The Great Shift in Conventional Wisdom: Deficit Hysteria Condemned as ”Bogglingly Stupid “Not Just by me But by bank economists in The Globe and Mail !

Well its been a very long time in coming to pass but finally my campaign against foolish dogma about deficits and public finance has borne fruit. I first started writing about the stupidity of fiscal orthodoxy in 1983. I had published my first monograph on deficit hysteria in 1984.(The Deficit:Hysteria and the Current Economic Crisis:Ottawa:The Canadian Centre for Policy Alternatives) I followed this up with a more extensive monograph also published by the CCPA in 1989 ,The Deficit and Debt Management:An Alternative to Monetarism. I followed these up with a series of essays in various Canadian and international collections plus a stream of op eds, letters to the editor and radio and tv broadcast interviews, and many academic conference presentations as well as several press conferences. but it has taken more than thirty years and a major financial crash to restore some thoughtful reason to the deficit and debt debate and to recognize the irrefutable scholarly evidence that deficits and government debt can play an essential counter cyclical role in financing critical infrastructure and sustaining aggregate demand in response to a slump in economic activity. In addition financing some of this debt temporarily through monetization or what has come to be known as quantitative easing can make an important contribution to the duration and strength of the recovery. I have argued this position in print,in scholarly publications and in my lectures for three decades.I did so because of my Canadian and international training as an economist who specialized in macro economic policy and my experience in government. So imagine my delight to see the headline in one of Canada’s most conservative business and financial newspapers The Globe and Mail Analysts on Canada’s budget: ‘Deficit paranoia is mind bogglingly stupid’.

The article goes on to quote a number of normally conservative bank economists approving the idea of a deficit financed stimulative budget and in some cases lamenting that the proposed deficit will be smaller than needed. What a refreshing difference from the previous dogmatic fiscal orthodoxy. Lets hope that finance Minister Bill Morneau takes full political advantage of this chorus of deficit favourable economic advice and brings down as stimulative a budget as possible. In the meantime I m enjoying the headline and also smiling at the admission in the same paper today by the leader of the NDP Thomas Mulcair that he now, unlike during the election campaign, believes that running a deficit is acceptable if it is required to meet NDP commitments. Better late than never !

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About haroldchorneyeconomist

I am Professor of political economy at Concordia university in Montréal, Québec, Canada. I received my B.A.Hons (econ.&poli sci) from the University of Manitoba. I also completed my M.A. degree in economics there. Went on to spend two years at the London School of Economics as a Ph.D. student in economics and then completed my Ph.D. in political economy at the University of Toronto. Was named a John W.Dafoe fellow, a CMHC fellow and a Canada Council fellow. I also was named a Woodrow Wilson fellow in 1968 after completing my first class honours undergraduate degree. Worked as an economist in the area of education, labour economics and as the senior economist with the Manitoba Housing and Renewal Corporation for the Government of Manitoba from 1972 to 1978. I also have worked as an economic consultant for MDT socio-economic consultants and have been consulted on urban planning, health policy, linguistic duality and public sector finance questions by the governments of Manitoba, Saskatchewan,the cities of Regina and Saskatoon, Ontario and the Federal government of Canada. I have also been consulted by senior leaders of the British Labour party, MPs from the Progressive Conservative party, the Liberal party and the New Democrats on economic policy questions. Members of the Government of France under the Presidency of Francois Mitterand discussed my work on public sector deficits. I have also run for elected office at the municipal level. I first began to write about quantitative easing as a useful policy option during the early 1980s.
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