Tuesday, December 09, 2008

What should the Government do?

OK, today the federal government admitted it’s a recession. So now what?

Over lunch today my friend Richard wanted to talk about what the government should be doing to fight off the worst effects of the newly acknowledged recession in Canada

I jokingly told him that while the “American Way” now seems to be a tendency to sue, the quintessential ‘Canadian Way,’ now seems to be a kneejerk reaction that “the government needs to do something.”

Governments can only act with money extorted from the economies that support them; any and all government actions bear a cost to their supporting economies. This is not only the direct monetary price, but also the wider de-energizing effect on everyone else who must continue to function in the economy that has been stripped of those dollars. Since I became a taxpayer I’ve had a selfish interest in curbing government spending. You and I bear the cost EVERY time an elected lawmaker feels the need to justify his or her existence to the electorate by the questionable accomplishment of passing some new law or regulation. Each time this happens I am quite personally offended and you should be too.

This ‘Canadian way’ has given us bloated government ministries that consume ridiculous portions of the funds they’ve been entrusted to administer. I give you as an example the fact that size and cost of the civilian civil service that supports the Canadian Armed Forces rivals the size and cost of the military itself. Our military infrastructure is nearly half a century obsolete, our Navy is virtually nonexistent, and our Jet fighters thirty years old. Or how about Indian and Northern Affairs (or whatever the hell Politically Correct designation it’s called by this year) which has a budget that is nearly the equal to Canada’s military? My parents have chosen to live in a ‘First Nations’ community and I’ve seen the squalor in which many people there must live. Yet the department’s salaries, pensions, and other benefits are the envy of the private sector. A third example is the relatively new bureaucracy which was created to consum- I mean, administer the GST. Yes, it does in fact consume a ridiculously large portion of the tax that it administers.

One major factor that has saved the North American nations from collapsing under suffocating levels of taxation to support their growing welfare states is the lucky geographical accident that blessed both Canada and the United States with unbelievably abundant natural wealth. Naturally our society’s various Green organizations, (themselves philosophically huge supporters of government intervention and regulation) have been perversely acting against their own self-interest by working to bar access to those natural resources for most of the last 40 years.

I've said all this to point out that I fear the cost of Government action. It's a stretch for me to be willing to consider it, so that's why I feel odd directing attention at something Financial Post editor Diane Francis wrote today.

Diane Francis thinks she knows what the government should be doing, and I'd suggest that her column in today's Financial Post is worth a look.

Today I heard her in a radio interview and to my surprise, this fiscally conservative writer was advocating massive public/private partnerships to re-finance the stalled half-dozen or so refinery projects in the Alberta Industrial Heartland near Edmonton. She also wanted to include all the recently suspended new Oilsands projects in Northern Alberta. The suspension of these projects, which would have created billions of dollars of new wealth for the economy, was forced by the nearly worldwide credit drought kicked off of course, by Frannie Mae & Freddy Mac-enabled Subprime Mortgage debacle. This is the time, she said, for the Prime Minister to act.

I’ve been reading Diane’s columns on and off ever since 1990, when I had to suffer through a two-year involuntary subscription to McLeans magazine, (no- don’t ask). She’s about as good an example of common-sense, fiscal conservative thought that Eastern Canada can provide, and I think her idea is worth consideration. It certainly seems better than NDP leader Jack Layton’s vague plan to engage in a huge nation-wide Rooseveltesque road and bridges make-work program and the no-doubt additional new bureaucracy to support it.

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