Monday, July 13, 2015

Failing Economics 101


Stephen Harper and Joe Oliver like to pose as economic gurus. They claim that, when it comes to running the nation's economy, they know what they're doing. But, Jim Stanford writes, they should review they're notes from Economics 101 -- assuming they took notes:

The Conservatives need to dust off their first-year college macroeconomics textbooks. Overall economic activity is determined by the spending power available to buy what we collectively produce. There are four major categories of spending, and hence four main engines that can potentially lead growth: business investment, exports, consumer spending and government.

Unfortunately, the first three are all currently headed in the wrong direction. Business capital spending was sluggish even before oil prices fell (despite large corporate tax cuts) and now it’s shrinking fast. Exports have fallen steadily through the year, producing record trade deficits. And consumers, finally tapped out after years of record debt, are sitting on their wallets: Retail sales fell in April. At any rate, consumers can’t usually lead the growth parade, anyway, since they need jobs before they can go out shopping.
In the face of such multi-dimensional weakness, what good does it do to eliminate a deficit in the remaining sector of the economy? In a best-case scenario, absolutely nothing. And more likely, the austerity imposed to attain balance (for the federal government, this includes $15-billion annually in cumulative spending cuts and nearly 50,000 lost jobs since 2011) only further undermines demand, both directly and indirectly, by further chilling consumers.

Still, Harper and Oliver keep insisting that a balanced budget is what Canada needs to jump start its economy. They are obsessed with a balanced budget because that's what they promised in the last election. But the budget really isn't balanced:

Mr. Oliver’s budget isn’t really balanced, anyway. His apparent triumph was achieved through accounting gimmicks: reallocating contingency funds, selling off public assets, raiding the EI surplus, even prebooking the value of expected cost savings from labour contracts that haven’t even been negotiated yet. Now, with growth falling well below his 2-per-cent budget assumption, another multibillion-dollar hole has opened up in his budget.

Harper and Oliver would make great case studies in a psychology course. Each provides ample evidence of what happens to someone whose life is driven by obsession. But, when it comes to economics, they both illustrate why people fail Economics 101.


Lorne said...

Like most things about the Harper regime, Owen, their economic 'strategy' is merely a shill game. Their tired rhetoric bespeaks a government devoid of ideas, and one that has a singular incapacity to inspire the imagination.

Owen Gray said...

It really does get tiresome, doesn't it, Lorne? The whole bunch is good at memorizing lines. But they lack genuine curiosity -- and, therefore, creativity.

Mogs Moglio said...

But its not Joe and Joe's fault [Harper & Oliver]:

The Canadian Press

"PICKERING, Ont. - Prime Minister Stephen Harper says the government will react with "strong fiscal discipline" to the "downturn" in the Canadian economy, which he blamed on the recent turmoil in the global economy.

"Let me just state clearly what the situation is, there has been a downturn and the reason for that has been the downturn in the global economy," Harper said in Pickering, Ont.

"It's really that simple. Look around the world, we have another crisis downturn in Europe, we have a very significant slowdown and some other related economic problems now in China, we had very negative first quarter growth in the United States." From --->

Notice how Harper uses the word we? Joe & Joe two of three little piggies cried wee wee wee all the way home, oui. Its never Joe & Joe's faults always someone else to blame Putin, Greece, China, the US, Harper didn't run consecutive deficits the world made him do it no wait a minute 'The devil [within] made him do it.' Austerity for the people spendthrifteyness for the Harper Government.

In a war we did not declare nor did ISIS declare on us nor did the US ask us to help, Harper alone made the decision unilaterally. From an April 08 2015 Globe and Mail article titled: "Canadian jets drop first bombs on Islamic State stronghold in Syria" Quote:

"The Harper government estimates its mission against Islamic State will cost Canadians more than a half-billion dollars by March, 2016."

$500,000,000/12 = $41,666,666.67 per month but Harper always low balls his estimates in order to sell his schemes to his rabid base. So we are talking roughly Forty Two Million Dollars per month plus cost overruns and adjustments for the low estimate. This could easily double to One Hundred Million per month. If a jet gets shot down even more. Joe and Joe I think I've found your budget woes and it ain't the rest of the world its you two tykes. Ya woe is Joe & Joe we are in for a major spin operation, I'll get dizzy if I have to listen to it. If the cost of the 'mission' doubles as I anticipate we are looking at the trillion dollar mark for the year April 2015 to March 2015.

What makes matters worse it is possible that Langley or the CIA and the US Army really created ISIS or ISIL or whatever. Russia prevented the US from invading Syria so they took the back door in with CIA/US trained and armed insurgents. Mossad was in on it too. Have we not seen this movie before? Al Queida is created funded and armed as an ally. Then becomes an enemy then in Libya becomes an ally again???? Wake up people...


Bye bye Medicare and EI and Veterans and seniors you've been dropped like a bomb over Syria sorry but Joe & Joe desperately need to balance the budget somehow and you are the 'collateral damage.' Sorry but its not our job to look after you we are busy bombing take care of yourself thanks ---> Joe & Joe.

Anonymous said...

I suspect Steve was struggling, if not actually flunking his mid term in Econ. 101 at U. of Toronto, which was why he quit after 2-3 months.

Usually, someone who wants to transfer to a different school/University would at least finish the year so that he/she does not waste the entire year. In Harper's case, he appeared to have quit mid term, thus wasting an entire year at least, and started anew at U. of Calgary. He then took almost twice as long as the average student to finish his bachelor's and master's degrees in Econ.(he took 12-13 years to finish both degrees). The length of time he had taken seemed long even for someone doing it only part-time. Thus on paper at least, Harper's credentials would hardly suggest someone with a bright academic mind or aptitude, eh?

But what does it matter whether Harper truly understands Econs. 101? His strongest support seems to come from voters with only high school or college diplomas, and who would hardly be in a position themselves to evaluate Harper's and Oliver's Econ. credentials.

Which of course could also explain why Harper's weakest support comes from people with University degrees. The latter see through his BS. LOL

Owen Gray said...

When you're obsessed, Mogs, it's never your fault.

Owen Gray said...

I've always had a hard time swallowing the notion that Harper is the smartest guy in the room, Anon. The most cynical, yes. But not the smartest.

John B. said...

There may well happen times that Harper would be the smartest guy in the room, but that would only occur should everyone else in the room be fellow members or supporters of the CRAP Party.

Owen Gray said...

True, John. Being the "est" is relevant. In a room of dead heads, he may be the least dead.