Fraser Institute deficit hawks enjoy intimidating the public with scary figures such as the increase in the government debt-to-GDP ratio from 34 per cent in 2007 to 37 per cent today.
However, after the Second World War our debt-to-GDP ratio was over 120 per cent. Instead of sharply cutting back expenditures, Ottawa built infrastructure, welcomed immigrants and introduced many new social services. Paradoxically, when the economy was sufficiently stimulated with a high level of employment, the debt-to-GDP ratio actually declined.
The Fraser Institute warns us about the problems of an aging population. But their policy recommendations of balanced budgets and smaller government programs will lead to a contraction in the economy, reduced tax revenues, higher unemployment and more welfare payments, and consequently increased government debt. We also will likely end up with a workforce that is less educated, and less healthy.
We should not focus on mumbo-jumbo accounting numbers, but on the real world. Our imperative is to educate, train and employ young people today so that they are more productive and more capable of building a bigger pie that can be shared with our future senior citizens.
Larry Kazdan, Vancouver