Friday, June 18, 2010

Who Do You Trust - Krugman or Harper?

Decisions, decisions. Which economist do you trust - Stephen Harper or Paul Krugman? Hint- you have to pick one because they have two completely irreconcilable takes on the global economic crisis.

Hmmm - let me see. Krugman is an economics professor at Princeton, a PhD and all that. He holds the Nobel Prize in economics. He warned all and anyone who would listen that the world was heading for a massive economic recession at least a couple of years in advance (see his book The Great Unravelling). He knew just why his country's economy would crater. And now he's warning anyone who'll listen that prematurely curbing stimulus spending will send the global economy spinning straight back into the toilet.

On the other hand... Steve Harper got a master's degree in economics from the University of Calgary. Steve went straight from that into becoming a political wonk - never worked a day in his life as an actual economist. It seems Steve didn't get a Nobel Prize or, for that matter, any other prize in economics. Once he got into power, Steve wasted no time beginning to implement the very economic madness Krugman was warning about at the time. Steve also wasted no time in defunding the national treasury. Steve didn't see the recession coming. He even said no one did (apparently Steve doesn't read the New York Times). Thanks only to his inability to dismember the fiscal prudence of his Liberal predecessors, Steve's government weathered the global meltdown relatively unscathed. And, unlike doctor Krugman, Steve is waving a ridiculously smug finger at G20 leaders to scrap stimulus spending and cut their deficits in half by 2013.

Krugman says don't cut now. Wait until your economies are recovered enough to bear the consequences of cuts. Steve says go ahead boys, start cutting and cut deep, just go for it.

Oh, I don't know. Which one do you think is right?


Michael Watkins said...

Canada probably is strong enough to remove the excess stimulus.

Some rational cutting might also be appropriate.

The real issue is that neither of the above are that interesting to Stephen Harper, never have been. He has expanded government so far under his reign, although has cut in some visible areas over the years. By underfunding the federal government through the reduction in GST collection and other tax cuts, he's made it a) near impossible for any future leader to enact new programs of any national scope and significance, and b) made it impossible for *him* to avoid cuts or, more accurately, make it virtually impossible for the opposition (who are sure to be crying foul over all the debt and thus fall into his trap) to bully him into avoiding paying it down.

Spending Canada deeper into debt at rates not seen since Mulroney is and has been, I believe, all part of his plan.

Krugman, while I'm sympathetic to his views often, is probably not correct here, at least as it concerns Canada.

Anonymous said...

Harper is rather lucky and goes around saying our banks are sound, but never tell you who made them sound.
A good economist would never have touched the GST. My daughter has a BA in social work, and she would need a year or two more to really get into the work she wanted.
Harper just took basic University economics.
Whoever thought he was an economist, in the first place ..people who are just as stupid themselves

Anonymous said...

It's not so much Canada cutting spending that's worrisome. It's when the USA's stimulus finally runs out that we're gonna be facing another unraveling. We're just about to another Wily E. Coyote moment.

Canada can afford to continue to strengthening its social security. Making it easier to get onto SA, EI, and, just as important, making it easier to get off social security, is vitally important for our governing party.

With the USA near to another failure, we should be preparing for less money all around.

The next failure will hurt, and it's gonna cut even deeper than the last one.

Us chumps at the bottom are gonna really feel pain, now. I'm not looking forward to when the banksters once again cause the system to lurch.

Fillibluster said...

Michael, yes I believe their aim has always been to bankrupt the national treasury, transfer all public wealth into private hands, and destroy the commons, once again.

We must resist.

The Mound of Sound said...

Michael,I agree that Canada's position is unique to the rest but it's the rest to whom Harper lectures and demands cuts. In no small part their fate will determine the efficacy of our own stimulus/recovery strategy.

Troy is right. The US recovery is the most important to the lot of us in the G20. Canada can go its own way, but only to a point.

And Fill states what is my worst nightmare. Christ I hope he's wrong. Where he is right in any case is that we have to fight this, really fight this, now.