Raise the Hammer

dsahota >> You would be much more credible if you compared 1996-2003 and 2003-2010

In the time period between the end of 2000 to 2003, real government spending (2002 dollars) jumped to an average of 4.8% a year. The effect on the economy was this....

Business spending on machinery and equipment

2001 = - 2.8%
2002 = - 6.5%
2003 = 6.0%

Exports

2001 = - 3.0%
2002 = 1.5%
2003 = - 0.1%

Residential Structures

2001 = 9.7%
2002 = 9.6%
2003 = 2.6%

Real GDP

2001 = 1.8%
2002 = 3.1%
2003 = 1.4% average 2.1% GDP over three years.

As soon as Mike Harris ramped up government spending, the private economy slowed down.

>> Only considering GDP growth and government spending in a single provincial economy neglects the effects of the global economy.

And how much do outside factors affect the performance of our economy. 10%, 30%, 50%? If you believe it is closer to 50%, then how do you explain the wide disparities between nations in overall economic output? If our economies all rise and fall together, shouldn't we all have similar GDP per capita numbers?

>> Public spending is still high, but the conference board of Canada predicts Ontario will lead GDP growth for 2010

And unless the Ontario Liberals go crazy with new spending, I agree 100%. The latest quarter showed government consumption at 23.3% of GDP. This figure reflects our high levels of spending on health and education. Seeing that McGuinty is looking to freeze wages, this number will likely go down and this will free up capital for the private sector.

However, if you bought a home recently, this will probably mean that your equity will soon turn negative as the economy starts building new homes. My advice is to sell now and rent for a couple of years.

>> Do you honestly believe that making cuts to the already broken Ontario Healthcare system... would have no long term economic effect 10-20 years down the road?

Hamilton was a booming city far before the province spent 23.3% of GDP on free stuff...

http://en.wikipedia.org/wiki/Economic_history_of_Hamilton,_Ontario

>> would Western Canada even really exist today if a government subsidized transcontinental railway hadn't been built?

Yes.

>> the reduction in government spending in 1996-2000 resulted in lowered GDP growth in 2000-2009 as Ontario was unprepared for the physical infrastructure and knowledge infrastructure needed to succeed in the rapidly modernizing global economy. Can you refute this hypothesis with your data?

Public goods are given away for free, they have no marginal cost to the user. That being the case, how do you measure how much society values these goods and services? Is it more than the cost of funding them, or less?

I have used this example before, but it is a good one. If the $30M in tax subsides that support the HSR were given back to taxpayers, how much of this money would go back to the HSR in fares? If it is less than $30M, that indicates that people would rather spend this money on things other than transit, like food, or clothes, or beer.

In this case, the city is possible wasting tens of millions on bus service that people don't want and short changing local business of tens of millions in business from local consumers.

How does this help Hamilton's local economy?