Thinking Before Spending Is Not “Ideology”

Commentary, Welfare, Frontier Centre

Open up any newspaper or magazine, watch talking heads on TV, or listen to your radio, and as governments rack up billions in new debt (or trillions!) you’ll find almost as many apologists who offer this justification for the new debt binge: this economic crisis should be managed without interfering ideologues; “it is time,” argue the would-be non-ideologues in their best imitation of gravitas, “to get past ideology.”

So, U. S. President Barack Obama demands $800 billion in pursuit of a $1.5-trillion deficit and Time magazine labels opposition to it as “ideological.” Our own federal government will throw $40 billion in fake stimulus at the recession (it’s fake because it won’t work) while the Alberta government will run at least a $1.4-billion “technical” deficit rather than do a nip-and-tuck operation on spending. Those who question the wisdom of that approach are labelled “ideological.”

Insofar as ideology goes, I agree: it has no place in public policy. And here’s an extra useful condition: ideology should be ignored not only in bad economic times but also when government coffers overflow. I’m all for doing what is sensible.

Problem is, someone who disagrees with what I think is sensible might accuse me of being ideological just as I might fling back the accusation if I think their advice is loopy.

Truth be told, many who advocate an “end to ideology” these days usually mean the rest of us should offer nary a criticism while governments madly borrow and spend.

Ironically, proponents of the no-ideology position advocate an ideology, except they either don’t admit or don’t recognize it. It’s called Keynesianism and it’s an ideology as much as any opposite libertarian version which, in a radical form last year proposed letting the U. S. financial system collapse rather than have the U. S. Federal Reserve intervene to guarantee interbank lending.

Can the “new” Keynesian advocacy be parsed for its simplistic approach to the present recession? Yes. It may be that governments should run deficits in selected cases and in certain years, especially if their revenues drop through the floor in the first year of a recession. But that will depend on the government in question and its unique circumstances.

Even then, it doesn’t mean every so-called stimulus will actually do anything useful. Take the recent federal budget (please). The federal government proposed to give VIA Rail another $407 million over its existing subsidies.

Anyone who thinks that will help “stimulate” the Canadian economy — to use the most unthinking word tossed around over the past six months, is mistaken. VIA competes with airlines, buses and even other train companies. So VIA gets subsidized (more) and takes passengers that if it didn’t exist, or existed in some scaled-down form, would otherwise travel by jet, Greyhound or a private rail company. The net benefit of such a “stimulus” is precisely zero.

The same analysis applies to other expenditures now made under the justification of a needed stimulus. Think of the several billion in public money headed to automakers (or $10 billion if they get their way), this while they lay off thousands. The shell game of subsidies to one company will only exacerbate the layoffs at another.

It’s not as if governments don’t already spend substantial amounts of cash to provide support during recessions: unemployment insurance and other government support systems have long existed to cushion the effects of downturns. Beyond that, tell me how any government can prevent the necessary readjustment that must come from a multitrillion-dollar popped bubble? Try and keep that bubble inflated, as Obama and the U. S. Congress are doing by subsidizing mortgage payments, and the recession will only be prolonged but with literally trillions spent in the meantime. Want to see ideology in action? Look there. It’s also risky and profoundly dumb policy.

Non-ideological policy requires combing through actual tax-and-spend policies to ponder what might work in the worst economic crisis since the 1930s. To use one example, to trade corporate welfare for substantial business tax cuts would be a better use of the fiscal room available, though I won’t hold my breath.

Contrary to the rhetoric, blind apologists for an ideology– Keynesian spending at all costs–won’t help the rest of us. And to oppose the rush to spend blindly is not to engage in ideology; it is to think.