How should the NDP address Canada's catapulting deficit and debt?

Screw Bay St and foreign bondholders for a start. The NDP plan says this should be a time of unprecedented levels for fuller employment and investing in Canadians, and tending to an infrastructure deficit that has become a chasm across the country. The largest part of the $130 billion dollar nfrastructure deficit is in the prov. of Ontario where the bulk of manufacturing job losses have taken place after too many years of top-down neoliberal ideology. There could be a construction and labour induced recovery with millions of drafty, leaky and energy inefficient commercial and residential buildings that should be retrofitted to meet modern building codes and effiency guidelines, or even demolished to make way for new homes and buildings of the future. Canada's economy could be bustling under an NDP federal government.

But one thing we should not be doing is borrowing more money from private banks at high interest, or for which interest rates could add to national debt down the road. Only our fiscal Frankensteins in the two old line parties would see more debt as the solution to what has become a debt crisis throughout the western world.  And Jack has said before, there could be better use made of our still nationalised bank of Canada. There has been a cult of neoliberal style impotence in Ottawa for too long.

The NDP is shown by Liberal government finance reports to be the most fiscally responsible of all three parties that have governed provincially or federally with balancing the books significantly more often than the two fiscal Frankenstein parties. The NDP would not put us in a debt hole, like Tories and Liberals did between 1975 and 2000 when national debt soared from $37 billion to $580 billion. The NDP would not clobber the economy with tight money policies, like the Liberals did in the 1990s in favour of feeding the banks interest payments on a collossal national; debt which they shared responsibility for having saddled Canadians with during years of bad federal management of just about everything in general.

"Debtor Group of Seven"? That's a good one. Liberals put that country into a debt hole and ran it into the ground similarly. And the NDP should be attacking the economic mismanagement at every turn.

Fidel wrote:

Doug wrote:

Bringing everyone home from Afghanistan will be a good start. Perhaps some consolidation in the federal regional development programs might be a good idea. Considering we have one now for every part of the country, it might make some sense to bring them together into an urban, a rural and a northern program for example. Review federal contracts to identify and eliminate any sweetheart deals next time they come up for renewal. Make senior bureaucrats fly economy. There's lots of other such opportunities to save that add up.

That's right! Tories have pledged to spend something like half a trillion dollars on US style military buildup between now and 2020, and with LPC supporting them. Lots of room for responsible government. We just have to give these two rightwing parties in power now the old heave-ho!

What concerns me about military spendig though is how the Conservatives seem to have managed to sell it to the public, convincing the public of Russian boogeymen North of the border. All I could suggest as a countermeasure would be for NDP MPs to reach out to Russia to build bridges and prove to Canadians that Russia is not a threat by opening dialogue on the issue. Otherwise supporting increased military spending may very well be a vote-getter next election now that the Conservatives have successfully spread paranoia into the population.

"Paranoia", Mach?

Might there not be even a little bit of national pride that he is playing on?  You know, that silly nationalist sentiment that Pierre Berton and other writers have stirred over the last half-century or so?

Steve keeps promising icebreakers and then cancelling the thought as the deficit grows like Topsy. Yet we know that Canada's shrunken shipbuilders with their empty slipways could use the work - along with the resident population. 

Icebreakers aren't particularly threatening, and in fact the people of Iqaluit (without the Iqua) seemed very receptive to the idea, and a deep-water port, etc. etc.

Promise to come through with the bloody things, damn the torpedoes (and deficit) on that score.

How to attack the deficit directly?  Well, just for starters, I see from the Globe, on Friday, that we should not count on new sources of revenue like the "Tobin tax" idea, in which the late economics professor (a disciple of Keynes) in 1971  proposed "small levies on currency trading" to curb speculation.

The governor of the Bank of Canada had to threaten to print a lot of money to accomplish the same thing as speculators were driving the loonie toward parity with the greenback again and threatening to shut down revival of what is left of Canada's export industry (we're well into trade deficit territory again).  The governor's threat worked (for now, along with still sagging oil and NG prices on the market) but dependable relief from such speculation would help us to  build our economy along green lines, slow the damned importation of goods, grow our tax base again....generally work our way out of this neo-con nightmare.

The Globe immediately launched a reactionary business-side colour writer to attack the revival of the Tobin tax idea when the head of Britain's banking regulator mused about its application to shrink the "swollen financial sector". "Most economists dislike any variation of the Tobin Tax because they surmise it would distort private decision making," observed the Glober's Kevin Carmichael. And he went to a down-home economist that he knew would oppose the idea.

"Stephen Gordon, an economics professor at Laval University in Quebec City, said he failed to see how taxing financial transactions would have prevented the financial crisis, which he attributes to excessive leverage and poor risk management.

"Prof. Gordon also pointed out that such a tax would have  exacerbated the cridit crunch be making capital even more expensive."

Douglas Peters at the Canadian Centre for Policy Alternatives, "a left-of-centre research organization in Ottawa", said that "if it could be done, it would be worth doing," but all the world's economies would have to apply the tax or banks would just do business where it did not exist.

(However, this hopeful person, observing that Swiss banks are now going to fess up to their secret accounts, are a sign of what can be accomplished to clean things up as things get very , very desperate.

And if we can shake the dead weight of academic thought on our economic difficulties, it seems to me New Democrats could build and sell a program of escape from the neo-con road to hell. )

Now to find a means of getting out the message without depending on the Globe, the Post, or waiting for solutions from the graduates of our schools of economics.

George Victor wrote:

"Paranoia", Mach?

Might there not be even a little bit of national pride that he is playing on?  You know, that silly nationalist sentiment that Pierre Berton and other writers have stirred over the last half-century or so?

Steve keeps promising icebreakers and then cancelling the thought as the deficit grows like Topsy. Yet we know that Canada's shrunken shipbuilders with their empty slipways could use the work - along with the resident population. 

Icebreakers aren't particularly threatening, and in fact the people of Iqaluit (without the Iqua) seemed very receptive to the idea, and a deep-water port, etc. etc.

I wasn't referring to civilian development but rather Harper's sabre rattling.

Now as for the shipbilders, I don't think shrinkage is a reason to build ships. If there is a need to build ships then we build them, but we don't build them just for the sake of creating jobs. That's what had angered me about the car industry bailout. Heck, if people aren't buying cars, they aren't buying cars, and it's not up to the government to subsidize car building for the middle-to-upper-class who can afford them. instead, that money could have gone towards retraining the laid-off workers for the industries of the future. We lost that opportunity and now are stuck with cars. Germany has successfully re-integrated laid-off workers into the solar cell industry years ago, to take one example. Though I'm all for the government ensuring full employment, it must never, ever engae in creating make-work jobs, but rather jobs that serve a particular social function, such as helping the environment or the poor etc.

This kind of thinking about creating jobs for the sake of creating jobs with creating jobs as an end in and of itself is precisely the kind of thing that pushes me towards the centre-right at times. I'm a moderate leftist at heart, but I also belive in a more rational use of government money than creating jobs as an end in itself. 

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Promise to come through with the bloody things, damn the torpedoes (and deficit) on that score.

I totally disagree. If we need those ships to serve a specific purpose, then raise taxes to pay for it, but don't go into debt to enrich the lendors.

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How to attack the deficit directly?  Well, just for starters, I see from the Globe, on Friday, that we should not count on new sources of revenue like the "Tobin tax" idea, in which the late economics professor (a disciple of Keynes) in 1971  proposed "small levies on currency trading" to curb speculation.

The governor of the Bank of Canada had to threaten to print a lot of money to accomplish the same thing as speculators were driving the loonie toward parity with the greenback again and threatening to shut down revival of what is left of Canada's export industry (we're well into trade deficit territory again).  The governor's threat worked (for now, along with still sagging oil and NG prices on the market) but dependable relief from such speculation would help us to  build our economy along green lines, slow the damned importation of goods, grow our tax base again....generally work our way out of this neo-con nightmare.

The Globe immediately launched a reactionary business-side colour writer to attack the revival of the Tobin tax idea when the head of Britain's banking regulator mused about its application to shrink the "swollen financial sector". "Most economists dislike any variation of the Tobin Tax because they surmise it would distort private decision making," observed the Glober's Kevin Carmichael. And he went to a down-home economist that he knew would oppose the idea.

"Stephen Gordon, an economics professor at Laval University in Quebec City, said he failed to see how taxing financial transactions would have prevented the financial crisis, which he attributes to excessive leverage and poor risk management.

"Prof. Gordon also pointed out that such a tax would have  exacerbated the cridit crunch be making capital even more expensive."

Douglas Peters at the Canadian Centre for Policy Alternatives, "a left-of-centre research organization in Ottawa", said that "if it could be done, it would be worth doing," but all the world's economies would have to apply the tax or banks would just do business where it did not exist.

(However, this hopeful person, observing that Swiss banks are now going to fess up to their secret accounts, are a sign of what can be accomplished to clean things up as things get very , very desperate.

And if we can shake the dead weight of academic thought on our economic difficulties, it seems to me New Democrats could build and sell a program of escape from the neo-con road to hell. )

Now to find a means of getting out the message without depending on the Globe, the Post, or waiting for solutions from the graduates of our schools of economics.

The Tobin tax is but a partial and temporary solution to currency speculation. A better solution would be to rid the world of multiple currencies altogether and go the way of Europe with the euro. Let's promote a world currency like Putin had suggested earlier this year and China had expressed sympathy for as a possible future solution. Sure they've been lukewarm to the idea, but even that is a step forward from not even acknowledging its possibility before.

Machjo:

"The Tobin tax is but a partial and temporary solution to currency speculation. A better solution would be to rid the world of multiple currencies altogether and go the way of Europe with the euro. Let's promote a world currency like Putin had suggested earlier this year and China had expressed sympathy for as a possible future solution. Sure they've been lukewarm to the idea, but even that is a step forward from not even acknowledging its possibility before."

Why, for chrissake, would the Tobin tax be a "temporary" solution for a country with a growing problem of international speculation - which we have seen destroying industry here. If we can apply this tax and at the same time rein in growth of the Tar Patch exports we can stabilize the dollar at 70 cents, re-grow our industry and end the deficits, fiscal and trade.

Implementing the Tobin would be hard enough, but you are proposing a sort of economic esperanto. Over the moon. Our grandkids would be pushing up daisies first.

You are not in the Keynesian mould are you, Mach. Perhaps studied with Stephen (Gordon or Harper).

And you are a professed New Democrat, right?

George Victor wrote:

Now I begin to see what has been happening to the New Democrats.

You are some sort of new (to me) entity, flying the global finance flag.   Everywhere nations are trying to rebuild their workforce (which pays taxes) but you are all for .....?

 

Machjo:

 

"This kind of thinking about creating jobs for the sake of creating jobs with creating jobs as an end in and of itself is precisely the kind of thing that pushes me towards the centre-right at times. I'm a moderate leftist at heart, but I also belive in a more rational use of government money than creating jobs as an end in itself."

 

You've already arrived at "right" mate. 

 

 

I'm all for increased government spending on education so as to empower all citizens. That's not a right-wing idea last I checked. If we need ships in the arctic (maybe we do, mmaybe we don't, I don't know), then let's build them, but not for the sake of helting the shrinkage of the shipping industry as an end in and of itself. Had we followed such a logic since the time ofthe Model T, we'd still be building it today.

Just going back to the auto bailout. How did the poor benefit from it? Sure it helped the auto workers keek hobs, and also helped to subsidize cars that the middle class could buy. But what about the poor. Instead of subsidizing the middle-class with the auto bailout, we could have retrained the workers for new industries that could have benefitted everyone, such as the solar cell industry which would have benefitted those who wanted to make their homes more energy self-sufficient as an investment in maing their lives less expensive. What did the auto bailout accomplish to actually help people beyond the workers themselves? That's what I call make-work jobs the end purpose of which is to create jobs as an end in itself. A job ought never be an end in itself but always a means to an end. If the ships in the actic are genuinely useful, then those autoworkers could have been retrained to build chip components for those ships, something we really needed byond its job-creation value.

And to comment on the reference to Keynes, I fully agree with the idea of maintaining economic stability, and that does mean taking money out of the economy in good times and putting more money into the economy in bad times. The question though is how that money is spent. Because once that money is put into the economy to fight recession, it will come back later in the form of inflation which we will need to fight afterwards. That's why the stimulous spending must be well thought out. Again, that money could have been spent on skills upgrading for new industries instead of subsidizing cars for the middle-class just to create jobs for their own sake.

I think a more fundamental economic approach has to be taken, even before we start looking at a process for balanced budgets, etc.

Things have to be realigned along the lines of what and who is actually adding value, flow the money that way, and away from the elements that have been parasitic in nature.

An obvious example would be to outlaw futures speculation.

Less obvious would be things like price controls on necessary items like prescription drugs, various insurances.

Finding cost free ways (to the government) to shift money from the non value added players to the value added players in the economy is going to happen,  one way or another anyway.  The game can't be sustained otherwise. 

Governments have to speed this along.

And just which political party are you proposing to immolate by its adding a couple of points back on the GST Stephen?

(And it looks like you've been joined by the political freethinkers).

George Victor wrote:

And just which political party are you proposing to immolate by its adding a couple of points back on the GST Stephen?

I really don't care. All successful social democracies have eventually figured out that high consumption taxes (GST/VAT) are the most effective way of generating large amounts of tax revenues.

The fact that the NDP has spent a generation denouncing the GST means that a generation has been lost; the federal government is now smaller (as a share of GDP) than it was in Diefenbacker's day. And probably another generation will be lost trying to piece together political support for a strategy to reverse the trend to ever-smaller governments.

But I'm against flat tax schemes like the GST, PST, user fees etc.  If I was president dictator for life and last king of Scotland, there'd be not flat taxes, or regressive taxes or the like.  Just a progressive income tax, with no fancy schmancy loop holes that are just a way for the priveleged to escape paying taxes.

You'd love me at the cash register and hate me in April.  Except your tax form would only take five minutes to fill out.

Corportate taxes have to go up.    Oh, I know, they'll flee the country to low tax juristictions.  I hope they enjoy Ireland and Iceland.

Meanwhile, money is to be made in this country, and others would replace those walking off in a huff. 

We've got resources comming out the ying yang, an educated work force, infrastructure galore.  Don't kid yourself, the most replaceable element of our economy are the extortionists who keep on insisting that if they have to pay their share of taxes they'll leave.

Let 'em.  Don't let the door hit ya on the way out.

George Victor wrote:

And just which political party are you proposing to immolate by its adding a couple of points back on the GST Stephen?

(And it looks like you've been joined by the political freethinkers).

I may be a freethinker, George, but you appear to have been dazzled into submission by Harper's tax cuts. Frankly, being free feels better.

A more interesting, and more telling way of comparing taxes from decade to decade or across sectors would be to assess the value.

What value do we get from our taxes?  No one seems to ever look at that, and it seems to me this is the real question that needs addressing.

The "freethinkers" is vicious, u?  

Stick to the issues people raise?

The thread, u, is an appeal  "How should the NDP address Canada's catapaulting deficit and debt"

What part of my economic entry does not deal with that?  (And least, DID deal with that before your jucular ho ho ho entry)?

It is ever thus.

Well, I'm not sure.

But it's only logical that control of the economy has to be taken away from those who fucked it up.

Then again, maybe we should let these latter day Marie Antoinettes stay in the driver's seat all the way to the guillotine?

Jobs have to be created, but they have to be jobs that provide some kind of value.  Jobs where people actually do something for the money they are paid. 

And that's where it gets phillosophic and arguementive.  Value is a relative thing.  At one time we valued automobiles much more highly than we do now.  But, we could not have.  But those auto jobs were real none the less.

Right now, that phillosophic arguement about what constitutes value is being dominated by a very few people who, in the final analysis, want to make boffo bucks for doing nothing.

Two hundred years from now, people will look back on this and wonder how the vast majority of people were horn swaggled so completely that their interests were subordinated to a small and rather useless percentage of people. 

Much like we look back now at the useless and rapacious monarchies that existed in Europe today.

Deffinately, auto parts supply.  Less so economists.

I have a feeling Stephen Gordon might order them differently.

:)

I don't think we can really assess value until we do what phillosophers do and determine a base point of reference. 

What always happens is that the persons in control of the government, and ultimately, the tools of force (military, police) determine that base point of reference.

That's why you and I get shit on, and Mike Duffy is a senator. 

It's got nothing to do with how hard you work, or whether your work is essential or vital to anything.

Or I should say, anything related to what most people would consider the common good.

Let's see, senators are well above six figures with wages and benifits and perks and such.

And the people we entrust to drive our kids to school on those big yellow school busses get about minimum wage.

Y'ever tink tings are a bit outta wack?

Stephen Gordon wrote:

I really don't care. All successful social democracies have eventually figured out that high consumption taxes (GST/VAT) are the most effective way of generating large amounts of tax revenues.

The fact that the NDP has spent a generation denouncing the GST means that a generation has been lost; the federal government is now smaller (as a share of GDP) than it was in Diefenbacker's day. And probably another generation will be lost trying to piece together political support for a strategy to reverse the trend to ever-smaller governments.

That's actually not true. Its actually neo-liberal or small "c" conservative parties that tend to embrace consumption taxes as the "most effective" way of generating tax revenue. The most rightwing elements in GOP tend to embrace the idea of getting rid of income taxes and having a national sales tax. Its no coincidence that it was the Tories that brought in the GST and coupled it with cuts in personal income taxes. I don't disagree sales taxes of some sort are a necessary part of the mix of different forms of taxation that any government needs to keep afloat. You can't have income tax or sales tax or property tax as the one and only source of revenue. BUT, its crystal clear that one of the major issues that actually distinguishes left from right economically in this day and age is that leftwing economists and parties tend to want higher income taxes because its more redistributive and more progressive. Rightwing parties and economists tend to prefer higher sales taxes because that way the wealthy pay less tax and the poor and the middle clas pay comparatively more.

Oh god. Some people NEVER learn.

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Progressive Person: How do we raise the tax revenues we need for the social programs we want to implement without tanking the economy?
Economist: Consumption taxes. Theory says that consumption taxes such as the GST are the least-disruptive way of generating tax revenue, and available evidence appears to be consistent with the theory.
PP: But consumption taxes are regressive!
E: Yes, but we can correct for that using targeted transfers to low-income households so that they aren't worse off; that's what the GST rebate is for. And there will still be lots left over to fund those social programs.
PP: But consumption taxes are regressive!
E: I know. But they introduce fewer distortions than the alternatives, and we can recompense low-income households for their lost buying power.
PP: But consumption taxes are regressive!
E: I'm not disputing that point, but there's more to the analysis than that. Okay, let me explain the effects of the various forms of taxes...
<15 years later>
E: ...and so we see that a consumption tax accompanied by direct transfers to low-income households is the most effective way of generating the tax revenues you want.
PP: But consumption taxes are regressive!

15 years and counting. I'm not optimistic.