Massive infrastructure spending a waste
Mild consumption boost required
By Stephen Pate
PEI Disability Alert
January 18, 2009
Any massive amount of infrastructure spending in Canada will result in more patronage spending, making the rich richer. It will have little benefit for ordinary Canadians and the long lasting effect of more national debt. If the government wants to improve the economy, a mild boost in consumption by consumers is the best approach. A modest tax cut for middle income taxpayers may work, although they can decide to save and not spend if they are worried about their jobs and homes.
The Guaranteed Annual Income plan for those living below the poverty line (LICO) would result in more direct spending. The poor have unmet needs and additional money would be spent to meet those needs not saved. The GAI is also supposed to be spending neutral for the government since it costs less to administer than the myriad of existing social programs, according to Senator Hugh Segal and other social economists.
In 2007, he said in the Toronto Star, “Surely the time has finally come to seriously consider a guaranteed income, financed by the money now in innumerable other programs.”
“Detractors of a guaranteed annual income will invariably point to its price tag. However, the municipal, provincial and federal governments are currently footing the rather hefty price tag of poverty as it translates into health-care costs, an overburdened judicial system, a myriad of social services that often duplicate each other and the basic loss of human productivity.”
The downside risk is that landholders, the rich, will increase rents to the poor and take away the benefit.
Just like the banks convinced the US, Canadian and European governments to give them trillions of dollars in bail-out money, the next rung in the economic ladder of oligarch’s want their share. Landowners and large construction firms are looking to dip into the public purse based on economic panic.
Throwing panic money at problems results in waste and fraud. The US Senate is blocking passage of more stimulus dollars because they cannot find over $300 billion that was spent in the last 3 months. The same thing is slated to happen in Canada as municipal, provincial and federal politicians clamor for tens of billions of dollars in emergency spending. Economic studies show that the money will be spent without normal controls. This will produce inflated windfall profits for landowners, contractors and other connected parties. It takes years of careful planning to execute large projects. Rushing projects through to stimulate the economy will have no positive effect.
