Comment 39402

By More roads (anonymous) | Posted April 01, 2010 at 21:04:51

Capitalist, a strong private sector is the result of a strong government. Look around Hamilton and you will see that where there are lots of public assets, there too will be valuable homes and healthy business activity. If you look at Hamilton's waterfront, there are very little public assets but many private rail lines and private land.

If the private sector produces wealth, why is this area of the city so poor, both in terms of home prices and commercial activity (Barton St)?

How do you explain Toronto's financial district? This area has one of the highest concentrations of public assets anywhere in Canada and yet the private sector is also very strong.

The reason why communist societies are bad at producing wealth is because they don't leverage the power of the people. Instead of allowing merchants to do what they do best, which is to know what people want to buy, they take on this burden themselves. In other words, centrally planned economies make the government work too much.

Allowing the private sector to make decisions is not the same as allowing the private sector to own all the wealth. The former makes life easier on the government, the latter makes life more difficult.

Same goes for public debt. This debt is not debt owed by the people, it's owed by the government. When governments take on debt to give free health and education to people, it's a burden they take off the private sector and put on themselves. The result is that the private sector is not taxed and therefore does not grow.

The role of the government is to make the private sector stronger by thinking selfishly. When the government does this, like they do now in China and like they did in the mid to late nineties here in North America, the private sector gets stronger. When the government tries to coddle the private sector by giving them tax breaks, selling off government owned assets, or allowing themselves to take on debt, it makes the private sector weaker.

That's why George W. Bush had such a bad economy under his watch. He cut taxes on the private sector, handed out freebies and did this by burdening the government with more debt. This coddling of the private sector led to slow growth rates and it was punctuated with a near economic depression for the very people he was trying to help.

In terms of Hamilton, the goal of the government should be to think selfishly. This means higher tax rates, more investment in assets the city owns, things like roads, sidewalks and buildings, plus debt reduction. By focusing on making it's own balance sheet strong, the government will create the environment for the private sector to get stronger as well.

Think of the government as a personal trainer, taking money from the private sector while at the same time allowing the private sector to do all or most of the work. If he/she does this well, the client will improve their fitness, if they coddle their clients, they will remain fat and weak.

The question then becomes, do we want to get fat and weak, or do we want a government that will force us to get stronger. If we want the latter, this means paying enough in taxes to allow the government to build up it's own balance sheet. This will include fixing all the roads, sewers and any other infrastructure the government owns. It will also include paying down the $900M in debt that the city is obligated to pay back.

If we can understand that economic strength and wealth is derived from accepting a heavier burden, not looking for freebies, Hamilton can and will be the economic powerhouse of this country. No longer will we need to beg for jobs, employers will flock to us because of our first class infrastructure and great public amenities.

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