for there to be another election. Should the CPC tried to have stay in power? Sure. But when you make a deal to bring in eap in order to stay in power then you need to own it, that's all I'm saying. If the were principled and just let the coalition do eap then I wouldn't say squat, but they didn't.
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