Bailouts won’t save us from our greed
I know a man--I'll call him Fred--who is entering his 80th year of life. Fred can recall the Great Depression and the war years. He's worked through the economic booms and busts of several decades.
So what is Fred's reaction to the doomsday scenarios suggested by some economists that have sent governments running for their wallets and made "economic stimulant packages" all the rage with formerly fiscally conservative governments?
"Poppycock" says the octogenarian.
For people like Fred, an economic downturn is nothing new. What is new is the economic shock treatment that turns Stephen Harper suddenly into Jack Layton and causes George W. Bush to bequeath a $17.4 billion US bailout to the U.S. auto sector (on top of a $350 billion US bailout for financial institutions that essentially nationalized a good chunk of the U.S.'s financial sector).
Are economic stimulants really the answer or just a quick high that masks fiscal rot?
Nobody wants to see auto workers who have bought houses and cars suddenly go broke. We shouldn't even want stock traders to suddenly become panhandlers. But is all the deficit-inducing spending--it's my tax dollars going to auto makers--really a good long-term strategy?
The problem with the "economic stimulant" strategy isn't so much with the principle of the idea--that governments should use their economic clout to stimulate their economies--but with the practice.
The problem with the auto bailout in North America is that it doesn't address the real issue: that North American automakers' CEOs and union reps have conspired to drive the sector into the ground, resulting in terrible cars made by unmotivated workers who earn outrageous wages.
Worse, automakers in Canada have received hundreds of millions of dollars in government subsidies in the last few years, supposedly to innovate so they could compete against Japanese and Korean automakers. These same North American companies couldn't succeed without government subsidies. Will they now be saved by yet more taxpayer money?
Economic religion
Our politicians have suddenly found a new age economic religion based on economic stimulus packages, the biggest being the one announced by our federal government that will likely lead to a deficit in the $20-billion to $30-billion range for the 2009-2010 fiscal year.
Let us pray that deficit financing saves all these auto sector jobs. I would like to think that if I'm going to ask my kids or grandkids to take on tax debt to save these jobs, at least let's make sure as many auto workers can keep earning a living.
I don't think anything the government does on the economic front in 2009 will save us from a crushing recession. The reason is quite simple: our economic system in Canada (and the West) is based on greed and selfishness rather than a kind of stewardship that Christianity preaches.
Fundamentally, it's an issue between cold, hard greed and stewardship which sees resources as entrusted to us by God.
Good economics holds that governments are stewards of public monies. Good stewards look at resources as being held "in trust" for the greatest common good. Is propping up the Big Three auto companies without real, fundamental changes both within the boardroom and the union hall really best for Canadian taxpayers or even auto workers whose jobs have been subsidized for years?
Good economics holds that governments should live within their means. Just like families, they can't live in debt forever. Ditching consumerism as the prime mover of our economy in favour of contentment with what we have might mean fewer toys (good-bye big screen TV), but more time with the kids.
Good economics holds that governments should encourage and honour the charitable sector, not build up the nanny state, thus fostering generosity and discouraging "me-first" attitudes which have already produced a spoiled generation of young people and broken homes.
Good economic holds that governments lead by example. They care less about how they look in front of the cameras for the voters and more about a legacy of good government and motivated, civic-minded citizens.
Ultimately, it is ordinary people who mold governments. But if we're okay with our kids and grandkids paying for our economic sins, then let the shock treatments continue.
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