04.14.16, 05:27 PM #1
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Stephen Harper's Son Criticizes Fiscal Policies Of Trudeau, Etc.
The balls on this kid - considering who his father is and the money he spent.
Stephen Harper's son has penned a column criticizing the fiscal policies of Justin Trudeau and his father.
Benjamin Harper's op-ed piece for the Ottawa Citizen, published Wednesday, takes aim at the Trudeaus' stimulus spending and deficits.
The column is co-authored by fellow Queen's University student Ethan Vera. The two write that, "like a defibrillator applied to a patient who hasn’t experienced a heart attack, fiscal stimulus used improperly has negative consequences."
"Under Pierre Trudeau’s governments of the 1970s and 1980s, the country experienced growing deficits, slowing growth, rising unemployment and rising inflation," the two write, adding that the previous Conservative government's use of stimulus spending during the 2008 financial crisis was "appropriate."
Here is full piece:
Ever since the financial crisis of 2008, the advocacy of deficit stimulus has become increasingly fashionable. Big Banks, international organizations and governments seem to be joining in recurring calls for fiscal action. In Canada, the slowing growth of the past year is behind the new federal government’s plan to “kickstart” the economy with billions of government “investment.”
But like a defibrillator applied to a patient who hasn’t experienced a heart attack, fiscal stimulus used improperly has negative consequences. The resurgence in Keynesian economic thinking is leading the Canadian and world economies down dangerous paths well mapped out during previous misadventures.
Keynesian theory dominated a large portion of the 20th century following its development during the Great Depression. According to this model, when aggregate demand falls below potential output, government spending (or tax reductions) can boost economic activity. In boom times, lower spending (or tax hikes) can appropriately cool inflationary pressures and allow the budget to be balanced. For more than 30 years, this thinking provided the philosophical basis for government’s conduct of fiscal policy.
As the years went by, the results were increasingly disastrous. By the 1970s, western countries were experiencing high unemployment and high inflation – supposedly impossible under simple Keynesian models – along with spiralling deficits and slowing growth.
In practice, governments were rarely able to identify and implement fiscal policy in the manner dictated by Keynesian theory. At best, the lag times between fiscal stimulus and economic cycles were just too great. At worst, stimulus spending was driven by political considerations. As a result, stimulus was deemed necessary when the economy slowed, while cutting stimulus seemed unnecessary when things were better. Over time, the excesses of government intervention resulted in structural deficits and ballooning debts.
A younger generation of economists began to question the logic of the Keynesian model. Isn’t deficit-financed government spending just borrowing money that would otherwise be spent by consumers or invested by businesses? Isn’t this just redistributing economic activity, while adding to the national debt burdens? As economist Russell Roberts quipped, fiscal stimulus is like taking a bucket of water from the deep end of a pool and dumping it into the shallow end, with the naïve hope that the water level will rise.
Canada had its own chapter in the story of failed Keynesian fiscal policy. Under Pierre Trudeau’s governments of the 1970s and 1980s, the country experienced growing deficits, slowing growth, rising unemployment and rising inflation. A decade of cautious austerity under Brian Mulroney did little beyond moderate the bleeding. Finally, with the looming risk of a debt crisis, Jean Chrétien and Paul Martin undertook a painful combination of tax hikes, vital service reductions, and provincial transfer cuts to cure Canada’s debt ailment. Not surprisingly, a consensus developed to leave demand stimulation to monetary policy and budgets close to balance.
Why, then, did governments around the world unanimously turn to fiscal stimulus as a tool to fight the 2008 financial crisis? G20 leaders suddenly found themselves in conditions resembling a crash in economic activity like the Great Depression. These were not just times of falling aggregate demand, but of complete failures in the financial system. During a financial failure, investors can’t find lenders, producers can’t find consumers and workers can’t find work. It is in these circumstances that governments, through deficit stimulus, can restore confidence in the short term, so that money can flow unaided in the long term.
The circumstances that face Canada today bear few resemblances to either the Great Depression or 2008. Canada’s recent slowing growth was initiated by a fall in the prices of key commodities, unlike the aggregate demand problems Keynesianism purports to address. Structural supply problems will be aggravated, not improved, by large, long-term deficits.
It is unfortunate that a rare, effective use of Keynesian principles has been so quickly followed by the old habit of taking them beyond their appropriate application. History clearly shows the limitations of a fiscal deficit. After its appropriate use in the 2008 crisis, it seems those lessons have been forgotten. The patient is conscious, their heart is fine, but they’ll be getting those electric shocks all the same.
Benjamin Harper and Ethan Vera are students at Smith School of Business (Queen’s University) and members of Queen’s Global Markets, a student run macro-economic think-tank. Mr. Harper is the son of former prime minister Stephen Harper
04.14.16, 05:28 PM #2
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Maybe they should at least wait a couple of years before criticizing economic policies.
Just a thought.Taylor Swift is nice to look at. Adele can sing.
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04.14.16, 05:33 PM #3
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Incredibly one sided piece of shit article. Mulroney brought "cautious austerity" but justin is fucking up? F-ing comical. And his pops (who did an OK job) ran deficit after deficit. How come no criticism for him?
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