Is now a good time?

by Aaron Wherry

Stephen Gordon projects the sort of job cuts the public service might be facing.

Federal program spending accounted for 7.4 per cent of GDP in the fiscal year that preceded the spring 1995 austerity budget, and this share fell by 1.3 percentage points over the next two years. In 2011-12, federal program spending was projected to be 7.0 per cent of GDP, and was to fall by 0.8 percentage points by 2013-14. In other words, the cuts in program spending announced in last year’s budget were roughly 60 per cent as large as what we saw in the mid-1990s.

Federal public service employment fell by 29,000 in 1996, and by an additional 26,000 in the following three years. If the effects of the planned cuts are proportional to what was experienced in the 1990s, then the number of job lost would be on the order of 30,000.

Stephen also considers whether now is a good time for austerity. Not that this spring’s budget will have anything to do with austerity.

See also: Looking the wrong way




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Is now a good time?

  1. We have a structural deficit and structural unemployment so no, now is definitely not a good time for austerity.

    • This comment was deleted.

      • I have no idea why you think that because something was done in the past, we should do it again.

        Consider an action on it’s merits, not on it’s partisanship.

      • Why not take a few seconds and read the linked articles?  From Gordon’s:

        “One of the most important features to remember of the 1990s budgets is that austerity was imposed after the economy had recovered from recession. Cuts in public-sector employment were more than compensated by job creation in the private sector.”

        • Exactly. You beat me to it Patchouli.

          Austerity in the midst of a recession is like pouring gas on a fire.

          Gee, I wonder what will happen?

          • We are not in a recession. University educated bureaucrats won’t have a problem finding jobs in private sector, they just don’t want to leave their cushy jobs and get proper ones. 

            Reuters ~ Jan 27 2012:

            “Canada should see modest job growth in January after an unexpected lull in late 2011 as manufacturers and retailers rebuild staff, but not enough to pull down the unemployment rate, according to a Reuters poll of analysts.

            The economy is forecast to have grown by 2 percent in the final quarter of last year on an annual basis, down from 3.5 percent in the previous quarter.Canada’s job market recovered more quickly from the recession than that of the United States, and the unemployment rate remains lower.

          • As usual you skip right over the point.

            Note the quote: “…economy had recovered from recession…”

            Are you honestly suggesting the global economy has recovered  from recession?

            Tony we have the standard of living we do primarily because of exports.

            So with the global economy still shrinking and a high degree of ongoing risk in our primary export markets, in what way can this be characterized as being a good time for austerity?

            Please step back and fixate less. See the forest, not just the trees.

          • That’s an awfully selective cut and paste… from the same Reuters article:

            “Even if the predictions are true and 2012 kicks off on a positive note, the European debt crisis and its potential fallout are hanging over employers and may restrain hiring decisions for months to come.”

            We are still at risk of a double-dip recession, we are not in the clear.

          • “Are you honestly suggesting the global economy has recovered  from recession?”

            Where in world do you live, Phil King? Gist of your argument is that a few European countries are having financial difficulties so it’s bad time for Canada to fire bureaucrats in attempt to balance budget and avoid situation like Europe is facing. 

            Forbes ~ Jan 2012: First, despite a year of tight credit and doomsday predictions from many China watchers, the China economy is alive and well and continues to grow at a healthy rate.

            Reuters – Jan 2012: The gross domestic product of the United States grew by an annual rate of 2.8 percent in the last three months of 2011, the Department of Commerce said Friday.
            That pace represents a sharp acceleration from the 1.8 percent growth in the third quarter, and according to Reuters is the fastest expansion since the second quarter of 2010.

            Reuters Jan 2012: Confidence in the eurozone’s economy strengthened in January for the first time since early 2011, EU data showed on Monday, but a recovery in Germany masked a deterioration in France and Italy, highlighting the bloc’s diverging fortunes.

          • Harper has set up the ‘greedy boomers’ as the scapegoat.

          • I didn’t catch the words “greedy boomers” in any speech or pronouncement from Harper.  Can you provide a link?

          • Probably because it’s the greedy boomers fault. Their entire lives were funded on deficit financing, they’ve never paid for their health care, infrastructure, or any of the social services they hold so dear. Now they expect future generations to pay for their retirement as well, and some of us are getting fed up.

          • @Rick_Omen:disqus 

            That’s amazing….and here I was sure we’d notice if boomers had failed to pay their taxes all these years.

          • @Rick_Omen:disqus 

            That’s amazing….and here I was sure we’d notice if boomers had failed to pay their taxes all these years.

        • There is a lot of this not reading the article going on.  Very annoying.

          • When you have people in power for whom fact is an inconvenience, it doesn’t surprise me that so many are emboldened to act in a similar manner.

          • @865444ea1a3aec1b5f1890dd40359673:disqus 
            He would never use those words, silly, but that is how it’s being framed when it’s criticized.  Another wedge issue, Harper’s favourite technique. 

          • Do you have a link to substantiate your claim that “this is how it’s being framed when it’s criticized”?

          • @Critical:disqus 
            He’s at the ‘protecting the system for future generations’ stage of the roll out but his usual tactic is to demonize the opposition to his plans – i.e. radical foreign environmentalists, militant unions, Toronto elites etc. 

          • Rick Omen (above)  has just demonstrated how the Con talking points are distributed. 

        • This comment was deleted.

          • No, we’re in a mess.

            And raising unemployment will make things worse.

          • @Turd_Ferguson:disqus 

            Yes, from where you’re standing.

          • You’re talking to the same people who will scream bloody murder every time Harper mentions how well our economy is doing, just because we’re currently working our way out of a deficit. If you expect any of these anti-Harper folks to start talking sense, I’ll warn you that it ain’t gonna happen.

          • Because all he is doing is talking…..he certainly didn’t help the economy….in fact he damaged it.

          • Because all he is doing is talking…..he certainly didn’t help the economy….in fact he damaged it.

    • Do you feel the same way about Dalton McGuinty’s impending cuts? Or is that all good with you?

      • Austerity is the wrong way to go at the moment. Period.

        I don’t know why you keep trying to make everything partisan.

    • We don’t have a structural deficit, and we certainly don’t have “structural unemployment” (what the hell is that even supposed to mean?)

      • We have both.

        Harper lowered the GST….that means the govt takes in less money to pay for things currently in use.  The govt has deliberately shorted itself, so the deficit will continue.

        We have lots of jobs available in Canada….and lots of unemployed….but the unemployed don’t have the job skills required to fill them.

  2. To be calling it “austerity” is a laugh.

    The global recession was in 2008.  It’s been over 3 years.  It’s time to balance the budget.

    Isn’t it funny that a previous post( http://www2.macleans.ca/2012/01/27/the-cost-and-the-savings-of-oas/ ) was claiming that paying almost an extra 1% of GDP just for social security was no big deal.  Now we have a post that a reduction of 1% of GDP over all program spending is “austerity”. What a laugh. Make up your minds.

    • Wherry et. al. have made up their minds…. that they’ll oppose the current government at any cost, even if they have to advocate ruining the country. 

      • Yes, the 60% of Canadians who didn’t vote for Harper are intent on ruining their own country….makes perfect sense.

      • Yes, the 60% of Canadians who didn’t vote for Harper are intent on ruining their own country….makes perfect sense.

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