Justin Trudeau, Tom Walkom writes, has done the country a favour. For the last two decades, the word "deficit" has been synonymous with "doom." But the two words are not synonyms. And now is the time to run a deficit:
But economists of all political stripes agree that if government is ever going to spend money on things like bridges and sewers, now is the time to do it.
First the spending is needed. Torontonians found that out last winter when the bitter cold caused ancient water pipes around the city to fracture.Second, interest rates are at rock-bottom lows. As the U.S. economist Paul Krugman notes in his New York Times column, the world is awash in capital. Investing in public works is a much better use for this capital than, say, stock market speculation.
Third, the Canadian economy is stagnant. It may or may not be in recession (my guess is that we did suffer a recession in the first six months of the year but are now out of it).
Neo-liberals have convinced voters that governments are like households. Households have to balance budgets. But, in hard economic times, government debt can stimulate an economy and help households balance their books.
Prime Minister Harper was absolutely gleeful when Trudeau said he was willing to run a deficit -- something Harper has done, better than any prime minister in Canadian history. But that deficit was caused as much by tax cuts as it was by the global recession.
He won't tell you that, of course. Honesty is not his strong suite. The Duffy Trial has underscored that point. And the NDP has bought into the neo-liberal characterization of deficits. Now the Liberals are to the left of the NDP.
Our politics is undergoing a fundamental realignment.