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The Progressive Economics Forum

Economists Against Austerity

UPDATE (Feb. 12): Carol Goar reports this statement on page A17 of today’s Toronto Star. To add your signature to it, please e-mail your name, title and institution to Mario Seccareccia at mseccare@uottawa.ca

Statement by 70 Canadian Economists Against Austerity

We, the undersigned, strongly urge the federal government to stop implementing fiscal austerity measures just to achieve its political goal of budgetary balance by 2015.

Since the mid-1990s, we have witnessed an era during which, under the influence of the same economists who had also advised the deregulation of the financial sector in the US, Canada, and other G20 countries, government policies brought the international economy to the edge of economic meltdown in 2008. After initially implementing a series of necessary fiscal stimulus measures to prevent the Canadian economy from slumping into depression, the current government did a policy U-turn and, at the time of the G20 Summit in Toronto in 2010, decided to go back to the pre-2008 era of targeting balances and budgetary surpluses. This turnaround occurred despite the fact that employment rates remained, and continue to stagnate, below pre-recession levels.

We believe that such austerity policy is terribly misguided. Not only are cuts in government spending completely inappropriate in the current context, but also the primary macroeconomic concern of the federal government ought to be the achievement of high levels of incomes and full employment for all Canadians, rather than the attainment of an elusive political target of budgetary balance that condemns the Canadian economy to remain stuck in a state of long-term stagnation. Unlike the countries of the Eurozone, as a sovereign country with its own national currency and a floating exchange rate, Canada faces none of the constraints on spending that prevent Eurozone governments from engaging in deficit-spending to stabilize their economies.

At a time when growth rates remain low and unemployment high, and with a world economy facing mounting uncertainties not seen since the 1930s, the government must pursue deficit spending, at least for a while, especially in the form of public investment, whose effect will be to repair private sector balance sheets and spur on private sector growth. A sustained and forceful investment effort on the part of the government would induce the private sector to follow suit. Cutbacks, by contrast, would create further uncertainty for many Canadian households and businesses and dampen economic activity.

The prime minister gave a speech (in November 2008) affirming that he was once studying to become an economics professor with interests in macroeconomic theory, political economy and economic history. It would seem unwise not to learn the lessons of history. Economic history teaches that the current fiscal behaviour, which characterized government policy of the 1930s, merely placed the Canadian and world economy on the path of stagnation throughout that era prior to the Second World War. During the war years, fiscal deficits no longer seemed to be a problem and the Canadian economy quickly restarted. It is time to pursue pro-growth policies and not fiscal austerity. Low interest rates by themselves were not enough to stimulate growth during the 1930s and they are not enough to guarantee strong growth today. What is needed is a rise, not cuts, in public spending and the abandonment of the ideology of austerity.

Manifeste de 70 économistes canadiens contre l’austérité

Nous, les signataires, implorons le gouvernement fédéral de cesser la mise en œuvre de politiques budgétaires d’austérité dont le seul objectif est politique et est l’atteinte de l’équilibre budgétaire en 2015.

Depuis le milieu des années 1990, nous avons été les témoins d’une période durant laquelle, sous l’influence des mêmes économistes qui réclamaient la déréglementation des marchés financiers aux États-Unis, au Canada et dans les autres pays du G20, nous avons subi des politiques gouvernementales qui ont mené l’économie mondiale au bord du gouffre en 2008. Après avoir initialement mis en place des mesures de relance budgétaire afin d’empêcher l’économie canadienne de plonger dans la dépression, le gouvernement actuel a fait un virage à 180 degrés lors du sommet du G20 à Toronto, en décidant de cibler, comme avant 2008, l’équilibre budgétaire ou des surplus budgétaires. Ce revirement a eu lieu malgré le fait que les taux d’emploi de la main d’œuvre continuent de stagner à des niveaux bien inférieurs à ceux qui prévalaient avant la récession.

Nous croyons que ces politiques d’austérité constituent une grave erreur. Non seulement la réduction des dépenses gouvernementales est inappropriée dans le contexte actuel, mais de plus la préoccupation première du gouvernement fédéral devrait être l’obtention de revenus élevés et le plein emploi pour tous les Canadiens, plutôt que l’atteinte d’un objectif politique insaisissable, celui d’un budget équilibré, qui condamne l’économie canadienne à rester prise dans un état permanent de stagnation. Contrairement aux pays de la zone euro, le Canada est un pays souverain avec sa propre monnaie et un taux de change flexible, et à ce titre le Canada ne fait face à aucune des contraintes budgétaires qui empêchent les pays de la zone euro de procéder à des dépenses financées par des déficits afin de stabiliser leurs économies.

Tandis que le taux de croissance persiste à rester faible et le taux de chômage élevé, et alors que l’économie mondiale est en proie à une incertitude croissante, jamais vue depuis les années 1930, le gouvernement doit poursuivre des politiques budgétaires expansionnistes, en particulier sous la forme d’investissements publics. Ceci aidera le secteur privé à solidifier sa santé financière et l’incitera à accroître ses propres investissements, menant ainsi à une reprise de la croissance du secteur privé. Au contraire, la réduction des dépenses gouvernementales créera davantage d’incertitude chez un grand nombre de ménages et d’entreprises au Canada et elle affaiblira l’activité économique.

Le premier ministre a fait un discours (en novembre 2008) où il affirmait avoir autrefois étudié pour devenir professeur de science économique, plus particulièrement en théorie macroéconomique, en économie politique et en histoire économique. Ce serait malavisé d’ignorer les leçons du passé. L’histoire économique nous enseigne que les politiques budgétaires actuelles, identiques à celles des années 1930, ont tout simplement conduit les économies canadienne et mondiale vers un état de stagnation continue durant toute la période qui a précédé la Seconde Guerre mondiale. Pourtant, pendant la guerre, la crainte des déficits budgétaires a été mise de côté, et l’économie canadienne s’est vite rétablie. C’est maintenant qu’il faut poursuivre des politiques favorables à la croissance; ce n’est pas le moment de faire de l’austérité budgétaire. Les taux d’intérêt très faibles ont été une mesure insuffisante pour stimuler la croissance durant les années 1930, et il en va de même aujourd’hui. Ce dont nous avons besoin présentement c’est un accroissement, et non la réduction, des dépenses publiques, ainsi que la mise au rencart de l’idéologie de l’austérité.

Abdella Abdou (Associate Professor of Economics, Brandon University)
Robyn Allan (Independent Economist)
Nigel Amon (Instructor, Department of Economics, Capilano University)
Fletcher Baragar (Associate Professor of Economics, University of Manitoba)
Tuna Baskoy (Associate Professor of Public Administration, Ryerson University)
Mike Bell (Economist, Manitoba Teachers’ Society)
Mehdi Ben Guirat (Lecturer in economics, Laurentian University)
Robin Boadway (Professor emeritus of Economics, Queen’s University)
Michael Bradfield (Retired Professor of Economics, Dalhousie University)
Jordan Brennan (Economist, Unifor)
Hassan Bougrine (Professor of Economics, Laurentian University)
Paul Bowles (Professor of Economics, University of Northern British Columbia)
Robert Chernomas (Professor of Economics, University of Manitoba)
Michel Chossudovsky (Professor emeritus of Economics, University of Ottawa)
Anupam Das (Professor of Policy Studies (Economics), Mount Royal University)
Radhika Desai (Professor of Political Economy, University of Manitoba)
Mathieu Dufour (Assistant Professor of Economics, John Jay College, CUNY, NY)
Bernard Élie (Professeur associé des sciences économiques, Université du Québec à Montréal)
Pierre Fortin (Professeur des sciences économiques, Université du Québec à Montréal)
Lynne Fernandez (Errol Black Chair in Labour Issues, Canadian Centre for Policy Alternatives, Manitoba)
Myron J. Frankman (Senior Research Fellow, Centre for International Sustainable Development Law)
Louis Gill (Professeur des sciences économiques (retraite), Université du Québec à Montréal)
Ricardo Grinspun (Associate Professor of Economics, York University)
Larry Haiven (Professor of Management, Sobey School of Business, Saint Mary’s University)
Trevor Harrison (Professor of Political Economy and Sociology, University of Lethbridge; and Director, Parkland Institute, University of Alberta)
Terry Heaps (Retired Professor of Economics, Simon Fraser University)
Roderick Hill (Professor of Economics, University of New Brunswick)
Andrew Jackson (Packer Professor, York University)
Kim Jarvi (Senior Economist, Registered Nurses’ Association of Ontario)
Larry Kazdan (Retired Instructor of Accounting, British Columbia Institute of Technology)
Afifa Khazri (Assistant Professor Economics and Management, Royal Military College)
Richard Kleer (Associate Professor of Economics, University of Regina)
Anna Klimina (Associate Professor of Economics, St. Thomas More College, University of Saskatchewan)
Tamara Krawchenko (SSHRC Postdoctoral Fellow, Mount Saint Vincent University)
Marc Lavoie (Professeur de science économique, Université d’Ottawa)
Joëlle Leclaire (Associate Professor of Economics, Buffalo State College, NY)
David Leadbeater (Associate Professor of Economics, Laurentian University)
Ronald C. LeBlanc, (Professeur de science économique (retraite), Université de Moncton)
Louis Lefeber (Professor emeritus of Economics, York University)
Ernie Lightman (Professor Emeritus of Social Policy, University of Toronto)
John Loxley (Professor of Economics, University of Manitoba)
David Macdonald (Senior Economist, Canadian Centre for Policy Alternatives)
Brian MacLean (Professor of Economics, Laurentian University)
Paul Makdissi (Professeur de science économique, Université d’Ottawa)
Bryce McBride (Lecturer in Economics, University of Guelph (Kemptville campus))
Mike McCracken (Economist, CEO, Informetrica Limited)
Marguerite Mendell (Professor, School of Community and Public Affairs, Concordia University)
Eric Miller (Consulting Economist, Hamilton)
Rob Moir (Chair of Social Sciences, Associate Professor of Economics, University of New Brunswick, Saint John)
Anthony Myatt (Professor of Economics, University of New Brunswick, Fredericton)
Lars Osberg (Professor of Economics, Dalhousie University)
Pierre Paquette (Professeur d’économie et de gestion, Collège militaire royal du Canada)
Ian Parker (Professor of Management, University of Toronto)
Corinne Pastoret (Professeure agrégée de science économique, Université
laurentienne)
Mark Peacock (Associate Professor, Social sciences, York University)
Patricia E. Perkins (Economist, Professor of Environmental Studies, York University)
Éric Pineault (Professeur de sociologie économique, Université du Québec à Montréal)
Kari Polanyi Levitt (Professor emerita of Economics, McGill University)
Louis-Philippe Rochon (Professeur agrégé d’économique, Université laurentienne)
Ellen Russell (Assistant Professor, Digital Media and Journalism, Wilfrid Laurier University)
Toby Sanger (Economist, Canadian Union of Public Employees, Ottawa)
Mario Seccareccia (Professeur de science économique, Université d’Ottawa)
Andrew Secord (Associate Professor of Economics, St. Thomas University)
Jim Sentence (Associate Professor of Economics and Chair, University of Prince Edward Island)
John Smithin (Professor of Economics, York University)
Brenda Spotton Visano (Professor of Economics and Public Policy, York University)
Jim Stanford (Economist, Unifor)
Salimah Valiani (Associate Researcher, Centre for the Study of Education and Work, University of Toronto)
J.I. Vorst (Senior Scholar, Department of Economics University College, University of Manitoba)
Joseph Warbanski (Economist, Manitoba Teachers’ Society)
Mel Watkins (Professor emeritus of Economics, University of Toronto)
Erin Weir (Economist, United Steelworkers and President, Progressive Economics Forum)
Armine Yalnizyan (Senior Economist, Canadian Centre for Policy Alternatives)

Contact:
Louis-Philippe Rochon (lprochon2003 [at] yahoo.com) Tel.: 647-505-1976
Mario Seccareccia (Mario.Seccareccia [at] uOttawa.ca) Tel.: 613-562-5800 x 1691

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Comments

Comment from MoS
Time: February 11, 2014, 1:38 pm

Interesting article in the “New Statesman” linking Cameron’s austerity programme with higher mortality rates among Britain’s elderly.

http://www.newstatesman.com/politics/2014/02/why-are-old-people-britain-dying-their-time

Comment from Larry Kazdan
Time: February 11, 2014, 7:38 pm

Letter in Toronto Star, Jan. 19
http://www.thestar.com/opinion/letters_to_the_editors/2014/01/19/same_old_same_old_on_jobs.html

If the Harper Conservatives were serious about job creation, they would not rely entirely on the whims of private sector hiring. In 1944, Canada’s unemployment rate dropped below 1 per cent because one out of every three adult males was engaged in military service and many private sector workers were fulfilling government contracts. As the British politician Tony Benn put it, “If you can have full employment by killing Germans, why can’t we have it by building hospitals, schools, recruiting nurses and teachers? If you can find money to kill people, you can find money to help people.”

In the 1970s the Liberal government experimented with direct job creation delivered through local organizations and citizen groups. The Local Initiatives Program successfully hired in areas such as arts and culture, recreation, tourism, research and protecting the environment.

The federal government needs to renew these initiatives. With double-digit unemployment currently among youth, do we really want a generation of young people living without incomes, without job experience, and without an opportunity to contribute to society?

Larry Kazdan, Vancouver

Comment from Rod Bolton
Time: February 12, 2014, 4:23 pm

I thought it interesting that I did not find one economist in private enterprise on your list. Some of us believe that we should not live beyond our means by accruing debts to be paid by future generations. An ever increasing percentage of government income going to pay interest on debt can only continue for so long. Look at Ontario’s situation as it flirts with downgrading of its credit rating.

Comment from Don Rankine
Time: February 13, 2014, 10:12 am

Stop cutting programs and spend our money to put people back to work.

“What goes around, comes around.”

Don Rankine
Toronto

Comment from Larry Kazdan
Time: February 19, 2014, 11:42 pm

Re: Petition supporting Economists Against Austerity

Recently a group of progressive economists spoke out against current government austerity policies.

In order to support them, I have started an on-line public petition.

Would you take a minute to read it and if you agree, add your name?

The link is http://chn.ge/NMZW5n

Many thanks for your help!

Warmest regards,

Larry

Larry Kazdan,

lkazdan@gmail.com

(604) 874-9982

Vancouver, B.C.

__________________________________________

Modern Monetary Theory in Canada – website
http://mmtincanada.jimdo.com/

Comment from Jack Boan
Time: February 22, 2014, 7:49 pm

Well, it’s about time. I would have promoted such an initiative, long ago, but was constrained by the thought that too many of my colleagues might be just fine with austerity economics, and anyway, the Harperites in Ottawa would not pay any attention. Thanks goodness you have taken this step. May it n ot be the last one!

Jack Boan, Professor Emeritus.

Comment from Larry Kazdan
Time: February 23, 2014, 2:17 am

Letter in Edmonton Journal:

Tight-fisted, short-sighted

A group of economists from more than 31 universities has published a statement urging the federal government to stop implementing fiscal austerity measures just to achieve its political goal of a balanced budget by 2015.

The statement notes that today’s policies are similar to those of the 1930s when the economy was stagnant and unemployment high, but that federal deficits were not a problem during the Second World War when the Canadian economy rebounded.

British politician Tony Benn once said: “If you can have full employment by killing Germans, why can’t we have it by building hospitals, schools, recruiting nurses and teachers? If you can find money to kill people, you can find money to help people.”

More Canadians need to challenge tight-fisted Conservative fiscal policies, which are leading us into an economic quagmire.

Larry Kazdan, Vancouver
© Copyright (c) Edmonton Journal
http://www.edmontonjournal.com/touch/opinion/letters/Tuesday+letters+Feeding+Alberta+gambling+addiction/9510787/story.html?rel=

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