Finally there has been an important Keynesian proposal that breaks with the obsessive misguided fiscal orthodoxy of the other two leading parties in Canada’s federal election.Both the Conservatives and the NDP insist they will not in any circumstances run deficits to finance important job creating and growth sustaining investments in infrastructure in the coming year.
They take this position despite there being considerable evidence of slow and possibly even negative growth in the Canadian economy over the past six months. The Liberals led by Justin Trudeau have now courageously committed themselves to be ready to undertake major investments, some 10 billion dollars over the next three years on transit improvements in Canadian cities and social and green infrastructure across the country. The Liberals plan to increase infrastructure spending by 60 billion over the next decade and expect to be able to balance the budget over a longer term cycle . Now given that the Canadian economy has a GDP of $ 2.o trillion, 60 billion over ten years is still a very modest amount of money out of the Federal government’s annual spending budget of $289 billion.
Nevertheless it is a step in the right direction and far more sensible than the dogmatic insistence of both Mr. Harper and Mr. Mulcair that deficits are out of the question. Intergenerational burdens that Mr.Mulcair speaks about are an illusion since future generations inherit all the non consumed assets of previous generations like stocks, bonds and real estate as well as the public assets created by investments in infrastructure.They are also harmed by any neglect in infrastructure spending and environmental damage brought about by this neglect and social problems that flow from higher unemployment and social capital investment neglect. It is quite false to argue otherwise.