Why this stimulus stuff will all soon be forgotten

It is raining money. Go outside without an umbrella and you’ll get largesse all over.


 

Why this stimulus stuff will all soon be forgotten

Hello? I am here to lodge a complaint on behalf of the Campaign Reporters’ Guild under Section 2. (a) of the Grievance Manual, “Time Utterly Wasted on the Campaign Trail.”

I will have you know I was there in Winnipeg. I was there at the vegetable distribution plant. I was not alone. There had to be two dozen fully accredited campaign reporters there, on that sunny morning in the second week of September. We got up early. We dressed warmly because a vegetable distribution plant is basically a big refrigerator. We stood around with our cameras and our digital recorders, amid the carrots and the turnips, and waited for nearly an hour for Stephen Harper to show up and make precisely one promise.

It was the biggest promise of the 2008 campaign: to lower the diesel excise tax by two cents, to give truckers a break on their fuel bills. Doesn’t sound like much, does it? Precisely: the Harper Conservatives were all about not sounding like much, because back then, Harper’s goal was to portray himself as the candidate of modest prudence against Stéphane Dion’s reckless adventurism. Stephen Harper wasn’t going to spend us into debt and recession. Stephen Harper wasn’t going to promise the moon. Stephen Harper would stay focused. That’s what was needed, he said at every stop. His “training as an economist,” which he took care to mention three times a day, told him so.

That little diesel tax cut actually accounted for half the total value of all of Harper’s promises in Campaign ’08. And, being a campaign promise, of course it was doomed.

Budget 2009 is 360 pages thick. It announces stunning amounts of spending increases and tax cuts. There is money for tourist boats on the Saguenay. There is $25 million for a new arts prize. There is $200 billion for an Extraordinary Financing Framework. There’s not a word about diesel excise taxes. My training as a journalist tells me that on that sunny morning in Winnipeg, the Prime Minister of all the Canadians was talking out of his bum.

Don’t cry for the truckers. The cost of diesel has fallen 20 cents a litre since Harper made his promise. It’s not that the biggest promise of 2008 was vital and unfulfilled, it’s that it was beside the point while he was making it. Harper’s “training as an economist” (he has a master’s degree—I took a few French literature courses in university; can I claim training as Gustav Flaubert?) wasn’t worth a lot. But then, neither was anyone’s. My favourite chart in this year’s budget book is Chart 2.12 on page 46, which might as well carry the title NOT MY DAMNED FAULT and demonstrates, plausibly, that much of the current mess really isn’t Harper’s fault, except insofar as he decided to claim oracular powers of foresight at the worst possible moment.

The chart’s actual title is EVOLUTION OF PRIVATE SECTOR AVERAGE FORECASTS FOR REAL GDP GROWTH IN 2009. In handy graph format it shows hundreds of economists getting everything wrong for months on end. At the end of last August, when Harper decided to have an election, the smartest guessers were guessing Canada’s GDP would grow more than two per cent in 2009. By the time Harper got to the vegetable plant the projections were closer to 1.5 per cent. By the time Jim Flaherty rose in the Commons to deliver his fiscal update at the end of November, the projection had fallen to zero. Now it’s well into negative territory. On the scale of a federal budget, the difference between two per cent and less-than-zero is many tens of billions of dollars. You’ll be relieved to hear Harper and Flaherty have decided to plan on the assumption that even these latest guesses are too rosy. We are headed for jumbo deficits, but at least they won’t be even jumbo-er if the economy gets even worse.

So the dogmas of the quiet past having proved inadequate to the stormy present, the Conservatives have delivered a stormy budget. It is raining money. The winds are whipping it all about. If you head outside without an umbrella this year you will almost certainly get some federal largesse on you. The term of art for all this bluster is “stimulus.”

Caffeine provides stimulus too, and within a day after drinking some you have peed most of it away. So too with this budget. In two years it will be hard to find evidence all this spending ever happened. In mid-November, before things got weird in the capital, I wrote, “Given a choice, Harper will avoid spending on things that work or last, because we might conclude that’s what government is for.” That prediction has held up better than others. Harper’s crystal ball having failed him throughout the latter half of 2008, he has abandoned any attempt to plan. Here is one example.

The budget provides $750 million to build new university labs and $2 billion to refurbish old university labs and $250 million to fix federal government labs and $87.5 million for scholarships so graduate students can sit in all those labs. And it cuts the budgets for the granting councils that pay for research. Apparently all those grad students are supposed to do something else in all those labs besides research. There is no use getting too fussed about all this. In November Harper faced advocates of stimulus who urged him to spend, and be quick about it. He did just that. The Prime Minister has had to swallow himself whole. It would be a bit much to ask him to be thoughtful while he did it.


 

Why this stimulus stuff will all soon be forgotten

  1. Isn’t that a strategy to make no one happy? The conservatives are apoplectic about the loose fiscal policy (see Coyne), and the liberals are disappointed by how ultimately useless it all is in actually achieving anything. If you’re going to spend like a liberal, why not at least make the liberals happy?

    • Ah, that way lies madness my friend!

    • ANPOC

      You should read Frank’s The Wrecking Crew: How Conservatives Rule.

      Essentially argues that conservatives governments succeed by failing… that to the degree their policies serve to illustrate (accurately or not) the government’s lack of efficacy in addressing social and economic problems they reduce demand for interventionist government.

      i am obviously boiling down a lot and it isn’t all Machiavellian (although there is a considerable amount of that)…

      The CPC has torn numerous pages out of this book.

    • He is making them happy. You think Iggy wants to be PM during this mess?

      • I don’t get this “spending like Liberals” thing. It was Liberals who stopped spending in 1995, after 9 years of Mulroney Conservative deficits. Who’s re-writing Canadian for some stupid non-existent Con-Lib dichotomy here?

  2. “Caffeine provides stimulus too, and within a day after drinking some you have peed most of it away.”

    Funniest line I’ve seen on “stimulus.”

  3. This is by far the best column I’ve read about the stimulus. A very effective blend of intelligent analysis and pithiness.

    • I concur.

    • Yup. Sounds pithed-off to me.

      • LOL

  4. Sounds about right to me.

  5. “Given a choice, Harper will avoid spending on things that work or last, because we might conclude that’s what government is for.”

    I seriously don’t understand how Conservatives can live with this kind of cognitive dissonance. I’m secretly suspecting they’re quite pleased with this budget because it’ll prove that government doesn’t work, as this Conservative government has so ably demonstrated the last three years.

    • Actually, what I don’t understand is how Canadians and conservatives don’t cotton on to the fact that all it really proves is that conservative government doesn’t work.

  6. The stimulus stuff wll be forgotten because we’re sailng straight into a world wide depression. We can see protectionist walls being erected, which will have a deleterious affect on third world countries, and we can see that humpty-dumpy will never be put back together again. At least our anti-American pro un on, anti-Canadian NDP will be happy.

    • You need some of Harper’s happy pills.

    • I’m a bit lost on the ragging on the NDP. Federally they’ve never been in charge. So, if you are going to bitch about a party in regards to the state of the country — shouldn’t it be the one in charge?
      Back when the NDP oversaw the recession in Ontario, they shouldered the blame. Isn’t this current trouble Harper and the Conservative’s responsibility? Whatever the cause of the crisis, they are the party that currently is steering the country.

      Coalition Nightmare forecasts an even more dire scenario, yet his dig goes to the fourth place party. It’s fine if you disagree with the NDP’s proposed platform, but they are just a bit player in this current mess. If Canada ends up in a depression, with Stephen H. at the helm — it will belong to him, and him alone.

  7. Nice job, Paul, although you probably should have been harder on the CPC for this BS budget. One major quibble:

    In two years it will be hard to find evidence all this spending ever happened.

    Check the federal balance sheet. You’ll find the evidence.

    • Major Quibble reports to General Disaster, doesn’t he?

      • ROFL – MAO … ground control to major tom –

      • The actual author of the budget, I believe, was Private Parts.

    • All right everyone, I am reporting you all to Corporal Punishment.

  8. Thank you, thank you, thank you… finally an analysis that focuses on how the money was spent rather than how much.

  9. Ti-Guy,
    Not that complicated. They don’t see any economic or social value in much of government activity, so the only reason they want to do it is for purely political or personal (as in corrupt) reasons.

    It was the liberals who unleashed the torrent of government spending for mostly social reasons and, whatever the result, this was in general with good intentions. The conservatives saw no social value, but could see that this money could be handily diverted to suit their political ends; no surprise that government spending exploded under Mulroney!

    Harper is following down this road. He may not like all this deficit spending, but he thinks he must do it to satisfy the citizenry’s cry to do something, deludes himself that he is doing it better than the Liberals would, and makes sure to further his political purpose at the same time.

    He is like the doctor who writes out prescriptions for drugs just to get patients out of his waiting room and get his OHIP fee or whatever.

    Not very pretty but I see no cognitive dissonance.

    • I don’t think Harper is capable personally of experiencing cognitive dissonance. He has a very compartmentalised mind.

      But Conservatives generally *do* suffer from acute cognitive dissonance, which is why they’re always so crabby.

    • This is precisely what CD is. Someone who’s need to self-justify an action or course of action is so immediate and compelling that they convince themselves, despite all evidence to the contrary, that what they are doing is necessary or right. But i’m not an expert on dissonance theory, so even if i’m wrong yr analogy of the Dr shirking his responsibilities is of an utterly bankrupt, both morally and politically, individual.

      • Why do people only “shirk” in economic discussions? In real life they piss around, goof off, etc. but never shirk. “What are you doing?” “I’m shirking.”

        They have crabs????? Must be because they oppose sex ed.

        • Just a hackneyed phrase. Nothing to get excited about!

  10. It’s raining layoffs all over the US. New York’s Bloomberg just announced massive lay-offs in education. It seems paradoxical for Ontarians who are dominatred by a union culture which continues to demand more and more and will stike until legislated back to work. A cold rain is beginning to fall and Canada’s pampered population is in for some rough times. And we dance.

    • A union culture eh? I presume you think unions are bad.

      Meanwhile, President Obama today said this today, as he used mroe executive order in rolling back more of ex-President Bush’s agenda – this time the anti-labour movement:

      I do not view the labor movement as part of the problem, to me it’s part of the solution. We need to level the playing field for workers and the unions that represent their interests, because we know that you cannot have a strong middle class without a strong labor movement. We know that strong, vibrant, growing unions can exist side by side with strong, vibrant and growing businesses. This isn’t a either/or proposition between the interests of workers and the interests of shareholders. That’s the old argument.

      • Union culture worked well for GM and Chrysler….lets ensure everyone is part of the fun.

  11. “In two years it will be hard to find evidence all this spending ever happened.”

    come see my new deck

  12. Wow, 25 posts on an article mentioning Winnipeg, & no one’s dissed it yet. I’m proud o’ y’all.

    • Winnipeg and a veggie warehouse to boot…

    • Ever since watching “My Winnipeg” I’ve found it impossible to diss the city. I can’t explain why.

  13. Uh, Paul, the point of a stimulus is to spend on things that will create jobs in the short term, while the economy is still in the tank – softening the blow of unemployment. The government’s credibility in not running a long-term deficit stems precisely from the fact that they have not invested in lasting things. Lasting things require a lasting commitment of funds and so, a lasting deficit. We are still paying for the “stimuli” of the 30’s and the Trudeau era precisely because past leaders decided to buy a legacy.

  14. If the coalition, or a minority liberal government had introduced the same document what would the comments be? I don’t think I’m being revisionist to say that essentialy the coalitions’ presumed rationale and economic/political justification for existance was to deliver essentially the same kind of budget as the one being trashed here.

    My God, politicians behaving as politicians…what next? Will pigs fly? Who would imagine that Mr Harper wouldn’t be stealing plays from the Joe Clark school of governance. As I recall staking out the moral high ground yielded a very pyrrhic victory for Mr. Clark. Message being “don’t take a knife to a gun fight.”

    As for electoral duplicity, does anyone recall the RED BOOK? Something about the GST? I appreciate that AC posts elsewhere but I do recall a column he wrote in the Spring of 2001 called “Why it matters” about the then PM’s fancy footwork at the BDC and the callousness of both the media’s and the PM’s attitude about the whole sordid affair.

    Then there was something recently about a guy named Gomery who turned over a couple of rocks and soon lost his appetite for going further. And no I’m not forgetting about Mr. Chretien’s predecesor either, but I find it curious that Paul Martin’s parting gift to the incoming CPC was his former DM Finance and IMF alumnus as Clerk of the Privy Council. A good Cape Breton boy I’m told, a star at Industry at a delicate time in the early 90’s and his senior EA at PCO just jumped ship to work for who?

    There’s more than enough skank to go around. There are serious issues to resolve. Perhaps we would all do better to focus our attention on the structural elements rather than the interior design of our problems.

    Not that Canada has always been perfect, but pretty much everyone who lives here (save the natives), or their ancestor’s CHOSE to live here and originally they mostly fled from Europe, now from Asia. They came here because we offered rule of law, respect for property and respect for natural rights. Sorta’ like the UK used to prior to the EUnification of Europe and the destruction of 800 years of law and tradition.

    • Yes, there is more than enough shank to go around. Don’t let the facts get in the way of your arguement.

      Q. Who worked for ten years to eliminate the deficit created by the Conservatives? A. Jean Chretian and Paul Martin, and they could not stand each other. But they knew what was good for the country.

      I remember the Red book, and I also remember:
      – income trusts (Harper reversal);
      – vetting appointment of judges (Harper reversal – not to mention the hundreds of Conservatives appointed to Boards and commissions);
      – an elected senate (Harper reversal for the largest number of appointed Senators in Canadian history) — a four-year election schedule (Harper breaking the law):
      – transparancy in government (the CPC routinely refuses to talk to the press);
      – DEMOCRATIC government (the CPC wrote the book on how to obstruct parliament and committees as well as twisting the GG’s arm to grant a proroguement in order to avoid a vote of confidence in the Commons (not to mention the fact that this unaccountable government has only sat 5 days since JUNE 2008;
      – taking credit for removing abuses which threaten the banking system like 40 year mortgages (introduced by, guess who, the Conservatives – in the 2006 budget).
      – I won’t go on for the sake of brevity. Last time I looked, Gomery had been disceredited for bias AGAINST the Liberals. Not to say that Chuck Gite was not a little crook, but every organization has them. Unusally the leader keeps his hands clean – not Harper. He got handed a bag of hammers when he went for majority on October 14 . Nothing like a nemesis. Harper has no moral compass and no vision. This overkill budget is just the dying gasp of a politician (not an “economist” as he claims) to save his skin.

      Q. Why would you assume that the Liberals, who know how to handle defecits, would not still be able to do so? A. Ideological bias.

      Now even conservatives are mad at Harper. Watch for the next episode.

  15. He has a Master’s degree, what is he supposed to do, have a phd to refer to training as an economist? How can you not distinguish between an MA and a few courses in something? Truly ridiculous.

    • Although Paul Wells is one of the best Canadian pundits, he has shied away from quantitative analysis ever since a traumatic experience in 1987. He flunked second-year chemistry at UWO, and has not been the same man since. So it’s understandable that he would equate an MA in Economics (which involves considerable mathematical rigor) with a few courses in French Lit, or a BA in Political Science.

      Either that, or he suspects that economics is actually a pseudo-science with as much relevance to the real world as French Lit. I`m not sure which.

      • I like to call them “sociologists in suits” myself.

  16. Paul, where is page three?

  17. Love this, you no someone is bitter when..LMAO

    From the aticle..

    “Harper’s “training as an economist” (he has a master’s degree—I took a few French literature courses in university;”

    Hey wells…

    What are your Uneversity creds?

    So Macleans and Paul Wells, now believe PM Harper’s education is suspect…..

    To funny…

    But great read Wells great read..LMAO

    Now back to PM Harper is bad…

  18. Not that some of the things in the Budget aren’t downright silly, BUT

    Harper gave Genome Canada $240 million dollars to be spent over five years. Genome Canada allocated it all in two years. Is that Harper’s fault?

    If you have allocated all of your five year allocation in two years, and need more, shouldn’t you be actively communicating to the government that this is the case, and communicating to the public how important the work you are doing is. It seems the people running Genome Canada are idiots.

    • Genome Canada hasn’t run out of money they just haven’t received new money for new research proposals. http://www.genomecanada.ca/en/about/news.aspx?i=327
      but for a background on the demand for Genome Canada grant money and how important this research is you could read, Wells in 05. ww.thecanadianencyclopedia.com/index.cfm?PgNm=TCE&Params=M1ARTM0012790
      or just check out examples of success, http://www.wikipedia.org/wiki/Metabolome

      I’m not sure if other funding agencies have been cut.

      • And here’s a quote from the 05 article that seems pertinent.

        But a big investment also creates a new reality. When you build dozens of new buildings and hire 1,446 new Canada Research Chairs, you’re creating immense new demand for research dollars. “It’s a peculiarly Canadian issue – I can say as an immigrant,” says Pawson, who was born in Britain. “Canadians always worry about building world-class institutions. My view is that actually, Canadians are pretty good at building world-class institutions. What they’re not good at is sustaining them once they’ve got them – because it takes a different order of commitment.”

  19. Flashback two months ago: “Harper’s not doing enough!!!” was the standard headline.

    Massive government stimulous later, and

    “It’s raining money!!!!”

    Here’s the recipe for the leftist media (Mr. Wells most certainly included) approach to Harper:

    Whatever he does, is bad,
    regardless of what he’s doing is precisely what we asked for the day before.

    Now,

    back to comparing Canada to Somalia (comparison reserved for when a Conservative is at the healm, otherswise Canada is a beacon of light on the world stage).

    Junk bond status anyone???

    • Nice to see you again Kody. Been in for a refit?

    • Aahhh, Kody, you big dissimilator you. Good to hear from you again. Please point to a single article that says, specifically, that PW thought SHPM wasn’t spending enough. The Somalia reference simply went over your head and doesn’t bear an attempt on your part to explain.

  20. Rafael, are these clips generated by some sort of bot? Are we being spammed?

    • No, WordPress has an automatic pingback when you link to another wordpress site. Macleans runs under the wordpress plugin.

      I quote Wells in my new blog entry. Read it if you like. Or don’t. Your choice.

      [p.s.: “Raphael”]

      • Got it now. Also, I read your blog entry. Good work!

  21. We folks on the reno industry love Mr Harper’s reno credits. NOw that is creative and getting down to the roots of where it is all being spent! That is a rural and city type of tax credit. I give the Harper gang a thumbs up for that creative thinking!!

  22. Ann Althouse asks: “What if elections were held in Iraq and no one was killed or even hurt?” Instapundit queries “would it be newsworthy?”

    Of course he was being rhetorical. The Iraq “quagmire” narrative (from the leftist/anti-war myopia) is the only one the media is interested in telling.

    In Anbar and elsewhere, peaceful elections, right now.

    I could have sworn that the media told us that part of the world was the most crucial and newsworthy, headline grabbing, epicenter for geopolitics for decades to come (when it was supposed to end in decades of quagmire-like war),

    is now not worthy of headlines, or stories, or even a peep.

    Quick question: if the media massively covers a story based on a particular narrative,

    then leaves that narrative in place, and doesn’t cover facts which show that narrative is now false,

    is the media merely grossly negligent in failing to inform (its purported purpose is to inform), or is it willfully attempting to maintain a false narrative in place by actively refraining from reporting the contra?j

    What’s remarkable is how the information gets out by alternate sources (like instapundit who is read by millions, who in turn talk to millions of others about these startling facts), and the media just sits and watches its credibility continue to shatter,

    as if the hope that the MSM maintaining complete control of information as they did before the dawn of alternate media, will somehow make it so.

    Me, I think that the nature of bias and myopic thinking, renders the media incapable of introspection. Almost all J-school grads, and all who they associate with, think the same way and reify their insular world view, such that they cannot see their institutional bias. They cannot help themselves, because they do not even think they need helping.

    To focus on any success in Iraq would question their world view, so rather than intentionally not report it, they simply believe it is not newsworthy. It doesn’t enter the radar screen because its not part of their conciousness.

    Sad, really, because the media, operating in conjuction with alternate media, rather than dismissing it as if the very true facts which are uncovered/highlighted there can be dismissed outright based on the beliefs of the purveyors of those facts, would actually be much stronger.

    No, the media wouldn’t be in the “making a difference, man” business, it would simply be reporting all the facts, and all the perspectives while letting the public decide what “difference” if any they should make with those facts,

    but it would be a viable business.

    Now, back to ignoring Iraq.

    Back to ignoring the torture (the real kind where appendages are sawed off) in Cuba, and highlighting the waterboarding of three avowed terrorists.

    Back to “making a difference, man”.

    The “correct” kind of difference.

    Back to junk bond status.

    • Well I think it is a bit more complex, though you are partly correct. Pundits (who are not necessarily journalists) get locked in to their initial reactions to an event – the more they defend that position, the greater their credibility is on the line. The problem with Iraq wasn’t just on the left – surely right-wing pundits misrepresented what was going on as well. The problem was that both were locked into essentially wrong positions – the right that this would be easy, the left (after the surge) that this was a quagmire like Vietnam. I noticed something similar on the economic front earlier in Bush’s term. Despite record productivity growth, Bush’s inheritance of the tech bubble created the first narrative: “Bush the dummy can’t manage the economy.” Was it true? Perhaps, but Bush’s sins were at least largely those of omission (or rather too weak an effort to rein in subprime mortgage lending), rather than comission (say, the Gramm bill legalizing derivatives trading signed by Clinton, or legislation of Fannie Mae and Freddie Mac).

      That reaction does not always fall on partisan lines either. For instance, Chantal Hebert went on and on about how big and important Harper’s Quebec breakthrough was, long till it was clear that diminishing returns existed on any investment in Quebec for the Tories. The response to the Harper budget, IS an example of insta-punditry, but insta-punditry that follows a paradigm shift from “Harper the chess-player” to “Harper the walking dead”. The latter emerged after the fiscal update, and should really make one scratch their heads: the man brought the country through a crisis, which he successfully navigated (initially most people – including me – thought the coalition was a fait accompli); while the funding cuts may have been over the line most Canadians agreed with him; and he continues to poll well above the other guys despite an exciting new Liberal leader (it is worth noting that Harper typically polls worse in mid-campaign polls when nobody is watching, as did the Alliance and Reform), and the first large deficit (the government ran a deficit in 2002 and 2003 of .1% of GDP) in over a decade.

      I disagree that pundits always have a media bias. Sometimes they line up on partisan lines, sometimes not. I do agree however, that their common education as journalists will tend to push them towards easy explanations of things. Journalists by their nature have to be dabblers, rather than experts – they don’t really understand economics, politics or anything (they are the kind of people who think Thomas Friedman is an important thinker in academia). They can’t be blamed for that either – they have to cover a lot of different kinds of stories. Moreover, even if they wanted to give anything a proper treatment, it is hard to explain complex ideas in say 500 words, particularly where one is not an expert.

      Paul Wells is one of the better ones, I should note. Though his lack of respect for graduate level economics is rather appalling (I did a graduate level Bayesian econometrics class that absolutely kicked my ass). Harper has never worked as an economist, but I suspect the main advantage of his training is actually more to do with his quantitative skills. He can ask questions about what is actually going into these government models and what some of the shortcomings of them might be.

      I recall a story once about a statistics professor who was diagnosed with a form of cancer. He was told by the doctor that the average life expectancy of somebody with this kind of cancer was a year. Being a statistician, however, he demanded more – what was the standard deviation? What were the variables that went into the model? What did the distribution of results look like? Because he was otherwise healthy, and perhaps guided by the model, he ended up living 20 more years, in which he published important work.

      Harper’s most important job does not require an MA in economics – his main job is making tradeoffs between different groups as is the case for any leader. But his training gives him a better sense of the implications of the tradeoffs he makes. Far more than, for instance, would be the case if Harper was a journalist.

      • The right “said that this would be easy” is revisionism concocted by the left.

        Some were estimating tens of thousands of American casualties in the first few days of the war. No one predicted the level of sectarian violence, but once it began, the left literally cheered for failure.

        A sad state of affairs.

        Funny how Obama, with his soothing words to the Muslim world, had nothing to say about Muslims (Sunni and Shia) voting in free elections in Iraq, violence free.

        Not so funny, actually, as not only was he one of the cheerleaders, he was staking his political future on its failure. It’s a good thing for him the media essentially gave him a pass on it……as with everything else.

  23. It doesn’t take a lot of brains to realise that the budget actually makes no sense overall and that it is simply a desperate attempt (albeit one that will cost billions) to assuage the demands of the voting public to do something. The evidence is in our face. The government loaded the now defunct RAF chicken cannon with a laundry list representing just about every constituency in Canada, but in such tiny amounts that even practitioners of holostic medicine are wondering, “where’s the beef?”. The reason for the scattergun approach is two-fold. Firstly, no one can claim they didn’t get something (aside from the administrators at Genome Canada, oops). Secondly, since there is no actual target and no way to reliably calculate what might have an effect, this is an experiment to see if any of the jelly ammunition actually hits anything solid.

    Since economists have nicely proven that their principles, rules and laws are about as practical in this disaster scenario as a life-vest made of sugar, what is the government to do? Answer, anything, just spread it around as though you know what you are doing.

    But it doesn’t take a PhD to understand why New Orleans was inundated. Nor does it take a MSc in economics to recognize that the budget was poorly crafted. The people wanted something concrete (literally). At a time when they were seeing their virtual savings being decimated by a virtual wave of stock price implosions, seeing multi-billion dollar institutions hand out their manicured paws for bail-outs (remember, why do bank buildings have enormous pillars? To reassure people that their business is solid) people wanted to see with their own eyes what was being done.

    Hence, the insane economics of building shiney new structures while simultaneously taking away support for the people who would occupy them. The oxymoronic policy of promoting TFSA’s at the same time as giving tax cuts in the hope of getting people to spend. The plainly ignorant provision of $1.3 billion to knock 13.5% off the cost of a home reno – in an industry that lives off cash transactions to avoid the consumer paying GST/PST and it paying income tax. Mr. Harper just had to ask the guy from whom he borrowed the nailgun. And don’t even start on the bailout of the most inefficient companies in the auto industry. Help the companies that are producing cars want to buy.

    We will see the product of the budget in two years time. There will be plenty of folly monuments to record this period for posterity. But will it have achieved anything to re-engineer our society to better deal with the global economy?

  24. Harper looks miserable. He doesn’t want to be PM under these conditions.
    Two month ago he was kicking sand in Dion’s face on the beach.
    Now he’s the 98 pound weakling being humiliated in front of all the girls..
    How did this happen?

    • “Humiliated”,

      as in, all the polls show public support for the budget, he continues to lead in the polls (still on the verge of majority territory), his party has a massive funding advantage and continues to pull in expoenentially more than the liberals from a huge broad base of donors,

      sort of way?

      The reality is, Harper is going to be PM for the forseeable future.

      I realize that drives the left (Paul “Canada is like Somolia under Harper” Wells here included) batty.

      The reality is the public does not share the anti-Harper derangement that permeates this and other far left liberal sites.

      It’s science.

      • The reality is the the Conservatives only have 37percent of the public’s support.

        • What does reality display for the support of the LPC – check out the latest polls as it doesn’t look good except in Quebec that is which is the kiss of death for Iggy. Actually now that the mickey mouse coalition is wearing toe tags and the spring prom won’t have Iggy and Jacko dancing together the polls are going to very interesting. The real test will be this winter and I think that ultimately it will be more of the same so what it all boils down is bums in seats and the CPC need only 12 more for a majority (not counting by-elections and floor crossers)

  25. If you don’t have a job any more you will lose your home which means you won’t be doing renovations to get the tax rebate. It also begs the question, “how many home renovation people are there in Canada and do they drive the economy?” Unfortunately you will be still waiting two weeks to even apply for EI, if you qualify at all, so get ready for a rough ride. Wonder is Mr Harper’s mother understands that as she worries over her reduced income on her investment portfolio? At least for now her son has a well paying job and can help her out unlike a lot of decent, hard-working Canadians who are being held hostage by self serving Liberal and Conservative Parties.

  26. Mr Wells,

    While I am sensitive to your final paragraph you know the answer and you hint at a little. Funding grads doesnt provide incremental jobs, which was the point of this budget. Now state of the art labs help attracts reasearchers, who often have grants attatched ot them. And labs….ulm dont they last, contradicting your original point? Or do conservtaive govenrment labs act like cinderella’s carriage and turn into pumpkins in two years?

    So what you are getting at is that you diagree with the objectives, and the tests used to determine whether a program meets those objectives. The objectives were jobs and demand for materials in short order.

    Now your continual lament for a lack of “science policy” is well placed. But I sure wouldnt expect it out of any government when they are being told from all sides that this is a big “C” crisis, a kitchen on fire kind of thing, you just dont go around deciding whether it is marble or granite counter tops.

    Unless what you are saying is that maybe this isnt that kind of a crisis, or admitting that Canada was in a different position and that we could take our time to come up with deeper strategy. If not, then keep passing the buckets before the antique table catches on fire.

  27. “Now your continual lament for a lack of “science policy” is well placed. But I sure wouldnt expect it out of any government when they are being told from all sides that this is a big “C” crisis, a kitchen on fire kind of thing, you just dont go around deciding whether it is marble or granite counter tops.”

    Canada’s science “crisis” is rather an old thing – Canada has historically invested far less in R&D than the rest of its peers. There are a few homegrown success stories – like RIM and (once upon a time) Nortel, but ultimately most of the private research that does take place happens through American branch plants that happen to be located in Canada. And yet, Canada is not poor and backwards. Canadians benefit considerably from our economic integration with the United States, which brings unparalleled technological transfer to Canada.

    Indeed, when one looks at the countries that invest the most in R&D, there is an interesting trend:
    Finland: 3.42% of GDP
    Sweden: 3.82% of GDP
    Israel: 4.48%
    Japan: 3.33%

    Each of those countries is geographically and economically somewhat distant from the core of North American or European markets. Moreover, they are not necessarily the richest countries. How to explain something like this?

    Investment in R&D, both private and public produces many public goods, but those public goods tend to be concentrated within geographical regions, rather than globally. For instance, government labs helped to build silicon valley, where considerable technical expertise is concentrated. The best and brightest from USC and Stanford get fed into jobs there, and have powered the last decade of economic growth. These kinds of industry clusters exist all around the world, but if you are Canada or the US, Canada’s industry clusters benefit the US and vice versa. On the other hand, Scandinavia, Israel and Japan are too far away from those clusters (or are not sufficiently integrated with them), and do not benefit in full from those public goods. They must – largely at a cost to the taxpayer – bankroll their own R&D, etc.

    Canada is in a particularly fortuitous situation. The US cannot rely on its neighbours to make investments in R&D-building institutions (and yes, the US spends more on R&D than Canada, and more on education). By contrast, in the EU there are probably collective action problems in making those kinds of investments – if you are Sarkozy, why invest in something that will benefit the Ruhr as much as Alsace-Lorraine?

    Big science will always want more money – and a stimulus is a good time to ask for money. But, given that Canada’s research crisis is overblown, and that money spent on science/R&D, whatever the long-term implications, is not a short-term job creator, I am not sure that we are talking about an utter scandal with this budget.

    • Very interesting post, thanks. One question: though, as you say, government investment in R&D has no short-term payoff, isn’t there a case to be made that strengthening our R&D clusters will augment our capacity to take advantage of the upswing when it does happen? In other words, when the private sector money starts flowing again post-recession, we create somewhere for it to flow to. Though this (along with all “stimulus,” for all I can see) may do nothing in itself to turn the macroeconomic outlook around, couldn’t it help us pull out of the recession quicker and better when the clouds finally part?

      • Paul’s point, I think, was that there is little sense in building laboratories while simultaneously pulling funds for operating them which is what is happening in this budget. It is actually not an issue of spending yet more money on, for example, research, rather it is how those funds can be most effectively used. Supporting graduate students, with stipends of $17,000 before tuition, is an effective way to create jobs. Supporting operating grants that are put through stringent reviews (with only 20% of the absolute best being successful) is an efficient process for weeding out the best ideas.

        We do undervalue and underfund research. But the research community is not so arrogant and insensitive to realise the crisis the world is facing. Rather, they want to ensure that the available funds are most usefully employed.

  28. >Q. Who worked for ten years to eliminate the deficit created by the Conservatives?

    What “deficit created by the Conservatives”? The Canadian federal deficit was created by the governments preceding Mulroney’s Conservatives and sky-high interest rates in the early 1980s.

    The reality: the Conservatives balanced the operating budget; all the Liberals had to do was hold spending increases at 2% from year-to-year for 1994-95 through 2000-01 and the budget would have turned from deficit to surplus in 2000-01. In the event, they accelerated the process with two years of spending cuts in 95-96 (modest) and 96-97 (sizeable). Revenue growth (GDP), falling interest rates, and reasonable spending growth are all that was needed. Both parties played a role, but economic forces beyond the powers of Canadian politicians did the heavy lifting.

    However, all opposition parties called for $30 billion+ spending this year, and the Conservatives have answered, making it unanimous. Everyone should be happy.

    • Typical right wing ideological answer – never let anything stick to you, and blame it on others.

      • Ideological? “Both parties played a role…” Yeah. I can see where some might find that “ideological”, since it apportions praise to both parties.

  29. Federal Deficit , economic, job creation and capital expenditure programs… are still untrustworthy. Being a past senior civil, mechanical , projects engineer, project manager myself here now are the major problem I righty still do had with capital expenditure projects even under PM Jean Chretien and never mind next under PM Stephen Harper firstly: and it is is that when you give do monies for a specific capital expenditure projects to the Provinces, Municipalities as well, and just like in many of the non profit organizations now too, a significant portion of the money firstly never even gets to the intended sources but it is diverted elsewhere.. Diverted to: such as paying for existing deficits, debts, unprofitable civil and public services, departments, Crown Corporations too, ineffective overheads, unrelated operating costs in the provincial , municipal departments. Now since all that happens even before it hits the supposedly private sectors we need to address that too. Now next as to the supposedly private sectors and related projects expenditures , totally honest and fair governmental competition bids still tends not to exists. So no one can make me into a believer that this all of this taxpayer’s money will solely go all into a valid job creation program spurring on the general economy. The existing projects, capital expenditure safeguards are still just not totally there, not the related transparency, accountably as well.. even even you try to use an ex retired, RCMP officer as a supervisor in the contracts, purchasing department, for by now we all should now who immoral, untrustworthy even the RCMP now are too in fact. Some of the money will likely be used even out of the country for a selected few persons rather too.. Are many of the civil servants, politicians still taking their holidays overseas at tax payers expenses? There are still much too many abusive and questionable expenses: All still Unacceptable too.

    Not just in Canada now there is increasing evidence even in the US, elsewhere that states like California and Michigan, are running huge budget deficits, do need federal aid to keep their essential and non essential services operating. They would plummet an already battered federal budget billions of dollars further into a non positive deficit. We all do need to face the negative fact of what our own political, corporate leaders are doing this to our country too. Still it all also does mean that no one can predict beforehand with certainty which industries and municipalities will get the needed designated federal capital.

    Also the too common practice of putting many local workers out of work or paying them less wages by sending the higher paying jobs offshore has a devastating impact on the rest of the World, not to mention the local economy. We also still do need to have the True Unemployment Numbers.

    First we need still a full review of the waste, fraud, and abuse that has plagued governmental. efforts. What is also needed is a program to remove public officials from office that take our money and spend it on their own false pet projects while many of our people still are not getting the help that they need.

    ” At last count, there were at least 785 criminal cases under investigation by the Hurricane Katrina Task Force, a joint effort of 19 federal agencies, including the Department of Homeland Security, the U.S. Postal Service, the Defense Department and even the Environmental Protection Agency. State prosecutors in Louisiana, Mississippi and Texas are similarly swamped. And scores more cases wait in the wings.”

    http://thenonconformer.wordpress.com/2009/02/02/federal-budget-approved/