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Dodge says not so fast with the stimulus spending


 

David Dodge, the former Bank of Canada Governor, is starting to sound like the closest thing we have to an economic sage. I guess it goes without saying that he will be respectfully ignored.

Earlier this afternoon, Dodge was interviewed by Don Newman on CBC Newsworld’s Politics, and he urged the government to ease up on its unseemly rush to start spending billions, ostensibly to stimulate the economy.

“What we’re going to spend this year isn’t going to change the outcomes in 2009 very much,” Dodge said. “It certainly will change outcomes in 2010, ’11, and ’12.”

Since this year’s grim economic trends can’t be quickly reversed by a few billion in taxpayers money hastily poured into who-knows-what projects, why not slow down a bit?

Dodge said it would make more sense to take the time to find wise uses for all that deficit spending. “In fact,” he said, “it’s more important that it be spent on things and done well so that it enhances our capacity here in Canada to meet competition from abroad and grow in the second half of the next decade.”

Not only is Dodge unconvinced that accelerated spending would ease Canada’s economic pain in 2009, he’s not even calling for a policy of making sure stimulus billions are spent in 2010. He’d be satisfied with some expenditures flowing in 2011-12, “as long as it’s concentrated on things we need to do to improve our productivity and our competitiveness.”

Doesn’t that sound about right? What are the chances that, say, three years from now we’re going to be looking back at this moment and remarking, “Wow, the government sure managed to prudently invest billions and billions of dollars, even though they did so at an ungodly pace, in the teeth of a world economic crisis, with minimal planning and next to no oversight!”

If anything is going to take the edge off bleak economic tidings in the next few months, it’s going to be the Bank of Canada’s experimental bid to free up commercial bank lending, along with President Barack Obama’s plan (still a matter of intense political wrangling) to shore up the economy of our biggest export market, and maybe whatever comes out of next week’s G20 summit in London.

And so, if short-term direct spending by Ottawa is not, as Dodge tells us, likely to be a decisive factor in the economic mix, why the headlong drive to shovel $3 billion out of the federal treasury between April and June? Why does the government need to spend all that money without telling us much of anything in advance about where it will actually go?


 
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Dodge says not so fast with the stimulus spending

  1. I agree – better to have people ride it out. And the people who have jobs, and there are some of us out there, will just spend the money they usually would.

  2. “Wow, the government sure managed to prudently invest billions and billions of dollars, even though they did so at an ungodly pace, in the teeth of a world economic crisis, with minimal planning and next to no oversight!”

    Excellent point. Seems very unlikely.

  3. “Why does the government need to spend all that money without telling us much of anything in advance about where it will actually go?”

    Photo-ops.

    • Why does the government need to spend all that money without telling us much of anything in advance about where it will actually go?

      If you have to ask, you probably haven’t heard that 75% of recent infrastructure spending has gone to Conservative ridings.

  4. I’d say Dodge has it about right – how do we get him his old job back, or maybe it’s the distance from the political centre that accounts for his seeming sanity?
    Why not beef up UI for the short term? That’s as good a way to get stimulus spending where it needs to be as any other plan, and it really is our money!
    “Why does the government need to spend all that money without telling us much of anything in advance about where it will actually go”?
    Silly question really: straight into as many conservative and swing ridings as possible – i’ll even go as far as to suggest the opposition are mostly jealous. Clowns the whole bunch of them! We need a King!

    • We already have a Queen who does her job just fine. We’re the ones who elect her ministers.

      • Yeah but she’s only a 2nd hand one, although i do have a lot of respect for her.

  5. “why the headlong drive to shovel $3 billion out of the federal treasury between April and June?”

    Ask the coalition.

    • That’s bs! It’s money the cons are reluctant to account for.

  6. “If anything is going to take the edge off bleak economic tidings in the next few months, it’s going to be the Bank of Canada’s experimental bid to free up commercial bank lending”

    It’s not clear to me why you think that a depression, caused by over-indebtedness stemming from easy money policies of government central banks, will be improved by “freeing up” lending.

    Money may be free, when the government prints it and borrows it and gives it to their friends, but wealth sure ain’t.

    And why do you trust the central bankers to “experiment” with solving the depression, when they are the exact same idiots who failed to warn that it would happen? (and who working in cahoots with politicians and private bankers actually caused it to happen) That’s like hiring the local burglars to fix the hole they made in your safe, cause, you know, “they’re the safe experts”.

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