Was stimulus spending useless?

Fraser Institute study says $47B did little to help the economy


The Fraser Institute, a conservative think-tank, says the Canadian government’s $47.2 billion in stimulus spending created massive deficits while doing nothing to curb the recent recession. A new study from the group says the spending accounted for only 0.2 per cent of the 1.1 per cent GDP growth between the second and third quarters of 2009, and that it had no impact on the one per cent growth in the third and fourth quarter of that year. The report instead gives credit to “private-sector investment and increased exports” for the economic turnaround. It also says the small impact of stimulus spending shouldn’t come as a surprise, as most government spending was earmarked for infrastructure projects, which only show results over a long period of time.

CBC News

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Was stimulus spending useless?

  1. Come on now Fraser institute all you so called brains.Spending 47 billion did not make a difference.give any homemaker an extra 1000 a month and see what a different it makes.Probably the most idiotic statement coming out of this bunch in years

  2. Fraser is notorious for defining their terms so that the statistics play out the way they want them too.

    Does that mean their analysis is wrong? No. They generally do decent work — within their terms.

    Start bringing in all the things they exclude though and their nice clear answers suddenly don't seem all that reasonable. How much private sector investment would there have been, for instance, if investors didn't think that investees would have any customers because jobs were being shed at record rates and nobody had any money?

    • Yes but it's a conservative think tank. By ideology, that generally means they'll try to frame numbers in an anti-state-intervention and pro-free-market way.

      I find it interesting how far from the Conservative blues the Fraser Institute runs in this set of numbers. Or, would it be the other way around?

  3. Just to put this in perspective, 47 Billion breaks out to $10K per person for over 4 million people. Imagine what would have happened if the government had left this money in the hands of private individuals. With an extra $10K each, there'd be a lot of home renovations, house down-payments, car purchases, donations to charity, celebratory restaurant meals, flights to visit friends and family, etc. The beneficiaries of those purchases would then have gone and spent their largesse on other things, etc.

    Economic prosperity is a function of people trading goods and services. You foster it by leaving people the means to trade for what they want, not by government fiat. Leaving power in the hands of those closest to the situation is always more effective.

    • At least the stimulus program will (presumably) leave an infrastructure legacy (bridges, sewers, community centres, etc) somewhere down the line. Lining the pockets of individuals gives them the opportunity to pay down personal debt or even go on a nice out-of-country vacation, neither of which stimulates the domestic economy.

      • Not just any production: production of something people will buy. If a nation wastes its resources building useless items it will go bankrupt – this was how the arms race broke the USSR.

        The stimulus is going to be spent on a combination of good things and useless token things. The tokens are a waste, and the money used to collect, allocate, and disburse the stimulus is also a waste.

  4. Was stimulus spending useless?

    No. It was WORSE than useless. Useless implies no benefit, without any discussion of harm.

    • You have to admit though, it could have been a lot worse. Under the circumstances I'd have done the same thing if the alternative was to let an LPC/NDP coalition take the reins and spend ten times this much.

      • Under the circumstances I would have refused to do "the same thing," stated my reasoning, and, if the government loses confidence, begged the GG (maybe successfully, maybe not) to hold an election on this single issue: increasing indebtedness of the presently voiceless (i.e. taxpayers of the future) versus taking responsibility for our own problems.

        • Well, different tactics for different folks I guess. In my opinion it's best to choose your fights, and once the fights are chosen it's also good to choose your ground.

  5. Stimulus should lower the burden of debt. I really have no idea what happened to all those stimulus plans.

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