Friday, June 30, 2006

My two cents

I'm a creature of habit. Each morning, upon arriving at the hospital where I work, I stop at the café. I always get the same size and type of coffee, and I know the price in advance. Surprisingly enough, today my coffee was 2 cents cheaper. Why? Well, the Conservative government has just lowered the goods and services tax (GST) by 1%.

Of course the price difference on a cup of coffee is utterly trivial. (How long before we save everyone a lot of trouble and get rid of the penny altogether?) If I'd been buying a new car I might have saved a few hundred dollars.

The Conservatives believe that this will stimulate the economy, and that may well be true, although I imagine that might take a little while. But in any case, that's an economic prediction, not a certainty. Economies don't always behave the way economic models suggest they will. (I'm being charitable.) Ultimately, it remains to be seen what will actually happen. If the economy does improve, the Conservatives will no doubt attribute the change to the reduction in the GST, but to convincingly argue for a causal relationship isn't nearly so easy. Any number of other factors could be responsible for such a change.

What seems indisputable is that in the short term at least, the government will take in less tax revenue. I haven't seen any economic analyses about the longer term. Perhaps we're supposed to just take it on faith that lower taxes are a good thing. If government revenues are reduced, then you have to increase debt or reduce spending. For fans of smaller government, the choice seems clear.

When Conservatives look at government spending, they see some prime targets: health care, education, social programs, funding for the arts. Oddly enough they seem to forget one big area of government spending: the military, which seems to enjoy some special metaphysical status. In any case, wouldn't cutting military spending be ... unpatriotic?

Tomorrow is Canada Day, and I must admit that while I generally abhor nationalism, I do have a soft spot for Canada Day. I think this is a wonderful country, and we're so fortunate in so many ways. I also love the celebration of diversity that has become such a central part of our national holiday.

I'm sympathetic to fiscal conservatives who want to cut bureaucratic waste and mismanagement. The trouble is it's much easier to talk about doing that than to actually achieve real progress. It's also pretty clear to me that while everyone would like to eliminate inefficiency, Stephen Harper's Conservative government has a lot more than that on their agenda. The move towards privatizing health care in this country isn't about eliminating inefficiency (in fact I'd argue just the opposite). It's part of the broader plan to downsize social spending in general. I, for one, would rather pay a few more cents for my coffee if it helps protect Canada's healthcare system and social programs.
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Blogger Dave said...

I have a couple of thoughts on your post Nick:

I don't think reducing the GST had anything to do with "improving the economy." The impression I get from the media is that our economy has been doing rather well for the past number of years - the Conservatives thought they could get votes by reducing the GST. From a broader perspective, this list of "accomplished" election promises (that I'm certain will be bandied about adnausium during the next campaign) were all designed to get votes rather than solve actual problems.

It is fairly odd that the Conservatives chose the same week to reduce the Government's income by some $5B / year and announce $15B in new military spending.

I wish the proponents of small government would apply their "bureaucratic ineffeciency, graft & corruption sensors" towards the corporate world - I'm tired beyond belief of listening to this bold-faced lie that "the market" and "businesses" are paradigms of efficiency & moral conduct.

I better stop here, I sense a rant coming on...

1:13 PM, July 04, 2006  
Blogger Pedro Gomes said...

I am from Brazil, and the illegitimate government is trying to privatize everything, it is very sad to think that all our progress will be destroyed.

1:09 PM, December 14, 2016  

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