Re: Mark Carney reveals his plan to balance the government’s budget in three years — and there’s one big condition, Ryan Tumilty, Toronto Star, February 19, 2025
The investment in educating young William Shakespeare returned more long-term profit to the English nation than any similar expenses that were then incurred building horse-paths and bridges.
In today's knowledge economy, having a fit and well-trained workforce is even more economically essential, so trying to distinguish between capital and operating budgets and capping the latter (i.e. vital health and education expenditures) will be dangerously counter-productive.
Today our elites want spending focused on infrastructure whose benefits immediately accrue to big businesses and financial institutions. Large projects may indeed have merit, but woe to us if we neglect crucial protection of our valuable human capital.
A dental program may be just as all-important as physical infrastructure: highly-skilled workers are likely to function much better when they grow up without nagging toothaches and infected gums.
"Schultz researched into why post-World War II Germany and Japan recovered, at almost miraculous speeds from the widespread devastation. Contrast this with the United Kingdom which was still rationing food long after the war. His conclusion was that the speed of recovery was due to a healthy and highly educated population; education makes people productive and good healthcare keeps the education investment around and able to produce. One of his main contributions was later called Human Capital Theory, and inspired a lot of work in international development in the 1980s, motivating investments in vocational and technical education.."
2. William Mitchell is Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), University of Newcastle, NSW, Australia http://bilbo.economicoutlook.net/blog/?p=34513
"the distinction between recurrent and capital accounts, which goes back to Keynes himself, is not only artificial but likely to distort our understanding of the benefits of government spending.
For example, is it reasonable to assume that the spending that funds the salaries of teachers in the state education system produces benefits that exhaust within a single year?
Clearly, a well resourced education system with well-paid teachers delivers long-term benefits to individuals and society in general.
These benefits include higher future productivity growth and enhance social stability, to name but a few."
3. 1939--1945: World War II Transformed the Canadian Economy
"The government budget deficit also increased rapidly: in 1939, the budget deficit was less than 12% of GNP; in 1945, that rate rose above 42%. Nevertheless, by 1944, the Great Depression had faded into memory, and the unemployment rate was less than 1%.
By the end of the war, the economy had a more highly skilled labour force, as well as institutions that were more conducive to sustained economic growth."
Excellent detailed analysis of the anticipated Liberal plan. I'm curious about the UPC plan under PP. I recall back in the Harper days, they ran a deficit budget for 5 straight years then instituted a 10% cut in government services. He also reduced income taxes, corporate taxes (from 22% to 15%) and the GST. However, during the 2008/9 recession his government invested in infrastructure, broadband internet, electronic health records, labs and personal income tax relief - likely acting on Carney advice? But ... what's the PP plan?
Honestly, not even worth analyzing his plan. His proposed tax cut is bad, he has said he’d get rid of the infrastructure bank, which is fine.
In 2008/09 everyone (IMF, OECD, etc) was telling Canada to invest in infrastructure, and their response was maybe better than it could have been, but it was not good.
Many thanks for your detailed analysis.
Unpublished Letter to Editor:
Re: Mark Carney reveals his plan to balance the government’s budget in three years — and there’s one big condition, Ryan Tumilty, Toronto Star, February 19, 2025
The investment in educating young William Shakespeare returned more long-term profit to the English nation than any similar expenses that were then incurred building horse-paths and bridges.
In today's knowledge economy, having a fit and well-trained workforce is even more economically essential, so trying to distinguish between capital and operating budgets and capping the latter (i.e. vital health and education expenditures) will be dangerously counter-productive.
Today our elites want spending focused on infrastructure whose benefits immediately accrue to big businesses and financial institutions. Large projects may indeed have merit, but woe to us if we neglect crucial protection of our valuable human capital.
A dental program may be just as all-important as physical infrastructure: highly-skilled workers are likely to function much better when they grow up without nagging toothaches and infected gums.
Footnotes:
1. Theodore Schultz
http://en.wikipedia.org/wiki/Theodore_Schultz
"Schultz researched into why post-World War II Germany and Japan recovered, at almost miraculous speeds from the widespread devastation. Contrast this with the United Kingdom which was still rationing food long after the war. His conclusion was that the speed of recovery was due to a healthy and highly educated population; education makes people productive and good healthcare keeps the education investment around and able to produce. One of his main contributions was later called Human Capital Theory, and inspired a lot of work in international development in the 1980s, motivating investments in vocational and technical education.."
2. William Mitchell is Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), University of Newcastle, NSW, Australia http://bilbo.economicoutlook.net/blog/?p=34513
"the distinction between recurrent and capital accounts, which goes back to Keynes himself, is not only artificial but likely to distort our understanding of the benefits of government spending.
For example, is it reasonable to assume that the spending that funds the salaries of teachers in the state education system produces benefits that exhaust within a single year?
Clearly, a well resourced education system with well-paid teachers delivers long-term benefits to individuals and society in general.
These benefits include higher future productivity growth and enhance social stability, to name but a few."
3. 1939--1945: World War II Transformed the Canadian Economy
http://web.archive.org/web/20050507140447/http://canadianeconomy.gc.ca/english/economy/1939ww2.html
"The government budget deficit also increased rapidly: in 1939, the budget deficit was less than 12% of GNP; in 1945, that rate rose above 42%. Nevertheless, by 1944, the Great Depression had faded into memory, and the unemployment rate was less than 1%.
By the end of the war, the economy had a more highly skilled labour force, as well as institutions that were more conducive to sustained economic growth."
Thank you for this much needed dose of realism.
Excellent detailed analysis of the anticipated Liberal plan. I'm curious about the UPC plan under PP. I recall back in the Harper days, they ran a deficit budget for 5 straight years then instituted a 10% cut in government services. He also reduced income taxes, corporate taxes (from 22% to 15%) and the GST. However, during the 2008/9 recession his government invested in infrastructure, broadband internet, electronic health records, labs and personal income tax relief - likely acting on Carney advice? But ... what's the PP plan?
Honestly, not even worth analyzing his plan. His proposed tax cut is bad, he has said he’d get rid of the infrastructure bank, which is fine.
In 2008/09 everyone (IMF, OECD, etc) was telling Canada to invest in infrastructure, and their response was maybe better than it could have been, but it was not good.