Main menu:

History of RPE Thought

Posts by Tag

RSS New from the CCPA

  • 2019 Federal Budget Analysis February 27, 2019
    Watch this space for response and analysis of the federal budget from CCPA staff and our Alternative Federal Budget partners. More information will be added as it is available. Commentary and Analysis  Aim high, spend low: Federal budget 2019 by David MacDonald (CCPA) Budget 2019 fiddles while climate crisis looms by Hadrian Mertins-Kirkwood (CCPA) Organizational Responses Canadian Centre for Policy […]
    Canadian Centre for Policy Alternatives
  • Boots Riley in Winnipeg May 11 February 22, 2019
    Founder of the political Hip-Hop group The Coup, Boots Riley is a musician, rapper, writer and activist, whose feature film directorial and screenwriting debut — 2018’s celebrated Sorry to Bother You — received the award for Best First Feature at the 2019 Independent Spirit Awards (amongst several other accolades and recognitions). "[A] reflection of the […]
    Canadian Centre for Policy Alternatives
  • CCPA-BC welcomes Emira Mears as new Associate Director February 11, 2019
    This week the Canadian Centre for Policy Alternatives – BC Office is pleased to welcome Emira Mears to our staff team as our newly appointed Associate Director. Emira is an accomplished communications professional, digital strategist and entrepreneur. Through her former company Raised Eyebrow, she has had the opportunity to work with many organizations in the […]
    Canadian Centre for Policy Alternatives
  • Study explores media coverage of pipeline controversies December 14, 2018
    Supporters of fossil fuel infrastructure projects position themselves as friends of working people, framing climate action as antithetical to the more immediately pressing need to protect oil and gas workers’ livelihoods. And as the latest report from the CCPA-BC and Corporate Mapping Project confirms, this framing has become dominant across the media landscape. Focusing on pipeline […]
    Canadian Centre for Policy Alternatives
  • Study highlights ‘uncomfortable truth’ about racism in the job market December 12, 2018
    "Racialized workers in Ontario are significantly more likely to be concentrated in low-wage jobs and face persistent unemployment and earnings gaps compared to white employees — pointing to the “uncomfortable truth” about racism in the job market, according to a new study." Read the Toronto Star's coverage of our updated colour-coded labour market report, released […]
    Canadian Centre for Policy Alternatives
Progressive Bloggers

Meta

Recent Blog Posts

Posts by Author

Recent Blog Comments

The Progressive Economics Forum

Truth from the Fraser Institute?

Yesterday’s Financial Post featured a rather strange op-ed by the Fraser Institute’s current and former directors of fiscal studies:

Most Canadians are unfortunately not aware of Canada’s 15-year track record of reducing the size of government (1992-2007). Since peaking in 1992, the size of government in Canada – best measured by total spending at all levels of government as a share of gross domestic product – has decreased from 53% to less than 40%, according to data from the Organization for Economic Cooperation and Development.

These figures are correct. Indeed, Andrew posted them on this blog more than two years ago (they did not change much from 2006 to 2007).

But the Fraser Institute in general, and the authors of this op-ed in particular, spent most of those 15 years railing against the allegedly increasing size of Canadian government. Are they now admitting that they were incorrect about what was happening to the size of government?

Fraser Institute types used to contend that public spending as a share of GDP was the wrong measure. They preferred public spending per capita adjusted for inflation, a measure almost guaranteed to show ever-expanding government over any extended period of time. Now, they agree that public spending is “best measured” relative to GDP.

Why the change of tune? The authors are trying to promote an IMF study showing that countries which cut public spending more, relative to GDP, enjoyed better economic performance. One must ask which way the causation runs. Obviously, it was easier for governments to reduce spending more, relative to GDP, in countries where GDP was growing faster. Furthermore, the need to maintain or increase public spending would often have been strongest in countries with the weakest economies.

While emphasizing the comparison between countries that cut spending very deeply and countries that cut spending less, the op-ed ignores the fact that this period in which “most industrialized countries” did cut spending led to a global economic meltdown. The argument seems to be that, if you stop the clock in 2007, free-market economics has a pretty good track record.

However, on the way to this bizarre conclusion, the Fraserites make a couple of other points that have previously appeared on this blog. They note, as I did a couple of months ago, that “given President Obama’s recent budget, Canada will likely have a smaller government than the United States within the next few years.”

They also note that Roy Romanow slashed public spending as much (relative to inflation, not GDP) as Paul Martin and more than Mike Harris. I recently lamented Saskatchewan’s incredible shrinking government (relative to GDP) under the last two NDP Premiers.

Enjoy and share:

Comments

Comment from Stephen Gordon
Time: April 30, 2009, 6:40 pm

Not this again?

The *size* of government is essentially irrelevant to economic growth; it’s the *quality* that matters. If you make use of taxes that don’t harm economic growth, then economic growth won’t be harmed. If you spend the money in ways that don’t harm economic growth, then economic growth won’t be harmed.

Geez.

Comment from Travis Fast
Time: April 30, 2009, 9:18 pm

Now if we could all just agree on what a large non-growth harming government would involve I am sure the world would be a better place.

The prejudice of most vanilla economists is not that the size of government matters but rather that government is more prone to harmful activity then the private sector. Public choice theory was developed just for this reason: to overcome the distinction between theoretical quality and practical reality. With that prejudice intact the size of government is merely a proxy for just how much harm the government can do.

Thus making the quality/quantity distinction in the eyes of the FI or much of the vanilla side of profession for that matter is akin to sticking lipstick on a pig.

Comment from Stuart Murray
Time: May 1, 2009, 8:39 am

Well, every clock is right twice a day. Marc, I disagree with your implication that reduced size of government caused the meltdown. I think it was mostly a regulatory failure, and deregulation was only sitting in the rear passenger seat of the neocon fiscal contraction vehicle.

I actually like Stephen’s characterization of the quality/quantity issue. For example, I think indirect taxes are regressive and bad, unless they are nailing a sector you actually want to kill, like tobacco or carbon emissions. Likewise, I think it’s a bad idea to give tax revenues back to randomly-selected industries which happen to have a high profile, a unionized white male workforce, and a location in politically dominant ridings.

On the other hand, taxing profits and high incomes and spending the money on health, education, and welfare are cost-effective, good for the economy, and passable amongst over 50% of voters. Then you can bolster that with innovative stuff that is further to the left, but only as long as the government gets re-elected.

Comment from travis fast
Time: May 1, 2009, 9:22 pm

If taxing something was sufficient to kill it, people would own more physical and less human capital.

I was not arguing the distinction between quality and quantity was not correct, and SG is far from the first one to make this observation: it has been a staple of progressive argumentation since like ever.

The real debate is over what constitutes growth augmenting versus growth destroying state activities. And I am sure that if we did a good study outside of Zimbabwe like experiments we would find that in a given environment some activities were growth augmenting but in others growth destroying.

I would also note that sometimes quality gives way to quantity and quantity gives way to quality. But even Hegel got bored of flipping vacant dualisms on their head.

Write a comment





Related articles