Don’t drop the economy

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Careful! By reading this editorial, you might topple the fragile economy!

OK, perhaps that’s a little over-the-top, but the way the Conservative government falls over itself legislating people back to work, you’ll forgive me for thinking that if Nycole Turmel sneezes violently enough, the entire country will collapse into a financial hell-storm from which no one will escape unscathed. Every time a union even makes a peep about striking, Labour Minister Lisa Raitt is there with a pen and paper to scribble down a law criminalizing taking collective action to improve workers benefits or salaries. In every case, be it Canada Post or Air Canada, unions are endangering the feeble economic recovery the Conservative government has cobbled together.

And what a feeble recovery it’s been, based heavily on reinvigorating the sign-making industry by putting up “Canada’s Action Plan” billboards everywhere while playing too coy about buying extremely expensive airplanes from foreign companies. The most recent Conservative strategy to put people back to work by cutting 30,000 jobs in the civil service is, to hear them tell it, a move that will inexplicably create more jobs. This “right-sizing” of the Federal civil service coincides with what is speculated to be a shockingly austere upcoming federal budget, one which will probably introduce spending cuts to everything from health care to the arts, a bare-bones budget that is a testament to our economic recovery and the competency of the government.

However, an austere budget makes sense when you consider that in conjunction with spending cuts, the government has lowered taxes to a ludicrously low level for corporations, ensuring that once money flows into corporate coffers, there is no way to pry it back out. Combined with that, the reckless slashing of the GST from seven per cent to five per cent has eliminated an estimated $12 billion from government revenue, a huge chunk of change that would go a long way towards eliminating the deficit without laying off thousands of Federal government jobs or maiming services that Canadians rely on.

The first problem with severe austerity and continually blaring on about the fragile state of the economy is that it creates a climate of fear that makes strong economic growth nearly impossible. How does scaring people into thinking the economy is fragile going to encourage them to spend their money? Fear will make people hoard their savings rather than invest them, creating a slow downward spiral that will eventually end in another severe recession, if not a depression. It’s mind-boggling to see how illogical the Conservative strategy is from an economic standpoint.

This leads into the second problem. I don’t claim to be an economist, but I do know one of the first things that they teach you in economics is that an increase in government spending provides far more economic stimulus than any lowering of taxes.     While many try to discredit this idea as returning the government to constant deficits, a concurrent increase in taxes, combined with the increase in tax revenue from the economic growth stimulated by higher spending, will deliver a balanced budget with much less pain, suffering, and austerity than slashing funding and slashing taxes. This isn’t Greece, where there is no money left to spend – so the government shouldn’t act like austerity is the only option.

If Canada is really serious about stabilizing the economy, it should increase spending, not impose austerity. It should continue to provide excellent services to Canadians such as health care and old-age security rather than forcing them to wait longer in emergency rooms that are already overcrowded or work much later into their lives. While unpopular, raising taxes will be required to pay for an economic renewal. Rather than fear-mongering and ending collective bargaining rights, the government should clearly show it will not abandon the economy by hamstringing the country financially with lower taxes and lower spending.

It is true that smaller government is the goal of the Conservative government, but frankly, smaller government is not the direction this country should go if we want stable economic growth. The government didn’t become so large unnecessarily – it entered into the economy in response to the failure of the free-market economy during the Great Depression. Unless we want a return to the economic conditions of the depression, it’s time the government stepped up and took a leadership role in stimulating the economy.

Edward Dodd
Op-Ed Editor

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