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In Which I State The Bleeding Obvious

Reading this Ezra Klein post (hat tip: Amanda at Pandagon), I was struck by how similarly applicable it was to the current Canadian discourse. While Ezra makes his analysis through the lens of the indeterminate bailout charge that the US government is going to take, Canada is going to be facing an economic downturn of its own even if we won't have to spend billions saving the banking system, and Harper's rhetoric in its face sounds like "Government will be making less, so it should be spending less. Just like any of you would."

This is, to quote Mencken, "neat, plausible, and wrong." It makes perfect sense if one seeks to run government like a business - you invest less when the climate suggests you're likely to lose out.

But doing so ignores a fundamental difference - I daresay a reversal - of attitude between the two. For government, money, and spending power, is a means. For business, it is an end. Of course they both have to watch the balance sheets, but a government that's in the black while its people are suffering has unmistakably failed, whereas a government whose deficit spending has enabled its populace to weather an inhospitable economy has quite possibly succeeded - if this spending can be made good in the long term. 

Amanda above suggests that the utility of this on the government scale isn't well explained or intuitive to your average voter (and also rails against opinion leaders' consistent underestimation of the average voter) . Surely most people don't have an academic understanding of Keynesian economics (god knows I don't), but I'm not sure we lack an instinctive one. My mother the investment rep has been beating the idea of investing in the future (student loans, mainly) being "good debt" into my head for years and years, and surely the logic isn't too hard to scale up.  It might even be easier here in Canada, where we seem to acknowledge more easily that government has a role in our lives besides keeping us from killing each other and keeping itself solvent in the short term while ignoring the long one.


ETA: Economist Mike McCracken advocates as much in Saturday's Star. Money quote:

"A political party's statement that it will never run a deficit is a declaration by that party that it does not care about the economy and those people hit by a recession. The sensible approach in a recession is to stimulate the economy with government spending in areas that help people obtain work."


Oct. 6th, 2008 10:12 am (UTC)
Yes, he's a bit more optimistic on the bailout idea than I would be in his place (though perhaps he's hoping for a more trustworthy Treasury Department in January to be administering the program).
Oct. 6th, 2008 02:50 pm (UTC)
You know, even if Paulson and Bernanke were trustworthy and reliable, which at this point is objectively ridiculous, there's just isn't enough money to "bail out" the financial sector.