Now We’re All Friedmaniacs

Maybe somebody can help me out with the math here. I’m trying to crunch numbers in order to understand what’s going on and something’s just not adding up.

The government of Ontario wants to freeze teachers’ wages for a couple of years (and prohibit them from striking during that time as well – but that’s another story). This is being done, we’re told, as part of an austerity drive in order to reduce the provincial deficit/debt which, we’re told, is nothing short of crushing. The accompanying strike ban is just for kicks, really. Something to do with a couple upcoming by-elections. But that’s another story.

Here’s what I don’t get.

We freeze teachers’ wages, therefore reducing the amount of money the government has to dole out. This reduces costs and reduces our deficit/debt. That’s pretty straight forward.

But by freezing wages doesn’t that flat line or, in real dollars, reduce the amount of taxes being collected by this same government? So while cutting costs, this move also reduces revenue. Surely there must be a study somewhere, with facts and figures that show overall this will ultimately amount in more cash for the government not less because if it’s less, well then, this manoeuvre could be seen as somewhat counter-productive to the claimed goal of reducing our deficit/debt.

Certainly, if we’re frolicking in the murky waters of economic theory, freezing wages will also dampen consumer spending especially in these our tough economic times. Less money in our jeans, as members of the former provincial Tory government would like to say, means less spending and less spending means less tax revenue in government coffers and less money in the coffers makes reducing our deficit/debt that much more difficulty.

Again, Premier McGuinty and his brain trust has factored all this in, obviously, tabulated costs versus spending, money going out and money coming in, and rationally decided that this makes good fiscal sense, yeah? It’s my math that’s bad not theirs, I’m hoping. This will all be short term pain for long term gain. That’s what’s happening here, isn’t it?

And it’s not just some fucking knee-jerk reaction to mollify right leaning voters in a couple ridings in order to, not prop up his government from defeat, but to secure another majority. A politician’s timeline shrunk from building a future for our grandchildren to nothing more than a five week campaign run. For what?

I keep hearing from our elected officials about this time in the future when we have wrestled our deficits and debt to the ground, when governments will spend again, judiciously of course. Where our taxes will remain low and our quality of life high. A time when our wealth/job creators will return to the table and deliver prosperity for all.

This is the theory. All our textbooks say it should work. It’s just that the numbers, the numbers don’t really back any of it up.

by the numbersly submitted by Cityslikr

4 thoughts on “Now We’re All Friedmaniacs

  1. The government will get more bang for their buck by spending that same money on fixing a bridge or improving transit than they will on increasing teacher’s salaries.

  2. This is silly. The total wages of public workers is just about wholly comprised of taxes. The wages teachers receive is a chunk of this overall pool and the taxes they pay just means they pay back a little bit to the pool and take a smaller net chunk away at the end. Ultimately, the teachers (or any public workers) is always a drain to the city expense and not a contributor; private workforce is. Nobody will increase the overall provincial budget by spending more on the overheads.

    Now whether the public workforce has the ethical right or responsibility to ask for benefits, compensations, and wages that the private sectors do not, and is furthermore blighthly irresponsible to the overall betterment of the community, is of another debate. It’s a shame that these are the same people that are given the responsibility of educating our future generation.

  3. I’m disappointed in you, slickr. You must it have done well in Grade 6 math.
    Let me make it easy for you.

    You get paid a salary. Does 100% of that go to taxes? Sure, some of it does. But not all. The remainder is yours to spend. Do you spend all of that remainder (I.e. “supporting the economy”)? No, hopefully you save some, and also, of the money you do spend, the province doesn’t necessarily get a piece of tax revenue. I.e. food that doesn’t have provincial portion of HST.

    If the above logic wasn’t true, and they got no take home pay, *nobody would work at all*.

    So, the net is, the province would be out some amount of cash if they allow public sector workers wages to rise.

    Seems kind of obvious to me.

  4. In the interest of full disclosure, I’m a teacher and a Liberal supporter. (Yeah, even now.) The first and second replies were dead on regarding the sketchy math. (But I strenuously disagree with the comments in the second paragraph of the first reply.) I receive 100% of my salary from the government and only pay back a certain percentage of that to the gov’t in the form of taxes. Freezing teachers’ salaries will indeed result in lower costs for the government.

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