JUST THE HARD FACTS PLEASE

For the past three months I have been at peace. I have lived in another environment, met a different kind of person, and shared, as much as a visitor can, the culture and personal climate of another country. But that is all over and I’m back to the more familiar often controversial reality.

(If you stayed on my blog for the letters from Paris, but don’t want my characteristic rants, let me know and I’ll remove your name from my list. Which would mean that when the “letters” get published in book form, you will not receive a free copy.)

It is true that most of us seek out people who share a common cause with us. We look for an affirmation of our opinions and ideas. Most of us find it difficult to spend too much time with people who constantly disagree with us, unless you are some kind of sadist.

So for my political companionship I look to people like Paul Krugman, the Nobel laureate in Economics who writes OpEd for the New York Times. Before I read Krugman’s take on the G20 resolution about deficits, I had already formed an opinion. (Only my sojourn in Paris made me keep my mouth shut.)

I didn’t need Krugman to tell me that the orthodox point of view about deficits was useless and downright destructive. My first response to the G20 announcement was: “Here we go again. Using countries like Greece and Spain, who are in dire financial straits, the “orthodox” decide it’s because they have spent too much money on social safety nets and have impoverished their country. So we get to the same old same old: when times are tough we ask everyone to “tighten their belts.” We seldom ask the affluent to tighten up because that would mean taxing them to pay for social concerns, you know, silly stuff like health care, education, day care, an horror of horrors – welfare. The first to get it when the going gets rough are the ones least able to cope. (I will not get into the futile argument about lazy people and people who want a free ride. The huge bonusses to Wall street manipulators should end the argument)

I am, while not an economist, an old fashioned Keynesian. There is nothing wrong with deficits when the economy needs a boost. And when the times are prosperous, we should be putting money aside. We don’t of course. We hand it all back to the taxpayers, especially the people in the high tax brackets.

To digress: in every developed country there is some kind of national bank. In the U.S. it’s the Fed and here it’s the Bank of Canada. They can have more effect on policy than the government. They operate outside the political arena and can, in a small but effective way, accomplish a lot by manipulating interest rates and the money supply. Only one problem: lower interest rates have failed to encourage manufacturers to produce more because with a diminished consumer market they have fewer people to sell their goods to. I have no argument with that reality.

Obama, and many other leaders, have decided that it is time for the Free Market to take over. It is time to reduce unemployment by relying on the private sector to create those jobs. In the meantime, in spite of conflicting political pressures, the one who should be creating jobs should be the public sector. What ever happened to deficits in a good cause? What ever happened to the creation, not only of make-work projects, but to subsidize the enrichment of the infrastructure. Better transit, high speed rail, more and better schools? Meanwhile there is that “orthodox” hue and cry: “Our children’s children will be paying for our big spending. We are burdening the next generation with our mistakes.” How about: “We are right now burdening the population as a whole with the decline in employment and the reduction in social and community services.” I know, we blow our Canadian horn here because our unemployment rate is lower than the U.S. That reality is as much a matter of good luck as it is good management. Tell it to a guy who lives in St. Thomas where the car makers upped and left. Or in St. Jerome where they did the same, or in St. Catharines, where they have announced a new program but the new jobs won’t make up for the ones that were lost,

a sidebar to the argument: many of Obama's advisors are telling him that bigger deficits don't go down well with the public at election time. Surveys are showing that the American people are worried about deficits, thanks to the incessant pressure from highly-paid lobbyists. So the future of a country can be dictated by the pressing need to stay in power!

Finally, Krugman is right. We need a heavy dose of deficit financing. But this time let’s not make the same mistake by giving money away when the economy improves.