I am not an economist. In fact, the last time I took economics in school, Keynesian Economics was taught. Things have changed since then. But it seems clear to me, that in this global credit crisis, which is caused by government overspending and extending too much credit to people who cannot afford it, that extending more credit is not the answer.
The Government’s role is to make sure the economy keeps rolling along. Left leaning governments do it, generally speaking, by raising taxes and spending more on social programs. They, generally speaking, want to have more of a hand in the marketplace. Right leaning governments do it, generally speaking, by lowering taxes and allowing the citizens to keep more of their money to spend as they wish (and spend it they will). The marketplace, according to them, will take care of itself.
And so we come to Canada. Canada is just on the brink of plunging into a recession. Mostly because of global economic woes, the financial trouble of our main trading partner, the United States, and also because Canadians too, have been overextending their credit. (As a side note, a recession is an inevitable part of our natural economic curve: it’ll come regardless of what governments do).
The Harper Government should be about less government spending, leaving more money with the people to spend as they wish (and again, spend it they will). It should be about less credit and more cold hard cash. Credit is what gets you into trouble, everybody knows that. First, the Canadian Government gave $25B to Canada’s banks to secure “shaky” mortgages, so that the banks had more cash on hand to, you guessed it, be able to extend more credit. Now there’s talk about bailing out the Big Three, private, foreign owned companies that make automobiles (bailout means: extend more credit to restructure), and as recent as yesterday, an announcement of going into a $30B deficit in the next four years, spending cartloads of cash on infrastructure. A $30B deficit means the government is operating on more credit.
Interfering in private business, increasing government spending, securing loans, does that sound like a right leaning government to you? No, it sounds like Liberal and NDP policies. Giving money to GM and Chrysler comes straight from Layton’s Book of Poor Economics, and speeding up infrastructure spending is straight from the Liberal Book of Doing Something to Accomplish Nothing. Even Flaherty’s Economic Panel is a Liberal plan.
So we have a right leaning government currently implementing left leaning policies to crawl out of a left-created hole. Why? Because of the threat of a coalition government taking over? Public pressure? Have we all been bombarded with so much left-leaning MSM messages that we believe stimulus packages are all that is needed to get out of this crisis? Referring to the title of this post, the Coalition has already pushed through their main objectives and as such, are controlling what the government is doing, and as a result, ARE governing. The threat of overthrowing the government has paid off.
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I have highlighted more credit throughout this post. Because more credit is what governments across the world throw at the current financial crisis to try to solve it. Again, I am not an economist, but it seems to me that in times where money is short, you cannot spend you way out of a shortfall on borrowed cash. That’s such poor economics, it could have sprung from the mind of Jack Layton.
Maybe a year or two with no available credit will make Canadians actually only spend what they have and maybe pay off some of their debt (at least not add to it). It will make them go back to the things that are important and cut out the things that are not. I know I am.
And maybe that’s not such a bad thing.
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