Budgetary Voodoo

June 13, 2011

I just want to add on to a post Matt Elliott at Ford For Toronto wrote last week called ‘Lame Budge Analogies’. It’s one I highly recommend everyone take a look at as it deals with budgetary decisions and the argument fiscal conservatives like to use that really doesn’t hold up in the light of day. ‘Governments need to run their finances like a household’, we’re told and the first time I remember hearing it was from a cheque book waving Preston Manning back in the early days of the Reform Party.In addition to all the logical fallacies of the argument Mr. Elliott points out, I’d also suggest that government shouldn’t really be run as a household because governments are nothing like households in one very important way. Individual households are, in the end, terminal economic units. They must earn, save and invest with the knowledge that the bulk of the revenue they generate is finite. At some point of time as they age, money coming in will decrease to the point where (if lucky) the last part of their lives they will be living off the money and assets they’ve been able to save and invest. It’s a fairly basic bell curve arc.

Governmental institutions, on the other hand, are more enduring for the most part. Stable democracies like ours don’t have to plan for their old age and retirement. So their fiscal approach is vastly different from those of individual households. Revenues and spending fluctuate, of course, depending on the economic environment but governments, unlike households, continue to maintain an ability to generate income perpetually. So their finances shouldn’t be viewed on a bell curve where one day, sometime in the future, their ability to generate revenue disappears.That is not to say our governments should go around spending more and more money, going deep into debt, with the expectation that the good times will never end. It’s just that they can (and should) take a longer view than we as individuals need to have. Think more along the lines of geological versus human timelines. Government will continue to exist after all of us have performed our mortal jig. To think that it should follow the same economic rules that we do is cute in its human self-importance but ultimately short-sighted and wrong-headed.

Operating under such a narrow conceit also reveals a fundamental misunderstanding of the role of government assuming, of course, it’s arrived at genuinely if more than a little misguidedly. I can’t help thinking, however, that because it’s a concept utilized mainly by right wing ideologues intent on shrinking the role of government in our lives, it’s little more than a ruse. A ‘lame budget analogy’ as Matt Elliott called it that is so appealing in its apparent common sense that it’s used to hijack a more honest discussion we need to be having. Not surprising really as the last thing our modern conservatives really want at this point is an honest discussion.

submitted by Cityslikr


Follow

Get every new post delivered to your Inbox.

Join 262 other followers