Quote:
|
This is bad policy. When entering a recession governments should spend more not less. Fiscal austerity by governments in the early 1930s turned a recession into a depression.
|
What you're talking about is classic
Keynesian economics which states that in times of recession/depression, the government can stimulate the economy by a combination of spending increases (make-work projects), tax cuts, and lower interest rates from the central bank. The theory is tried and tested, but it's only a short-term fix. Implementing such a program, like FDR did in the 1930s, will result in a greatly increased national debt.
I'm certainly no supporter of Harper, but his policy of tightening the pursestrings isn't necessarily bad. Ever since Chretien/Martin balanced the budget, Canadians no longer tolerate deficit spending. Yes, the government could spare Canadians some economic hardship by simultaneously lowering taxes and increasing government spending, but at what cost to our future?