Now it’s obvious what the pre-budget leaks were about. They were softening us up, so when we saw the actual $84.9 billion five-year deficit figures we’d go, oh well, that’s only $20 billion more than the $64 billion over two years they already said, and what’s $20 billion to government? Other than a giant familiar debt sinkhole, I mean.
For numbers like that, we might as well have elected a Liberal government. Or not; the front-page chart in Wednesday’s Citizen showed a flood of Mulroney Tory red ink followed by a decade of Liberal surpluses and now more Tory red ink. You don’t have to like Liberal governments (and you know I don’t) to acknowledge they seem to be better financial managers. But facts are facts.
Including that it’s silly for people to talk about this Tory government abandoning “its conservative antipathy to spending.” It hasn’t got one. Never did; it inherited spending of $209 billion, and promptly hiked it to $222 billion, $233 billion then $237 billion in good times. Now in hard times it’s to rise to … say, they didn’t mention that in their press release, did they? Or in the budget speech, come to think of it. Nor did the press dwell on it; I had to get to the 19th page of Wednesday’s National Post for John Ivison to blurt out that the spending target five years out is $293.7 billion. Continue reading
I’ve always treasured a crack by Rose Friedman about the illusion of precision in economics. Her husband Milton was half-way through declaring that if you can’t measure something you don’t really understand it when she interrupted with “If you can’t measure it, measure it anyway”. Which brings me to Michael Ignatieff’s latest swaggering statement that he and his party will support the Tory budget provided they get quarterly updates including how many jobs it is creating. The trouble is, you can only know how many jobs it created if you know exactly what would have happened in employment markets if the budget had been different or absent. And since we can’t run history two different ways we can’t even if we have really fast computers that let us pretend we’ve somehow created a spreadsheet that completely accurately captures every interrelationship in the economy and accounts for chance as well. (To test this proposition, plug 1980 data into the spreadsheet and see if it predicts 1985.) On the plus side, this approach lets talking heads sound wise and politicians talk tough while acting weak. If you think that’s good.
Uh, that’d be eight four nine zero zero zero zero zero zero zero zero. So if you earned $84,900 a year you’d have to work for a million years just to pay for the deficits the government expects to run over the next five years. To pay for their planned total spending in 2013-14, you’d have to work for three and a half million years. Amazing how a few years in politics lets people smirk while hurling sums like that into the furnace.
The latter part of the 19th century was a period of appalling economic crisis in America. 1873-1896 was known as “The Great Depression” long before the 1930s came along. Farmers faced falling prices, workers toiled in massive new factories for low wages and went home to seedy slums if they weren’t killed in industrial accidents; politics was explosive and fears or hopes of revolution were everywhere. It was also the most rapid economic growth the nation ever experienced. Because back then governments knew how not to do dumb stuff.
The statistics on economic growth in the period are extraordinary. Economic output quadrupled; manufacturing output increased six-fold. Railway track in operation rose from 53,000 miles in 1870 to almost 200,000 in 1900 and ton-miles of freight hauled increased ten times just from 1870 to 1890. By 1894 the United States was the world’s leading manufacturing nation, on its way to producing one third of the world’s manufactures by the start of World War I.
A few mores statistics if you’ll indulge me. On the eve of the Civil War total power available in the U.S. was round 13 million horsepower, two-thirds of it more or less literally, that is, produced by animals. By 1880 steam exceeded animal power; by 1900 steam engines accounted for two-thirds of the 65 million horsepower available. And while the 1880 census didn’t even mention electric power, by 1900 it was gaining fast on steam. Continue reading