FORGIVE US OUR DEBT?
Justin Trudeau’s victory at the last federal election (October, 2015) was a truly interesting moment in recent history. He offered big deficit spending on infrastructure projects and a big tax hike on the rich. Meanwhile Conservatives and NDP promised a balanced budget. Strange bedfellows! I guess more people were tired of Harper government than those who were concerned about balancing the budget. Perhaps, like me, many didn’t think that a deficit was a taboo. You may say I lack knowledge of economic fundamentals. But I think the question of a balanced versus deficit budget is neutral, not good or bad. It all depends.
Debt used to be a dirty word for conservatives. In my first job, I had a co-worker who was a kindest person I have ever known. She was Bible-centred, conservative and evangelical. She believed that debt was immoral: quoting the Bible, “Owe nobody anything.” She bought even a car with cash. Old prayer books had the Lord’s Prayer with a sentence “Forgive our debt,” not trespass sounding as though debt equalled wickedness. But today, our economy can not be sustained if nobody borrows money. George W. Bush said after 9/11 something like, “If you are patriotic, go out and shop.” He was encouraging consumption; borrowing was a patriotic act. Banks invented sub-prime mortgage – cheap money, and saw the seeds of recession of 2008.
When I was in Southern Africa during the seventies, I became Dean of Students, a job that required lots of travelling. So I applied for a credit card. It was refused because my name must have looked suspiciously non-white. It was during the days of Apartheid. My African colleagues had no credit card. But nowadays, credit cards arrive in the mail without asking for them. Personal debt is good for business. A successful businessman friend of mine said, “the measure of a good business man is how much money he can borrow.”
Buying government bonds ( a tool of deficit financing) can be a patriotic act, like Victory Bonds during the war. No one thought they were enabling the government to commit sin. There are certain things the government can and must do, like responding to crisis, defence, building infrastructure, and maintaining public order. Then we have to let the government borrow necessary funds. It’s a patriotic act.