Writing in McLean’s Kevin Milligan makes an interesting argument—that the conditions required for Keynesian stimulus just don’t obtain in Canada right now. Here’s the kernel of his argument.
- The Keynesian multiplier is predicted to be reduced in small, open economies like Canada’s
- The effectiveness of fiscal stimulus is relatively lower in countries with flexible exchange rates.
- Canada doesn’t have a shortfall in aggregate demand.
- A national program would be insufficiently focus geographically to compensate for the industry that’s contracting—oil production.
- The strategies that are being contemplated are insufficiently focused in time.
I find #3 to be the most telling and judging from Canada’s retail sales over the last couple of quarters, he’s right.
I made some of those arguments with respect to our own Keynesian stimulus plan in 2009. I was also concerned that political pay-offs would be disguised as fiscal stimulus which in fact turned out to be the case. Maslow’s Hammer seems to have international appeal.
It sounds to me like Canada gambled and lost. I guess that’s why it’s called “gambling”.
Don’t really have a good place to put this, but you might enjoy this:
Henry and Kant: outsourcing morality
And something that looks to be a reply of sorts is here:
Societies whose business leaders have moral integrity are successful societies
I haven’t read the second piece yet. But the first one definitely parallels some of your thinking through the years in terms of internalized guilt vs. externalized shame. And it seems to me we’ve definitely transitioned towards being the latter kind of society in my lifetime, though this may just be my own grumpiness.
1,3 and 4 sound right. Tryin got fix one sector in a limited area with changes affecting the whole country sounds unlikely to work.
Steve