Canada's debt

[August1991]

These options coud be a way of killing two birds with one stone, putting money into the economy in recession while still keeping control of it so as to be able to take it back out of the economy afterwards.

Machjo, you are describing what is now called "quantitative easing".

The growth of a national debt should also be evaluated relatively to the growth rate of the national population.

You are right but a better measure would be the government's ability to tax. The growth of government debt should on average be no greater than growth in the economy. Canadian governments are well within such a definition.

We should always aim to be debt-free. A national debt should only occur in the event of a national emergency. If we're indebted when it uccurs, then we'll be adding debt to debt. If we are debt-free at the beginning, then the government could borrow considerably and easily in the event of a national emeency.

I fundamentally disagree. An individual should always aim to be debt free. But a country will always be in debt.

----

A quick glance at this thread bothers me. Tax revenues are collapsing while government spending (largely mandated) is constant. As a result, our various governments are going into deficit. Is this a surprise? [To me, the surprise is that many Canadians don't understand the effects of this recession.]

Secondly, do we in Canada really look at what we get for our government expenditures? In our own households, we've all at various times looked at spending (in a large sense) and admitted that: "This just won't work."

IMV, the problem with government people is that they spend other people's money sometimes for themselves but far too often, they spend other people's money for still other people. They are like the boss's secretary who buys a gift for the boss's wife.

I think deductions for charity contributions are perverting the charitable spirit. How about showing directly a spirit of self-sacrifice?

Benny, let me take on this comment.

Most rich people view taxation as control of how their money is spent: either they choose how to give it away or government bureaucrats make these choices. Bill Gates, his wife or children will never use all the money Gates has earned. So, the question is: who will spend it? Either the US government can select the bureaucrats or Bill Gates can.

Edited June 4, 2009 by August1991

[benny]

As I'd mentioned above, I'd rather just tax-cuts. I give of my time and money already, but with tax cuts, I could give even more. Recognizing though that some might fear that the more vulnerable could suffer from such tax cuts, I'd be willing to compromise on just making more money charity deductible.

I used to be a hard-core socialist until I'd seen first hand, ironcially enough when I came to need help myself at one point in my life, just how inefficient, bureaucratic, and incompetent government help is. In the end, I got more help from a friend than from the government. Once I'd gone back to work, I was not as enthusiastic about paying my taxes to such a system as I was before. Before that, though I did give to charity, I was quite satisfied with how my taxes were being spent (while I was paying my taxes in ignorant bliss). Now that I've seen how that money is realy spent, I'd rather it go to a charity of my choice, which I know to be more competent than the govenrment. The problem of course is that they tend to be more limited in their funding partially due to high taxes.

I can understand what you're saying there, and that leaves me in two minds about charitable tax deductions. I'm not sure myself if I support the idea I'd presented above, but offered it as a brainstorm anyway. I'm certainly open to ideas of course.

Let's not forget that most not-for-profit organizations may only be front organizations (loopholes) allowing the rich to promote anti-redistributionist propaganda (think to the Fraser Institute for example).

[benny]

You are right but a better measure would be the government's ability to tax. The growth of government debt should on average be no greater than growth in the economy.

The long term ability to tax is strictly relative to natural assets which are poorly correlated with what we can understand by "the economy".

[Machjo]

Let's not forget that most not-for-profit organizations may only be front organizations (loopholes) allowing the rich to promote anti-redistributionist propaganda (think to the Fraser Institute for example).

True. Personally, I generally give money to organizations in which I also am actively involved, giving me a chance to see them from the inside.

I can also see an issue with religious organizations. While cetain religious organizations are more progesive than the secular population (e.g. quakers, mennonites, Doukhobors, all of whom are very much pro-peace, communal, and always willing to help each other), we also have other churches that promote killing abortion doctors. I'm pro-life myself, but I certainly can't support a wrong for a wrong.

This also puts us in a catch-22. If we alow religious deductions, all kinds of fanatical and potentially violent religious organizations get a new source of funding. If we prohibit it, then those religious organizations that would be more proressive than even our government are denied funding which goes instead to govenrment pork-barelling. So, do we take the risk or not? In the end, it depends on our view of human nature. Personally, I'd rather take the risk on the grounds that I think most people, when gien a choice, will be there for their community.

Another possibility would be to go on a case-by-case basis whereby politically partisan groups can't give tax receipts to contributors. Again, I'm not saying I have the answer, but merely brainstorming. After having seen first hand how government operates, I'm not as fond as I wonce was of funding it.

[August1991]

The long term ability to tax is strictly relative to natural assets which are poorly correlated with what we can understand by "the economy".

I would agree if your reference to "natural assets" means the ability of Canadians to generate goods and services of value to others.

This is a general definition of GDP (the economy, economic activity) and this is what governments can tax. As long as government debt grows on average less than the growth in economic activity, then government deficits pose no problem.

Nonetheless, this ignores the critical question of what government bureaucrats are doing with all this money. Bill Gates' wife can buy all kinds of unnecessary crap far before Bill Gates declares bankruptcy: the better question is - should she spending the money?

IOW, I think the focus on debt and deficit is misplaced. It is government spending that matters, not government debt or deficit.

My family budget and the government budget are not the same thing. To begin with, I'm not Bill Gates or Paul Desmarais. Stephen Harper on our behalf can tax Desmarais, something that I can't do.

Edited June 4, 2009 by August1991

[benny]

I would agree if your reference to "natural assets" means the ability of Canadians to generate goods and services of value to others.

This is a general definition of GDP (the economy, economic activity) and this is what governments can tax. As long as government debt grows on average less than the growth in economic activity, then government deficits pose no problem.

Nonetheless, this ignores the critical question of what government bureaucrats are doing with all this money. Bill Gates' wife can buy all kinds of crap far before Bill Gates declares bankruptcy: the better question is - should she spending the money?

IOW, I think the focus on debt and deficit is misplaced. It is government spending that matters, not government debt or deficit.

A political party is elected on the basis of its ideas for the near future. If it is able to convince the population that under its watch the productivity and efficiency of the present economy will be improved, it may not have to bother about the present debt.

Edited June 4, 2009 by benny

[Machjo]

Machjo, you are describing what is now called "quantitative easing".

Quantitative easing is certainly dangerous if used to spend our way out of recession. If used only to spend our way out of deflation, however, it is much less dangerous, and even beneficial and quite safe if invested wisely.

A disadvantage of using it exclusively to fight deflation is, of course, that it can then not be used to fight our way out of recession. But at least it can moderate the recession.

[Machjo]

A political party is elected on the basis of its ideas for the near future. If it is able to convince the population that under its watch the productivity and efficiency of the present economy will be improved, it may not have to bother about the present debt.

And that's the people's fault. We should think beyond a four-year mandate when we go to the voting booth. I'm thinking at least 70 years ahead when I vote, thinking policy X will affect us not next year, but 70 years or more from now.

[benny]

Most rich people view taxation as control of how their money is spent: either they choose how to give it away or government bureaucrats make these choices. Bill Gates, his wife or children will never use all the money Gates has earned. So, the question is: who will spend it? Either the US government can select the bureaucrats or Bill Gates can.

To me, everything concerning people like the Gates has to be dealt with through a critical evaluation of the role of patent protection.

[Machjo]

Most rich people view taxation as control of how their money is spent: either they choose how to give it away or government bureaucrats make these choices. Bill Gates, his wife or children will never use all the money Gates has earned. So, the question is: who will spend it? Either the US government can select the bureaucrats or Bill Gates can.

And Bill Gates is in fact a known philanthropist, and has given his money to good causes. Does it matter who decides how his money goes to good causes? Why not him? it saves one bureaucrat's salary in deciding how that money is to be given.

[Machjo]

To me, everything concerning people like the Gates has to be dealt with through a critical evaluation of the role of patent protection.

I'm aware that there are different opinions on the idea of intellectual property. Some believe that an ideas belongs to the community, not the individual. Others disagree. As for me, I lean towards the idea that ideas are public property. But until that law changes, owners of patents will continue to get rich and I see nothing wrong with their having more say in how that money is spent.

[benny]

The world economy is like dominoes. If one is standing, they'll all stand. When one falls, they'll all fall. If we want it to succeed, we need to work with the international community foreign governments, the private sector, NGO's etc. It's not up to the government to act like a hero and come and try to save the day carrying the world's burden on its back.

Strictly speaking, we (that is you and me) can only start a political movement to implement what we will agree upon about the world economy.

[benny]

I'm aware that there are different opinions on the idea of intellectual property. Some believe that an ideas belongs to the community, not the individual. Others disagree. As for me, I lean towards the idea that ideas are public property. But until that law changes, owners of patents will continue to get rich and I see nothing wrong with their having more say in how that money is spent.

The crucial aspect is that to protect a private property from public infringements, one needs the help of a community with some kind of social contract.

[August1991]

And Bill Gates is in fact a known philanthropist, and has given his money to good causes.

And he has chosen how the money is spent.

You can give the money to the charity of your choice, or you can give it to an anonymous government bureaucrat.

[Machjo]

And he has chosen how the money is spent.

You can give the money to the charity of your choice, or you can give it to an anonymous government bureaucrat.

And between those choices, I'd rather my taxes be charity deductible.

[benny]

And he has chosen how the money is spent.

You can give the money to the charity of your choice, or you can give it to an anonymous government bureaucrat.

Bottom line: it's public office holders who take the decisions about charitable deductions.

[August1991]

Bottom line: it's public office holders who take the decisions about charitable deductions.

The State can possibly decide how much money private players lose - but the State cannot decide how the "lost" money is used.

[Machjo]

The State can possibly decide how much money private players lose - but the State cannot decide how the "lost" money is used.

I would disagree with taking this to the extreme. I'm all for direct taxes on our income or wealth to be charity deductible (once the national debt is paid off of course), but the government should still reserve the right to tax resources and such, which we'd all have to pay of course.

[Jerry J. Fortin]

Personally I think you guys are nuts! Income taxes are repressive and a solid wall against wealth creation. Normally I would say that governments have or should have nothing to do with wealth creation, however taxes have a negative impact in wealth creation and therefore are detrimental to growth in all respects.

Abolish income taxes, replace the government revenue stream with transaction taxes on the sale and purchase of goods and services. Make essential goods and services tax exempt to consumers, not to vendors. On the surface this would appear to be revenue neutral, in reality it would result in huge savings for busioness as their tax load would be in reality completely paid for by the end consumers. It would represent a huge savings for lower and middle income citizens because tax is applied on sales and purchases on a pay as you go basis. The less you spend the less tax you pay. This is consistent with taxation based on the ability to pay.

You want widespread non-partisan support for a political agenda that would serve to eliminate apathy, then taxation is your issue. It is the one area where everyone agrees, we pay too much tax.

On the bright side, removing income taxes would bring a lot of professional and corporate action into the nation. Tax is very important to business, they go to great lengths to avoid it and spend much needed capital in the process.

[benny]

The State can possibly decide how much money private players lose - but the State cannot decide how the "lost" money is used.

I find this seemingly libertarian view self-defeating: individual powerlessness putting the blame on the State!

[Zachary Young]

"The crucial aspect is that to protect a private property from public infringements, one needs the help of a community with some kind of social contract."

Paging Locke, Rousseau, Hobbes...

You know what you need to protect private property from the transgressions of others? A lock or a gun. Do you think the government (oooooooooh) is going to magically stop people from stealing from you? The state is the ultimate violator of property rights. It is absurd to envision it as some sort of white knight here to prevent other people from taking your stuff. Where does half your money go every year? It's like we're all so terrified of some stranger in a distant land hurting us or stealing from us that we submit to the ultimate tyranny at the hands of those who claim they love us (the state) in exchange for false promises of safety.

I'll tell you what - you do whatever you want, but if the government tries to take my money, they will have to kill me first. Because that's what it comes down to in the end. Money. Everyone has grand words about self sacrifice and greatness and nobility and honour, but in the end you're all a bunch of idiots who want something for nothing and are willing to have the state enslave me if they promise they can do it. Well guess what? They can't. And I'm not going to be your fucking slave.

[Machjo]

That quote was referring to intellectual property. How is a lock or a gun going to protect that property?

Also, we need to define private property. For instance, is an idea public or private property? At the moment, we have copyright, patent and other such laws. Of course we could get into the philosophical and perhaps even religious question of whether one can own an idea.

[benny]

Paging Locke, Rousseau, Hobbes...

You know what you need to protect private property from the transgressions of others? A lock or a gun. Do you think the government (oooooooooh) is going to magically stop people from stealing from you? The state is the ultimate violator of property rights. It is absurd to envision it as some sort of white knight here to prevent other people from taking your stuff. Where does half your money go every year? It's like we're all so terrified of some stranger in a distant land hurting us or stealing from us that we submit to the ultimate tyranny at the hands of those who claim they love us (the state) in exchange for false promises of safety.

I'll tell you what - you do whatever you want, but if the government tries to take my money, they will have to kill me first. Because that's what it comes down to in the end. Money. Everyone has grand words about self sacrifice and greatness and nobility and honour, but in the end you're all a bunch of idiots who want something for nothing and are willing to have the state enslave me if they promise they can do it. Well guess what? They can't. And I'm not going to be your fucking slave.

Locke, Rousseau, Hobbes have made history precisely by outlawing private ownerhip of guns as means of protecting private property.