Thursday, February 18, 2016

Friedman's Ghost


Justin Trudeau won the election on his promise to run deficits but return to a balanced budget by the end of his term. He's backed away from the promise to return to balance by the end of the term -- something that isn't surprising, given the slowing U.S. and Chinese economies. But, Tim Harper writes, Trudeau will have to eventually answer the questions, "How big and How long?" And the answers to those questions will not come easily:

Big city mayors have big city hopes for infrastructure spending. The AFN wants a targeted First Nations infrastructure program.
Bombardier is knocking at Ottawa’s door and if the Trudeau cabinet has not already decided to float the company $1 billion (U.S), Economic Development Minister Navdeep Bains set the stage for that Tuesday, reminding us the aerospace sector employs 180,000 people and adds $29 billion to our gross domestic product.

Tax changes aimed at helping the middle class did not come in revenue neutral and is costing the treasury up to $8.9 billion over the next six years.

The cost of the Syrian refugee resettlement program will top $1.2 billion over six years, according to one estimate, there is $1 billion allocated for humanitarian aid for refugees in the region and Ottawa pledged $15 million to the United Nations High Commission on Human Rights this week.

Alberta has already been promised some $700 million in a special fund, and Saskatchewan and Newfoundland and Labrador could also be eligible for such help. The CBC has been promised $150 million annually in new funding. The Canadian Association of University Teachers wants an investment of $1.1 billion over three years to support scientific research and access to post-secondary education.
Some of these expenditures are admittedly small change in a $2-trillion budget. Others are not. Most are laudable. But how many are doable?

The times call for Keynesian economic solutions. But Trudeau faces an opposition which is fixated on the failed economic policies of Milton Friedman. And the myths Friedman perpetuated are alive and well.

It will take a great deal of political skill to silence Friedman's ghost. 


Anonymous said...

The revenge of Maggie Thatcher's infatuation with Friedman and Hayek is alive and well in the UK, where the state through local councils is happily evicting people from council flats. Ever heard of tax on extra bedrooms? That's right.

Camaroon,the Conservative nitwit running the UK is now well ahead of where harper got to here. Read this stuff and weep. It's pretty well unbelievable, but true. There are other articles of course if you really want to get depressed. Government after people who cannot help themselves due to some illogic the elite uses in their top-down disfavour of the poor.

Cut taxes for the well off, but tax the little guy for existing. That's Friedman's legacy in the UK.

Now we have to listen to the intellectuals running the Conservatives here at home make vast pronouncements based on no knowledge, zero research and mere prejudice, following a failed economic policy they haven't got around to acknowledging is rubbish.

Owen Gray said...

"No knowledge, zero research, mere prejudice." That just about covers it, Anon.

Steve said...

I really think that Japan is the future. They have pretty much given up. We will get there unless JT can convince us there is a future.

Owen Gray said...

That really is a large part of his task, Steve. Harper sold fear. To be successful, Trudeau will have to sell hope.

The Mound of Sound said...

We maintain this myth that Friedman stayed with his beliefs to the grave. He didn't. He and his fellow true believers ran their experiments for more than 20 years and watched them fail to achieve the predicted ends. They quite openly acknowledged their theories were wrong. What happened is that the plutocrats didn't care because that ideology only failed governments and populations as a whole but still worked for them and so, like Lenin's corpse, they kept pretending the theory remained valid. It's still considered sacrosanct in the halls of Congress and among a sizeable portion of the American people. It's even accepted pretty widely elsewhere in the Western world.

Owen Gray said...

It's not convenient to admit failure, Mound -- particularly when it doesn't suit your benefactors.