OTTAWA, Feb. 11, 2014 /CNW/ - We, the undersigned, strongly urge the
federal government to stop implementing fiscal austerity measures just
to achieve its political goal of budgetary balance by 2015.
Since the mid-1990s, we have witnessed an era during which, under the
influence of the same economists who had also advised the deregulation
of the financial sector in the US, Canada, and other G20 countries,
government policies brought the international economy to the edge of
economic meltdown in 2008. After initially implementing a series of
necessary fiscal stimulus measures to prevent the Canadian economy from
slumping into depression, the current government did a policy U-turn
and, at the time of the G20 Summit in Toronto in 2010, decided to go
back to the pre-2008 era of targeting balances and budgetary surpluses.
This turnaround occurred despite the fact that employment rates
remained, and continue to stagnate, below pre-recession levels.
We believe that such austerity policy is terribly misguided. Not only
are cuts in government spending completely inappropriate in the current
context, but also the primary macroeconomic concern of the federal
government ought to be the achievement of high levels of incomes and
full employment for all Canadians, rather than the attainment of an
elusive political target of budgetary balance that condemns the
Canadian economy to remain stuck in a state of long-term stagnation.
Unlike the countries of the Eurozone, as a sovereign country with its
own national currency and a floating exchange rate, Canada faces none
of the constraints on spending that prevent Eurozone governments from
engaging in deficit-spending to stabilize their economies.
At a time when growth rates remain low and unemployment high, and with a
world economy facing mounting uncertainties not seen since the 1930s,
the government must pursue deficit spending, at least for a while,
especially in the form of public investment, whose effect will be to
repair private sector balance sheets and spur on private sector growth.
A sustained and forceful investment effort on the part of the
government would induce the private sector to follow suit. Cutbacks, by
contrast, would create further uncertainty for many Canadian households
and businesses and dampen economic activity.
The prime minister gave a speech (in November 2008) affirming that he
was once studying to become an economics professor with interests in
macroeconomic theory, political economy and economic history. It would
seem unwise not to learn the lessons of history. Economic history
teaches that the current fiscal behaviour, which characterized
government policy of the 1930s, merely placed the Canadian and world
economy on the path of stagnation throughout that era prior to the
Second World War. During the war years, fiscal deficits no longer
seemed to be a problem and the Canadian economy quickly restarted. It
is time to pursue pro-growth policies and not fiscal austerity. Low
interest rates by themselves were not enough to stimulate growth during
the 1930s and they are not enough to guarantee strong growth today.
What is needed is a rise, not cuts, in public spending and the
abandonment of the ideology of austerity.
Signed by some 70 economists including the following:
Fletcher Baragar (Associate Professor of Economics, University of
Robin Boadway (Professor emeritus of Economics, Queen's University)
Paul Bowles (Professor of Economics, University of Northern British
Mathieu Dufour (Assistant Professor of Economics, John Jay College,
Pierre Fortin (Professeur des sciences économiques, Université du Québec
Andrew Jackson (Packer Professor, York University)
Marc Lavoie (Professeur de science économique, Université d'Ottawa)
John Loxley (Professor of Economics, University of Manitoba)
Brian MacLean (Professor of Economics, Laurentian University)
Mike McCracken (Economist, CEO, Informetrica Limited)
Anthony Myatt (Professor of Economics, University of New Brunswick,
Lars Osberg (Professor of Economics, Dalhousie University)
Kari Polanyi Levitt (Professor emerita of Economics, McGill University)
Louis-Philippe Rochon (Professeur agrégé d'économique, Université
Mario Seccareccia (Professeur de science économique, Université
John Smithin (Professor of Economics, York University)
Brenda Spotton Visano (Professor of Economics and Public Policy, York
Jim Stanford (Economist, Unifor)
Mel Watkins (Professor emeritus of Economics, University of Toronto)
Erin Weir (Economist, United Steelworkers and President, Progressive
The full list is available at http://www.progressive-economics.ca/2014/02/11/economists-against-austerity/
SOURCE: Progressive Economics Forum
For further information:
Louis-Philippe Rochon (email@example.com) Tel.: 647-505-1976
Mario Seccareccia (Mario.Seccareccia@uOttawa.ca) Tel.: 613-562-5800 x 1691