Sunday, September 28, 2014

All That Dead Money


In 1974, Arthur Laffer famously drew a curve on the back of a napkin while he had dinner with a reporter from the Wall Street Journal. The curve illustrated Laffer's theory that, as governments cut taxes, their revenues increased. Margaret Thatcher gave the curve a try and it didn't work. Ronald Reagan gave it a shot, too; but he managed to create the biggest deficit  -- up to that time -- in American history. Next in line was Brian Mulroney, whose application of the Laffer Curve caused Canada to hit the "debt wall."

Paul Martin, Mulroney's successor, managed -- with a great deal of pain -- to bring government revenues into surplus and he began to pay down the national debt. But then came Stephen Harper, who insisted that taking the path that Thatcher, Reagan and Mulroney had trod before him would bring Canada to the gates of economic Nirvana.

However, Frances Russell writes:

Corporate Canada reached a milestone in 2014. For the first time ever, it now has more cash on hand than Canada’s entire national debt – $630 billion and counting.

In other words, Canada’s big corporations could pay off Canada’s entire national debt in one fell swoop with just the cash sitting in their collective bank accounts. And they wouldn’t even have to touch their other assets.

David Macdonald, the senior economist at the Canadian Centre for Policy Alternatives, has had the temerity to point out that tax cuts have not increased government revenues or economic productivity:

Back in the 1990s, Corporate Canada said it would use the new money to build more factories, employ more workers and make Canada more productive.

“Governments dutifully cut social programs as taxes decreased,” Macdonald says. “But Corporate Canada passed on making Canada’s economy more productive….(And) Canadians are left with weaker health care, veterans care and other social programs.”

The Harper government's response was to order the Canada Revenue Agency to audit the CCPA because it displayed political bias. But the CCPA has the facts -- and history -- on its side. Wherever governments have followed Arthur Laffer's advice, the result has been a pile of dead money -- not increased government revenues.

And Stephen Harper continues to assert that Laffer's laughable curve is sound economics.


Rural said...

I watched a repeat of a 16x9 bit last night that revealed that at the same time as they are 'investigating' these charities they are ignoring millions of taxes owing by corporations and doing nothing about offshore tax loopholes that hide billions. Its clear that this is not about tax evasion, Owen.

Owen Gray said...

This has nothing to so with "tax fairness," Rural. It's all about the truth -- or, more specifically, making sure that the truth never sees the light of day.

Lorne said...

When given the choice between facts and ideology, Owen, the extreme right will always choose the latter. Most of the media, sadly, will support that choice.

Owen Gray said...

It's easy to let other people do your thinking for you, Lorne -- particularly if that thinking is presented in short sound bites.

Critical thinking takes work -- hard work -- which lots of Canadians aren't prepared to do.

Anonymous said...

Harper works for the giant resource barons and all wealthy barons.

Every time the barons line up at the trough and squeal for more money? Harper gives them another $60 billion in tax reductions.

Harper sneak work with the TPP, is just another corporate give-a-way. That gives the wealthy barons a hell of a lot more power, to steal from citizens around the globe.

The giant barons and the wealthy sit on all the money. This stops the cash flow around the world which, causes a recession. This is what Flaherty said and he didn't like it. I don't think Flaherty could put up with Harper any longer, so he resigned.

I believe the wealthy barons chose Harper, to be the front man for going global. If so, they chose well. Harper has the characteristics of the dictators in the 30's and 40's. Harper has no scruples, decency, honor, ethics nor morals, what-so-ever.

So, I began to wonder about the Bilderberg Group.There is Harper, his henchman Gordon Campbell, Jason Kenny, Nigel Wright and Conrad Black was on the Bilderberg steering committee. Harper said, global governance has been worked on since WW2.

Conrad Black was also a member of, Harper's Northern Foundation of 1989. That is why, Conrad Black was permitted back into Canada. Black was Harper's propaganda machine.

Seems to me, Harper sold Canada to Communist China? Harper took a planeload to Israel, wonder why? I knew there was dirty work afoot.

Harper takes his orders from the wealthy barons, who are bottomless pits of greed. Aren't they the 1%? Harper takes from us to give to, the wealthiest outfits in the world.

Owen Gray said...

All that wealth certainly isn't trickling down to ordinary folks, Anon.

Anonymous said...

Arthur Laffer's taxation curve theory sounds suspiciously like Anne Elk's brontosaurus curve theory. Given that Miss Elk's curve theory was introduced three years before Mr Laffer's curve theory, could this possibly be a case of academic plagiarism on Mr Laffer's part?

Owen Gray said...

Interesting speculation, Anon.

Anonymous said...

privatize profits .Socialize debt

Owen Gray said...

That's precisely what neo-con policy has been all about, Anon.