[brockm]

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.

Well, you clearly don't dislike Keynesian economics that much if you think the government should take on debt to build infrastructure when it has to borrow to do it.

What bothers me about most people's understanding of government deficits it that they fail to realize how government debt works, how it affects the money supply, and how it actually causes inflation -- long before taxes are increased to pay for it. The vast majority of government debt is monetized, and therefore requires an increase in the size of the money supply, which creates more dollars versus the availability of capital. This causes the purchasing power of money to decrease.

Ironically, these government subsidies and spending measures are designed to make services -- like transit -- more affordable for the downtrodden, but they actually have the effect of making the cost of everything else more expensive. And we shouldn't just blame government debt. We can blame consumer and homeowner debt too, since the government bankrolls most of that through central bank guarantees.

Market pricing always brings the system into balance. If the government is borrowing against the future, and using monetary instruments and bonds to do it, you're paying for it through what Milton Friedman referred to as "the one form of taxation that can be imposed without legislation" -- inflation.

That downtrodden individual may be saving 50 cents every-time he or she gets on the bus, but he/she is paying 3 cents more for an Apple, and $1.00 more for their phone service, and 5 cents more for a bag of chips. But at leas transit costs are kept down, by god!

 

[JasonParis]

Interesting debate, but let's try to keep this about the Ontario budget cuts in particular.

 

[SimonP]

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.

It seems that you do need to do some more reading about basic economics. Externalities are in no way Keynsian and Keynsianism has nothing to do with what we are talking about. Keynsiansim is a theory of what is known as macroeconomics. Issues of demand and suply, such as we are talking about with regards to transit, is part of what is called microeconomics. Furthermore externalities are a central part of classical and neo-classical economics.

 

[brockm]

Interesting debate, but let's try to keep this about the Ontario budget cuts in particular.

Don't you think this debate is relevant to the way forward in lieu of the budget cuts?

 

[Towered]

I e-mailed my MPP today. Wonder what sort of reply I will get.

The other parties should send a direct mail piece to everyone who lives within a km of Eglinton and let them know that the Liberals have just canceled their subway. There are 9 ridings along Eglinton:

*Etobicoke Lakeshore - Laurel Broten - Liberal
*York South—Weston - Laura Albanese - Liberal
*Eglinton—Lawrence - Mike Colle - Liberal
*St. Paul's - Eric Hoskins - Liberal
*Don Valley West - Kathleen Wynne -Liberal
*Don Valley East - David Caplan - Liberal
*Scarborough Southwest - Lorenzo Berardinetti - Liberal
*Scarborough Centre - Brad Duguid - Liberal
*Scarborough—Guildwood - Margarett Best - Liberal

Everyone of them is Liberal. If you want to get this reversed, you have to convince these members that this decision will cost them on election day.

So what are the options? Replace them with Conservatives - you know, those people who don't even pretend to give a shit about transit? Riiiiiiiight. NDP? An even bigger joke. The Greens? An unproven fringe party with no political experience.

Honestly, I'm at my wit's end. Crestfallen doesn't even begin to describe how I feel after this announcement. It isn't even really about Transit City itself, but rather the callous, ambivalent attitude displayed towards transit funding in general by one government after another that is gutting me. My cautious optimism for the future of Toronto, especially where public transit is concerned, has at last been dealt a fatal blow. I remember how awful it felt when Harris cancelled the Eglinton subway - never in my wildest dreams did I expect the same thing to happen again, especially from what was a pro-transit government. It is a betrayal of the highest order, not just to Toronto, but to Ontario cities in general.

I'm practically shaking with disgust. I really thought we were getting somewhere in the last few years, with an ardently pro-transit mayor who managed to get the premier on his side and shift thinking, and funding, away from car-oriented planning for the first time in decades. The stars had aligned. And now, from one day to the next, that hope has been dashed to pieces, no matter how much they're trying to downplay the impact by using words such as "delay".

Are we really living in the 21st century? My provincial government just effectively told me "buy a car, you're on your own". And the part that enrages me the most is that there is no alternative, so I feel that for the first time in my adult life that there's no point in even voting in the next election. You think Tim Hudak will fund transit? FAT CHANCE. The feds (whether Conservative or Liberal)? Don't make me laugh, especially given the rest of the country's well known hatred for Toronto. And you can stop wasting time discussing Toronto becoming its own province, because given what needs to be done to make that a reality, it will NEVER, EVER happen. Then there's our joke of municipal government, with a line-up of mayoral candidates who seem ambivalent towards transit at best, with the exception of Sarah Thompson, but what are her chances of getting elected? Openly proposing road tolls to pay for it, even though aside from a successful Olympic bid (yes, that's how low we've been forced to stoop) that's clearly the only solution now given how the cities of Ontario simply cannot rely on senior levels of government to do anything for them, is political suicide. Voters will scoff because of the usual knee-jerk backlash against any kind of consumption fee, no matter how noble of a cause it would support. The system is broken from every angle.

IT'S OVER.

 

[brockm]

It seems that you do need to do some more reading about basic economics. Externalities are in no way Keynsian and Keynsianism has nothing to do with what we are talking about. Keynsiansim is a theory of what is known as macroeconomics. Issues of demand and suply, such as we are talking about with regards to transit, is part of what is called microeconomics. Furthermore externalities are a central part of classical and neo-classical economics.

I'm fully aware of the concept of internalized and externalized costs in economics. And inflationary pressure as a result of government deficits are a negative externality that arises from infrastructure spending. And the crowding-out effect, as well. In any case, I don't even agree that any of these externalities resulting from the lack of a specified level of transit are well-understood.

Thanks for the "education" on macroeconomics vs. microeconomics. I totally didn't pick that up in my studies. </sarcasm>

In any case, I do think these arguments are endemic of Keynesianism. As the infrastructure projects are framed as improving the economy, creating employment, etc. I mean, whether they're being justified through the perspective of the paradox of thrift or not, is really immaterial to me. It's still attempting to justify the release of amortized future capital out of some alleged economic necessity.

Urban planners in a sense may not be Keynesians, but they're certainly accustomed to viewing the world of public finance through Keynesian policies. And that is where my criticism comes to bear.

 

[Mapleson]

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.

I can agree that all these suggestions are construtive and would help Canada out. However, they are all seperate from the direct issue of transportation, and generally won't happen because of invested interests. Look at the demand for transportation infrastructure in the GTA (over 300,000 AADT on the 401) and look at the population growth of the GTA over the last decade and where we are projected to be by 2020 (over 7m). Can you truly say you believe our current tranportation network will continue to operate effectively without sustained spending? What you describe as a fetish is thought by most here to be a concern over the historical neglect of investments in transportation infrastructure and more specifically transit infrastructure.

I don't really view the glut of over-glorified, under-thought projects brought on by the perceived need to 'stimulate' the economy as the type of infrastructure spending we need. Infrastructure spending should be afforded the same protections as other core costs and investments kept on track regardless if the economy is booming or busted.

 

[Cranky Old Fart]

So what are the options? Replace them with Conservatives - you know, those people who don't even pretend to give a shit about transit? Riiiiiiiight. NDP? An even bigger joke. The Greens? An unproven fringe party with no political experience.

You replace them with MPP's & MP's from a "Toronto Party" based a bit upon the Bloc Quebecois, a Toronto/GTA Centric party that only cares about the specific concerns of the citizens of the Toronto Area & the eventual Provincehood of the GTA.

It doesn't have to be a so-called "fringe party". The Bloc Quebecois was formed by former members of the Federal Progressive Conservatives, Parti Quebecois, Liberals.

A Toronto Party can also be a "Big Tent" coalition of like minded Conservatives, Liberals & NDP'ers.

 

[brockm]

I can agree that all these suggestions are construtive and would help Canada out. However, they are all seperate from the direct issue of transportation, and generally won't happen because of invested interests. Look at the demand for transportation infrastructure in the GTA (over 300,000 AADT on the 401) and look at the population growth of the GTA over the last decade and where we are projected to be by 2020 (over 7m). Can you truly say you believe our current tranportation network will continue to operate effectively without sustained spending? What you describe as a fetish is thought by most here to be a concern over the historical neglect of investments in transportation infrastructure and more specifically transit infrastructure.

While I agree the TTC is chronically under-funded and is not keeping pace with demand, I do believe -- like with all things -- that there is a breaking point. A point at which, a solution will be found when push comes to shove. Markets and people have a funny way of solving problems when faced with adversity. Political will is found to undertake things when the going gets tough.

I think that the TTC is sort of in that "good enough" phase for people. Everyone knows the TTC is kind of crap compared to other transit systems in the world; it's still using tokens instead of smart cards, there hasn't been much investment in new subway lines in decades except for the Line to Nowhere(tm), etc.

What I do know is, that having a collapse of government finances would be far more painful than having a below-average transit system. I'd prefer to fix the problem without putting government finances in jeopardy. That means convincing the public to accept higher costs, and perhaps extend special consideration to low-income people (perhaps a re-imbursement program of part of the fare). But I think a significant fare hike should be on the table. And even congestion taxes like in Stockholm and London.

I happen to be a fan of user fees.

I don't really view the glut of over-glorified, under-thought projects brought on by the perceived need to 'stimulate' the economy as the type of infrastructure spending we need. Infrastructure spending should be afforded the same protections as other core costs and investments kept on track regardless if the economy is booming or busted.

Well, that's good.

 

[TOareaFan]

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

Why the bulk.....I would have to research it but I think the GDP of Toronto Province would be higher than the GDP of WhatsleftofOntario Province so the lenders of the money would look to Toronto Province to repay the bulk of the debt. It is one of the problems with running up debt....your freedoms to act as you choose get restricted by the needs to keep your creditors sweet.

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

It is just my opinion that it is silly. For one, I don't think it would ever happen so spending time discussing it seems silly (it is the equivalent of me saying "if I ever got a date with a supermodel what restaurant would I pick").....assuming Toronto could negotiate its way out of Ontario...how would it negotiate its way back into Canada? Isn't Canada a confedration of provinces and territories? Wouldn't Toronto need the blessing of the Federal Government to get back in as a Province? Wouldn't the feds blessing the right of Toronto to leave Ontario be tantamount to a pre-approval of Quebec's right to leave Canada?.........then, if that all happened, we end up with two slightly smaller provinces who would then both have their own provincial parliaments with their own members and their own cabinets and their own buildings....so we would end up with a higher collective cost of governing/administering the same number of people......I happen to be someone that thinks we have too many provinces already....the maritimes/atlantic provinces should just be one province (IMO) and all we do by splitting into ever smaller jurisdictions is increase the overall cost of government.

 

[Mapleson]

I'm fully aware of the concept of internalized and externalized costs in economics. And inflationary pressure as a result of government deficits are a negative externality that arises from infrastructure spending. And the crowding-out effect, as well. In any case, I don't even agree that any of these externalities resulting from the lack of a specified level of transit are well-understood.

Transit infrastructure spending is 1.38% of Ontario's budget, inflationary pressures a result of lack of government restraint in overall spending.

Well, you clearly don't dislike Keynesian economics that much if you think the government should take on debt to build infrastructure when it has to borrow to do it.

Actually, I am against government deficits and I was against the auto-sector bail-out and I was against the 'stimulus package', so please make your own points and allow me to make my own.

 

[SimonP]

Personally I'm all for Keynesian economic spending. In terms of inflation, my personal view is that it is not a major issue at the moment. Globalization exerts strong deflationary pressures. As some have commented China's most important export to the west is deflation. Interest rates have been a record low levels for the last 20 years, yet there has been only a very moderate rate of inflation. With the bubbles caused by a combination of these low rates and deregulation, we have run into danger of actually experiencing deflation a couple of times.

The past couple of years have been hard on those who follow the theories brockm seems to hold. I remember Peter Schiff and others predicting we were about the be hit with hyperinflation, it turns out that inflation rates have been healthy and stable. We should always be wary of inflation, but at the moment all the evidence points to it not being an issue.

 

[js97]

The bail out to the auto sectors would have been much better suited as infrastructure spending for Toronto and Metrolinks.

Perhaps this simply a favour for either smitherman/Rossi for the campaign... returning the favour for miller and his plans that extend his term?

I guess we will see!

 

[CodeMonkey]

Why the bulk.....I would have to research it but I think the GDP of Toronto Province would be higher than the GDP of WhatsleftofOntario Province so the lenders of the money would look to Toronto Province to repay the bulk of the debt. It is one of the problems with running up debt....your freedoms to act as you choose get restricted by the needs to keep your creditors sweet.

Not necessarily, if a "Province of Toronto" where to happen, the debt would be divided; For example, any debt associated with Spadina subway expansion would make "Province of Toronto" libialy because it falls in their region. Lenders can't come after the "Province of Toronto" just because of "WhatsleftofOntario" GDP isn't good enough for them, and vice-versa.

 

[TOareaFan]

Not necessarily, if a "Province of Toronto" where to happen, the debt would be divided; For example, any debt associated with Spadina subway expansion would make "Province of Toronto" libialy because it falls in their region. Lenders can't come after the "Province of Toronto" just because of "WhatsleftofOntario" GDP isn't good enough for them, and vice-versa.

Unlike you, I have not read the creditor agreements....I have read my mortgage document though....If I used the money to build my ex wife a villa in spain....I don't get to say to the bank.....get it from her she has the villa!

Ontario, including Toronto, borrowed the money.....Ontario, including Toronto, owe it back. Even if the two halfs of Ontario agree some sort of split...they still need the agreement of the people they borrowed it from....here is a better idea then....why doesn't Ontario split into 3 parts. Toronto....the rest of the populated part of the province and find a couple of thousand acres of unpopulated land and make that NewOntario.....and we will have them assume the bulk of the debt....problem solved?