Friday, 21 February 2014

Going in the Wrong Directon: PQ Budget and Krugman's Take-Down of Austerity Memasures

As usual Paul Krugman is worth reading today.  His analysis of why stimulus in the US hasn't done what it should have is clear: there should have been more, not less, and things would be much worse if there hadn't been the stimulus package in 2009.

He writes that the "huge natural experiment Europe has provided on the effects of sharp changes in government spending....  If stimulus opponents had been right about the way the world works, these austerity programs wouldn’t have had severe adverse economic effects, because cuts in government spending would have been offset by rising private spending. In fact, austerity led to nasty, in some cases catastrophic, declines in output and employment."

The message about the adverse effects of austerity hasn't been heard in Quebec City (or Ottawa, for that matter),  given the budget that Pauline Maurois's PQ government brought down Thursday.  Lots of talk about fiscal responsiblity and zero deficit, and no recognition of the important role government should play in  supporting public programs and putting the emphasis of full employment. 

We're headed for an election here, and certainly the PQ, the provincial Liberals and the right of centre Coalition pour l'avenir du Québec aren't going to talk about the need for stimulus.  Thank goodness Québec solidaire is around to raise some important questions. "The old model is broken down," commented Amir Khadir, one of the two QS members of the National Assembly.

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