Canada’s deflating economy

1 06 2011

Click here for Article

Discussion questions:

1. Do you think that it was right or wrong for the government to spend so much money to kick-start the economy, even though it was increasing their debt?

2. Are there any alternatives, or recommendations you have for the Canadian government to boost the economy?



9 responses

2 06 2011
Alejandro Enamorado

I may be labelled an interventionist but I believe it was the appropriate action for Government to step in and dump money to try and revive the economy. It is true that eventually, as the cycle goes, we will come out of it but the question was how long it would take without intervention. Could Canada handle a prolonged great recession? With that in mind, to avoid futher financial turmoil, the government had to resort to desperate measures. I may not have agreed with the distribution of funds and question if some of it was used well or efficiently but this was the time the government needed to act. Even if it resulted in a record deficit, debt can be paid off (this is of course hoping we have a surplus soon), but damaging the economy would result in a far more expensive repair job.

2 06 2011

1. In my opinion, you have to spend money to make money. I believe that in order to get the economy started up again, spending is indeed needed, but as with all decisions, consequences must be considered. I think that in order to achieve proper circulation, money from the government must be inputed into the economy, but they must make sure to not go overboard, and to know how to handle the increased debt they will face in the future.

2 06 2011
Chris Li

From what I understood from the article, the debt that the government is inposing upon themselves does not necessarily benefit the economy in any significant way. The articles specifically mentions the fact that the jobs that are being created is being used for wealth consumption spending rather than wealth generation. So in the end, there may be more jobs, but they are not doing anything except creating the illusion that more people are employed and people are better off. Their deficits will nevertheless continue to increase and there is no guarantee of a recovery. While it is true that the government cannot allow the economy to fail, if they continue to create more and more debt for themselves, they may not be better off than just failing. They must create a better method to stimulate the economy rather than what they are doing right now.

2 06 2011
Carolyne Wang

1. I believe that it was a good idea for the government to spend money to kick start the economy and increase consumption, otherwise Canada may not have recovered from the recession as much as it has now. However, in the long run continued government stimulus spending is unsustainable as it increases debt, so the government should start cutting stimulus spending now in order to avoid the negative consequences of a large national debt.
2. I may be biased because my research topic is income inequality, but I think that the government should try to reduce the gap between the rich and the poor. The government should do this by increasing taxes for the rich and decreasing them for the poor, so that wealth is redistributed more evenly. This increases the disposable incomes of the poor, giving them more money to possibly spend on Canadian made goods and increase the aggregate demand in the Canadian economy. Also, with low income families richer, the government spends less on welfare programs, which leaves more money to pay off debt.

3 06 2011

1. Government should step in to help the economy even though it increases their debt. The government spending can help people to get back on track and get economy grow again. Government will eventually benefit from a growing economy because they can get more tax revenue in return which gave them more financial power to run the country. One example is that a growing economy can also attract foreign investors to invest in the country which leads to more tax revenue and this money will be used on welfare, education, health care, etc just to make people feel better. A government need to make people feel comfortable and happy so they can vote for the party again!

3 06 2011
Maria Li

It is a good idea for the government to spend money to kick start the economy because in order for the Canadian economy to recovery well from the recession, the government should step in. Even though the government is in a deficit right now, it is right for them to do something to benefit the economy as a whole. If they hadn’t inputted money into the economy, Canada might have risked losing its competitive image. However, I do think it is necessary to spend the right amount.

3 06 2011
Kevin Yeo

The government’s spending to stimulate the economy was a necessary action to ensure that the economy of Canada did not fail. This stimulus money has also been one of the main reasons as to why the Canadian economy was able to bounce back from the recession very well. The stimulus money was necessary during the recession but continuous excess spending to stimulate the economy would be counterproductive as it would only be creating jobs that would not be sustainable while creating a larger deficit for the government. In my opinion, the government has done its job with the stimulus spending and should start cutting back little by little ensuring that the jobs created can be sustained while attempting to fix the national deficit.

3 06 2011
Mike Seo

I believe it was necessary for the government to spend so much money to kick-start the economy. If such action was not done, Canada would not have been able to get out of the recession as quickly as they have done now. However, in the long run, this is not a good thing. They will be in a big debt and will not be able to get out of the debts if it continues to spend more. The stimulus program has done what it needed to do, and the government should spend this money elsewhere.

3 06 2011

I think that in order to get out of the pit we were in, it was necessary to put on debt to dig ourselves out of it. All in all it was the right thing to do, in my opinion It was the lesser of the two evils. As for trying to fix it, I believe Canada can consider to maybe lower the value of its currency to stimulate our exports industry, and regain our competitive advantage we had on the world stage. I think that would bring some money into the economy. I don’t think they should spend much more though, to be safe economically.

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