Crawl Across the Ocean

Friday, January 23, 2009

Memo to All Would-Be Progressives

Government deficits are *not* your friend! They increase the percentage of tax revenue that must go to interest rather than program spending, they further the right-wing meme of ineffective government, they make it harder for people to see a return on their tax dollars, and they eventually lead to spending cuts justified by the need to trim the deficit.

Other than, 'I want to spend money and I want to spend it now', what good do deficits do that so many (although by no means all) progressives seem to support them?


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Note: I am not referring in this post to the Keynesian argument about deficits to escape a liquidity trap, that is a separate discussion, I'm just talking about run of the mill deficits such as the one we are now in.

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posted by Declan at Friday, January 23, 2009

7 Comments:

  • You are so right, Declan.

    Hopefully, the Canadia public will agree and not allow harperco to buy their support with a future of debt repayments . . . .

    By Blogger West End Bob, at 8:12 PM  

  • This comment has been removed by the author.

    By Blogger Suzanne, at 10:16 PM  

  • Although the premise of your blog is good, I don't agree with the idea that conservatives want deficit spending to get ineffective government.

    Ineffective is inefficient. We want efficient government.

    Nevertheless, I don't think deficits are anyone's friend.

    By Blogger Suzanne, at 10:18 PM  

  • West End Bob - if history is any guide, it will be around the end of the recession by the time people get around to taking their anger out on the ruling party. Of course, if we have a depression then all bets are off.

    Suzanne - "I don't agree with the idea that conservatives want deficit spending to get ineffective government."

    Fair point, I sacrificed some accuracy for the sake of brevity on that line. Some conservatives do in fact support deficit spending to get ineffective government but most just want to have lower taxes but still get all the government services they currently have. They think they can accomplish this by increasing efficiency but end up running deficits instead when they realize that government is already very efficient and there is little improvement to be had.

    I talked about why right wing government leads to deficits in more detail back in this post

    (Where you can read the comments for the added amusement of Andrew Coyne, who just wrote a short novel in Maclean's railing against deficits the other day, telling me to calm down and stop worrying about right wing government leading to big deficits. (the post is from about 3 years ago).

    At least we all agree that we should avoid deficits as much as possible.

    By Blogger Declan, at 10:27 PM  

  • Well, its natural enough to think you ccan get all the government services for less taxes. Even before considering all the factors that can lead to illusions either of progress or of the good old days, I think it really is true both that we used to get some of the services we get from government much cheaper and that we can get some things much cheaper than we used to. But the things the government gets stuck paying for are the ones that have got more expensive.

    As someone who has futile ambitions to investigate one particular area of this, and who has occasionally skimmed economic literature looking for any signs of general understanding about it, I have no idea what causes this, whether it can be changed easily, with dificulty or not at all, and if it can, how. But it semms clear that the right-wing (and other) governments elected in Canada and the United States on the promise of more bang for the buck haven't managed to change it.

    In other countries, such as Britain, people like Parkinson have at least thought of possible forces at work and strategies for circumventing them, and the lack of empirical verification could be put down to the complained-of obscurity of public accounts. And some of the theories, if not better accounts, have been at least nominally tried.

    But if anything has been succesful, it hasn't been passed on to our countries, where governments, whether of left or right, are less literate, less intellectual and much less interested in the real world.

    Best Wishes,
    Alan

    By Anonymous Anonymous, at 4:39 PM  

  • Belated Note

    And of course, as you point out, one reason we get less service per tax contant dollar or whatever you want to measure in is the interest we pay on past deficits, and if we run a deficit now we will get still less in future. But the Conservatives don't seem to be long-term thinkers enough to avoid adding to the problem for some short-term relief from what was brought on them by previous governments.

    Best Wishes,
    Alan

    By Anonymous Anonymous, at 6:06 PM  

  • Alan, seems to me that government is generally involved with those aspect of the market that have market failures, so perhaps it is not surprising their costs have not declined.

    Also, government is less ruthless with its employees so that probably leads to fewer cost reductions as well.

    Could be partly a fluke as well. I mean it seems likely that health is something you would spend more on as a society gets wealthier.

    That's just off the top of my head, as you say it might be an interesting area to research.

    By Blogger Declan, at 9:30 PM  

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