Canada's Opposition Parties Vow to Bring Down Government, 1 month into its term...

[Victor Galis]

Originally posted by CrONoS

It could be a valid argument, but here in our discussion, for this thread, we take for granted, that the roads and bridges are at a level security that is equal to the marginal rates of the social value that we give to a human life.

Why? Assumptions like this limit discussion.

And right now, canadian seems to give a higher value to the health of our economy.

But higher infrastructure spending can't be bad for the economy unless it displaces other spending somewhere else that is more stimulating. I'm unconvinced that this is true.

You as an individual you said: "My preference is to save human life".

Actually my personal preference would be to have high-speed rail from Windsor to Quebec City, because high-speed rail gives me warm fuzzy feelings. I suspect that this doesn't make economic sense though

So if our preference (goal) is not to go in recession, the infrastructure programs is a bad idea; in microeconomic terms & in macroeconomics terms.

This is only true if you accept the idea that infrastructure spending slows the economy. Quite frankly, I don't think that's true. Even if the study KH posted is still accurate in current economic conditions (which I doubt), better infrastructure generates economic benefits by virtue of existing. It's not only a matter of safety, but also of ability to ship goods quickly, efficiently, and cheaply.

Duh.

And my point is that if you're going to overspend from a macro perspective, doing it on projects that make micro sense is better than spending on stupid projects. Now, I believe in the current economic climate overspending is safer than underspending. (Granted this is more true in the US than Canada.)

[CrONoS]

@NYE:
I understand your impressions, having read again my last post, but no, what I say is, if our goal is to go out of the recession. The best option is not to go into a infrastructure programs. Consider it as a opportunity cost of not doing something that could be more efficient & effective.

Effective because it could take time to plan it, and see it's effect in our society. And also because the construction sector seems to already be working at full capacity.

Efficient: Because the effect on GDP would be lower than others measures.

[Victor Galis]

Originally posted by CrONoS
@NYE:
I understand your impressions, having read again my last post, but no, what I say is, if our goal is to go out of the recession. The best option is not to go into a infrastructure programs. Consider it as a opportunity cost of not doing something that could be more efficient & effective.

But the question is what would be more effective? Again, infrastructure has the advantage of being justifiable in micro terms (well, some projects) and leaving behind lasting benefits.

[notyoueither]

Originally posted by CrONoS
@NYE:
I understand your impressions, having read again my last post, but no, what I say is, if our goal is to go out of the recession. The best option is not to go into a infrastructure programs. Consider it as a opportunity cost of not doing something that could be more efficient & effective.

Effective because it could take time to plan it, and see it's effect in our society. And also because the construction sector seems to already be working at full capacity.

Efficient: Because the effect on GDP would be lower than others measures.

OK.

Unfortunately, our politicians and media seem to be locked into this stimulus now or broke mindset, and many are assuming that stimulus will be paving equipment on their street.

[CrONoS]

Originally posted by Victor Galis

But higher infrastructure spending can't be bad for the economy unless it displaces other spending somewhere else that is more stimulating. I'm unconvinced that this is true.

It would displace the resource. Like I pointed it out earlier; the construction sectors is mainly working at full capacity (right now).

The models would be very easy to draw.

Offer and Demand of Infrastructure: the offer curve would be mainly inelastic. Displace the private demand by adding governmental demand, and since the offer curve is mainly inelastic ( in short terms), the government would have to pay an higher price than the private sector if they want to make things done.

So, if the government would like to do things, it would have to displaced the resource from the private sectors (which were used at a lower cost)

This is only true if you accept the idea that infrastructure spending slows the economy. Quite frankly, I don't think that's true. Even if the study KH posted is still accurate in current economic conditions (which I doubt), better infrastructure generates economic benefits by virtue of existing. It's not only a matter of safety, but also of ability to ship goods quickly, efficiently, and cheaply.

Yep, but you have to thought in order of opportunity cost.

And my point is that if you're going to overspend from a macro perspective, doing it on projects that make micro sense is better than spending on stupid projects. Now, I believe in the current economic climate overspending is safer than underspending. (Granted this is more true in the US than Canada.)

The problems, maybe it's an academic deformation, but I don't see how it could make any more sense in an microeconomics analysis. I can only see one variable, that could make infrastructure program make more sense, in a microeconomics analysis, and it's the value of the human life.

P.S.: For your informations, in Canada, in a cost/benefit analysis we value human life at 5-6 millions.

[KrazyHorse]

Now, I believe in the current economic climate overspending is safer than underspending. (Granted this is more true in the US than Canada.)

Based on what evidence? THE FISCAL MULTIPLIER ON ADDITIONAL SPENDING WAS STRONGLY NEGATIVE IN THE MOST RECENT TIME PERIOD FOR WHICH DATA IS AVAILABLE.

As Cronos has already pointed out, the construction sector is already operating at record levels. This means that even with a 0 fiscal multiplier economic activity in other sectors would decline by as much as construction activity increased. And since the other sectors are slack (assuming we actually drop significantly below potential output) while construction is tight there will be a significant efficiency cost! (output measures would not change, but there would be a hidden deadweight loss)

[Fake Boris]

Originally posted by notyoueither


So you are in favour of finance minister Jack Layton and public works minister Duceppe to facilitate getting your street fixed?

Harper was irresponsible with the party funding bomb. The Liberals are being irresponsible in pushing ahead with plans to form a government that would be hijacked by people whose plans are to throw billions blindly at automakers (NDP) while trying to engineer the destruction of the country (PQ).

It's already acknowledged that the Bloc would not be part of the government - they will keep doing as they've always done, i.e. vote on a case-by-case basis.

[Asher]

Originally posted by Oncle Boris


It's already acknowledged that the Bloc would not be part of the government - they will keep doing as they've always done, i.e. vote on a case-by-case basis.

Then why is the media still harping about this "coalition"?

The conservatives still outnumber the NDP + Liberals, they need the Bloc.

[Fake Boris]

The GG doesn't need the Bloc to be part of government. It suffices if they back the defiance motion and assure that they will be reasonably cooperative with the new cabinet.

[Asher]

Originally posted by Oncle Boris
The GG doesn't need the Bloc to be part of government. It suffices if they back the defiance motion and assure that they will be reasonably cooperative with the new cabinet.

That's tremendously undemocratic, would never happen.

[notyoueither]

Originally posted by Oncle Boris


It's already acknowledged that the Bloc would not be part of the government - they will keep doing as they've always done, i.e. vote on a case-by-case basis.

I know that. I included pw minister Duceppe anyway.

The reason I did so is that the Bloq would be required for every single money issue. Their wishes would have to be factored into every decision.

The Tories will begin the King campaign the second the GG accepts a Liberal-NDP cabinet. They will vote to defeat the government at every opportunity, or at least the PM and finance minister will have to assume so.

I am surprised the Liberals are being so stupid that they want to put themselves in this position. They'll be taking over government as the layoffs get underway. They'll have to make widely unpopular decisions on a regular basis. And they will have handed the Tories a majority maker, gift-wrapped, on a platter.

[notyoueither]

Originally posted by Asher


That's tremendously undemocratic, would never happen.

Not at all.

The government does not have to command a majority in the house.

The prospective PM needs to make a case to the GG and her advisors that they can govern. If they have the assurances of the Bloq the scheme would be entirely within the bounds of tradition.

The problem will be in public perception when the PM represents a party that had just been given its worst result, ever, and could be said to have anything but a mandate to govern. Additionally, the government would only be viable if propped up by seperatists.

I'm not always a good prognosticator, but I can guess the result after a prolonged media campaign on the merits of the Liberal scheme and resulting government. It won't be a slim Tory majority.

[Victor Galis]

Originally posted by KrazyHorse

Now, I believe in the current economic climate overspending is safer than underspending. (Granted this is more true in the US than Canada.)

Based on what evidence? THE FISCAL MULTIPLIER ON ADDITIONAL SPENDING WAS STRONGLY NEGATIVE IN THE MOST RECENT TIME PERIOD FOR WHICH DATA IS AVAILABLE.

I can't seem to find the link to the paper anymore (was it in a different thread?), but the data is from 2005. Can you recognize that macro-economic conditions are vastly different? In particular, consumer confidence is much lower, which suggests that increasing government spending might be more effective than it was in that latest time period.

I am surprised the Liberals are being so stupid that they want to put themselves in this position. They'll be taking over government as the layoffs get underway. They'll have to make widely unpopular decisions on a regular basis. And they will have handed the Tories a majority maker, gift-wrapped, on a platter.

Either that, or they intend to come up with a reasonable-looking plan, which will then get defeated so they can blame Tory obstructionism for the continuation of the economic crisis. (Well, ok, Dion is probably not that good.)

[notyoueither]

http://www.ctv.ca/servlet/ArticleNews/story/CTVNews/20081130/conservative_budget_081130/20081130?hub=TopStories

NDP, Bloc in coalition talks before fiscal update: tape
Updated Sun. Nov. 30 2008 4:07 PM ET

CTV.ca News Staff

The New Democrats and Bloc Quebecois held talks to form a coalition party well before the opposition's uproar over the government's fiscal update, CTV News has learned.

NDP Leader Jack Layton was in talks with Bloc Leader Gilles Duceppe for a "considerable period of time," reported CTV's Ottawa Bureau Chief Robert Fife on Sunday.

Layton held a telephone-conference meeting with his caucus Saturday morning that was recorded by a Conservative member. According to the audio tape, Layton appears to take credit for the possibility of a coalition.

"Let's just say we have strategies. This whole thing would not have happened if the moves hadn't been made with the Bloc a long time ago and locked them in early," Layton says. "Because, you couldn't put three people together in one or three hours. The first part was done a long time ago."

He then goes on to say that the NDP "spotted and prepared for the opportunity and had taken the steps that were required, so that when the opportunity arose, which was when Mr. Harper made his disastrous strategic error by not providing stimulus to the economy and instead playing political games, we were able to move and things began to move very quickly."

Layton also says about the Bloc: "Nothing could be better for our country than to have 50 members who have been elected to separate Quebec...actually helping to make Canada a better place."

In recent days, the Liberals and NDP have been in talks to form a possible coalition, with the support of the Bloc.

However, the NDP has strongly denied they had a plan to unite with the Bloc.

"Not at all, this is absolute nonsense," said Brad Lavigne, the NDP's communications director.

Lavigne told CTV Newsnet Sunday afternoon that the "lines of communication" between the NDP and the Bloc have been open, but that there was never a "deal" to form a coalition.

"Besides, why would you cook up a deal that only took you to 87 seats?" he said. "Cleary, you don't create a coalition with the two smallest parties in the House of Commons."

The news comes as the Conservatives try to stop coalition talks by retreating on measures in its fiscal update, including a proposal to ban public sector unions from striking. Finance Minister Jim Flaherty also said the government would table its budget early in January.

"On Tuesday, January 27, we will present a complete, comprehensive budget," Flaherty told CTV's Question Period.

"We will have consulted...nationally with the provinces, the territories, the municipalities and that will come on as soon as Parliament returns."

Flaherty said the government will be holding pre-budget consultations with each of the provinces in December, as well a series of January meetings with all of Canada's first ministers, prior to delivering the budget.

Showdown on Dec. 8

But Liberal MP Michael Ignatieff said Flaherty's appearance on Question Period did little to persuade opposition members from banding together and defeating the government during the non-confidence vote on the fiscal update set for next week.

"I didn't hear anything in Mr. Flaherty's statement that backs us off this ledge," said Ignatieff, who is a candidate to replace current Liberal Leader Stephane Dion.

It's believed the confidence motion on the fiscal update will be on Dec. 8.

On Sunday, the Conservatives announced they would back away from a ban on public servants striking. They had already relented on a contentious plan to drop $27-million worth of annual taxpayer subsidies to the political parties that comes from $1.95 per vote in the general election.

"That was an ill-conceived and provocative gesture," Ignatieff told Question Period. "But our objection to...the autumn statement was its economic content."

Flaherty said he was "disappointed" that it had not been supported by opposition members in the House of Commons.

"I'm disappointed that the opposition parties did not want to lead be example with respect to the contribution to political parties," he said.

"We are going to freeze the contribution level, the subsidy level on that, but we will not seek to eliminate it, because the number one issue is the economy."

The finance minister also defended the level of economic stimulus the Conservatives had put forward in recent weeks, and suggested Canada was sitting ahead of the United States and the United Kingdom.

He said opposition members "are crying for some sort of scattered, shotgun, back-of-the-envelope, throw-money-around stimulus," that will not be effective in dealing with the current economic problems.

Liberal MP John McCallum told CTV Newsnet that he questioned how much Canadians could trust the Conservative government to deliver what they are promising, when they are in a vulnerable position as a political party.

"I don't think the statements that they make today on the brink of falling as a government are terribly credible for us, or for Canadians," he told CTV Newsnet on Sunday.

McCallum said the Conservatives have failed to deliver the help that Canada's struggling economy needs.

"They had a chance to deliver what was needed for the economy," he said.

"What they did last year has clearly not worked. What we needed was something last week. They had the opportunity to deliver what is clearly needed for a weak Canadian economy."

[Victor Galis]

Originally posted by CrONoS
@NYE:
I understand your impressions, having read again my last post, but no, what I say is, if our goal is to go out of the recession. The best option is not to go into a infrastructure programs. Consider it as a opportunity cost of not doing something that could be more efficient & effective.

Effective because it could take time to plan it, and see it's effect in our society. And also because the construction sector seems to already be working at full capacity.

Efficient: Because the effect on GDP would be lower than others measures.

Why do we assume that private construction is more efficient than infrastructure projects? This may or may not be the case. Given the property bubble that just burst in a large number of countries, which featured very large over-investment in private construction...