By Kevin M. Smith
Harris Heresy? No!!
Did Mike Harris and the new Tory government betray Ontario and its poor by enforcing draconian spending cuts last week? There are many on the left who would scream and shout (read pout and whine) yes. There are even some liberal economists who seem to be presenting logical arguments to discredit the Common Sense strategy. Here, with a quick lesson in macroeconomics (logical stuff) are the facts.
An economy can go in two main directions, up (boom) or down (recession). There are certain factors that cause an economy to do this. Increases in consumer spending, government spending, investment and/or exports will cause the economy to go up. Decreases have the opposite effect. Increases in taxes, savings, and imports will cause the economy to go down, while decreases have the opposite effect. Lesson over.
The main liberal argument is that the Harris government is cutting spending by $9 billion while only cutting taxes by $4 billion. By looking at this policy and doing simple math you can see that Harris will be shrinking the economy. All things being equal, this might be true.
But all things are not equal.
Because Harris is also getting rid of Bob Rae’s business-choking labor laws, getting Ontario’s fiscal house in order, and reducing taxes, investment will increase. It has been estimated that Bob Rae’s government has cost Ontario up to $10 billion in investment. By gaining only half of that back Ontario’s economy will not shrink.
Those who do spend their hard-earned money will have more to spend and will increase consumer spending. And what about those who will have less because of the spending cuts? Well, they won’t have any money to save up anymore and will have to draw money out of savings which will have two effects, increased consumer spending, and less saving.
Those receiving high welfare payments will eventually resort to going elsewhere, and those who won’t — or can’t — leave will do their best to keep their heads above water. Necessity is the mother of all invention.
The net effect is a growing Ontario Economy. That means more jobs, more opportunities, higher wages, and most of all, fewer poor.
When the NDP came into power they increased spending, taxes, and regulations, all with good intentions. Good intentions aside, they killed the economy of Ontario in just four years. Mike Harris and the Tories will return Ontario to its economic glory, with good intentions and a lot of Common Sense.
Kevin Smith is a Ryerson student who looks just spectacular in a dark blue suit.
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