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Sunday, July 26, 2009

Liberal Leader sticks to his guns on need for more spending and EI reform

"Even with central bank declaring end to recession, Liberal Leader sticks to his guns on need for more spending and EI reform."


Why is the Liberal Leader of Canada pushing the Prime Minister of Canada to increase Government spending, when experts say that Canada is now out of the recession?"

In his article, "The Economic Consequences of Government Spending",
by Daniel J. Mitchell, Ph.D., the author states:

"Economic theory tells us to examine costs and benefits in order to determine whether resources are allocated in a manner that increases or decreases economic growth."

If the Liberal Leader of Canada is indicating that the governing Tories should increase the spending of their Government, what benefits does Ignatieff see in such spending and why hasn't he indicated these benefits to Canadians in a speech or news release?

As Daniel Mitchell states:

"Not all government spending is created equal. Some forms of spending on “public goods” facilitate the operation of a market economy. A well-functioning legal system, for instance, is necessary to facilitate private contracts. There will be an economic cost when resources are taken from the private sector to finance outlays for a court system, but the benefits presumably will exceed those costs – meaning that the net effect on economic performance is positive.

Other forms of government spending have a less desirable impact on economic activity. If a program does not facilitate or encourage economic activity, or has only a small positive effect, then the aggregate impact on the economy will be negative because there are limited benefits – if any – to outweigh the costs. And if the program actually undermines work, saving, and investment or encourages misallocation of resources, then the overall adverse impact on economic growth will be particularly pronounced. A good example from recent events is federal flood insurance. Not only does the program require resources to be taxed or borrowed from the productive sector of the economy – with all the associated economic costs, but it also encourages over-building in flood zones, which leads to the destruction of wealth during natural disasters.

There are two macroeconomic reasons why government spending can undermine economic performance. The first reason, mentioned above, is “resource displacement.” Every time government spends money, it is using labor and/or capital and those resources no longer are available for private sector uses.

The second macroeconomic issue associated with government spending is the “financing cost.” When government taxes, it not only takes money from the productive sector, but it also raises revenue by means of a tax system that generally reduces incentives to work, save, and invest. And if it finances spending with debt, it siphons money out of private credit markets."

According to Neil Reynolds, in his article, "Unnecessary government spending is no accident", ( source:,

"The real problem now is precisely what it has been for 40 years or more, once succinctly described by Gordon Robertson, Clerk of the Privy Council under prime ministers Diefenbaker, Pearson and Trudeau (and thereby in a position to know), as the utter disappearance of all sense of frugality from the federal government. As government spending increased in the 1960s and the 1970s, public-service thrift diminished. It remains a forgotten virtue. Aside from ritual references to waste in government, it is never discussed."

"The real problem is that democratic governments never, ever, cut spending in absolute terms. They may occasionally reduce the anticipated rate of increase - from 6 per cent, say, to 5 per cent - and proclaim this apparent restraint the stuff of conscience and courage. But, in absolute terms, they never, ever, cut. It is an attribute now common to all modern democracies."

"The real tragedy lies in the inexorable rise in deliberate spending. In the exponential increases cited by Gordon Robertson, across two or three decades, the most unnecessary spending was entirely intentional, duly instigated by government and duly authorized by Parliament."

"Inflation has always made it easier for governments to spend wildly. But we have now entered a period of official deflation. This period may well have lasted only for the month of June when (year over year) the cost of living fell by 0.3 per cent, the first official month of deflation in 15 years. Or it could persist. At any rate, we should take what we can get. It seems only fair that governments be required to reduce spending by the rate of deflation. Even with low-level deflation, the savings would add up. With deflation of 0.3 per cent for a year, for example, the federal government would be obliged to cut spending by $1-billion - and not lose a penny's worth of public services."

I suggest that Mr.Ignatieff has no business asking the ruling Federal Progressive Party headed by Mr. Harper to increase its spending. As of Friday, July 10, 2009,
"Employment was little changed in June, leaving total net losses during the last three months at 13,000, much smaller than the 273,000 decline in the first three months of the year. The unemployment rate edged up 0.2 percentage points to 8.6% in June, as more people looked for work." In addition, "Employment was virtually unchanged in June in all provinces except Newfoundland and Labrador, where it went up. (source:

According to the article:"Employment outlook survey reveals Canadian employers expect a mild hiring climate for the third quarter of 2009",

"Canadian employers expect a mild hiring climate for the July to September period of 2009, according to the latest results of the Manpower Employment Outlook Survey, the most extensive, forward-looking employment survey in the world.

The survey of more than 1,900 Canadian employers reveals that 16 per cent expect to increase their payrolls in the third quarter of 2009, while 11 per cent anticipate cutbacks for a Net Employment Outlook of five per cent. Of those polled 70 per cent of employers plan to maintain their current workforce and three per cent are unsure of their hiring intentions for the upcoming quarter.

With seasonal variations removed from the survey data the Net Employment Outlook declines to a subdued minus three per cent, indicating a sluggish hiring pace for the third quarter of 2009. This forecast shows a slight decrease from the previous three months when employers reported a seasonally adjusted Net Employment Outlook of one per cent.

“This quarter’s Net Employment Outlook indicates that the modest hiring climate reported in the previous quarter will continue,” says Lori Rogers, VP Staffing Services for Manpower Canada. “Canadian employers are indicating that they will expand their payrolls but at a weaker pace than in the previous quarter.” (source:

In my opinion, in saying what he has, about the need of Mr.Harper to increase his Government's spending, Mr.Ignatieff is not in touch with the Canadian and
World economic scene. As I have stated in the past about Mr.Ignatieff on this blog, he appears to be simply trying to cause Mr.Harper trouble, without giving any solid foundation for his statements, in this case,Mr. Ignatieff's insistence that Mr. Harper increase spending of the ruling Federal Government. In addition, Ignatieff is blasting the Harper Government without giving any concrete plans which Canadians can examine to determine if Ignatieff would be a good leader of Canada! When Mr. Ignatieff makes statements such as the following:

"We think Canadians are going to need employment insurance through '09, through 2010, through 2011,"

Based upon the expert evaluation of our present economic situation in Canada and the World, the Federal Government of Canada does not need to increase its spending, so why Mr.Ignatieff do you say Mr.Harper should increase his Government 's spending?

In regard to Mr.Ignatieff's claim that the ruling Progressive Conservative Party needs to conduct reform to the existing EI system, as Joan Bryden of the Canadian Press indicated in her news article:"Tories issue ultimatum to Ignatieff on EI reform", (source:

"On Friday, the ruling Progressive Conservative Party of Canada publically released "a thinly veiled ultimatum to Michael Ignatieff: Drop your proposal for easier access to employment insurance or there'll be no election-averting deal on EI reform."

Joan Bryden states:

""The Liberal leader is advocating a single national standard of 360 hours of work to qualify for EI. That's less stringent than the current regime, which requires from 420 to 700 hours of work depending on local jobless rates."

Bryden states, "But Conservative MP Pierre Poilievre, a member of the bipartisan working group struck last month to negotiate an agreement with the Liberals on EI reforms, says the Harper government will "never" accept Ignatieff's proposal.

"The bottom line is we're not going to be supporting the notion that someone could collect EI for almost a year after working only 360 hours or nine weeks," Poilievre said in an interview Friday.

"All the costing shows that a nine-week work year would cost billions and the only way to fund it is through higher taxes, so we can't support that proposal."

Bryden continues her examination of this issue by stating the following:

"Poilievre noted that Ignatieff is well aware Prime Minister Stephen Harper has repeatedly and categorically rejected the idea. He said it's therefore surprising the Liberal leader chose to reiterate his preference for a 360-hour standard just as members of the bipartisan working group were embarking Thursday on their first meeting."

"Ignatieff said Thursday that Liberals believe "very strongly" a single national eligibility requirement is crucial. He said he's willing to entertain "a certain flexibility on 360 but not that much."

"Poilievre wouldn't go so far as to say the working group is doomed if Ignatieff doesn't back down. But he left no doubt that Ignatieff's proposal is a non-starter."

"The government will not support a nine-week work year. That I can say with certainty," he said.

"I think our goal is for an agreement. It remains to be seen whether he (Ignatieff) is prepared to abandon a nine-week work year."

"Harper and Ignatieff agreed last month to strike the working group of three Conservatives and three Liberals as part of a bid to avert a summer election."

"As part of the deal, Liberals insisted they get another opportunity to defeat Harper's minority government in a confidence vote on Sept. 30 should negotiations fail to satisfy their demand for EI reform."

"Ignatieff spokesperson Jill Fairbrother said Poilievre's warning is surprising and not in keeping with the tenor of Thursday's meeting."

"She said the "most substantive part" of the discussion revolved around Ignatieff's proposal and both sides agreed to have departmental officials prepare some models of how a national eligibility standard might work, using 360 hours as a starting point."

"So, if what Mr. Poilievre is saying is the case then why are they wasting people's time doing more work on it?"

"Fairbrother added that Poilievre's description of Ignatieff's proposal is "a mischaracterization of our position." She said Liberals have never suggested anyone should get a year's benefits after only 360 hours of work, as they made clear in Thursday's meeting."

"Nor have they advocated hiking payroll taxes to cover the additional cost, which Ignatieff has estimated at about $1.5 billion."

Why is Mr. Ignatieff indicating he is willing to spend 1.5 billion dollars of tax-payer's money on EI reform and secondly why is Mr. Ignatieff willing to allow Canadians to work only 9 weeks before they can collect EI Benefits?

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Thoughts worth thinking about

"Our subconscious minds have no sense of humor, play no jokes and cannot tell the difference between reality and an imagined thought or image. What we continually think about eventually will manifest in our lives."-Sidney Madwed

Laws alone can not secure freedom of expression; in order that every woman and man present their views without penalty, there must be spirit of tolerance in the entire population.- Albert Einstein Too often we underestimate the power of a touch, a smile, a kind word, a listening ear, an honest compliment, or the smallest act of caring, all of which have the potential to turn a life around. - Leo Buscaglia

A person's true wealth is the good he or she does in the world. - Mohammed

Our task must be to free ourselves... by widening our circle of compassion to embrace all living creatures and the whole of nature and its beauty. -Albert Einstein

The best way to find yourself, is to lose yourself in the service of others. - Ghandi

The unselfish effort to bring cheer to others will be the beginning of a happier life for ourselves. - Helen Keller

Aim for success, not perfection. Never give up your right to be wrong, because then you will lose the ability to learn new things and move forward with your life. Remember that fear always lurks behind perfectionism. Confronting your fears and allowing yourself the right to be human can, paradoxically, make yourself a happier and more productive person. - Dr. David M. Burns

Life is as dear to a mute creature as it is to man. Just as one wants happiness and fears pain, just as one wants to live and not die, so do other creatures. -His Holiness The Dalai Lama

Mankind's true moral test, its fundamental test (which lies deeply buried from view), consists of its attitude towards those who are at its mercy: animals. And in this respect mankind has suffered a fundamental debacle, a debacle so fundamental that all others stem from it. -

Milan Kundera, The Unbearable Lightness of Being

The worst sin towards our fellow creatures is not to hate them, but to be indifferent to them. That's the essence of inhumanity. -George Bernard Shaw

Ego's trick is to make us lose sight of our interdependence. That kind of ego-thought gives us a perfect justification to look out only for ourselves. But that is far from the truth. In reality we all depend on each other and we have to help each other. The husband has to help his wife, the wife has to help the husband, the mother has to help her children, and the children are supposed to help the parents too, whether they want to or not.-Gehlek Rinpoche Source: "The Best Buddhist Writing 2005 pg. 165

The hostile attitude of conquering nature ignores the basic interdependence of all things and events---that the world beyond the skin is actually an extension of our own bodies---and will end in destroying the very environment from which we emerge and upon which our whole life depends.