[brockm]

This is getting pretty off topic, debating if transit should be funded at all.

Every city in the developed world funds the transit system, and some very basic economic literacy makes clear why. The reason every city funds transit is that it makes economic sense to do so as travel patterns generate large externalities. Externalities are costs borne by society that are not reflected in the operation costs or benefits to the user. Pollution and congestion are two big negative externalities of commuting by car. If you take transit, you don't get any direct benefit from the congestion that you have relived or the pollution that you have prevented. These accrue to the entire society. The entire society balances this by using government to discount each transit ride.

With all due respect, I don't believe I'm lacking in economic literacy. And I'm familiar in great detail, with the Keynesian economic theories that drive your opinions, from Maynard Keynes himself all the way up to his modern flag-bearer Paul Krugman. It so happens that I believe that Keynesian economics have been a general disaster for developed countries, and I believe the next decade is going to be an extremely turbulent period that will bring a lot of the imbalances brought about by these polices -- that everyone so proudly endorses -- back into balance in a drawn out and painful affair.

Many world governments are reaching the limits of fiscal imbalance, before debt levels create untenable inflation and the complete seizure of international trade with some nations. Especially the United States, and the United Kingdom. These are two nations, whose projected debt over the next decade will exceed the entire value of their economy.

I don't agree that a transit system cannot be run revenue neutral. I believe the problem is best described in the dilemmas laid out by Public Choice Theory; the prices "need" subsidy for political, not economic reasons. And they're probably more subsidized than they need to be for political reasons.

 

[GraphicMatt]

Hey, brockm, what ended the Great Depression?

 

[tkip]

Hail Miacheal....

I'm a huge fan of Michael Coren. I think he has good, solid points on many topics from social to religious issues and the man makes sense on more occasions than not. He's consistant, extrememly well read and has a wealth of knowledge in his head.

I love it when someone makes a comment without facts and he puts them on the spot and asks for some kind of referrence to something that can be substantiated.

Many times, the person in question can't. They're just voicing an opinion.

I don't always agree with him and certainly thinks he's been wrong on more than one ocasion but his preachy tendecies on social morals and ethics and calls for a return to this along with common sense ring true.

 

[brockm]

I take it you don't agree with the Toronto Board of Trade, or the OECD report claiming that lack of transit options cost the GTA $2.3 billion on an annual basis, then?

Having an infrastructure deficit is no better than having a budgetary deficit. Think of it this way: would you rather be homeless with no debt, or have a house and a mortgage?

I don't much agree with the Toronto Board of Trade, no. Nor do I much agree with much of what Bay Street has to say at all. Of course corporate Canada supports these big infrastructure projects. It's win-win for them. The Canadian financial sector benefits by being the conduit for government borrowing, and they're accepting no risk at all by doing it. The Bank of Canada stands ready to print and guarantee all loans, and the banks can leverage the cash before it has inflationary pressure to boot!

They also know the government will protect business from economic costs and impose those costs on individuals. So they're more than happy to encourage the government to spend like drunken sailors. Until they start seeing negative consequences, and then they come out from their office towers and preach fiscal responsibility.

I may be a capitalist, but I actually share something in common with my socialist counterparts: I can plainly see the entanglement of corporate Canada with the government, and how corporations benefit at the expense of the taxpayer -- General Motors can tell you all about this.

 

[brockm]

Hey, brockm, what ended the Great Depression?

Not the New Deal.

While there is not consensus on this issue among economists, there's at least some consensus today -- even among a few Keynesians, that the Great Depression was instigated and prolonged by the initial restriction of the money supply, and then the over-expansion of the supply as well as tight trade restrictions. Unemployment did not return to pre-depression levels until two years after the end of the Second World War, and the economic boom was accompanied by the removal of many trade barriers. The repeal of the Smoot-Hawley Tarrif Act, for instance. Which was an act pushed through by Hoover in 1930, imposing 60% tariffs on most imports to the United States, which both Canada and the UK quickly responded to with countervailing measures. Within a year of passing the measure, trade between all these nations collapsed by more than 60% -- and most economists certainly believe this was a huge driver in turning a very bad recession into a very deep depression.

So the return to more liberal economic conditions post-war played a fairly huge role.

 

[tkip]

I'm a huge fan of Michael Coren. I think he has good, solid points on many topics from social to religious issues and the man makes sense on more occasions than not. He's consistant, extrememly well read and has a wealth of knowledge in his head.

I love it when someone makes a comment without facts and he puts them on the spot and asks for some kind of referrence to something that can be substantiated.

Many times, the person in question can't. They're just voicing an opinion.

I don't always agree with him and certainly thinks he's been wrong on more than one ocasion but his preachy tendecies on social morals and ethics and calls for a return to this along with common sense ring true.

 

[GraphicMatt]

Not the New Deal.

Is your answer "World War II"? I'm working a theory.

 

[ssiguy2]

Toronto refuses to look outside the box. Monorail construction is growing at a blistering pace all over the world but somhow that's not good enough for Toronto because our politicians have wet dreams of turning Kingston, Sheppard, Don Mills, Finch into bohemian meccas.
Bangalore is beginning construction of its 58 km monorail project complete with accessible 80 metre stions. By 2013, just 3 years, Bangalore will have a massive monorail system for $2.5 billion using PPP.

Bangalore................summer 2010 construction begins, service starts 2013 for 58km. Toronto.........................paperwork begins summer 2010, first phase of paperwork by 2013 complete.
Sao Paulo ..................$1.6 billion 100k km monorail construction begins. service begins 2017. Toronto..............2017 second phase of paperwork complete, moves onto enviornmental review.

Enough said.

 

[brockm]

Is your answer "World War II"? I'm working a theory

No. I edited the above response. I don't think any real economists these days think World War II actually pulled us out of the depression. If anything, it made it somewhat worse. During the war, there were chronic oil, food and supply shortages due to the war effort. Ask anybody who was alive during that time, and they talk of nothing but hardships until the end of the war.

Certainly GDP during the wartime period increased due to the war spending, but there's little evidence that overall wealth increased. Rather, you basically had depression-like conditions right through the war, and not really starting to reverse itself until the end of the war. Full recovery from the Great Depression definitely did not occur until well after the war had ended.

The reason why people may have had the impression that the depression was over, was more like that depression-like conditions had become the new normal for people living then. They had become so accustomed to living with less, and to focusing on the war, that they sort of forgot about how crappy the economy was. Any perception that WWII ended the depression is merely a psychological artifact, not a economic reality.

 

[EnviroTO]

Toronto refuses to look outside the box. Monorail construction is growing at a blistering pace all over the world but somhow that's not good enough for Toronto because our politicians have wet dreams of turning Kingston, Sheppard, Don Mills, Finch into bohemian meccas.

The same could be said about subways. Delhi has created a huge subway system while we did very little. Many other places have also been building subways. It takes the will power to take on the debt required to invest in infrastructure first and reap the rewards second. It is time to put tolls on the freeways and start construction now.

 

[Mapleson]

Brockm, you spend a lot more time debating wording than actually substance.

Ontario and Canada are in a deficit position. This means some combination of raising taxes and cutting services will occur at some point in time, unless you hold the position you can grow out of mounting debt. You dislike Keynesian economics, so do I. However, it that does reflect anything on infrastructure spending and specifically transit spending. Ontario will spend $1.7b on transit and $4.9b on transport infrastructure in 2010-2011. Medicare spending is $45b; education spending is $21b; interest payments are $13b.

If you want a fiscally responsible government, those three areas are where you'll make the most progress. 1% of medicare spending equals 26.1% of transit infrastructure spending. Even if you stopped all infrastructure projects from roads to trains to schools to hospitals, we'd still be running a deficit.

 

[Cranky Old Fart]

The reason why people may have had the impression that the depression was over, was more like that depression-like conditions had become the new normal for people living then. They had become so accustomed to living with less, and to focusing on the war, that they sort of forgot about how crappy the economy was. Any perception that WWII ended the depression is merely a psychological artifact, not a economic reality.

The War ended the Depression.

There was full-employment in fact Women were employed due to the shortage of labour. There was nothing to buy for consumers so people saved much of their income. The economy readjusted itself from a Wartime economy to a consumer economy taking several years with a developed massive pent-up demand for consumer products, housing, infrastructure etc..

It took about 20-25 years for the this consumer boom to come to an end.

 

[TOareaFan]

Assuming part of Ontario's Debt is a non-issue for me as we are already on the hook for it being citizens of Ontario. You say "significant portion" well that would be up for negotiation remembering that citizens of the GTA send far more in taxes & fees to Queen's Park than are received back in services.

Well, if Ontario borrowed a lot of money based upon its ability to pay back that money and Toronto is a large part of that ability, then it makes sense that a equally large portion of that money should then be allocated to Toronto in any split. Think of it this way....a couple borrow a bunch of money....the husband is the sole earner (turn back the clock to Wally and the Beav days)....they both used the money borrowed and shared in the benefit....in fact perhaps the wife got a bigger share of the benefit because she spent more time in the house..... but the bank that lent it to them was relying on his salary to pay back the money.

A couple of years later they are getting divorced...it didn't work out.......he felt he was paying too much for her to enjoy her good life and he just simply wasn't getting the benefits back that warranted that spending....they go to the bank and say "we are splitting up...can you just allocate half of the debt to her and half to him"....the banks response?....."NO!...he has the earning power, it was his income that made us lend you the money in the first place...we don't care how you split up the benefits.....he is on the hook to pay us back".

Any departure of Toronto from Ontario (which I think is a pretty silly concept anyway) would see Toronto being responsible for the bulk of the current provincial debt.

 

[brockm]

The same could be said about subways. Delhi has created a huge subway system while we did very little. Many other places have also been building subways. It takes the will power to take on the debt required to invest in infrastructure first and reap the rewards second. It is time to put tolls on the freeways and start construction now.

I'd say it takes willpower to understand that if you want to have a well-maintained and expanding transit system, you have to be willing to pay for it. The problem will be with the TTC, like any transit system, is you can always say there's an "infrastructure deficit". I'm not a big fan of that word, by the way. There will always be room for newer, better infrastructure, and there will always be someone arguing to sell off government bonds to get it.

If you want to make the system economical, you need to get ridership up. That means removing density limits in the city, and at a Federal level it means ending Canada's obsession with home ownership. Shut down CMHC. And stop having the Bank of Canada fix interest rates. Let interest rates float and reflect actual capital availability.

The government shouldn't be encouraging home ownership for the purpose of "stimulating" construction. People need to learn that renting is completely fine, and a floating interest rate will take a lot of steam out of the urban sprawl we have in North America.

 

[Cranky Old Fart]

Well, if Ontario borrowed a lot of money based upon its ability to pay back that money and Toronto is a large part of that ability, then it makes sense that a equally large portion of that money should then be allocated to Toronto in any split. Think of it this way....a couple borrow a bunch of money....the husband is the sole earner (turn back the clock to Wally and the Beav days)....they both used the money borrowed and shared in the benefit....in fact perhaps the wife got a bigger share of the benefit because she spent more time in the house..... but the bank that lent it to them was relying on his salary to pay back the money.

A couple of years later they are getting divorced...it didn't work out.......he felt he was paying too much for her to enjoy her good life and he just simply wasn't getting the benefits back that warranted that spending....they go to the bank and say "we are splitting up...can you just allocate half of the debt to her and half to him"....the banks response?....."NO!...he has the earning power, it was his income that made us lend you the money in the first place...we don't care how you split up the benefits.....he is on the hook to pay us back".

Any departure of Toronto from Ontario (which I think is a pretty silly concept anyway) would see Toronto being responsible for the bulk of the current provincial debt.

Why the bulk ? Based on what ? Figures show that more leaves the GTA in taxes than is returned in services.

Why is a Province of Toronto a silly concept what personal benefit do you derive from being a citizen of Ontario ?