I made the mistake of reading the Francis Russell column "A toxic jewel in the neo- conservative crown" in the Free Press today. I have to remember not to do that anymore, because everytime I do I get frustrated that she's allowed to expose the public to her ignorant bile. Anyhoo ... since I did, I feel compelled to respond, at least to my modest little web audience.
The basis for Ms. Russell's column is a paper from the left-wing Canadian Centre for Policy Alternatives, written by a Mr. Marc Lee, who does not have PhD, nor any peer-reviewed journal articles that I could find. He has an MA in Economics (as do I, btw. It's not hard to get). Perhaps she should balance her views with some research from an organization who's senior economists are actually PhDs? I may email that suggestion to her. Anyhow, despite the author being a quasi-economist with an agenda, she gives the impression that it is the product of a "team of economists from across Canada". Whatever. Let's look at what she's actually telling us:
She starts by citing the CCPA paper's claim that we are at risk entering a deficit situation because we've tax-cutted our economic buffer away. Mr Lee's aim is to steer economic policy away from tax cuts and towards social spending. Francis Russell, however, is more creative...
She tells us that Jim Flaherty is advancing a "supply-side" tax cut argument (her words), which allows her to get into this:
David Stockman called the Reagan administration's Kemp-Roth tax cut "a Trojan horse to bring down the top rate... It's kind of hard to sell 'trickle-down,'" Stockman continued. "So the supply-side formula was the only way to get a tax policy that was really 'trickle-down.' Supply-side is 'trickle-down' theory."
Keep in mind that Regan's tax cut dropped the rate for the top income bracket by 20% -- not comparable at all to Harper's tax cuts. But that doesn't slow Francis down:
Supply-side economics is neo-conservatism's jewel in the crown. Neo-conservatism rails against debt and deficits produced by government spending, but falls strangely silent when they are caused by tax cuts. "Reagan proved that deficits don't matter," Vice-President Dick Cheney famously said.
Are you following along? The government's modest tax cuts (which the Liberals started) are no different than the dramatic high-income tax cuts that Regan implemented, therefore Harper is a "staunch supply-sider" (again, her words), therefore he is a neo-conservative, a la Dick Cheney. What's next? Does this mean we're invading Iraq? No, better than that ... we're going to cause another Great Depression:
Inequality in the U.S. is at its highest level in 80 years. ... While total income increased almost nine per cent, incomes for the bottom 90 per cent fell. But the top one per cent saw their incomes rise by an average of 14 per cent.
The top 10 per cent of Americans now command a share of national income not seen since 1928 -- the year before the 1929 Wall Street crash that ushered in the Great Depression.
Reality is much more boring:
"We will be extremely cautious in the year to come," Harper said on New Year's Eve as his government's latest GST cut was about to go into effect. "We're not going to undertake any long-run spending or tax reduction initiatives unless we believe they are affordable on a long-term basis."-cbc-
5 comments:
Hey,
What's with the ad hominem attacks? Why not stick to policy?
All I did was to take Flaherty's own numbers and see what happened to the budget balance under four scenarios of economic downturn/recession. You could do it, too. It does not require a PhD!
And just because I decided not to spend another few years beavering away at one narrow slice of academic economics to get a PhD does not disqualify me from making informed commentary on the issues of the day.
But really, if you want to criticize my arguments, please do. I welcome the debate. But to try and argue by discrediting my credentials, is pretty amateurish. Shame on you.
The numbers seem pretty similar in Canada and the US (except the US income levels are higher across the board).
Here are the Canadian figures from 2002 (see pages 7 and 8, PDF file) and the US figures from 2005 (page 2, PDF).
So in terms of the horrors of income inequality, wouldn't Canada's bottom 50% be better off if their income and tax situation were closer to the US bottom 50%? Does it matter that the US top 10% are earning more? Should someone implement a huge, forced, income redistribution program (something bigger than the implied income redistribution going from the top 50% earners paying 97% of income tax to the bottom 50% paying 3%)?
Marc,
Point taken.
I was trying to show a lack of balance in Francis Russell's sourcing, but the cheap shot on your credentials was probably not necessary to make my point about her poor commentary. If I have an issue with CCPA or your research I should address that properly in a separate post. Please accept my apologies.
I am still astonished by her attempt to use your commentary on the appropriateness of tax cuts at this point in time as a launching pad for linking Harper to Cheney and labelling him as a neo-con who is going to destroy the economy.
Mr.B
I think people are too hung up on income gap. In general, the standard of living of everybody is going up. It really isn't relevant if the top 1% are getting richer faster. As long as I have food on my table and a bigger TV than 10 years ago I'm happy.
I thought protectionist trade policy exacerbated the Great Depression. Foolish me - Ms. Russell seems to suggest it is income gaps that are to blame.
Marc, while Cherenkov has apologized, you still have not effectively refuted his other points. It would be interesting to hear your defense.
I do have an additional question to ask of the CCPA - while the Centre calls for increased social spending as the panacea for societal woes, there seems to be no discussion as to metrics that would actually determine if these desirable societal outcomes (i.e. reduced poverty, etc.) are being achieved.
The Keynesians had their chance to prove the efficacy of their assumptions in the post-war period. And this chance led us to failed US wage and price controls, Trudeau's near bankrupting of Canada and other such misadventures. While I would never argue for the eradication of social programming (some level should always exist), the debate as to whether or not this can "fix" an economy was lost by the Keynesians way back in the 70's.
Post a Comment