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Economics 101

Obviously, Toronto Mayor Rob Ford only has a cursory knowledge of economics. He was, after all, elected to “trim the fat” from a city budget that he considered overflowing with “gravy”. He said he could do this without cutting city services. And yet, while city services get hacked to the bone, high-profile citizens like Margaret Atwood campaign to save Toronto library branches from closure, and nearly 1200 City employees await pink slipsFord has personally wasted about $65 million.

As many of you know, Ford’s first order of business when he was sworn into office last December was to cancel Transit City. I leave aside the insanity of refusing to implement provincially-funded transit infrastructure in the largest city in the country. I won’t go into the fact that increases in TTC ridership actually resulted in a $60 million budget surplus in 2010 and the system even saw a 3% increase in 2011 (in what world is high transit ridership rewarded with intense cuts to transit services?) I won’t even dwell on the Scarborough LRT riders who will now be forced to ride buses for four years while their crumbling line is rebuilt. I will concentrate on just one fact: the man who said he could save taxpayers’ money already cost them millions of dollars in cancellation costs. In a single day: his first day in office.

Now, I’m no economist. But clearly, neither is Ford. The false duality between services or no services is a device often raised by the balance-the-budget crowd to enable cuts. Canada’s largest public-sector union recently slammed the federal government for forcing Canadians to make an “absurd choice” between a balanced budget and strong public services. Among the services provided by the Public Services Alliance of Canada are environmental protection, food inspection, infectious disease tracking and search-and-rescue. After years of fiscal restraint, PSAC is concerned that a government-wide austerity program will seriously disrupt services in communities across the country. Do we really want to risk increases in E. coli or Avian flu in our cities just to save a few bucks? As we enter the winter months, does decreasing search-and-rescue funding make sense? PSAC insists that balancing spending and services doesn’t require an either-or choice (check out their hilarious videos at ThirdChoice.ca).

As Jim Stanford writes in The Globe and Mail, running a government like a corporation cannot possibly work: while Canadian corporations have retained strong profit margins and benefitted from tax cuts, they’re too spooked by recent financial chaos to actually spend their growing cash hoard. Their reticence is deeply damaging to the system as a whole. Stanford argues that governments shouldn’t focus on decreasing their own spending and debt, but on getting people back to work. And for that, they need more spending, not less. Increased government spending during recessions has been a staple since the Great Depession. You would think Mayor Ford might have learned that over the course of multiple recessions in Ontario.


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