brockm
Active Member
Brockm, you spend a lot more time debating wording than actually substance.
Ontario and Canada are in a deficit position. This means some combination of raising taxes and cutting services will occur at some point in time, unless you hold the position you can grow out of mounting debt. You dislike Keynesian economics, so do I. However, it that does reflect anything on infrastructure spending and specifically transit spending. Ontario will spend $1.7b on transit and $4.9b on transport infrastructure in 2010-2011. Medicare spending is $45b; education spending is $21b; interest payments are $13b.
If you want a fiscally responsible government, those three areas are where you'll make the most progress. 1% of medicare spending equals 26.1% of transit infrastructure spending. Even if you stopped all infrastructure projects from roads to trains to schools to hospitals, we'd still be running a deficit.
Well, you clearly don't dislike Keynesian economics that much if you think the government should take on debt to build infrastructure when it has to borrow to do it.
What bothers me about most people's understanding of government deficits it that they fail to realize how government debt works, how it affects the money supply, and how it actually causes inflation -- long before taxes are increased to pay for it. The vast majority of government debt is monetized, and therefore requires an increase in the size of the money supply, which creates more dollars versus the availability of capital. This causes the purchasing power of money to decrease.
Ironically, these government subsidies and spending measures are designed to make services -- like transit -- more affordable for the downtrodden, but they actually have the effect of making the cost of everything else more expensive. And we shouldn't just blame government debt. We can blame consumer and homeowner debt too, since the government bankrolls most of that through central bank guarantees.
Market pricing always brings the system into balance. If the government is borrowing against the future, and using monetary instruments and bonds to do it, you're paying for it through what Milton Friedman referred to as "the one form of taxation that can be imposed without legislation" -- inflation.
That downtrodden individual may be saving 50 cents every-time he or she gets on the bus, but he/she is paying 3 cents more for an Apple, and $1.00 more for their phone service, and 5 cents more for a bag of chips. But at leas transit costs are kept down, by god!
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