Thanks for your question, Regular reader. In response, I would point out that while monetary policy (and in particular, cutting and keeping interest rates low for over a year) was an attempt to support market confidence and promote continued investment, government stimulus packages were an attempt to end the recession by boosting GDP and to mitigate the effects of the recession on Canadians.
Over 400,000 Canadians lost their job during the recession (www.cpj.ca/bearingthebrunt), and while certain stimulus projects were slow to roll out, unemployment certainly would have been higher without government spending that resulted in job creation/retention. Other programs, such as extending EI and work sharing provisions, ensured that more people had a reliable source of income, even when they couldn't count on work.
And while there is a certain element of artifice to stimulating demand, much of the stimulus-supported investments were far from artificial and unnecessary demand. We need investments in physical and social infrastructure in Canada. And many of the unemployed are spending their benefits on basic needs, like food, clothing and housing.
The second clarification I would make is that the austerity measures are not actually necessary in order to ensure that lending, investing, and borrowing continue. That's the point that Paul Krugman makes and why he considers the situation so absurd. Markets aren't actually calling for these measures. It's the fear that they might that is driving this policy. And fear-based policy that disregards the harmful impact on vulnerable people is, I think, quite fair to describe as idol worship.
Thanks for your question, Regular reader. In response, I would point out that while monetary policy (and in particular, cutting and keeping interest rates low for over a year) was an attempt to support market confidence and promote continued investment, government stimulus packages were an attempt to end the recession by boosting GDP and to mitigate the effects of the recession on Canadians.
Over 400,000 Canadians lost their job during the recession (www.cpj.ca/bearingthebrunt), and while certain stimulus projects were slow to roll out, unemployment certainly would have been higher without government spending that resulted in job creation/retention. Other programs, such as extending EI and work sharing provisions, ensured that more people had a reliable source of income, even when they couldn't count on work.
And while there is a certain element of artifice to stimulating demand, much of the stimulus-supported investments were far from artificial and unnecessary demand. We need investments in physical and social infrastructure in Canada. And many of the unemployed are spending their benefits on basic needs, like food, clothing and housing.
The second clarification I would make is that the austerity measures are not actually necessary in order to ensure that lending, investing, and borrowing continue. That's the point that Paul Krugman makes and why he considers the situation so absurd. Markets aren't actually calling for these measures. It's the fear that they might that is driving this policy. And fear-based policy that disregards the harmful impact on vulnerable people is, I think, quite fair to describe as idol worship.